Coate said the water agency, which serves 1.3 million customers in Alameda and Contra Costa counties, has deferred infrastructure and maintenance work during the economic downturn in recent years but that "there's only so long you can defer this work without having an impact on our water service."
Coate said EBMUD, which celebrated its 90th anniversary last week, has aging pipes and other equipment that needs be upgraded or replaced.
He said that in addition to deferring infrastructure and maintenance work, EBMUD has taken other steps to save nearly $200 million over the last several years, such as reducing staffing by 10 percent and not granting any general salary increases.
Coate will present his rate and budget proposal to the water agency's board of directors at its meeting later today.
It calls for raising water rates by 9.75 percent for fiscal year 2014, which begins July 1, and by another 9.5 percent in fiscal year 2015.
It also calls for raising wastewater rates by 9 percent in fiscal 2014 and another 8.5 percent the following year.
Coate said that under his proposal, by fiscal 2015, the typical EBMUD customer would pay an extra $4.19 a month in water rates and an extra $1.46 in wastewater rates.
The rate hikes, if approved by the board on June 11 following several public hearings, would come on top of water rate increases that have totaled 12 percent in the past two years.
But Coate said that even if the new rates hikes are approved, EBMUD's rates would remain among the cheapest in the Bay Area, as they would still be lower than 10 of the 13 water agencies in the region.
Coate is calling for EBMUD's total budget, which is $704 million in the current fiscal year, to be increased to $713.5 million in 2014 and to $740 million in 2015.
The board of directors meeting begins at 1:15 p.m. today at 375 11th St. in Oakland.