Sewer rates in Cape Elizabeth are going up.

The Town Council last week approved 4 percent increases for the next three years to help fund upgrades to the Southern Cape sewage treatment plant, on Spurwink Avenue.

Starting Jan. 1, the current $33.50 base rate and $4.38 incremental rate go to $34.84 for up to 100 cubic feet of monthly measured water usage, and the incremental rate goes to $4.56

On Jan. 1, 2010, the rates move to $36.25 and $4.75. On Jan. 1, 2011, the rates increase to $37.70 and $4.95.

A sewer-connection fee of $3,500 will increase by $500 on Jan. 1, 2010.

According to town officials, the rate increases will fund a 20-year, $2.7 million bond that the Portland Water District is proposing to borrow from the state’s revolving loan fund, at 3.5 percent interest. Work is scheduled to begin in 2011. The upgrade would increase the hydraulic capcity of the 20-year-old plant, now 20 years old, to 2.75 million gallons a day, up from the 550,000 gallons per day at which it is now licensed.

Town Manager Mike McGovern proposed the three-year, 4-percent increase i to ease the impact and to reduce the amount that would need to be borrowed, according to the town’s Web site.