Water and sewer rates could soon be rising in Carmel.

The Carmel City Council introduced ordinances Dec. 6 that would bump the residential base water rate by $5 per month (and charge $1.14 more per 1,000 gallons used) and increase the base sewer rate by $2.02 per month (and charge $1.01 more per 1,000 gallons sent through the system).

Scott Miller, partner with Baker Tilly Municipal Advisors and a consultant for Carmel Utilities, said the increase is needed to keep up with rising energy and personnel costs and because payments will soon begin on debt acquired nearly 20 years ago to fund system improvements.

In 2005, Carmel Utilities gained more than 8,300 customers when it began providing water for an area previously served by an Indianapolis utility. The city has not made interest or principal payments on the debt and is not set to begin doing so until 2029. The city structured the bond this way so that a larger customer base (as a result of population growth) would be in place to spread out the costs.

Carmel Utilities had approximately 16,000 customers at the end of 2005, Miller said, and now has nearly 33,000. Miller said he would not recommend this type of financing structure in a city that wasn’t poised for growth.

“It’s not common (to finance this way), but we didn’t want to pass on the increase that would be necessary for the $150 million improvements when people who weren’t even in the community yet weren’t here to pay those bills,” Miller said. “It was a way to match up as best as possible the repayment of the cost of the improvements with the people who were going to be there benefitting from those improvements.”

Miller said if the rate increases are approved, Carmel Utilities plans to refinance its debt to pay it off over a longer period of time.

The council’s finance committee will review the ordinances before sending them back to the full council. If the city moves ahead with the proposed rate increases, a public hearing will be held in advance of a final council vote.