Cape Elizabeth entered into an agreement with South Portland and the Portland Water District to fix sewer overflow at the Ottawa Road pump station, an agreement that could cost the town hundreds of thousands of dollars.

The three will share equally the costs of meeting conditions of the Department of Environmental license for combined sewer overflow. The agreement also calls for a study to determine where the flows are coming from.

Combined sewer overflows are discharges of untreated wastewater from municipal sewerage systems that carry mixtures of sanitary sewage, storm water, and industrial wastes, according to a report published by the state Department of Environmental Protection titled “Maine Combined Sewer Overflow 2008 Status Report.”

Cape Elizabeth’s combined sewer overflow at the Ottawa Road pump station comes from an 8-inch overflow out of the final manhole at Drew Road that discharges into Casco Bay during heavy rainstorms.

The Portland Water District will conduct the study along with Wright-Pierce engineers in an attempt to find the sources causing the overflow, Cape Elizabeth Town Manager Mike McGovern said.

“This is not an insignificant issue,” McGovern said. “Most of the flow that comes to this area comes from Cape Elizabeth.”

The costs of the study and agreement are not known yet, but could be in the range of several hundred thousand dollars, said James Rowe, Cape Elizabeth Town Council chairman.

Cape Elizabeth recently approved an $8.5 million municipal budget, $500,000 less than the previous year because of excise tax decreases and other declines in revenue.

“It’s difficult to come up with that money, but it’s something that has to be done,” Rowe said.

The agreement calls for upgrading hydraulic pumps that help clear away large volumes of water entering sewer systems through catch basins, old and leaky pipes, roof drains, cellar drains and sump pumps.

Cape Elizabeth recently replaced pipes at the end of Oakhurst Road near Shore Road to prevent overflow there.

The problems at Ottawa Road need to be taken care of quickly, Rowe said.

“It’s a situation that’s been going on for quite some time,” Rowe said. “Ottawa Road has a dated sewage treatment system, for lack of a better word, and it doesn’t have enough capacity to deal with it.”

Rowe said that Cape Elizabeth would need to forgo other projects in order to pay for the overflow upgrade.

What projects will be bumped is not yet known, he said.