By Marty Mazzella, President, Ti-SALES.
As stewards of a community’s water resources, water utilities know that non-revenue water (NRW) is an important statistic to understand. Many states also have NRW reporting requirements, with potential fines levied for being out of compliance. But what exactly is non-revenue water? What causes it? And most importantly, how can we reduce and control it?
What is Non-Revenue Water (NRW)?
At its most basic, non-revenue water can be defined as water that has been supplied (pumped, treated, etc) but is either unaccounted for or has not been billed for. In other words, NRW is water that has been lost somewhere in a water system.
How to calculate non-revenue water
The most common way to quantify non-revenue water is to calculate the percentage of water which has been lost compared to the total amount of water produced and/or pumped into the water distribution system. Arriving at this number is fairly straightforward: measure the amount of water that your source meter or meters are recording; measure the amount of water that you are billing; and divide total amount billed by the total amount pumped.
As a note: in addition to the NRW solutions and services we provide to help with our municipal customers’ non-revenue water goals, we recommend the American Water Works Association’s (AWWA) free water audit software tool, available on their website.
While this formula is easy to understand, seasonal fluctuations in water use can skew a calculation; if a system is seeing higher overall usage, the same amount of water lost will show as a smaller percentage. For this reason, some experts recommend also considering the absolute volume of water loss, either in terms of water loss per connection or per mile of distribution network length over time.
What’s the difference between non-revenue water and unaccounted-for water?
Another common term used to describe water loss is unaccounted-for water (UFW). NRW and UFW are very similar, but not interchangeable; there are some types of water use that is accounted for, but not billed. For example, many utilities do not bill for municipal building water use. Firefighter training is generally accounted for, but unbilled, and most utilities calculate the water used for flushing hydrants even though it does not generate revenue.
What’s a normal amount of non-revenue water?
It can be difficult to define a reasonable benchmark for non-revenue water. As previously mentioned, the percentage rate can fluctuate by season; additionally, regional differences such as topography and the age of the system make it hard to compare the data from one water system to another.
In general, however, a utility can consider NRW less than 10% as a good result, indicating a well-functioning water system. An amount between 10% – 20% is considered normal; greater than 20% would indicate a water system that could benefit from taking action to reduce the total NRW. In some states, regulators can cite a water system and levy fines if proper action is not taken to address high NRW percentage.
On the other hand, a NRW level less than 5% should be viewed with suspicion. Even discounting accounted-for but unbilled use, it’s never possible to fully eliminate water loss (especially here in the Northeast US, where our water systems are some of the oldest in the country!). Furthermore, some losses simply aren’t cost-effective to fix (e.g., a pinhole leak costing you $20 of water per year, but which would take $2,000 of labor and materials to fix).
What Causes Non-Revenue Water?
Non-revenue falls into three general categories or types of water loss: unbilled authorized consumption, apparent loss, and real loss. Real water loss consists of leaks at any point in the system. Apparent losses include unauthorized use (theft of water service), inaccurate water meters (both at source meters and customers’), and authorized, but unaccounted for use such as unmetered water from a fire hydrant for a municipal project or event. Apparent loss also includes billing errors or anomalies.
Anomalies or errors in the billing process are a very common source of NRW. One of the most impactful errors is having the wrong multiplier assigned to older meters or meters of a certain size in the utility billing software. Multiplier errors can creep into a system when changing billing software, changing meters, or even changing meter reading systems – and can throw a billing amount off by a factor of 10 or in rare cases, 100X.
The effects of non-revenue water
Non-revenue water and unaccounted-for water directly translate into reduced income for a water utility, both in terms of lost revenue and, increasingly, in fines for non-compliance. In addition, the cost of any water purchased or pumped into the system that is not accounted for is money that is lost completely.
How to Reduce and Control Non-Revenue Water
It’s important develop the right overall strategy before starting a non-revenue water reduction project. A successful non-revenue water solution will be focused on reducing and controlling NRW water losses in the most cost-effective way possible. Over our many years of experience in the water utility industry, we have found the following steps – in the following order! – have achieved the best and most lasting results for our municipal utility customers.
First, test your source meter(s). (If you’re pumping water in from an outside source, validate the accuracy of the meters feeding your system from the wholesaler.) If you don’t have an accurate measurement of how much water you are producing, your NRW measurement will always be inaccurate. It’s important not just to regularly calibrate your source meters – you must also isolate and flow-test them. In many cases, this is easier said than done – but it’s worth it!
We have found that in some cases, certain types of source meters (specifically, those that measure velocity) can “run fast” due to plumbing issues or the buildup of material on the inside of the piping and/or meter. By correcting the “total volume produced” number, the utility’s non-revenue water will decrease without making any changes or upgrades to the system itself.
Second, test your large meters, as well as any other meters in your system that generate significant revenue. While large meters make up only 10-20% of a typical water utility’s meter inventory, they are responsible for measuring 60% or more of its water consumption. Inaccuracies in large meters, therefore, have a significant impact on overall total water billed. In addition to reducing a system’s non-revenue water, replacing an inaccurate large meter can pay for itself within a surprisingly short time frame with the increased revenue that accurate metering provides.
Next, review your billing practices and reporting system. As previously mentioned, anomalies in the billing system are a very common source of non-revenue water; having the wrong multiplier assigned to a meter can throw off the volume billed by a factor of 10. (We recently had a customer incorrectly billing a large hotel for ~$1,000 per month when the correct bill should have been closer to $10,000 per month!) Any billing system, no matter how technically robust, has room for human error – rooting out and correcting those errors will help to control non-revenue water without any inconvenience to a utility’s customers, and with minimal impact to overall utility operations.
Depending on a utility’s specific circumstances, there are a number of other steps and solutions we would recommend after these three. Finally, in conjunction with the steps outlined above, a well-designed leak detection program may help reduce NRW, but only after executing on the three key recommendations. This may be counterintuitive; after all, isn’t non-revenue water mostly about leaks? In our experience, it’s not – the greatest returns can be found in source and large meter/high-use meter testing as well as in billing anomalies. Additionally, leak detection is often expensive, time-consuming, and tedious – all factors that weigh heavily on oft- overextended water utilities.
The benefits of reducing non-revenue water
Reducing and controlling non-revenue water yields numerous benefits. Most obviously, revenues go up, allowing a utility more effective revenue planning and a greater ability to serve its customer base. By the same measure, the cost of producing water (such as pumping and chemical treatment costs) decreases, and the utility achieves greater compliance with state regulations.
Additionally, a non-revenue water reduction project can be highly visible and a great opportunity to educate the public about water conservation, encouraging them to seek out ways to reduce their own water usage.
As more and more states and regions put increasing focus on water conservation, we expect to see more water utilities developing non-revenue water reduction and control strategies. Please reach out with any questions; we are here to help you to achieve your NRW goals.
Marty Mazzella is the President and Owner of Ti-SALES, a leading distributor of water and wastewater supplies, now providing large meter testing/revenue optimization services to water utilities throughout New England and New York. Provided in partnership with Hydro Utilities, LLC, the service is designed to reduce non-revenue water by identifying meter inaccuracies with a data-driven approach.