City officials are considering adjusting Santa Fe's municipal water-rate structure but aren't yet sure how.

The rate structure determines how the burden of generating the money needed to fund the community water system is shared among various types of customers.

The overall cost of delivering water to Santa Fe homes and businesses has been going up. In March, an 8.2 percent water rate increase went into effect. Similar rate hikes are scheduled for the next four years.

Councilors met Wednesday for a study session with a consultant to discuss how the current rate structure has worked since changes went into effect two years ago.

At the time, after long debate about the best way to encourage conservation, city officials created a rate structure that charges users more for the commodity after water usage exceeds a certain threshold. Commercial water bills are based on both the size of the meter and how much water the business uses.

Consultant Jason Mumm, president of StepWise Utility Advisors, recommended that the City Council revisit some ideas that emerged during earlier discussions by elected officials and area residents but weren't adopted. He said policies that were adopted have resulted in some undesirable consequences.

He said the effort to generate sufficient revenue from extremely high water users while benefiting people who use less water wasn't entirely successful.

Another issue that resulted from political wrangling was an "inclining block" structure for commercial water users that charges more per 1,000 gallons for businesses that have larger meter sizes. Businesses such as an ice plant or commercial laundry that have small meters ended up paying much higher bills than hotels, for example, that used more water but didn't get dinged with "high use" charges because they have larger meters.

Although some administrative rules have helped specific businesses, Mumm said, he "strongly recommends" that the city consider revising the commercial rate structure.

Mumm said he would return to the City Council soon with calculations on how a rate restructuring would affect the cost of water for various residents and businesses.

The consultant plans to provide separate reports and recommendations on help for low-income residents and on utility expansion charges for new developments.

The city's tentative timeline calls for additional rate discussions in September, leading to a rate-design proposal in October, followed by public hearings as soon as November and December, with new rate structures taking effect as soon as July 2010.

Half of the eight-member City Council attended Wednesday's study session. Councilors Patti Bushee, Chris Calvert, Ron Trujillo and Rebecca Wurzburger all expressed interest in moving ahead with restructuring, but some with reservations. Trujillo said he worries most about whether residents end up paying more. Bushee said she wants to make sure conservation is encouraged for businesses.

Contact Julie Ann Grimm at 986-3017 or jgrimm@sfnewmexican.com.