General Manager Jan Schori is expected to propose the increase to the board of directors this Thursday. The Sacramento Municipal Utility District had no increase in 2006. If approved, the rate hike would begin at year’s end. Before natural gas prices spiked in 2005, after Hurricanes Katrina and Rita, SMUD had locked up its future supply. The utility did not have to pass on the market-rate cost of natural gas. Those contracts protected rates through 2006 stretching into 2007, according to a SMUD executive. But this 2008 rate increase will also underwrite initiatives for greater energy efficiency.