The 9 percent hike last year followed a pattern of annual increases. Rates have more than doubled in the past decade, and the average annual water bill for a family of four is now $1,276, according to officials.

Cities across the country have seen similar hikes.

In Baltimore, the increases have significantly raised the city utility's annual operating revenue, officials say, from $84 million in 2002 to more than $129 million in 2011. Estimated revenue for the fiscal year 2013 is nearly $153 million.

The city has also increased spending on capital assets, including more than $12 million annually on "capital reactive water distribution system fixes," such as water main repairs.

In 2002, the city spent $34 million on capital assets, including improvements to untreated water facilities and new water main installations. In 2011, it spent $72 million.

The investments are funded largely through contributions from the counties and through the issuance of revenue bond debt.

From 2002 to 2011, debt service charges to the utility's operating budget grew from $15 million to $30 million. In recent years, Chow said, much of the spending has paid for projects required by the EPA under the Clean Water Act.

Rawlings-Blake, a co-chair of the U.S. Conference of Mayors' Water Council, said she is optimistic about the direction the utility is headed. But she agrees that residents can't be expected to pay increasing water rates forever — which is why she has argued strongly for more federal infrastructure funding.

"The model that we have is not sustainable long-term," she said. "We can't continue to make the investment that's needed to get into this proactive infrastructure investment, as opposed to [being] reactive to water main breaks and disasters.

"We're not going to get there on the backs of ratepayers. We need to find another way."

To address some of the concerns about higher rates, the city has established a grant program for low-income residents and a discount program for senior citizens.

Still, rate increases are likely to continue. And this summer, the city will institute a remediation fee for stormwater management, which the state required last year to help clean up the Chesapeake Bay.

That fee will likely cost residents about $72 annually, and bring in about $30 million, Chow said — a drop in the bucket compared to overall needs.

According to a review of Baltimore's water system by the local chapter of the American Society of Civil Engineers, the city's 2011-2016 capital budget called for spending more than $1 billion on water supply improvements, including the construction of a new treatment plant at Fullerton. Overall, the ASCE found, the city has more than $5 billion in immediate wastewater infrastructure needs.

Public works officials confirmed the $1 billion capital budget projection, but said they could not confirm the $5 billion estimate for wastewater needs.

A recent independent forecast of the city's fiscal standing found that agencies are facing a $1.1 billion deficit in the next decade, but the estimate did not include water and public schools infrastructure needs.

City officials realize they're facing an uphill battle, but hope the new asset management division will help find savings. Officials said the division, a combination of management, financial, economic, engineering, and other related practices, will prioritize projects that best serve the city for the least amount of money.

Eger, of the Water Environment Federation, called it "a very smart approach."

Chow said Baltimore will gain an even bigger advantage if the EPA agrees to some of the city's requests regarding the list of federal mandates and consent decrees that have required the city to invest hundreds of millions of dollars in sewage control and protection of outdoor drinking water resources.

"All of these revenue streams we've increased in the past have gone to these unfunded federal mandates," Chow said. "The mandates are killing us."