Norwich — Norwich Public Utilities officials explained and defended the proposed $92 million combined budget for electric, water, sewer and natural gas divisions and its proposal for significant increases in water and sewer rates to the City Council Monday.

The Board of Public Utilities Commissioners will hold a public hearing April 26.

If the commission approves the budget, it would be included in the final budget approved by the City Council in June — but would not require any taxpayer funding.

New proposed rates would take effect July 1.

NPU is proposing a 23.3 percent rate increase for water customers, a 12.3 percent increase in sewer rates, along with a 4.3 percent decrease in city electric rates.

Natural gas rates would remain the same.

The $9.2 million water division budget includes $4.7 million in investment into water system plant and water distribution system upgrades, including replacing the million-gallon water tank in Mohegan Park.

The proposed rate increase would add an estimated $10.29 to an average residential customer's bill, NPU figures showed.

The $7.9 million sewer budget calls for a 12 percent rate increase that includes a projected $2.5 million for an improved collection system in sewer pipes throughout the city and increased federal regulation.

The rate increase is expected to increase a typical residential customer's monthly bill by $7.80.

An average residential customer with all four NPU services would see a combined monthly bill increase of $12.98 per month.

NPU General Manager John Bilda said commercial customers should see an overall decrease in their bills, because some of the biggest water and sewer users also are the utility's biggest electricity users.

Steve Sinko, NPU division manager, said city government departments also should see an overall decrease in bills.

The Board of Education, for example, should see a $46,000 reduction in the overall utility bill for city schools, and city government offices should see a $39,000 combined savings.

NPU's annual payment of 10 percent of gross revenues to the city to offset taxes jumped by 11 percent for the 2016-17 fiscal year to $8.6 million, driven mainly by the ongoing expansion of natural gas lines throughout the city.

Aldermen questioned detailed expenditures in the budget as well as the rate increases.

Bilda's comparison that the daily cost of the rate increases, 43 cents, would be less than a cup of coffee at Starbucks was rejected by Alderwoman Joanne Philbrick, who said she can't afford a daily coffee at Starbucks.

"People have reached a saturation point,' Philbrick said of the rate increases. “Where are the people supposed to get this money?”

Bilda said NPU is reducing costs, but said costs of utilities are high in the Northeast and New England specifically.

He acknowledged NPU salaries are high, but said NPU has a difficult time recruiting qualified staff, competing with Dominion and Electric Boat for highly qualified engineering positions.

Bilda said NPU strives not to be the lowest cost utility nor the highest, but to be competitive.

“We're trying hard, we really are,” Bilda said.

But he also warned that future rate increases aren't out of the question, calling the future regulatory climate for water and sewer systems “scary” with mandates to comply with state and federal mandates.

c.bessette@theday.com