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PEPPERELL — The Board of Public Works held its annual water and sewer rate hearing last week, agreeing with DPW Director Kenneth Kalinowski that rates would need to increase to address significant new debt.

The board voted unanimously to increase sewer rates by 3 percent and, with one dissenting vote, agreed to increase water rates by 8 percent. For the average household, the rate increases are approximately $24 per year for sewer and $27 per year for water.

“Our realized revenue lags behind that which is both billed and that which is required to meet the requested budget,” explained Kalinowski, who cited the Indian Village sewer project and the Nashua Road municipal well as two major projects that contributed to the recommended rate increases.

“The Indian Village project was not bettered 100 percent, and therefore there’s a component of this debt that has been placed on the rates,” said Kalinowski.

“This only exacerbated the past practices such as insufficient rate increases and the use of the betterment funds to defray the rate increases,” he said.

“We’ve been fortunate that we’ve not had a catastrophic event,” said Kalinowski, who noted that each year the infrastructure gets older, thus increasing the chances of major failures.

Kalinowski praised the work of the water and sewer staff, whose skills he noted have enabled maintenance rather than replacement of some systems in the infrastructure.

“It’s getting to the point where some of the system components can no longer be repaired, and, as such, the replacements must be seriously considered and planned for,” he said.

With Pepperell’s water and sewer rates below the average of six other local towns with similar annual residential usage, the increases reflect new average annual residential bills of $815 for sewer and $416 for water.

Water and Sewer Superintendent Laurie Stevens explained to the commissioners that water infrastructure remains a critical concern and could cost the town $2.1 million over the next 10 years.

Stevens summarized the facilities comprising both the water and sewer infrastructure. The town maintains five municipal wells, three storage tanks, five pump and treatment facilities, a water operations center, more than 600 hydrants and 75 miles of water mains. The majority of those water mains are more than 100 years old.

The town also maintains 35 miles of sewer, 795 sewer manholes, 1,516 sewer services, and another 438 potential services. With Groton also on the Pepperell sewer system, that adds another 26 miles of sewer lines, 286 sewer manholes and 470 service connections. The wastewater treatment facility currently treats 1 million gallons of sewerage per day.

Stevens also explained to the commissioners that uncollected revenue, or late bills, totaled more than $700,000 for bills unpaid beyond 30 days with another $181,000 sent to lien for bills unpaid after two years.

The new increases go into effect on Jan. 1.

The board agreed to increase the salary of DPW Director Kenneth Kalinowski by 2 percent effective in January. Kalinowski’s salary increases have lagged behind bylaw employees by six months.

“I would recommend that we extend a 2 percent raise effective the first of January,” said Commissioner Greg Rice.

“I’ve been real pleased with the performance of the director over the past two years,” he said.