Citing credit costs and other financial challenges, the Pittsburgh Water and Sewer Authority on Friday approved rate increases that will cost the average residential customer an additional $4.15 per month.

Board members said they regretted the increases and would try to avoid additional hikes for two years.

The 7.7 percent increase in the water and sewage conveyance rate and 2 percent increase in an infrastructure maintenance fee, called the Distribution Infrastructure Service Charge or DISC, will generate an additional $8 million to $9 million next year, PWSA finance director Stephen Simcic said.

Along with the rate increases, which take effect Jan. 1, the board approved a 2011 budget of $156 million, up about $5 million from this year, Mr. Simcic said. City Councilman Patrick Dowd, a PWSA board member, cast the lone vote against the rate increases and budget.

With the rate increases, the average bill for a residential customer will increase from $42.97 to $47.12. The average customer consumes 4,500 gallons of water each month.

Officials said the increase in the water and sewage conveyance rate was the first since 2007.

The infrastructure maintenance fee -- a 5 percent fee on consumption -- is only about a year old.

"PWSA is not immune to the struggles felt by cities and municipalities across the country," the agency said in a statement about the rate increases. "Due to the financial crisis that occurred in the fourth quarter of 2008 and through 2009, PWSA's credit costs have increased roughly $4 million per year."

State Rep. Dan Deasy, D-Westwood, the board chairman, said the infrastructure maintenance fee will help to control the authority's future borrowing needs and credit costs.

PWSA also cited financial challenges caused by a declining customer base and conservation efforts -- factors that have taken a toll on consumption. PWSA is pumping an average of 60 million gallons of water a day this year, down from about 70 million gallons a day in 2009.

Yet Mr. Deasy and other board members said they would try to hold the line on rate increases for the next two years by attempting to cut costs and expand the customer base.

In 2009, PWSA bought the Millvale water system and its 1,800 customers. "I think we should be looking at more things like that," Mr. Deasy said. "I think we provide a quality product at a good price."

Mr. Deasy said he's willing to explore the possibility of taking over service to about 30,000 customers in the city's southern and western neighborhoods now served by Pennsylvania American Water Co. Pennsylvania American has said it isn't interested in giving up those customers.

Last month, PWSA proposed a 13 percent increase in the water and sewage conveyance rate but made no mention of an increase in the DISC rate. Mr. Simcic said officials pared spending to arrive at the more modest rate increases.