The city sewer system is not bringing in enough revenue to cover its costs, which means city officials are contemplating a rate increase.

A consultant hired by the city to analyze the wastewater system concluded that if unchanged, the cost of operations, scheduled debt payments and planned new employees will outpace revenue.

Jason Mumm, president of StepWise utility advisers, recommends that officials charge 47 percent more for sewer services in four years, starting with an immediate 20 percent increase in monthly charges this year, then adding another 9 percent each year for three years.

City councilors on the Public Utilities Committee on Wednesday told city staff to begin the process of holding hearings on formal ordinances to hike rates somewhere between that level and a lower level also analyzed by the firm.

Former Wastewater Division Director Costy Kassisieh, who retired this summer, warned city councilors that he felt the department needed such an increase last year, but councilors wanted a formal rate analysis.

The analysis suggests that if the city minimizes its reserve balance and puts off some planned capital projects, rates in 2011, 2012 and 2013 would instead need to increase by 7 percent each year.

Either way, however, Mumm wrote that the city should make "a large adjustment immediately" to avoid a need to subsidize debt payments for the system some other way, according to a report issued last week.

In 2007, the city set sewer rates for those who live inside the city limits at a monthly base rate of $4.50 and a monthly use charge of $2.75 per 1,000 gallons of water used. Mumm said the average customer's sewer bill is about $22.50 and under the most aggressive proposal would increase to $35.61 by fiscal year 2013-14.

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