The D.C. Water and Sewer Authority will hold a public hearing next week on a proposal to raise rates for its commercial and residential customers by a total of 18.8 percent over four years.

At the same meeting Sept. 30, the authority will hear from the public on proposals for a low-income "lifeline" rate, a new fund to help nonprofit groups pay their bills and a new fee the city would pay for fire hydrants.

The multi-year rate increase would come on top of a 42 percent rise in rates that took effect two years ago. Water authority officials say this proposed increase is intended to be gradual and predictable, avoiding larger, one-time hits.

"We're doing a few more creative things this time around with the rates," said Jerry N. Johnson, the water authority's general manager, referring to the concept of spreading the increase across several years. "We're sensitive to the concerns of customers with holding down the rates."

The higher rates would help finance a 10-year, $1.9 billion capital improvement program to overhaul the city's aging network of water pipes and to upgrade the Blue Plains sewage treatment plant.

Some of the fixes are required by federal environmental regulations, but others--such as making the billing system more customer-friendly--are designed to improve service.

Even with the increases, officials say, District rates would be in the mid-range for utilities locally and nationwide--less than suburban Maryland but more than most of suburban Virginia.

The proposal would raise rates by 5.1 percent April 1 of next year; 5.4 percent April 1, 2001; 4.4 percent April 1, 2002; and 3.9 percent April 1, 2003. The average residential bill--now $102 a quarter, or $34 a month-- would rise by a total of $6.87 a month, water authority officials say.

The lifeline rate program is similar to those offered by Potomac Electric Power Co., Bell Atlantic and Washington Gas.

Eligibility will be based on income--for example, a person living alone could have an income no higher than $12,360 a year.

The D.C. Office of Energy would administer the program, which would begin in April. People who qualify would save an average of $76 a year and receive about 3,000 gallons each month for free, water officials say.

The "community support program," which would establish a fund to help nonprofit groups pay their bills, would be the first in the region, authority officials say. It is intended to soften the impact of the board's decision to end free and discounted water service to churches and nonprofit groups in 1997.

Before establishing the new fund, the board would have to determine eligibility criteria and solicit applications, and officials say that means the program would not begin for at least several months.

Authority officials are leaning toward creating the fund but want comment from the public on funding options and setting eligibility criteria--for example, whether to solicit donations for the program.

Terry Lynch, executive director of the Downtown Cluster of Congregations, praised the authority for proposing the lifeline rate and the fund to help nonprofit groups. But he opposes the proposed general rate increase, saying the money is needed in part because the authority cannot account for what happens to a fourth of the water it purchases from the Army Corps of Engineers treatment plants--the highest percentage loss in the region.

"You don't go to the ratepayers and ask them to cover your mismanagement, it seems to me," Lynch said. "Fix the leaks. Fix the mismanagement. Maximize conservation. If that won't cover the bills, at that point you go to ratepayers."

Johnson, the authority general manager, said one major cause of water that cannot be accounted for, known as unbilled water, is the city's large number of faulty meters, which will be replaced with money raised from the rate increase.

The water and sewer authority also is proposing to bill the District for water used in fire hydrants, which has been furnished for free. Some authority officials have said the money raised from this could underwrite the program to help nonprofit groups pay their bills.

The cost of operating and maintaining each hydrant has been calculated at $217 a year, so the total would be about $1.9 million annually, billed to the District, according to authority officials. Since 1996, water and sewer programs have been under the control of the semi-independent authority, not the D.C. government.

The hearing will be held from 6 to 8 p.m. Sept. 30 at the Martin Luther King Library, auditorium A-5, 901 G St. N.W.

People who want to sign up in advance to testify should call 202-645-6296, but speakers also can sign up at the hearing.

The authority also will accept written comments until Oct. 30. Mail them to WASA, Office of Public Affairs, 5000 Overlook Ave. SW, Washington, D.C. 20032. Comments also may be faxed to 202-645-0663 or e-mailed to info@dcwasa.com.

The board hopes to vote on the rate increases, the lifeline program, the fire protection fee and the nonprofit program at its December meeting.