Harnessing Data Science to Solve Apparent Loss

water data

By Janani Mohanakrishnan, Christine Boyle & James Poff

Every day, U.S. water utilities lose an estimated six billion gallons of water, or 30 percent of the water they provide, through non-revenue water loss. The water loss can be attributed to main leaks and storage tank overflows (real loss), and inaccurately measured or unauthorized consumption (apparent loss). This translates to a $8.76 billion annual loss in the United States. Globally, the annual value of non-revenue water is estimated to be more than $14 billion, according to the World Bank.

Apparent losses in particular have become a pressing problem for water utilities in Georgia and California, where there are regulations around water loss and efficiency measures. Savvy managers recognize that proactive water loss control can yield benefits like revenue recovery, more accurate water demand quantification, improved planning of capital-intensive water supply projects and better customer care. Even the best-managed utilities can benefit from recapturing “hidden” revenue via reduction of apparent water loss issues.

However, apparent loss can be challenging to detect and quantify, and water utilities interested in taking a more proactive approach to manage it face a common dilemma: (a) how to manage the overwhelming volume of data produced by their metering and (b) how to glean value-added insight in a timely manner from the data. Valor Water Analytics, which was acquired in early 2018 by Xylem, a global water technology company, partnered with Clayton County Water Authority (CCWA) in Georgia to answer these two questions – and to break new ground in how utilities can harness the power of data to uncover hidden revenue and deliver greater value to their customers and communities.

CCWA Early Adopter of Proactive Apparent Loss Management

CCWA is an award-winning private water, wastewater and stormwater utility with annual revenue in excess of $110 million and around 80,000 customer accounts. CCWA’s service area is predominantly residential and the utility regularly contends with customer affordability challenges and a growing transient population base.

The utility is known among Georgia water utilities as having a culture of continuous improvement. This is partly due to its geography at the top end of the watershed, where water is scarce and expensive, and also due to intrinsic motivation among CCWA employees to be excellent water stewards and service providers. As part of their commitment to good stewardship, CCWA sought to be an early adopter of proactive apparent loss management by engaging Valor Water Analytics and leveraging the company’s powerful Hidden Revenue Locator solution.

Today, many water loss control programs are restricted to “top down” annual water audits and operational focus is on a small subset of high revenue accounts. While these static assessments are useful for reporting purposes, they do not empower utility’s field and customer services teams to identify, prioritize, investigate and resolve apparent loss issues across their meter base as they occur.

In addition, many utilities look to broad meter replacement programs as the primary and costly antidote to address customer metering inaccuracies. Software-as-a-Service (SaaS) technologies like Valor’s Hidden Revenue Locator provide the capability to identify faulty meters one by one, on a real-time basis, and give utilities visibility and intelligence into their overall metering operations and data.

Data-Powered Approach

The Hidden Revenue Locator’s Data-Powered Approach.

Mining Meter Data with Hidden Revenue Locator

Hidden Revenue Locator mitigates the challenge of navigating large data volumes through the use of data application programming interface (API), which automatically extracts data from client meter and billing systems to Valor systems for analysis. Apparent loss issues are presented on user-friendly online dashboards, with guidance on actions and quantification of benefits. The solution offers a state-of-the-art data engine comprised of multiple apparent loss detection models incorporating established engineering principles, advanced data science methodologies, and machine learning. Issues are flagged at the meter level once scores pass the established thresholds for each apparent loss indicator and the Hidden Revenue Locator dashboard presents the findings along with confidence level (HIGH, MEDIUM), total volume loss (gallons), and total revenue loss (USD). Utilities use these fields to prioritize and manage issues to optimize meter management and upgrades. Field investigation data from utilities is collected by Valor and used to train the models to improve precision of issue detection and increase value for utilities.

Valor has deployed its Hidden Revenue Locator at more than ten clients across the United States and has achieved precision results that are at least 30 times greater than those obtained by current utility operations through a random sampling approach (e.g. replacing meters based on age because they could be under-registering).

Two-Phase Program Monitors Entire Metering Operation

CCWA analyzed its entire metering operation for apparent loss issues (Table 1) using Valor’s Hidden Revenue Locator as part of a two-phase program that covered 14 months from May 2016 to August. The utility has automated meter reading (AMR) technology, with monthly meter reading and billing across 25 cycles (reading routes). Its approximately 80,000 meters are predominantly mechanical and sourced from a single meter manufacturer. CCWA undertook an extensive meter replacement program from 2008 to 2013, and the utility regularly monitors the top 2000 revenue accounts and tests 700 meters annually.

Table 1

Table 1 – Apparent Loss Issues Detected for CCWA.

Phase One of the CCWA-Valor collaboration occurred between May and October 2016. As part of the planning phase, CCWA IT leveraged Valor’s standard data API to transfer monthly billing data, customer information data and meter data for all meters into Valor’s system. Historical data was provided upfront from January 2012 through April 2016, and an automated data feed was established to share ongoing monthly updates. Valor reviewed and transformed the data and performed necessary health checks, and then put the power of its cutting-edge data engine to work.

Hidden Revenue Locator Identifies Revenue Loss

In Phase One, Valor flagged 3 percent of CCWA residential meters as under-registering. This averaged to about $6 per meter. Interestingly, the rate of non-residential meters flagged as under-registering was 5X higher, averaging about $67 per meter. In total, Valor’s Hidden Revenue Locator identified a significant estimated total revenue loss of $754,424 over a four-year time period.

CCWA Meter Services proceeded to review 196 flags and zeroed in on testing 22 meters deemed “high priority.” After confirming the Hidden Revenue Locator technology’s findings that the meters in question were under-performing, CCWA green-lighted Phase Two, and Valor and CCWA began a more in-depth evaluation of meter under-registration. During this second phase, which took place from March 2017 to August 2017, the program laser-focused on the meter category where the largest revenue losses had been identified – 1.5- and 2-in. non-residential meters. Of the top 100 meters in that category, 72 were tested and 28 were confirmed as under-registering. Compared to CCWA Meter Services’ previous tests conducted randomly while undertaking their meter replacement program, Valor’s Hidden Revenue Locator quadrupled the improvement in identifying meter registering gaps and uncovered more than $207,214 (over a five-year time period) in hidden revenue.

Program Supports Targeted Action

The CCWA-Valor initiative not only identified which meters were under-registering, it also revealed that meter under-registration was the largest apparent water loss issue facing CCWA. Armed with this information, CCWA was empowered to subsequently focus its meter management efforts on realizing this critical opportunity. In addition, the data established that greater short-term gains were possible by concentrating on non-residential meters, and within this category, the 1.5- and 2-in. meter sizes in particular.

Key Findings Demonstrate Broad Applications for All Utilities

These findings have wider application beyond CCWA and suggest that other utilities facing similar resource pressures as CCWA consider focusing first on non-residential meters, and then work their way through residential meters. Another key finding with broader application is that a majority of CCWA’s under-registering meters failed at low flow, suggesting that low flow under-registration can be more significant to utilities than may have been anticipated from previous understanding.

An additional learning from this work is that meter age is not the only determinant of under-registration, nor is there any strong correlation between meter age and total revenue loss. This is important because it signals that a change is needed in the ways utilities consider and prioritize meter replacement. While most utilities have different residential and non-residential meter schedules, Valor and CCWA’s data suggests that there are greater revenue advantages to locate and resolve under-registering meters as part of normal operational workflow, rather than to wait for the next meter replacement program based on length of service.

Most Clients Report High ROI

The success of the CCWA-Valor collaboration shows that a proactive, data-science approach can transform a utility’s efforts to identify and address apparent water loss issues. In fact, many Valor clients who use Hidden Revenue Locator have reported a return on investment of more than 100 percent annually.

By leveraging this pioneering technology, CCWA is now receiving powerful insight on apparent water loss issues, enabling the utility to prioritize action, capitalize on revenue enhancement, and enhance business process efficiency and customer care, and the utility is setting the pace in utility non-revenue water loss innovation. Valor is advancing the vision of its parent company Xylem, named Water Technology Company of the Year at this year’s Global Water Awards, to harness the power of technology and expertise to meet its customers’ needs – and to solve water.

Janani Mohanakrishnan
Chief Product & Delivery Officer | Valor Water Analytics

Dr. Janani Mohanakrishnan is chief product and delivery officer at Valor Water Analytics, a Xylem brand. Mohanakrishnan works with utilities worldwide to ensure Valor are developing products that clients love, and that clients obtain the maximum value and success from Valor solutions. She is a member of the International Water Association, the Association of Women in Water, Energy, Environment and has a Ph.D. in Chemical Engineering from the University of Queensland, Australia.

Christine Boyle, Ph.D.
CEO | Valor Water Analytics

Dr. Christine Boyle is the founder and chief executive officer at Valor Water Analytics, a Xylem brand. She works with utilities worldwide to introduce technologies that drive efficiency and set a new bar for how utilities understand and utilize data to help them achieve both resource and financial sustainability goals.

James Poff
Assistant General Manager–Operation | Clayton County Water Authority

James Poff is assistant general manager of operation at Clayton County Water Authority in Morrow, Georgia, just south of Atlanta. He has 30 years of professional experience in the water sector. At CCWA, Poff oversees CCWA’s water production, water reclamation, distribution and conveyance and general services departments.

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