A plan to replace Nevada City's flat-rate water bill with a tiered, pay-as-you-use model is moving forward.

City Council members will review a study on water rates at a meeting at 6:30 p.m. Wednesday at City Hall, 317 Broad St., downtown

The council may direct staff to develop water rates. Before they can take effect, the city must notify customers and hold a public hearing.

Volunteers and staff for months have been investigating water usage as one source of revenue to fill a gaping deficit in the city's water fund. In fiscal 2008-09, the city paid $250,000 more for water and related expenses than it collected in water bills.

Nevada City's current structure — in place since at least 1980 — charges customers a flat rate for the first 25,000 gallons. A proposed new structure would charge different rates for low usage (up to 4,000 gallons each month), medium (up to 9,000 gallons) and high (up to 20,000 gallons).

The average household uses about 9,000 gallons each month; usage is somewhat higher during the summer.

Water rates “need to be increased, designed in a manner to solve inequities and encourage water conservation,” the study concludes.

To contact Staff Writer Michelle Rindels, e-mail mrindels@theunion.com or call (530) 477-4247.