State legislators have passed a bill to form a regional Bay Area agency to finance up to three billion dollars in improvements to the region´s Hetch Hetchy Water System. The bill now goes to Governor Gray Davis. If the governor signs, it will create the Bay Area Water Supply and Conservation Agency, including up to 26 public entities to finance improvements benefitting two million people. Backers say the new agency will issue revenue bonds for badly needed repairs. Water users in San Francisco, San Mateo and Santa Clara counties are likely to see higher bills to pay off the bonds.