Norwich - Norwich Public Utilities General Manager John Bilda said he has heard "loud and clear" that the proposed 36.7 percent water rate increase will hit the city's largest businesses in two months time with little advance notice.

Bilda told the City Council during a workshop session on the proposed rate increase that the utility needs to do a better job publicizing project upgrades and the rates necessary to support them. But the timing is a function of the utility's own budget process, which is done in March and April for the fiscal year starting July 1.

The proposed water rate increase would cover $8.2 million in mandated water system improvements, from replacing aging equipment and century-old water lines to improving water quality and the reliability of service. NPU qualifies for 20-year, 2 percent interest loans from the state for the projects. The state loan would require paying off a $400,000 water system debt and eliminating a $261,000 operating deficit.

Both would be accomplished with the rate increase, Bilda said.

But he also said members of the Board of Public Utilities Commissioners, too, are asking if the steep rate increase could be phased in over time. He said he is discussing the possibility with state officials who oversee the Drinking Water State Revolving Fund to see whether that's possible, but the loans for each project have different deadlines and closing dates.

"I challenge anyone to say 'don't do it,'" Bilda said of the upgrades.

This proposed rate increase would remain steady for the next two fiscal years, Bilda said.

NPU also recently learned that the utility could be in line for approval of another $12 million in projects over the next 10 years. Bilda said if those projects are approved by the state, it could mean another 7 percent to 10 percent rate increase no sooner than the 2015-16 fiscal year.

The utilities board is scheduled to review the rate request at its May 22 meeting.

c.bessette@theday.com