The Carmichael Water District, under fire late last year for a proposed 18 percent rate hike to compensate for reduced water consumption, has adopted a compromise rate plan.

District directors, in a 4-1 vote Monday night, approved an 18 percent rate increase effective Jan. 1, but eliminated previous plans for further increases in rates within the next three years, district spokesman Chris Nelson said Tuesday.

The increase boosts bills for thousands of metered residential customers with 1-inch connections to under $96 every two months. That's based on a yearly average, so bills likely will be higher in summer.

About 540 flat-rate residential customers will see no increase. Their current bill, about $115.50 bimonthly, will remain in place until meters are installed, sometime within the next two years, Nelson said.

The district has 11,500 service connections, and most serve residential customers.

As part of the district's five-year plan, a 3.5 percent rate increase had been scheduled for the fiscal year that starts July 1. Another 3.7 percent increase was set for the subsequent fiscal year, 2013-2014.

Nelson said compromise rates, instead, will be frozen for the next three years. At that point, the district will seek participation from water users to devise a new rate structure, he said. The district plans to hire a private consultant to help guide that effort.

Ratepayers expressed their frustration last fall over the district's decision to raise rates as an alternative to added spending cuts.

The initial rate the district proposed sought to overcome a sharp drop in customers' water use that, in turn, depressed revenues.

Water use fell 25 percent below the district's historical average, district officials have said, thanks to a mild and wet weather year, vacant homes and ratepayers' conserving due to rising water bills.

District officials had said the increase was needed to continue sound operations despite the drop in revenue.

Nelson said that the compromise rate hike, combined with a 10 percent cut in spending last October, "will still get us to where we need to be for our expenses and our bond servicing."

The current operations and maintenance budget is about $9 million, Nelson said.

Among the $1 million in cuts: Five employees were laid off, including three represented by labor groups. The district quit membership in several professional associations, including one that cost about $1,500 yearly and another that cost $3,200 annually.

Nelson said the district also cut travel, froze wages for the district's 14 non-represented workers, and reversed a cost-of-living increase granted in July to unrepresented workers. The district has 25 employees overall.

There will be no cost-of-living increases; and the pay scale is frozen for all non-represented workers, Nelson said.

In addition, the district is slowing the pace of its meter installation program.

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