Calculating Economic Level of Leakage in Malaysia: Uncertainties and Practical Solutions. Martin Shaw Waterloss and Pressure Management Sdn Bhd

Transcription

1 Calculating Economic Level of Leakage in Malaysia: Uncertainties and Practical Solutions Martin Shaw Waterloss and Pressure Management Sdn Bhd

2 Economic Level of Leakage - History The concept of calculating an Economic Level of Leakage (ELL) has been around for decades. The first universally accepted approach was presented in the Managing LeakageseriesofreportsintheUKinthemid90 s. Current practice is derived from the Tripartite Report Best Practice Principles in the Economic Level of Leakage Calculation (2002). Tripartite Group consisted of Ofwat, Environment Agency and Department for Environment, Food and Rural Affairs.

3 History

4 Definition The ELL is defined as the point at which the marginal cost of active leakage control equals the marginal cost of water lost through leakage. The level of leakage control activity should be increased or reduced to The level of leakage control activity should be increased or reduced to the point where the marginal cost of finding an additional unit of water equals the marginal benefit derived from the water saved.

5 Definition Ofwat: It is generally accepted that expenditure on leakage control should be increased to the point where the incremental costs involved are in balance with the incremental costs of alternatives for balancing supply and demand, for example resource development or demand management(such as metering). The marginal benefit of water saved from leakage control is a function of the marginal cost of water provided by ALL of the other options, such as new water resources schemes or additional metering. To calculate the Long Run ELL requires an assessment and the importance of optimising across the full range of water supply and demand options to maintain minimum required headroom.

6 Definition MLD Planning Demand Actual Demand Planning Demand Available Supply (NWRS) Available Supply (RMKe-9/10 & BP)

7 Definition Core Economic Concept The job of a water authority is to provide its services at least cost to the community/shareholders

8 Timeframes There are 2 Timeframes to consider when calculating ELL Short Run and Long Run. Short Run the period of time in which the quantity of at least 1 input isfixedandthequantitiesoftheotherinputscanbevaried. Long Run a period of time in which the quantities of all inputs can be varied and new inputs can be introduced.

9 Timeframes Short Run considers the costs for different policies of Active Leakage Control. Long Run considers the costs for different policies of a number of water loss management activities such as: pressure management speed and quality of repairs pipeline and asset management customer metering Active Leakage Control

10 Long Run ELL Tripartite Report recommends 2 approaches Least Cost Planning and Marginal Cost of Water. Least Cost Planning The least cost planning approach looks to minimise the total cost of managing the supply/demand balance over the planning period (typically 25 to 30 years). The purpose of the analysis is to minimise the net present value of the cost of all supply-demand related investment(capital, system, operating and possibly social and environmental costs). Leakage is considered as one of the options to manage the supplydemand balance. The leakage profile that results in the lowest net present value of costs is the Economic Level of Leakage.

11 Pressure Management LRELL Least Cost Planning

12 Mains Replacement LRELL Least Cost Planning

13 NPV Analysis - Demand LRELL Least Cost Planning

14 NPV Analysis - Supply LRELL Least Cost Planning

15 LRELL Least Cost Planning Combinations of supply, demand and leakage schemes are analysed and the least cost option identified. Water Supply Source Options Estimated Total Capital Cost Total Daily Water Production or Saving (ML/Day) Cost/ML/day Wyralong Dam $220,000, $3,100,000 Regional Pipeline $110,000, $2,000,000 Hinze Dam Stage 3 $95,000, $3,900,000 Leakage and Pressure Control $10,500, $700,000 Desalination Depends on Size Subject to Size $3,000,000 Total Rebate Scheme to Sept 05 $2,760, $1,900,000

16 LRELL-Marginal Cost of Water Marginal Cost of Water The marginal cost approach is complementary to least cost planning. Requires a comparison of the marginal cost of active leakage control with the marginal cost of alternative options for balancing supply and demand. Itislessrobustthantheleastcostplanningapproach,sinceitrequiresa number of assumptions to be made. It is, however, considered by Ofwat to be suitable for the development of ELL targets.

17 LRELL-Marginal Cost of Water Supply Side Costs Scheme Cost RM/ML/y year Scheme

18 LRELL-Marginal Cost of Water The economic level of leakage is the point where the additional cost of leakage control equals the marginal cost of the next option.

19 Short Run ELL Short Run considers the costs for different policies of Active Leakage Control. It requires an assessment of what the leakage would be for a certain investment in ALC and is calculated using durations between Leak Surveys. 2 approaches for calculating SRELL: BABE analysis Natural Rate of Rise analysis

20 SRELL-BABE

21 SRELL-BABE

22 SRELL-BABE The cost of increasing effort on active leakage control (ALC) is nonlinear and shows diminishing returns. Increasing the volume of water put into supply results in increased production costs (i.e. cost of water), which follows a linear relationship. The total cost curve is the sum of the marginal supply cost curve and the manpower cost curve. It is at a minimum when the gradients of the two component curves areequalandoppositeandtheleakagelevelatthispointistheell.

23 SRELL-BABE

24 Malaysia Short Run Economic Level of Leakage Cost of ALC and Water Lost (RM/d) Losses m3/d Cost of ALC Cost of Water Lost Least Cost Curve

25 10 0 SRELL-NRR Typical Minimum Night Flow into a DMA Night Flow cum m/hr Customer night use assumed constant with time varying burst leakage Background leakage assumed constant with time at current pressure Time in Days

26 SRELL-NRR

27 Summary Least Cost LRELL This approach allows the trade-off between leakage control, resource development and other supply-demand options to be considered in a consistent and transparent manner. It does, however, require a detailed understanding and modelling of the interactions of the supply-demand balance.

28 Summary Marginal Cost LRELL Less robust than the least cost planning approach, since it requires a number of assumptions to be made. It is, however, considered to be suitable for the development of economic level of leakage targets, particularly when the current level of leakage is close to the economic level. The main feature of this approach is that it requires the calculation of an appropriate and robust marginal cost of the next representative resource/treatment option.

29 Summary Short Run ELL The BABE model is heavily reliant on the assumed burst flow rates and durations which are inevitably very uncertain. Forthisreason,itisnowconsideredthatamodelbasedonnaturalrates ofrise(nrr)ofleakageatdmalevelwillbemoreaccurate.

30 ShortRunELL NRRanalysis Summary The only calculation that does not require an estimate of volumes of leakage at different ALC policies how many Malaysian water suppliers have this information? Data Required: Background leakage / ICF NRR Burst frequencies-reported bursts Leak detection costs Marginal cost of water

31 Terimakasih