Petaluma residents will likely see small water and sewer rate hikes for each of the next five years as the city looks at passing on wholesale water costs to customers and adopts annual inflationary increases.

But, the city's water experts said, the hikes aren't as bad as they could have been — and are lower than each of the last five years' increases.

One segment of customers — mobile home park residents, often seniors or lower-income residents — could even see a dollar or two savings per month.

On Monday night, the council received a five-year rate analysis that examined the city's existing rates, costs and billing structures.

The analysis anticipates water and sewer revenue increases of 4 and 5 percent, respectively, will be needed in January to maintain current operations and maintenance of water delivery and sewer treatment services to the city's 58,000 residents.

With other variables, that will amount to monthly increases of about 3 percent for many users. High-volume residential users and industrial customers will see hikes near 12 percent.

A typical residential customer will likely see a 3.8 percent increase in water and a 2.6 percent rise in wastewater rates. The average customer who today spends $97.77 a month will see their January bill jump to $100.75.

"It's not going to be as bad as we anticipated," said Rem Scherzinger, the city's interim water resources director.

Two residents spoke out against the proposed increases Monday, although a larger turnout is expected Dec. 5 when the City Council takes formal action.

For the past five years, water rates have increased 5 percent a year while wastewater rates have increased 13 percent annually until this year.

In December 2010, the council approved a sewer rate hike for 2011 of 9 percent, down from the 13 percent recommended in the previous study's multi-year rate schedule.

If the city adopts the recommended changes, for the first time it will begin passing on to customers the increases in the wholesale cost of water Petaluma purchases from the Sonoma County Water Agency. The agency typically announces its price increases each July and city hikes would take effect in August.

Bob Reed, whose firm conducted the analysis, said his recommendations assume a 6 percent increase annually in the city's cost for the water.

Also a first — the study recommends a minimum 2 percent inflation bump to take effect in January 2013. The rate would be tied to the consumer price index.

The city's rate changes were deemed necessary to provide water and sewer services, establish reserve funds for those departments and pay debt service on bonds, mostly for the new Ellis Creek sewer treatment plant.

-- Lori A. Carter, The Press Democrat