A Look at Statewide Efforts to Eliminate the Blind Spot of Water & Revenue Losses
By George Kunkel
It is a highly unfortunate occurrence for many drinking water utilities that a considerable portion of the water that they withdraw from available resources never reaches a customer or is not (fully) billed to return revenue to the utility. Collectively, these losses are defined as non-revenue water (NRW) by the American Water Works Association (AWWA). This condition is exacerbated by the fact that U.S. water utilities have not traditionally audited their supplies sufficiently to know the extent of losses and the costs that they impart to the utility, and ultimately, to their customers. By auditing their supplies and implementing effective new technologies for NRW management, water utilities can save water and energy, recover uncaptured revenue, defer new water source and infrastructure development and become better stewards of one of life’s most precious resources.
The core mission of drinking water utilities in the United States is to treat water to safe drinking water standards and deliver it to customers at sufficient quantity and pressure to meet domestic, commercial and fire protection needs. To help ensure that water utilities provide water of sufficient quality, the U.S. Environmental Protection Agency (EPA) implements the rules mandated by the Safe Drinking Water Act. These rules apply to all water utilities across the country.
Conversely, there are no laws and regulations at the federal level to ensure that the quantity of water managed by utilities is handled in an efficient manner. Without national requirements on NRW, most states have implemented cursory requirements that measure losses via simple percentage indicators. However, a number of state and regional water agencies have more recently enacted progressive rules and regulations for water utilities to compile annual water audits, validate the data and launch efforts to reduce water and revenue losses toward economic levels. Action has accelerated notably since 2009, frequently motivated by drought and water shortages, but also due to concerns for customers and infrastructure sustainability. A description of these fast-emerging regulatory programs is given in this account.
Background
Concerns for utility water efficiency seemingly had little prominence in the United States until the 1950s when an AWWA committee first wrote about water that did not produce revenue. For the next 40 years, the industry employed a simplistic percentage (difference of annual water supplied volume and billed consumption volume, as a percent of water supplied) as the sole means of assessing utility NRW. Over time, astute water utility managers rightfully criticized the imprecise and misleading nature of percentage indicators; noting how ineffective they are in both portraying loss standing and guiding loss reduction activities.
AWWA teamed with the International Water Association (IWA) to conduct a study and produce a report in 2000 that offered a new methodology for utility water audits. Since this time, AWWA adopted this approach and incorporated it into its leading guidance manual (M36), “Water Audits and Loss Control Programs,” and the AWWA Free Water Audit Software (Audit Software). These inexpensive tools give water utilities the instruction and means to audit their supply, plan cost-effective NRW management and a path to implement appropriate loss control activities.
In 2005, Texas became the first state to implement legislation with a requirement for utilities to submit a water audit in the AWWA format. The initial requirement collected water audits only once every five years, but this has advanced to an annual basis for many water utilities. The most notable finding of the early efforts in Texas was that much of the water audit data was incomplete or sketchy. Simply put, most water utilities had not previously given much thought to compiling water supply volumes and comparing them to annual customer consumption volumes. Additionally, many utilities did not collect pertinent system attribute data (size of the water distribution system in miles of pipeline, average water pressure, etc.) and costs that are important audit inputs that are used to calculate an array of useful new performance indicators.
There are no laws and regulations at the federal level to ensure that the quantity of water managed by utilities is handled in an efficient manner.
It became evident that utility personnel needed training on the water audit method and ways to distinguish poor quality data from high quality data. AWWA’s Water Loss Control Committee – the Audit Software author – upgraded this package in 2010 to include a feature that allows utility auditors to “grade” or rate the trustworthiness of each of the inputs to the water audit. The Audit Software uses these inputs to calculate a composite Data Validity Score (DVS), which has a range of 1-100. The DVS allows reviewers to assess the credibility of audits: those with a validated high DVS as viewed as trustworthy assessments that can guide planning for effective water loss reductions. Audits with a low DVS mean the audit data is too preliminary to use to reliably define specific loss reduction activities. Utilities with a low DVS should instead direct their efforts to improved data recording and collection, and gain a better understanding of their operations as they currently exist, before launching specific loss control activities.
Initial Water Audit Data Validation Efforts
Once the Audit Software was upgraded to include a data grading capability, the Water Loss Control Committee promoted use of the Audit Software by enlisting several dozen volunteer water utilities to submit their annual water audit to a small group of Committee members for review and “validation” of the audit. This effort became known as the Water Audit Data Initiative (WADI) and has collected and validated data annually since 2011.
During this effort, the Committee developed the basic concepts of a validation process into a formal program. Committee members hold one or more conference calls with utility staff to give each audit input and data grading a considered review. Gross errors or omissions are identified, then utility staff are asked to describe the processes and practices that are in place at the utility to generate and manage the individual data inputs. Gradings are adjusted as needed by the Committee reviewers if it is believed that the grading assigned by the utility to a particular input is not representative of actual utility practices. Since the validation process was first introduced, it has been consistently found that the gradings and DVS of data sets of invalidated utility water audits are notably higher than the final gradings/DVS accorded at the completion of the validation process. It appears to be inherent that water utilities that are new to the water audit process naturally assign higher gradings to many of the inputs than their operations justify.
Thus, formal validation of water audit data is essential to ensure that water audits are both free from gross error, but also that the gradings and DVS are representative of utility practices. The data validation process was studied and structured into formal process in a project administered by the Water Research Foundation, “Level 1 Water Audit Validation” in 2016, and a formal data validation guidance manual was produced as part of this work.
Figure 1 — Training sessions held in the State of Georgia helped ensure water audits were compiled with representative data and gradings (Source: Cavanaugh).
The earliest water audit data collection efforts using the Audit Software include programs instituted by the Delaware River Basin Commission, Pennsylvania Public Utility Commission and the State of Tennessee (Office of the Comptroller). Most notably, however, the first such effort to include a formal training and data validation program was the State of Georgia (Environmental Protection Division and Georgia Environmental Finance Authority). Georgia used an innovative financing approach by leveraging State Revolving Fund Set-aside funding to pay for consultants to provide expert training and data validation services (see Figure 1).
The first validated water audit data set for Georgia water utilities was published in 2011 (large water utilities) and 2012 (small water utilities). In order to evolve into a self-sustaining data validation function, Georgia created a formal training program for Qualified Water Loss Auditors (QWLA) in 2015. As a result, more than 170 personnel from water utilities, consulting firms and regulatory agencies were trained and approved to become a QWLA in the state, forming a pool of qualified individuals able to validate utility water audits. Each water audit must be submitted with a signature page signed by a utility executive and the QWLA. The quality of water audit data in Georgia now exists at a notably higher level than data from most other state and regional agencies. This is due to both the extensive training that utilities receive and the formal data validation used to truth the submitted water audit data.
Water utilities will need to invest time and resources into loss control activities in order to bring losses down to targeted levels.
Georgia has also leveraged State Revolving Funds to launch pilot programs with various utilities to test production flowmeters for accuracy, implement district metered areas (DMA) for improved leakage management and to investigate pressure management potential in systems with high pressure. To date, Georgia exists as the model state for NRW management by collecting representative utility water audits, providing appropriate training and validation and by advancing specific activities to better manage losses.
Recent Developments in Water Audit Data Validation
Figure 2 — State of California Water Loss Management Program (Source: California Water Loss Collaborative, CA-NV Section of AWWA).
The largest NRW management program to date was authorized in 2015 by the State of California Senate Bill 555, which requires a comprehensive three-phase, seven-year program for water utilities to compile water audits with third-party validation, define system-specific loss reduction targets and take actions to reduce losses to target levels. Figure 2 is a schematic of the program timeline and details the activities of the three phases. Water utilities are initially required to submit validated annual water audits by Oct. 1, 2017. Extensive training workshops launched in 2016, with data collection/validation efforts occurring throughout 2017.
California also put into place a highly effective implementation structure by creating the California Water Loss Control Collaborative, a consortium of agencies and other stakeholders who are guiding and implementing the process. The lead agency is the California-Nevada Section of AWWA, and members include the United States Environmental Protection Agency (EPA), California State Water Resources Control Board, California Department of Water Resources, California Urban Water Conservation Council, Natural Resources Defense Council and Sweetwater Authority and the City of Sacramento as water utility members. Water System Optimization, Inc., and Cavanaugh and Associates are the consulting firms providing training, technical assistance and water audit data validation.
The Collaborative receives funding from the EPA and the State Water Resources Control Board through the State Revolving Fund set aside for technical assistance. The Collaborative is proving to be a highly effective process for reaching consensus decisions, managing the program logistics and communicating frequently with stakeholders. With the State of California suffering from severe drought in recent years, it is essential that the State’s water utilities move to a new, reliable existence of efficient water supply operations and sustainable infrastructure and SB 555 and the Water Loss Collaborative are helping to ensure this.
On the heels of the ambitious California program, the State of Hawaii has enacted Act 169 authorizing the Commission on Water Resource Management to develop and implement a water audit program and technical assistance (training, validation) to the counties and public water systems in the state. Water systems supplying a population of 1,000 or more are required to submit the initial validated water audits by July 1, 2018. Smaller systems must submit by July 1, 2020.
New legislation or pilot programs have emerged in numerous states within recent years, including Wisconsin, Indiana, New Jersey, Massachusetts and Arizona. Long standing programs such as Tennessee, Texas, the Delaware River Basin Commission and Pennsylvania Public Utility Commission have opportunity to refine their efforts by leveraging state revolving or other funds to fully standardize the water audit data collection process, formalize training and provide for water audit data validation. Additionally, most remaining state and regional agencies are now aware of the AWWA water audit method, the Audit Software and the current best practice approaches to NRW management, and it is certain that more of them will implement new requirements using the AWWA method in coming years.
Pulling It All Together to Save Water & Gain Utility Revenue
Establishing structures for validated water audits is only the first step in the process for water utilities to reduce lost water and optimize their revenue capture. Ultimately, utilities need to initiate or accelerate their loss control activities, including leak detection and pressure management, customer meter management and improved billing practices. As noted, programs in Georgia and California include pilot programs to field investigate leakage and apparent loss levels, and these programs will most likely reveal valuable findings in the participating utilities. However, there are some important perspectives to consider in actually controlling losses. Water utilities will need to invest time and resources into loss control activities in order to bring losses down to targeted levels. Once a reliable water audit exists, however, the water utility knows how much their existing losses are costing them in excessive production costs and uncaptured revenue. Their investment in loss control should be designed to reduce these embedded (and previously hidden) costs of NRW in their operations.
Water resources management is becoming more holistic with integrated planning recognizing the need to manage all forms of water as a valuable resource throughout the entire hydrologic and human managed water cycles. Unfortunately, many water managers in the United States have had an inexplicable “blind spot” for the water and revenue losses that are happening right under their feet. In compiling and validating a reliable water audit, utility managers can now see the potential water savings and revenue gains that are within their grasp if they undertake cost-effective leakage control activities. As more state and regional agencies across the United States adopt best practice water audit requirements, loss levels will be more reliably represented and will prompt effective action to contain losses to economic levels. 
Recent NRDC Reporting on Water Loss
Two recent reports prepared by water loss expert George Kunkel for the Natural Resources Defense Council (NRDC) shed some light on the largely hidden loss of drinking water across New Jersey and Pennsylvania.
New Jersey
Based on a review of the audit reports filed by 76 utilities in New Jersey for the year 2013, an extrapolation to all water utilities statewide produced the following estimates:
- An estimated 130 million gallons per day treated drinking water are being lost each day across New Jersey;
- Out of this total, more than 50 million gallons per day of water losses, conservatively valued at over $10 million per year, are likely to be cost-effective for utilities to save. (This amount of water is equal to the water use of about 700,000 New Jersey residents, or a population 2½ times the size of Newark, the state’s largest city);
- An additional $12 million per year in lost revenue is likely to be cost-effective for utilities to recover through improved water measurement and billing practices.
Pennsylvania
In a separate report for NRDC, Kunkel carefully reviewed 155 water audits in the state of Pennsylvania from 2013. Based on the reported data, an extrapolation to all water utilities statewide produced these estimates:
- An estimated 327 million gallons per day treated drinking water are being lost each day across Pennsylvania;
- Out of this total, over 104 million gallons per day of water losses, conservatively valued at nearly $20 million per year, are likely to be cost-effective for utilities to save. (This amount of water is equal to the water use of about 1.78 million Pennsylvania residents, or a population greater than Philadelphia, the state’s largest city);
- An additional $138 million per year in lost revenue is likely to be cost-effective for utilities to recover through improved water measurement and billing practices.
In addition to Kunkel’s findings, his reports provided recommended steps that could be taken immediately to make critical (and credible) water audit information available statewide in New Jersey and Pennsylvania. To learn more, or to view the full reports, visit nrdc.org.
George Kunkel is principal of Kunkel Water Efficiency Consulting, a firm specializing in water loss control in drinking water utilities. He has more than 36 years of water utility and consulting experience and led the successful water loss control program in Philadelphia for more than 20 years.
