Non-Revenue Water: All Flows are Cash Flows

money going down a hole

By Sue Mosburg & Will Jernigan

There is no simple solution to optimizing water loss and ensuring that the maximum volume of water entering your system reaches your customers. However, a validated water audit is the essential first step to mitigate water losses and positively impact your utility’s bottom line. The goal is to reduce water loss in a way that is economically sustainable, both for your utility and your ratepayers. Climate change, extreme weather events, conservation rate structures and regional population shifts are changing the face of business as usual in the water industry. It’s time to get with the program.

Water loss control. Leak detection. Non-revenue water. As a water industry professional, you’ve probably heard these terms pop up several times. Maybe you’ve been asked, “What are we doing to control water loss?” The focus is shifting from demand-side (customer) focused conservation, to supply-side (distribution system operational) water efficiency. When asked to quantify water loss, a general manager’s typical response may be something like, “We are less than 10 percent, which is the industry average” or “Our losses have been holding steady for years, and we just put in a new work order tracking system which helps us respond to leaks faster.”

If pushed hard enough, the question will make its way to staff responsible for water conservation activities, the distribution superintendent or maybe the water resources engineer or billing manager, who is asked to “verify” the stated water loss percentage. Wherever the task lands, a water loss tracking spreadsheet is typically pulled out, updated, and after the last data field is entered, predictably spits out a percentage similar to the last time. (Or maybe staff discovers, like one Southern California agency did earlier this year, that with the drought-driven drop in water sales it appeared to be selling more water than it was producing.) A quick check of the flow meter at the treatment plant and a call to the billing department to make sure they have the right time period matched up reveals nothing helpful. At a subsequent board meeting, our hypothetical GM reports that the staff has validated the previous estimate of less than 10 percent water loss, aware this is hardly the best answer. (It’s important to note that there is no industry standard percent water loss number. Percentages can be easily skewed by customer conservation or other changes in demand and can be highly variable across different sizes and utility profiles.)

Apparent versus Actual

AWWA Manual M36-Water Audits and Loss Control Programs defines water loss as the difference between the volumes of water supplied to a system and authorized consumption within that system. Total water loss is defined as the sum of apparent and real losses.

Apparent loss can result from inaccuracies associated with metering errors, systematic data handling errors, data gaps, misreported data, unauthorized consumption (theft), estimated volumes due to lack of metering, and similar nonphysical (paper) losses. Real losses are physical water losses that can result from leaking water mains and service connections, storage tank overflows, water flow from damaged pipelines and the like, reported or not.

Although the terms water loss and non-revenue water are commonly misused interchangeably, they are not the same. Non-revenue water is the sum of apparent and real water losses combined with the volume of water used for fighting fires, water main flushing, fire flow testing and similar unbilled authorized consumption. Water loss control begins with accurately categorizing the nature and volume of a system’s apparent and actual losses.

The Water Loss Audit

Conducting an annual water audit using the AWWA Free Water Audit Software is the best way for a utility to identify and categorize volumes of water entering the system while simultaneously assessing the system’s efficiency and the utility’s water accounting practices. Built on the methodology detailed in Manual M36, the software makes it easy to identify, measure or estimate the volume, and assess the value of all water sources, consumption, and losses. The software includes a planning guide with suggestions to improve data validity, control apparent losses, and plan leakage control management activities based on audit results.

A water audit can be completed by the in-house water system staff, a consultant, or a combination of the two. The best way to prepare is to assemble a team from the departments that own the data and understand its origin/derivation such as engineering, billing, distribution system maintenance, and finance. The audit process gathers water supply data, meter inventory and testing data, billed and unbilled water consumption and metering data, and system operations data, including length of mains, number of service connections, pressure and operating costs. As this data is compiled, the auditor assigns data “grades” which are reflective of the utility’s business and data management practices.

A standardized grading matrix is used by the auditor to select the appropriate data grade for each input on a scale of 1 to 10. For systems just getting started—as a small system in California’s Central Valley discovered—the software provides several default values and allows for entering estimates. Systems just beginning to understand their data often find data grades of five or lower are common. Similarly, fully metered systems are learning that a proactive meter-testing program is required to get data grades above eight. Once all data grades have been assigned, the software calculates an overall data validity score between 1 and 100. This score represents the overall reliability of the entered data, as well as the extent of water loss control best practices employed by the utility.

Validation vs. Auditing

Validation can occur at graduated levels of effort and outcomes. As defined by Water Research Foundation project 4639 (2016), Level 1 validation is an examination for correct application of the audit methodology including errors evident in summary data and to confirm data grading applications. Level 2 investigates raw data and archived reports at a deeper level to ensure the best sources of data have been used. Level 3 focuses on bolstering data reliability through instrument accuracy tests, pilot leak detection studies and similar field tests. Currently in California, Georgia and Hawaii, Level 1 validation is required for annually submitted AWWA water audits. A Level 1 validated water audit provides the foundation for developing an economically sound water loss control program focused on the true nature and extent of a system’s losses and their financial impact on utility operations. To validate an audit, the water loss expert reviews the data entered and the associated data grades, and discusses business and operational practices with the audit preparation team. Validation does not make data inputs or grades “right” or “wrong” but merely aligns them with the actual conditions that occurred in the operation of the utility for the audit year.

Any discrepancies noted during validation are discussed between the audit team and the validator, and documented in a validation report. The initial outcome of Level 1 validation is a better understanding of the data and business practices informing the water audit. The examples are numerous. One water system discovered a billing system error during its audit validation and was subsequently able to correct an inaccuracy that resulted in thousands of dollars of lost revenue. Another system identified a source metering configuration that was misrepresenting the volume of water entering the system. Yet another system used its water audit to communicate the need for, and value of, a targeted leakage detection and monitoring capital project, resulting in millions of gallons of water saved.

Utilities that embrace the M36 methodology, and use their validated water loss audits to pursue an economically-based water loss control program are true stewards of the resource, and are able to confidently answer the question, “What are we doing to control water loss?”

Sue Mosburg and Will Jernigan are the co-chairs of the North American Water Loss 2017 Conference, being held in San Diego, Dec. 3-5.


Sue Mosburg
Program Manager | Sweetwater Authority

Sue Mosburg is a program manager at Sweetwater Authority in Chula Vista, Calif. She also serves as incoming association director for the California-Nevada Section (CA-NV) of AWWA, chair of the CA-NV AWWA California Water Loss Control Collaborative and chair of the CA-NV AWWA Water Loss Control Committee.

Will Jernigan
Director | Cavanaugh

Will Jernigan, P.E. is a director with Cavanaugh and a nationally-recognized leader in water loss management and bioenergy. He is active with AWWA as a trustee with the Distribution & Plant Operations Division, vice chair of the AWWA Water Loss Control Committee, a principle contributing author on the M36 Manual for Water Loss Control, 4th Edition, and more.

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