Understanding and Addressing Apparent Losses to Better Manage Non-Revenue Water
By John Van Arsdel
Water utilities are faced with water loss issues that have long lasting impacts on their ability to function properly and efficiently and its ability to derive revenue from what it does daily. The very basics of how revenue is generated is tied to the utility’s water meters and the way the billing system functions. Basically, a water meter is a cash register, and without proper metering and accounting of water uses, utilities lose money because they are not receiving fair compensation for what they are providing to customers. Metering water provides a basis of assessing users equitably and encourages responsible and efficient use of a precious resource.
With several areas of the country suffering from long-term drought, proper water accountability has become more important than ever. Since more water utilities are also conducting water audits, the area of apparent losses needs to be looked at because it’s an area where the utility may be losing revenue due to meter inaccuracy, meter reading issues, water being used but not properly accounted for and possible billing issues.
How Do Apparent Losses Occur?
Apparent losses can occur with accounting and billing errors, unauthorized water use such as theft, inaccurate meters and improper meter settings – which eventually lead to inaccurate meters. Another way to look at apparent losses is that the water is not physically “lost” from the water system, but rather, the ability to properly measure its use and account for it has been compromised. To fully understand how this occurs, utilities need to make use of the AWWA Water Audit Software and conduct a “top down” water audit. This process will help track how the water in a distribution system is produced and consumed, and where losses can potentially occur. Once the losses are identified and quantified, a plan for intervention can be devised to correct those losses.
As part of the audit process, all authorized water consumption is identified and characterized. Four areas of authorized consumption include:
- Billed Metered Water, or water that passes through meters and is eventually billed for;
- Billed, unmetered water, or water that is billed based on such things as building size or home size instead of having a meter;
- Unbilled, metered water, or water use that is measured but not billed such as municipal uses, schools or parks; and
- Unbilled, unmetered water, or authorized water use such as hydrant flushing or street cleaning where the use is not measured but can be estimated.
At any point in the above authorized consumption uses, water can become “lost” for various reasons. Metering inaccuracies and data handling errors (accounting and billing) can occur, but in addition, unauthorized consumption can also occur, such as theft of water.
Meter Maintenance
Metering inaccuracies, probably by far, have the most potential for lost water in the apparent loss area. This is because water meters are subject to wear and eventually lose the ability to correctly measure and record flow. There are several factors that cause meters to wear out, such as water quality and how the meter is actually being used in a particular setting. The chemical makeup of the water, hardness and abrasive materials in the water can have effects on the performance of a meter. Meters have typically measured water flow by mechanical means, and thus, subject to wear. But the use of electronic meters that have no moving parts has made gains in the meter market. Even though these meters are not mechanical and are not subject to the wear that traditional mechanical meters may have, electronic meters can have other issues that cause them to misread and not measure flow accurately. Batteries can run down and lightning strikes can cause issues. Other factors such as the meter setting, the type and size of the meter, will also have a bearing on proper revenue generation, so water utilities need to periodically test their meters to make sure that customers are being charged fairly and the utility receives proper revenue for its service.
Meter = Cash Register
A meter that over-registers flow can become a serious cause for concern. Most of the time meters do not over-register, but rather they lose their accuracy over time resulting in the customer receiving more water than they are paying for. This can get serious, especially if a utility has not kept up with a regular meter maintenance program.
In the meter population of most utilities, there are usually a variety of meter sizes. It is not uncommon that there are a larger number of smaller residential meters compared to the larger commercial and industrial meters. However, the larger commercial and industrial meters usually bring in more overall revenue. Large meters by count may only make up 10 percent to 15 percent of the meter population but account for up to 60 percent of the revenue generated for the water department. Meter accuracy is a critical issue in these cases because the failure of a few large meters can cause serious revenue losses. There have been cases where two or three large meters were discovered to be severely inaccurate, and once remedied, enough revenue was generated to be able to pay for a meter testing and repair program and the installation of a few new meters.
A water utility should test its meters periodically as that is the only real way of knowing if a meter is working correctly. Periodical testing is also a good way to see if water use at a particular location has changed. The question, though, is “How often should a utility be testing its meters?” It depends on the economics of the water utility. It comes down to how each and every water utility functions. Water rates are a big factor in this decision. The cost of implementing and maintaining a meter testing program is another factor. If the cost to operate a meter testing program is too high, then the program may disappear. If there is no meter testing program, then the utility will simply not know if it is correctly receiving fair compensation for its water. Another factor in the decision-making process is determining whether it’s easier or more cost effective to change meters out instead of repairing them. Years ago, most meters were rebuilt because the components were made of brass. Today, a lot of meters are made of plastic or composite materials and do not get rebuilt if they fail testing. In some cases, the cost of removing meters from their settings, testing and repairing, and then reinstalling them are too high, so new meters are installed. Large commercial or industrial accounts, however, are the notable exception.
Apparent losses can occur with accounting and billing errors, unauthorized water use such as theft, inaccurate meters and improper meter settings – which eventually lead to inaccurate meters.
To implement a meter testing program, a utility needs to have complete inventory of its meters by size and type. This is usually contained in the accounting and billing records. Also, past consumption records for each account should be reviewed to look for decreasing consumption that can possibly indicate a malfunctioning meter. A lot of utilities also have different types and models of meters that have been purchased over time, each brand having its idiosyncrasies.
Many utilities have accuracy testing programs in place based on past practices by their meter staff. They also have methods and protocols that have been followed for many years. However, with meter technologies changing, it is important for meter maintenance departments to be up-to-date on each type and style of meter being used. It has been observed throughout the industry that many utilities have combined labor jobs and often meter testing either is not being performed at the level it used to be or it is not being done at all.
Accounting & Billing
Another area of concern is in the accounting and billing area. In the past, meters were read by the meter reader taking a manual read. This was tedious and required each meter to be looked at during the course of the billing cycle. Meters were subject to misreads and were often located in confined spaces requiring special equipment to enter the space. With the advent of automatic meter reading (AMR) systems by radio and cellular signal, misreads have declined considerably and the billing cycle has changed to where the utility can often read the entire system in a matter of days rather than over the course of a month or a quarter. With newer systems, the process of meter reading has been streamlined considerably and has allowed for a more accurate accounting of water uses at any given location.
Still, mistakes can occur. When new meters are installed now, the newer style registers are encoded and programmable for electronic reading. That requires the meter installer to make sure the meter register is properly programmed at the time of installation so that when the meter is read, it produces the proper reading for the water that passed through it. It is also important that the AMR/AMI systems can meet the needs of the utility. Any utility that has installed an AMR system can tell several stories about the decision making process and the pitfalls encountered along the way. The AMR system should truly match the needs of the water utility.
With an AMR/AMI system, the utility can make use of data analytics, that is, make use of the data collected by the utility for predictive analysis allowing better account management and predictability of water use patterns. This can also allow for faster customer service whenever an account needs attention such as a stopped meter. The analytics can also be used to trend consumption for predicting how often a meter may need to be tested or changed out.
Unauthorized Use
Another area of apparent loss is that of unauthorized water use. Theft of water is usually rare, but meters do get tampered with and illegal connections made. In addition, some landscape contractors will help themselves to water from hydrants without proper permission. Some water utilities have installed water “ATM” machines where contractors can purchase water in bulk. Utilities need good policies that identify improper uses along with strong enforcement with stiff penalties. This is not just a matter of the theft of water but also one of protecting the water supply. Where large meters have by-pass lines that allow for on-site testing, these bypass lines need to be periodically inspected to make sure the lines are not open.
Utilities are challenged by the constraints of their budgets. They need programs that address the challenges of meeting their financial obligation, infrastructure replacements and more. Thus, controlling apparent losses is so important to the health of the utility.
John H. Van Arsdel is vice president at M.E. Simpson Co., and has been with the company since 1989. He has more than 27 years of experience directing projects for water utilities including water audits, loss prevention, leak detection programs, meter evaluation and maintenance and flow testing using the Polcon Flow Testing method. He has presented numerous classes for continuing education credits for water operators for more than 18 years to several local and state water works organizations on water loss reduction topics.
John H. Van Arsdel is vice president at 
