Sonoma County is preparing to raise wholesale water rates by between 3.8 and 5 percent, the smallest annual increase since 2007.

Consumers may not feel the effect directly, since the rates are charged to municipal water systems in Sonoma County, along with a few other bulk users. The cities set their rates separately and are not obligated to pass along the increases directly, and even if they do, the cost of water accounts for less than half of their yearly expenses, according to the Sonoma County Water Agency.

Most residents and businesses, therefore, will see a hike of between 1 and 2 percent, the agency estimates. Municipal customers in Marin County would see smaller hikes, and in one case possibly a tiny cut, under the complicated patchwork of water systems served by the agency.

The Sonoma County Board of Supervisors, which doubles as the head of the water agency, will take up the proposed rate hikes Tuesday. The agency provides the water that winds up in about 600,000 homes and businesses in central and southern Sonoma County and northern Marin County.

Water agency officials say the Sonoma County rate hikes are due largely to two major projects: seismic upgrades throughout the system and environmental restoration on Dry Creek, the stream that carries much of the system's water supply down from the Lake Sonoma reservoir.

The most visible part of the seismic upgrade is work under way now to shore up the water lines along Sonoma Avenue in Santa Rosa. That project cost about $3.2 million. Rehabbing Dry Creek, including making it more hospitable to the salmon that once spawned there, will cost about $45 million to $50 million over a number of years, agency spokesman Brad Sherwood.

The cost of those projects was only partly offset by outside funds, including federal money, so the water agency must boost rates to make up for the rest, Assistant General Manager Mike Thompson said.

Water rates have surged in recent years — up as much as 85 percent in a decade in some parts of the system — and have featured a number of major spikes.

The worst year was 2009, when rates jumped 19.88 percent for Santa Rosa, 10.36 percent for Petaluma, and 27.95 percent for Sonoma. Thompson said that spike was a combination of the initial cost of the Dry Creek project and a dramatic drop in water consumption by customers, driven in part by the recession and in part by better conservation methods in homes and businesses.

That more thrifty use of water by customers had the counter-intuitive effect of forcing a boost in rates, since the fixed cost of treating and transporting water remained the same, even as the revenue-generating water sales declined.

The water agency came up with a plan last year to smooth out the major spikes by stashing away money in good years for expensive infrastructure projects. About two-thirds of this year's increase will go into such accounts for the future, Thompson said, a plan agreed to by all the major municipal water systems.

The water agency also manages several sewage systems in the county, serving about 60,000 homes and business. The agency is proposing rate hikes from 2 to 7 percent depending on location.

The supervisors will consider those hikes on May 21.

Detailed information on the proposed water and sewer hikes is available on the agency's website: www.scwa.ca.gov.

You can reach Staff Writer Sean Scully at 521-5313 or sean.scully@pressdemocrat.com.