Baldwin City is in line to get a water rate reduction courtesy of Lawrence city commissioners.

How much Lawrence residents will pay for water in 2013, though, is still a bit cloudy.

Lawrence city commissioners at their meeting on Tuesday are set to approve a new 40-year contract ensuring Lawrence will continue to provide treated water to Baldwin City, which is Lawrence’s second-largest water customer.

But the contract provides new price breaks to Baldwin City after the leaders in that southern Douglas County community began objecting to double-digit rate increases for the millions of gallons that Baldwin City buys from the city. The new rate will charge Baldwin a wholesale water rate of $2.91 per 1,000 gallons, which is about 25 percent below the current rate.

Lawrence City Manager David Corliss said the large rate reduction recognizes the wholesale water market has become more competitive, as new wholesale water districts have been formed and plans are being explored to restart a wholesale water plant on the former Sunflower Army Ammunition Plant near De Soto.

“We think it is a healthy price reduction that follows our philosophy that we want to provide an appropriate wholesale price to one of our larger customers,” Corliss said. “We know Baldwin City has options, and we know they have been exploring other options.”

The new contract also states any future rate increases must be no larger than the rate increase Lawrence city commissioners approve for the average residential customer in Lawrence. Increasing water rates has proved politically difficult recently in Lawrence.

City commissioners, in fact, still have not settled on what water and sewer rates will be for Lawrence residents in 2013. But residents shouldn’t expect a reduction.

Staff members this summer proposed a rate plan that would have increased the combined water and sewer bill of an average Lawrence resident by about 6 percent, City commissioners, however, balked at the proposed increase.

Corliss and his staff said at the time that a new rate plan would be brought back before the end of the year. Corliss said Monday that his office is still working on a new proposal that tries to balance the desire for steady rates with the need for several capital improvements — a new intake for the Kaw Water Treatment Plant and preliminary work for a new sewer treatment plant south of the Wakarusa River are among the biggest projects.

Corliss said he still hopes to present a rate plan before the end of the year, but said it is possible a plan won’t be approved in time for rates to change in January. The city, though, has the ability to change the rates at any time in 2013.

Settling the Baldwin City rate issue does alleviate a worry Lawrence would lose one of its largest water customers just a few years after Lawrence spent more than $15 million to expand the capacity of the Clinton Water Treatment plant.

Attempts to reach Baldwin City officials on Monday weren’t successful, but previously they had expressed concerns that Lawrence’s wholesale water rates were unpredictable, and they had increased by more than 10 percent on several occasions.

Baldwin City in 2011 purchased 195.5 million gallons of treated water from Lawrence, making it the second-largest purchaser of Lawrence water behind Kansas University. Baldwin, however, actually owns the rights for the water it purchases from Lawrence, although the new contract also gives Baldwin City an option to purchase water held under rights by the city of Lawrence, if needed.

Lawrence city commissioners will consider the new contract at its weekly meeting, which starts at 5 p.m. Tuesday at City Hall.