The agency says it needs the cash to pay for repairs to the aging network of pipes, reservoirs, pumps, aqueducts and water treatment equipment that bring water from the Sierra and other sources to five counties along the eastern side of San Francisco Bay.
Since 2007, the 90-year-old district has been dealing with a 19 percent drop in water sales. Users have conserved water — partly at the district's own urging during years of drought.
"Even though we are using less water, which is important for conserving our water supply, the pipes in the ground and the facilities that bring that water to the East Bay still need to be operated and maintained," district spokeswoman Abby Figueroa told KQED's Peter Jon Shuler. "And the truth is that the East Bay has an aging infrastructure, and maintaining it is costing more each year."
Over half the district's pipes are more than 70 years old, she said.
EBMUD has also had fewer new customers from new developments than it expected.
At the same time, it has been trying to protect the system from earthquakes and reduce its environmental impact. Costs of energy, chemicals, labor and equipment are up, Figueroa said.
The district plans to increase spending on capital improvement projects by 21 percent over the next five years.
It is now paying for the bonds it issued for a project to obtain water from the Sacramento River. In October 2012, Standard & Poor's issued a negative outlook for the district's AAA bond rating.
The proposed budget says that the district used cost controls to save $194 million "over the past several years" and that employees haven't gotten a raise in two years, while 236 positions went vacant and it deferred maintenance.
Out of 13 water providers the agency surveyed in the Bay Area, its rates were the fourth lowest.
Some of the district's 1.3 million customers say they're unhappy with the proposed increase.
"The little guy out here like me is just at their mercy," retired engineer H. Thomas Nelson of Danville told Shuler. "It’s an unregulated utility and it would be nice if somebody would jump up and say we’ve got to regulate these people."
And Bay Area News Group columnist Daniel Borenstein last week accused the district of having "glossed over a third driver" of the increase: employee benefits.
The benefits now make up 70 percent of payroll costs, he said. He particularly pointed to the district's generous pension plan.
But district spokesman Charles Hardy said increased pension costs account for only half a percent of the proposed rate increase.
The district is currently negotiating new salaries with its employees.
Change in EBMUD Water Rates
