Apparent Losses

It is important to notice that apparent losses are not caused by leakage. They do not include any physical losses of water, since the water has reached the destination of an end user. However, this successful supply function was inaccurately metered, archived improperly in the billing system, or the use of water was unauthorized. Apparent losses are a very important component for the water supplier to keep under control as they have a direct negative impact on suppliers' revenue generation for a product that was delivered to the customer.

Accurate metering of customers provides valuable information on consumption trends needed to evaluate loss control and conservation programs. It also elevates the value of water in the mind of the consumer by linking a price with a volume. With improved metering, automatic meter reading, and data-logging technologies now widely available, customer consumption information has become a critical resource to better manage water-utility operations and the water resources of individual watersheds or regions.4

Before discussing the specifics of these losses, it is appropriate to review the typical metering and billing structures used by water suppliers. With the establishment of modern indoor plumbing, customer service pipes have been tapped directly into local water pipes or mains to bring water directly into the homes of the consumer. Figure 3.5 shows a typical direct-feed situation.

Many water suppliers have chosen to incorporate customer water meters at the end-user premises and gather regular meter readings for the purpose of billing per unit

Mixed volumetric and direct pressure use

Mixed volumetric and direct pressure use

Figure 3.5 Typical direct pressure residential supply situation.

volume of actual water used. Customer meters also allow the user to monitor his or her own water usage and provide the customer the option to exercise restraint against excessive use and identify waste. Outwardly, this approach seems to follow the norms of typical free market commodities, payment is based upon the volume of product or service delivered. Yet, the use of customer meters and usage-based billing is far from universal in the water industry in the United States or the world at large. For a large portion of public water supply customers, service is provided without any measurement of their actual water usage and billings are based upon flat rate charges assigned by customer user type. In the United States, perhaps only one-half of all users have water meters, with sentiments regarding metering sharply divided in certain areas of the country. In England and Wales, traditionally only the industrial, commercial, and institutional (ICI) customers were metered. Environmentalists and regulators support the establishment of universal residential customer metering, and a slow transition is occurring with meters being installed in new construction and upon customer request. Approximately 25% of all residential properties were metered in England and Wales as of the close of the year 2006.

Why Do Apparent Losses Occur

Apparent losses occur in three primary ways:

1. Customer meter inaccuracies

2. Errors in water accounting

3. Unauthorized consumption

In comparison to real losses, apparent losses have a much greater negative effect on the utilities revenue generation since they directly impact the utility's cash register. Apparent losses should always be valued at the retail value of the water sold. Another important factor regarding apparent losses is that an understatement of the apparent loss volume results in real losses being overstated in the water audit. This can potentially misguide water loss control planning by placing inappropriate emphasis on leakage while highly potential revenue recovery goes unattended.

How Customer Meter Inaccuracies Occur

Errors in measurement can occur in several ways. First, water meters reading can be in error due to a variety of mechanical or applications reasons. Due to widely varying water consumption patterns among customer populations, a number of different meter sizes, and sometimes types, can be found in any single water utility. Standard displacement or velocity meters provide accurate flow measurement for residential users while

The guiding institution on water supply in the United States, the American Water Works Association (AWWA), recommends that every water utility meter all water taken into its system and all water distributed from its system at its customer's point of service. Customers reselling utility water—such as apartment complexes, wholesalers, agencies, associations, or businesses—should be guided by principles that encourage accurate metering, consumer protection, and financial equity.5

large ICI users may experience dramatic differences in daytime and night time flows; requiring meters that are accurate through a wide range of flow rates, that is, compound type meters. Other factors place demands on the water supplier to provide accurate metering. Some of the major reasons why water meters fail to measure water flow accurately include

• Water quality impact

• Chemical build up

• Poor finish and workmanship

• Environmental conditions such as extreme heat or cold

• Incorrect installation

• Incorrect sizing

• Incorrect specification of meter type for the application

• Lack of routine testing and maintenance

• Incorrect repair

Recommended maintenance practices for customer meters include monitoring recorded consumption patterns and rotating the meter out of use on a regular basis for testing, calibration, repair, or replacement.

Many systems use estimates of customer consumption for accounts where water meters are nonexistent, defective, or unreadable. Estimates, which are used both temporarily or permanently, can be inaccurate if they are not devised in a rational manner or kept up-to-date with changing customer consumption patterns; hence another form of inaccurate water measurement can occur here.

Meter reading is the next step in obtaining accurate water consumption data. Errors in meter reading are essentially errors in measurement. With the growing use of automatic meter reading (AMR) systems, the opportunity for meter reading error is probably being reduced relative to that occurring in traditional manual meter reading operations. However, all systems seeking to optimize should include at least a brief assessment of the accuracy of meter reading operations in transferring actual measured water consumption into the information handling (billing) system.

How Errors in Water Accounting Occur

Errors in the handling of customer accounts can occur in a number of ways, some of which include

• Customer water consumption data is modified during billing adjustments.

• Some customers who use water are inadvertently or intentionally omitted from billing records and go unmonitored.

• Certain users are accorded nonbilled (free or subsidized) status and actual consumption is not recorded.

• Human error occurs during data analysis and billing.

• Weak policies create loopholes in billing and water accounting.

• Poorly structured meter reading or billing systems.

• Poor tracking of changes in real estate ownership or other changes in customer account status.

• Lack of understanding of technical and managerial relationships in assessing, reducing, and preventing apparent loss.

In the United States, "water accounting" is not an established practice as is "financial" accounting, which has substantial controls and accountability built into its standardized process. The fact that consistent standards for water accounting don't exist likely results in many water systems understating actual customer usage and failing to capture full billing potential.

Unauthorized Consumption

The last of the three primary occurrences of apparent water loss is unauthorized consumption. While human nature holds a high regard for the quantity-cost relationship, it is also true of human nature that a certain small segment of a population will attempt to illegally obtain service without making payment. Unauthorized consumption is likely a more common phenomenon in systems where customer meters are in use and water is billed per unit volume. Where flat rates are charged and consumption is not routinely monitored, customers can draw greater quantities of water to lower their own effective unit cost. These customers would need to evade inclusion in the billing process altogether in order to obtain water service without paying.

Unauthorized consumption can occur in a number of manners. Much unauthorized consumption occurs at the point of established end users. Some customers tamper with meters or meter-reading equipment in order to lower meter readings. Fortunately, many AMR systems have tamper detection features that help thwart such activity. Unscrupulous users with large water meters have been known to open valves on unmetered bypass piping, thereby routing their supply around the active water meter. Some users or contractors may consciously or unwittingly connect branch plumbing pipes to customer service lines upstream from the water meter, which also provides supply without passing through the meter.

Urban systems in the northeast section of the United States have encountered a frequent occurrence of customer restoration of terminated service connections. Closing and locking curb-stop valves on the customer service line is a common means of terminating service used by water utilities in the United States against delinquent customers. Illegal restoration occurs when delinquent customers reactivate their own water service after the water supplier due to nonpayment has stopped it. These situations evidence the need for water suppliers to continue to monitor terminated accounts, after they are shutoff, for resumed, unauthorized consumption. The city of Philadelphia provides such monitoring and has achieved success in reducing illegal restorations; lowering their discovery rate from 35% of all terminated accounts to less than 20% since the installation of their AMR System in 1999. During its 2007

M ost errors in water accounting occur mainly due to a lack of structure and controls in the accounting process.

Theft of water can be a common occurrence in the United States and is not just a third world problem.

Fiscal Year, Philadelphia uncovered 2984 accounts that had been illegally restored, and was able to collect $341,000 in missing revenue in motivating delinquent customers to make payment. With its AMR system meter reading and consumption continue to be monitored even if an account has been shut off for nonpayment. In contrast to the U.S. experience, regulations do not allow water companies in England and Wales to terminate water service to customers under any circumstances.

Unauthorized consumption has also been known to occur when persons find ways of withdrawing water from a location in the distribution system other than the customer service line. With fire hydrants constructed as above ground appurtenances in the United States, illegal opening of these devices happens regularly in many cities. In some areas, using fire hydrants to fill street cleaning equipment, landscaper trucks, and construction vehicles has occurred so casually that upstanding businesses perceive this to be acceptable practice. Water utilities in such places have a public education challenge to instill the value of water as a commodity in the business community. Establishing bulk water dispensaries is now common for water systems that wish to allow, and even promote, water sales outside of the normal customer service line connection. Some systems allow water to be used from fire hydrants in an authorized manner with the filing of a permit. With concerns for cross connection protection and the accountability of water, such a practice is not a preferred one for most water utilities.

All water suppliers should be mindful that the potential for unauthorized consumption exists to some degree in their systems. Just as retail establishments must take safeguards against "shoplifters," water systems should have appropriate controls to monitor for unauthorized consumption and keep such occurrences in check.

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