Utilities Director Ken Komiske will present a cost/benefit analysis of the proposed Goldsby Water Sales Contract to the Norman City Council at the council's study session, scheduled for 5:30 p.m. Tuesday in the Municipal Building Conference Room, 201 W. Gray St.

The council voted at its June 9 regular session to put consideration of the contract on hold until the financial study could be conducted.

"Goldsby is looking at purchasing 3 million gallons a month to begin with," Komiske said.

Goldsby's maximum water demand under the proposed 20-year contract is 8 million gallons per month, which represents about 2 percent of Norman's total monthly production, Komiske said. The Norman Utilities Authority produces an average of 375 million gallons per month.

"It's an expensive proposition for Goldsby, because they'd need to drill a water line under the (Canadian) river," Komiske said. "They want to know if they spend over a million to connect to us, that we'd have a long-term contract to provide water to them."

Goldsby's town representatives have reported that Oklahoma City has proposed to run a water line to Goldsby and bill the town according to OKC rates, officials said.

A bigger issue for the council to consider, Komiske said, is a "regionalization" strategy being pushed by the Environmental Protection Agency and the state, encouraging nearby cities and towns to rely on each other in crisis situations.

The waterline would connect the McClain County town's water system to Norman's water main at the southernmost point of 24th Avenue SW, south of State Highway 9. Meters would be installed at the location to measure the quantity of water provided to Goldsby.

Under the proposed 20-year contract, Goldsby would pay Norman's current commercial rate for water, plus an accelerator amount per 1,000 gallons. The accelerator would be adjusted beginning each fiscal year based on the number of days Norman purchased water from Oklahoma City during the previous year and the average amount of water purchased by Goldsby on those days.

A mathematical formula has been established to arrive at the accurate amount Goldsby would pay for its water purchase.

Komiske said the formula assures the City of Norman that Goldsby is paying its way for all of the water it purchases, while utilizing a system that is easy for Norman's finance staff to track and easy for Goldsby to budget for.

The initial rate for the first year would be $2.24 per 1,000 gallons instead of Norman's standard commercial rate of $2.10 per 1,000 gallons. The accelerator is based on 36 million gallons a year, and the average number of days per year Norman has purchased water from Oklahoma City since it began doing so in 2001.

The contract allows for adjustments throughout the year should Norman or Oklahoma City increase their rates during the fiscal year, he said.

At its June 9 meeting, Councilman Tom Kovach made a motion to postpone consideration of the proposed contract until a cost/benefit analysis could be performed. The analysis was performed by the utilities department, presented to the Council Finance Committee, and revisions were proposed to address council concerns. One of the concerns was that the contract would not adequately protect the city should a water main break or some other infrastructure failure occur. Language has been added to the proposed contract to cover such system breakdowns. Additionally the contract was revised to more clearly cap the city's provision of water to Goldsby in the amount of 8 million gallons per month. The contract allows for Goldsby to request an increase in water supply as its demand increases, and provides that the Norman Utilities Authority not unreasonably deny such a request as long as it does not affect Norman's ability to provide water to its own customers.

Based on the rate structure proposed in the contract, Norman's net revenue from selling water to Goldsby over a 10-year period would be approximately $700,000.

No additional staff would be required. Associated variable costs, such as electricity, chemicals, pumps and other supplies are built into the rates all customers pay, including the rate that would be charged to Goldsby, officials said.