Rates are set to rise in Dunedin - as the city council releases its draft Annual Plan

The proposed rates increase - excluding water rates - is 6.9 percent - lower than the 8.5 percent forecast in the nine-year plan.

However, the water, stormwater and wastewater rates increase is 16.7 percent - higher than forecast - because the value of water assets has increased.

Chief Executive Sandy Graham says they're challenged by increasing maintenance costs, electricity and gas costs, interest rate movements, and the current economy.