California's water woes have compelled East Bay and Peninsula residents to conserve more water than they have at almost any time since the drought of 1992. Their reward? The biggest water-rate increase they've ever seen.

On May 10, the San Francisco Public Utilities Commission will consider tacking on a 47 percent rate increase for the water it pumps to Bay Area customers from the Hetch Hetchy Reservoir in the lower Sierra Nevada. The agency needs to fill an unexpected revenue gap of $65 million, which it attributes to the fact that water customers outside San Francisco have been using less water and saving money on their bills.

The changes affect all wholesale water-buyers, including Hayward -- the largest single buyer outside of San Francisco -- Fremont, Newark, Union City, most of the Peninsula and some South Bay cities.

Hayward gets all its water from Hetch Hetchy through the SFPUC, and has since the 1960s, said Public Works Director Bob Bauman. He said they knew a rate hike was due, but didn't expect it to be 47 percent.

Bauman said the increased charge to water users would be "smoothed out" over a number of years, and the matter will be the subject of a May 3 meeting.

The water charge that cities pay SFPUC is only part of a ratepayer's bill.

The water-rate increase will add up to only 16 percent or so on average, according to Todd Rydstrom, assistant general manager of the SFPUC. Typically, about one-third of a customer's water bill reflects the SFPUC's own wholesale water rates. The rest consists of each's city's delivery service fees and other add-ons.

"There's the raw water, then there's our fixed costs," Bauman said. "Distributing it, and making sure all our pipes are maintained. But the cost of the water itself is becoming a bigger and bigger chunk of our rates."

The Alameda County Water District, which serves Fremont, gets nearly 20 percent of its supply from Hetch Hetchy.

If the 47 percent cost increase is approved, it would cost the district about $3.3 million, translating into a little more than a 3 percent rate hike for a typical household bill, General Manager Walt Wadlow said.

But he said district officials would try to minimize the increase by getting more of their supply from local and state sources.

"We will work very hard to try not to pass all that cost through," he said.

Rydstrom said that while water consumption has dropped, his agency's expenses have not -- especially the bond payments on its $4.6 billion Water System Improvement Program to repair, replace and upgrade pipelines and reservoirs most at risk in a major earthquake.

"You have to pay your rent, whether you spend 30 nights of the month there or whether you're on vacation," Rydstrom said. "For us, the debt is a fixed cost and we have to pay that, regardless of what the water usage is."

Under the proposal, the commission will begin charging $2.80 per "unit" of water, roughly 750 gallons -- up from $1.90. Those charges will be passed on to customers based on the amount of water their city receives from the SFPUC. Some, like Santa Clara or the Alameda County Water District, also use Delta water or groundwater.

Rydstrom said the increased rates aren't that high if you consider it on a per-gallon basis.

"We're talking about a third of a penny. That's one of the best deals you're going to find in the Bay Area," Rydstrom said. "This is a fraction of a fraction of what someone would pay for a cup of coffee at a Starbucks."

Conservation plans aren't the only reason water use has dropped recently. It's been a wet year, which means lawn sprinklers haven't been called into action much. And the economic downturn has lowered water consumption in office buildings and employee bathrooms.

Bauman, of Hayward, said the city understands the need to make the pipeline seismically safe, and also supports lower water consumption by Hayward inhabitants. He said that across the East Bay, there's been about an 8 percent drop in water consumption.

"It's a good thing that people are using less water," Bauman said, "but it's also bad because it brings in less revenue. The water company has the same expenses, but is selling less water -- that's a problem that every water company has right now."

The East Bay Municipal Utility District imposed severe mandatory water cutbacks during the worst of the drought in 2008 but lifted the measures in 2009.

Staff writers Eric Kurhi and Rob Dennis contributed to this report. Contact Julia Scott at 650-348-4340.