Austin Water Utility recommended several changes to Austin City Council, including a rate increase, that would take effect with the FY 2013 budget. The recommendations came in collaboration with a joint committee formed to develop strategies improve the financial stability of the utility.

According to documentation provided by AWU, the typical water customer would see a $6.77 increase in his monthly water bill, starting with the October cycle.

"When we calculate the $6.77 impact, what we do is we take our average customer and calculate 12 bills for those average customers and divide that by 12," Assistant Director of AWU David Anders said.

Anders said in practice, more than half of the utility's customers—about 53 percent—use less than 6,000 gallons per month on average. He said the average skewed to the higher end because of large customers who use well above that.

The proposal could lower bills for some customers because the revenue stability fee would be removed and instead there would be a minimum charge. For the lowest tier of users, that monthly charge would be $2, as opposed to the $4.40 revenue stability fee.

The recommendations call for establishing a reserve fund, which would have 120 days of operating costs. AWU would not be able to use the fund unless revenue was less than budgeted revenue by at least 10 percent, and the utility must receive authorization from the council to make a withdrawal. The most AWU could withdraw in any one year would be 50 percent of the amount in the fund at the time.

According to staff, AWU is concerned about future revenue because of weather volatility, the council's commitment to reducing daily per capita usage to 140 gallons, and the utility's dependence on high-use residential customers to subsidize two-thirds to three-fourths of the other residential customers.

"We will continue to make progress on the gallons per capita per day reduction," Anders said. "It is tough to do, but it is something that is a priority for us and for the council."