1. Component Analysis of Apparent Losses Paul Fanner, Principal of Veritec

2. IDB NRW Workshop, Belize, 18-19 th May 2010 2 Overview Introduction Components of managing apparent losses Meter under-registration Meter reading errors Water accounting errors Unauthorized use (theft) Conclusions

3. IDB NRW Workshop, Belize, 18-19 th May 2010 3 Apparent losses Are in many cases the most costly losses in a water system, as they are valued at retail $’s. Reducing apparent losses can generate sufficient new revenue to fund real loss reduction programs Come in many forms and are not just metering losses

4. IDB NRW Workshop, Belize, 18-19 th May 2010 4 Four Components of Managing Apparent Losses

5. IDB NRW Workshop, Belize, 18-19 th May 2010 5 Meter Accuracy Error Meters can be in error for a number of reasons: Wear Incorrect Installation Incorrect sizing Inappropriate meter type Spinning or jetting Environmental problems Low flow rates

6. IDB NRW Workshop, Belize, 18-19 th May 2010 6 Typical Small Meter Error Curve

7. IDB NRW Workshop, Belize, 18-19 th May 2010 7 Ageing of Positive Displacement Meters

8. IDB NRW Workshop, Belize, 18-19 th May 2010 8 Ageing of Velocity Meters

9. IDB NRW Workshop, Belize, 18-19 th May 2010 9 Consumption Profiling

10. IDB NRW Workshop, Belize, 18-19 th May 2010 10 Error Curve of New Meter

11. IDB NRW Workshop, Belize, 18-19 th May 2010 11 Error Curve of Installed Meter

12. IDB NRW Workshop, Belize, 18-19 th May 2010 12 Weighted Average Error

13. IDB NRW Workshop, Belize, 18-19 th May 2010 13 The example below shows an existing meter and flow profile and the example above the correctly sized meter

14. IDB NRW Workshop, Belize, 18-19 th May 2010 14 Four Components of Managing Apparent Losses

15. IDB NRW Workshop, Belize, 18-19 th May 2010 15 Causes of Meter Reading Errors In many situations data can be recorded correctly by the meter but transferred incorrectly due to: Hard to access / read meters Illegible meter dials Meter reader error in the case of manual reads “Café” readings Fraudulent readings Scaling problems Pulse or factor problems Absence of reading validation and follow up Failure to follow up meter reading problem codes

16. IDB NRW Workshop, Belize, 18-19 th May 2010 16 Review Meter Reading Process

17. IDB NRW Workshop, Belize, 18-19 th May 2010 17 Data Handling Errors – Meter Reading Examine meter reading and checking processes How is data collected? What scope for manual errors –Validation and high / low / zero consumption checks Is there scope for “café” meter reading? Is there scope for meter reading fraud? How are readings transferred to billing system? What validation checks are run in the billing system? What follow-up is done with exception reports? What follow-up is done with meter reading error codes? How are zero consumptions checked? Check a sample of readings through these processes

18. IDB NRW Workshop, Belize, 18-19 th May 2010 18 Four Components of Managing Apparent Losses

19. IDB NRW Workshop, Belize, 18-19 th May 2010 19 Data Analysis Errors Once data arrives at the utility office it can often be misused Billing systems not designed to retain integrity of consumption data Estimates are generated and volumes inferred Reversal of previous over-estimates Rebates are given and volumes inferred Customers can be lost or incorrectly categorized

20. IDB NRW Workshop, Belize, 18-19 th May 2010 20 Data Handling Errors – Billing Processes Interview relevant billing staff: How good is customer cadastral? Are customers located on GIS? How are estimates calculated? How are over-estimates reversed? What happens to consumption data when bills are adjusted? Customer complaints Leakage allowances Etc. How does the system manage meters “going round the clock” What happens to consumption of accounts that aren’t billed?

21. IDB NRW Workshop, Belize, 18-19 th May 2010 21 Billing Extract Take full extract of data re. meter reading, meter, consumption, customer information, customer class, flags for estimated, no bill etc. Year of study, plus meter reading interval either side, based on meter reading date Check samples of records to confirm correct operation of processes Determine consumption by month from data, based on meter reading date. Apply reversals! Compare with reported consumption Adjust for meter reading lag time Evaluate average number of months for stopped meters Identify any systematic errors

22. IDB NRW Workshop, Belize, 18-19 th May 2010 22 Check Against Reported Consumption Volumes

23. IDB NRW Workshop, Belize, 18-19 th May 2010 23 Four Components of Managing Apparent Losses

24. IDB NRW Workshop, Belize, 18-19 th May 2010 24 Theft and Illegal Consumption Regular connection mis-coded Inactive connection reactivated Bypassed meter Tampered meter Illegal connection (urban and rural) Illegal use of hydrants or fill points for tankers Illegal use of fire lines Illegal use of new connections for construction water Others?

25. IDB NRW Workshop, Belize, 18-19 th May 2010 25 Illegal Connections (and poor materials!)

26. IDB NRW Workshop, Belize, 18-19 th May 2010 26 Tankers Often Fill in an Unauthorized Manner

27. IDB NRW Workshop, Belize, 18-19 th May 2010 27 Unauthorized Hydrant Use

28. IDB NRW Workshop, Belize, 18-19 th May 2010 28 How to Identify Illegal Consumption? Cross reference power consumption with water consumption records Random field investigations to identify frequency Estimate number and frequency of tankers filling up at hydrants Road cleaning? Sewer and storm drain flushing? Water trucking? Others?

29. IDB NRW Workshop, Belize, 18-19 th May 2010 29 Estimate all 4 components of apparent losses of the 4-arrow diagram Apparent losses are not just meter under- registration Evaluate the economics of the apparent loss components Apparent loss reduction normally has very short payback times Tackle those components of the 4-arrow methodology that provide the highest returns first Conclusions

30. IDB NRW Workshop, Belize, 18-19 th May 2010 30 P hiladelphia’s Water Audit Summary July 1, 2001 - June 30, 2002 in Million Gallons Per Day (Mgd) Water into Distribution - 263.0 Customer Billed Usage - 177.6 85.4 Non-Revenue Water Non-Revenue Water Components Authorized Usage 3.1 $ 146,000 Apparent Losses 13.1 $ 9,036,000 Real Losses 69.2 $ 3,369,000 Non-Revenue Water Cost: $ 12,551,000 Infrastructure Leakage Index = 69.2/5.3 = 13.1 Non-Revenue Cost Ratio = $12.5/$155 million = 8.09%

31. IDB NRW Workshop, Belize, 18-19 th May 2010 31 Features of the Philadelphia Audit Includes over 90 detailed components of usage and losses Costs are evaluated, including: Four levels of Retail Costs for Apparent Loss (Residential, ICI, City Property and Average) Short-term Marginal Production Costs for Real Losses: $121.70 per mg Liability Costs for incidents related to Real Losses: $295,600 total for the year Currently no assessment of long-term costs (Environmental, political, social)

32. IDB NRW Workshop, Belize, 18-19 th May 2010 32 Features of the Philadelphia Audit Top-down audit until 2000 Bottom-up started in 2000, including Nightflow leakage measurements in 4 pilot DMAs Revenue Protection Program targeting specific areas of Apparent Loss Balancing Error This is not “unaccounted-for” water! Determined to be 26.3 Mgd after preliminary audit completed (out of 82.3 Mgd of water losses) The Balancing Error is apportioned over the three major leakage components

33. IDB NRW Workshop, Belize, 18-19 th May 2010 33 Quantifying Components of Water Use and Loss Water Usage and Water Loss are quantified by either: Measurement OR Estimation Using Estimates does not imply inaccuracy or “unaccounted-for” water Bottom-up approach replaces Estimates with Measurements

34. IDB NRW Workshop, Belize, 18-19 th May 2010 34 Quantifying Components of Water Use and Loss Measurement Permanent meters on source supply mains and customer service connections Portable/temporary meters on distribution mains, fire hydrants (fire flow tests), other devices Estimation Inferred - based in part on gathered data to arrive at a reasonable quantity –Example: Illegal Restores (Items III-8, III-9, III-10 in Audit) Subjective - best judgement of the most knowledgeable stakeholder –Example: Unauthorized Fire Hydrant Usage (III-4, III-5, III-6)

35. IDB NRW Workshop, Belize, 18-19 th May 2010 35 Master Meter Verification If you don’t measure it, you can’t manage it! Bulk Source Flows should be metered Bulk Flows should be configured to determine water delivery on a daily basis Flow data should be reviewed and reconciled daily Mass Balance Technique compares Raw Water Pumping, Treatment flowrates and delivered flowrates Routine Meter Testing/Verification should occur

36. IDB NRW Workshop, Belize, 18-19 th May 2010 36 Authorized Usage Customer Billed Usage: 177.6 Mgd Billed Unmetered: 0.594 Mgd (to new wholesale supply unmetered for part of year) Unbilled Authorized Usage: 2.483 Mgd Largest components include High Pressure Fire System, various fire hydrant usage and system maintenance Cost: $145,984 Total: 180.677 Mgd

37. IDB NRW Workshop, Belize, 18-19 th May 2010 37 Apparent Loss Components Estimated to be 13.1 Mgd Cost: $9 million in lost revenue annually Under-estimating Apparent Losses causes Over- estimation of Real Losses Largest Components Unauthorized Usage: 5.1 Mgd City Properties: 4 Mgd Accounts Lacking Proper Billing: 2.25 Mgd

38. IDB NRW Workshop, Belize, 18-19 th May 2010 38 Apparent Loss Idiosyncrasies Customer Metered Usage Vs. Customer Billed Usage A sampling of Customer Billed Usage: 8-inch meters Month # of Accounts Usage (100 cubic feet) July 1999 71 177,312 Aug 1999 70 -134,825 Sept 1999 69 246,923 Oct 1999 68 178,278 It’s important to find out what the Billing System does to Metered Data

39. IDB NRW Workshop, Belize, 18-19 th May 2010 39 More Apparent Loss Idiosyncrasies Philadelphia has 474,657 Billed Accounts But - - Philadelphia also has 85,898 Non-Billed Accounts! Non-billed Accounts: Typically a temporary status, yet accounts often remain indefinitely Eight categories of NB’s include unoccupied properties, non-payment shutoffs, other Invalid NB Accounts: a primary target of Philadelphia’s Revenue Protection Program

40. IDB NRW Workshop, Belize, 18-19 th May 2010 40 Real Loss Components Real Losses: 69.2 Mgd Real Losses Cost: $3.4 million of excess production costs each year Largest Components Customer Service Line Leaks: 33 Mgd Main Leaks: 29 Mgd Unavoidable Annual Real Losses: 5.3 Mgd Four Pilot DMA’s: 0.36 Mgd (> 1% of system miles) Main Breaks - less than 0.1 Mgd, yet these drive our Capital Water Main Replacement Program!

41. IDB NRW Workshop, Belize, 18-19 th May 2010 41 Unavoidable Real Losses Four Components of Managing Real Losses Improved response time for leak repair Active Leakage Control: Leak Surveys NightFlow Analysis Improved System Maintenance Replacement Rehabilitation Existing Real Losses Economic Level Pressure Management Philadelphia can gain from Improved Leak Repair response time, particularly for customer service line leaks

42. IDB NRW Workshop, Belize, 18-19 th May 2010 42 Four Components of Managing Apparent Losses Unavoidable Apparent Loss Unauthorized Consumption Theft and illegal consumption Data transfer errors between meter and archives Poor customer accountability Data analysis Errors Between archived data and data used for billing/water balance Existing Apparent Losses Economic Level Meter accuracy error Philadelphia can gain from unauthorized use reduction, better none billed account control and Billing System improvements to reduce data analysis error

43. IDB NRW Workshop, Belize, 18-19 th May 2010 43 Using the Water Audit and Moving Forward Tracking aggregate performance year-to-year Compare with IWA water audits of other systems Target-setting: currently analyzing means of setting long- term target for loss reduction (setting economic levels of Real and Apparent Losses) Loss control interventions being pursued: Real Losses: pilot DMAs, long-term policy changes regarding leaking customer service lines Apparent Losses: Revenue Protection Program focusing on none billed accounts, city properties. Long-term Billing System structural changes are likely needed. Also, continue to reduce unauthorized usage

44. IDB NRW Workshop, Belize, 18-19 th May 2010 44 Contact Information: George Kunkel, Philadelphia Water Department Telephone (215) 685-9635 E-mail george.kunkel@phila.gov

45. Thank You - Any Questions? paul@veritec-us.com www.veritec-us.com