The Leesburg Town Council was urged Tuesday night to raise water and sewer rates 10 percent next year and to keep raising them for several more years.

The council, in its biweekly work session, received a report from a private consulting group also suggesting that, from fiscal years 2007 through 2009, the town increase water rates by 7 percent a year and sewer rates by about 10 percent a year.

The rate increases are necessary to stabilize the water and sewer system's finances, according to Municipal and Financial Services Group of Annapolis, which examined the agency's budget. Without an increase in rates, the town will face a substantial shortfall in water and sewer revenue next year, the consulting group concluded.

If the council accepts the recommendation, town residents would pay, on average, $123.78 a quarter next year for water and sewer, up from $113.84 this year. In-town commercial customers would pay an average of $519.27 a quarter, up from $464.80.

Elderly customers now receive a 25 percent discount on their water and sewer bills. Under the proposal, that discount would drop to about 20 percent, and the average quarterly bill for elderly customers would increase from $104.23 to $113.35.

The Town Council must hold a public hearing before deciding whether to approve the changes.

"We've found that [the town] needs some substantial rate increases in the next few years to make up for the fact that they didn't raise them for a while," said Dave Hyder, manager of Municipal and Financial Services Group.

Leesburg has not increased water and sewer rates since 1992, when the water rate went to $2.67 per 1,000 gallons, up 54 cents, and the sewer rate went to $3.21 per 1,000 gallons, up 64 cents. The consultant's proposal would boost those rates next year to $2.79 and $3.53, respectively.

The report also suggested that, beginning in 2010, the town implement small annual increases to prevent the need for large rate increases in the future.

In 1995, Leesburg adopted a seasonal conservation surcharge for customers who use more than 135 percent of average winter water use.