"New home building has fallen off," Raleigh Utilities Director John Carman said. "People have conserved. And it's really represented a perfect storm for the revenue of the utility."
Water revenue is down 25 percent as water consumption is down 25 percent. And a new water treatment plant has come on line in south Raleigh, raising the city's debt burden, because the water department is swimming in a $22 million dollar shortfall.
So the department wants a 9 percent rate hike, on top of other recent hikes.
"Last year we had a big rate increase, but the reduction in consumption basically made it a wash," Carman said.
One city council member suggests the City should suspend conservation rules and sell more water since Falls Lake is full.
"It gives everybody a chance to do what they please at a lower rate," Raleigh City Council Member John Odom said.
Odom says a 9 percent rate hike is inevitable this year, but he says future increases can be curbed if conservation rules are relaxed.
"We have the ability to stop and start conserving any time we want to," he said. "We've proven that, because when they asked us to during the last drought, everybody did."
City officials say residents now pay on average $1.21 a day per person for water and as a reward for conserving, they only want each resident -each day- to pay $0.11 more.
The average monthly water bill in Raleigh would go from $36.50 to about $39.80.
Raleigh's city council will discuss water rates when they debate a new budget later this spring.