The increase by the water district, which serves 1.3 million customers in Alameda and Contra Costa counties, means that the average single-family residential water bill will increase by $2.88, to $35.95 per month, in the fiscal year that begins in July.
The average bill will jump and another $2.71, to $38.66 per month, the following year.
The budget approved by directors on Tuesday also increases wastewater rates by 5 percent for each of the next two years. The average single-family residential wastewater charge will increase by 62 cents per month in the next fiscal year and by another 72 cents the following year.
The good news for /*EBMUD*/ customers is that most of the 7.5 percent rate increase will be offset because the district also plans to end mandatory water rationing on July 1, which means that the drought rate increase that was imposed last year will expire.
EBMUD spokesman Jeff Becerra said the average residential customer will pay about 2 percent more this year, and customers who paid drought rate surcharges last year may actually see their bills get smaller.
Although precipitation this winter was below normal for the third straight year, this winter's level -- 88 percent of normal -- was much higher than last year's level and is enough to end rationing, district officials said.
The district normally has a supply of 600,000 acre-feet of water at its reservoirs and must declare a water shortage emergency and impose higher rates when the supply goes below 450,000 acre-feet.
EBMUD spokesman Charles Hardy said the water supply was as low as 405,000 acre-feet last year but is now projected to go up to about 540,000 acre-feet.
Water district officials said their revenues have taken a $30 million hit from the slumping housing market, which has resulted in fewer connection fees for new homes, as well as reduced water use by customers.
They say their financial situation has also been made worse by more than $16 million in added expenditures for debt service for capital projects, increased costs for chemicals, self-insurance, employee salaries, health care and other ongoing costs.
EBMUD Board President Doug Linney said in a statement, "This has been the most difficult budgeting process in years. To keep the rate increase as low as possible, we instituted a hiring freeze, delayed numerous capital projects, restricted travel and conferences, and deferred scheduled replacements of vehicles and equipment."