NORTH READING — Andover and North Reading continue to negotiate on extending the water purchasing agreement between the two towns and it looks like there will be additional discussion in the coming week.

At the suggestion of Town Administrator Michael Gilleberto and Andover Town Manager Buzz Stapczynski, further dickering over the intermunicipal agreement will be carried on by a subcommittee made up of two members from each town’s board of Selectmen. Chairman Robert Mauceri and member Joe Foti will represent North Reading.

For over 20 years, North Reading has purchased about 300 million gallons of water per year from Andover worth about $1.5 million per year, but the intermunicipal agreement expired in March of 2011 and renewal negotiations have been rocky. Gilleberto and Stapczynski have held discussions to try to break the log jam and last Monday night Gilleberto updated the North Reading board on the progress, which has been substantial.

Gilleberto said Andover is now offering North Reading an agreement for 10 years with an option for North Reading to withdraw at the end of five years after giving one year’s notice.

North Reading would pay $3 per 100 cubic feet of water, which is somewhat less than what Andover residents pay. That rate would increase by 2 1/2 percent over the life of the agreement and North Reading would have to commit to continue purchasing 300 million gallons per year over the life of the agreement.

The offer was positively received by the North Reading Selectmen, who noted it is very similar to the deal they thought the agreed to last March when the accepted the $3 per 100 cubic feet rate and told Andover this rate had been accepted. Gilleberto noted there are a couple of areas in the agreement where the language might have to be “fine tuned.”  First and foremost among these was Andover’s proposal that if North Reading decides to withdraw from the agreement before the conclusion of 10 years, that it would have to pay a 25 percent “premium” on the water rate for the last year.

North Reading Selectmen saw that as a penalty, not a premium, because North Reading is known to be considering joining the MWRA water district to supply its water needs in the future. But while the members thought the proposal clearly has “open issues” in the words of Chairman Robert Mauceri, they didn’t reject anything in the proposal out of hand.

Selectman Michael Prisco noted that the previous discussions between the two towns have been focused on a five year deal and wondered why a 10 year contract was brought back again. Gilleberto explained the 10 year term was proposed as a mean to provide the $3 water rate North Reading approved last March.

Prisco also noted the agreement outlined by Gilleberto is silent on Andover’s claim that North Reading is $85,000 in arrears on the water bill it owes to Andover, which North Reading Selectmen adamantly deny. Gilleberto agreed that’s not part of this agreement and would have to be further discussed between the two towns.

North Reading’s consensus was that while there’s a need for additional dialogue, the discussions could be fruitful.

Selectman Stephen O’Leary didn’t see the arrears issue or the termination penalty as insurmountable issues. “Andover has been a terrific partner since 1991 (when the original intermunicipal agreement was approved). We’ve been their best customer. There need sot be some good wholesome discussion on how they (Andover) will wean themselves (from selling water to North Reading) so the financial impact to their water budget isn’t so devastating. At the same time we have a fiduciary responsibility to our own residents and taxpayers.”

O’Leary saw “considerable merit” in maintaining a relationship with Andover in the future.

Mauceri commented the proposal has the advantage of providing a predictable rate for the first five years at least. “If we can convince them about modifying the end without some penalty, those numbers may work for them.”