Halifax's water utility said Friday that it must increase rates by 40 per cent to cover the cost of replacing its deteriorating storm-water and sewage pipes.

If the fee increase is approved by provincial regulators, customers would pay an average of $8.64 more a month from October, with another hike of $7.60 a month in April 2011.

The average residential customer currently pays $470 a year. If the increase is approved by the Nova Scotia Utility and Review Board, the average would rise to $665 dollars a year.

Carl Yates, general manager of Halifax Water, said it has no choice but to act now to replace aging infrastructure. Yates said the utility would spend $1 billion over the next 25 years on new infrastructure.

"We have some of the oldest infrastructure in North America," Yates said. "Many of the underground pipes that carry our wastewater and storm water are over 100 years old and in desperate need of repair or replacement."

The fees for sewage and storm water are based on water consumption and 93 per cent of Halifax Water's customers are households. It would be the first rate rise in three years.

"The fact is that the current rate structure will not fund the necessary steps we need to take to protect the health of HRM residents and our environment," Yates said. "This rate application will ensure the wastewater and storm water rate structure is fair and equitable and based on a user-pay system."

Reconciling rates

In March 2008, the board ordered a review of the rates to determine if services are fairly billed. It was also to investigate if enough funding was in place to ensure Halifax Water could operate safely.

The review found that industrial, commercial, multi-residential and institutional customers had been subsidizing residential customers for wastewater, but that they had not been paying their share for storm-water service.

The user-pay proposed rate structure would reconcile these differences and represent varying rate increases for businesses.

"The cost to our environment and to future generations of doing nothing far outweighs the cost of acting now," said Blaine Rooney, director of finance at Halifax Water.

"Even with the rate increases we are seeking to allow us to carry out this vital work, HRM residents will still be paying one of the lowest costs for service in the country."

The utility and review board will hold a hearing on the proposed increase from June 7 to 9 and a decision is expected in September.