BOSTON -- One of the largest components of the cleanup of Boston Harbor will cost about $1 billion less than expected, according to the Massachusetts Water Resources Authority.

The authority said yesterday that the combined sewage overflow system will cost approximately $372 million instead of the $1.3 billion that had been estimated earlier.

"The important thing here is that we have shown the ability to improve the water quality of the harbor at a much lower cost," said MWRA executive director Douglas B. MacDonald. "This savings overwhelms everything else that is left to do with the Boston Harbor project."

Because of the latest cost revisions, low interest rates, and state and federal aid, the projected cost of the Boston Harbor/Deer Island project has fallen to about $5 billion from more than $7 billion.

Initially, the authority planned to build a 13-mile, 25-foot-wide tunnel under Boston to carry all sewage and wastewater to the Deer Island plant for purification.

The new plan would eliminate the need for the tunnel and treat the wastewater on a smaller scale.

The next step toward creation of a combined sewage overflow system is to provide the U.S. Environmental Protection Agency with a report on the environmental impact of the changes, said Michael Dominica, MWRA's director of facilities development. The report is due before the end of the year.

"The actual performance of the facilities that have been built since 1990 has been much better than had been anticipated," said Dominica. "We actually will get a higher level of water quality by spending less money."

Combined sewage overflow systems are an important part of any sewage plant because they must handle not only the sewage but the water generated by storms. During particularly rainy periods, Boston Harbor and several rivers and lakes in the Boston area absorb much of the overflow from city sewers.

During the 1970s, as much as 450 million gallons of waste per day poured into Boston Harbor during storms.

The new plan will eliminate any waste overflows into swimming and fishing areas, reduce any untreated overflows, and improve several existing treatment plants

The one question that was not addressed in the plan is the pollution problem of the Charles River. Dominica said that the MWRA, the EPA, and the Charles River Watershed Authority are seeking a solution.

"In reality, the sewage overflow into the Charles River is not the main problem in the river," Dominica said. "There are commercial, industrial, and residential sources along 350 square miles of river that all contribute to the problem."

The reduced cost of the combined sewage overflow system will also help the authority limit rate increases over the next few years, according to authority sources.

MacDonald said that the cost revision addresses some of the concerns of critics who have said that the authority is saving money today only to pass it on as higher costs in future years. But the combined sewage overflow project is not expected to require funding until 1997 through 1999, he said.

In the mid-1980s, the authority was charged by a federal judge to finance the cleanup of the Boston Harbor and the construction of the Deer Island sewage treatment plant.

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