Reducing Non-Revenue Water: Actions to Reduce Real Losses and Improve Customer Satisfaction. June 21, 2016
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1 Reducing Non-Revenue Water: Actions to Reduce Real Losses and Improve Customer Satisfaction June 21, 2016
2 A growing problem VS. 2
3 Good news and bad news No magic wand! Knowledgeable people sharing insight 3
4 Introductions George Kunkel Principal Kunkel Water Efficiency Consulting Laurent Carrot VP/General Mgr. New Jersey Operations SUEZ Water Darin Kamradt Financial Planning Manager WaterOne Richard Spafford Director of Engineering Merchantville- Pennsauken Water Commission 4
5 George Kunkel, Principal Kunkel Water Efficiency Consulting 5
6 Water Use: a Public or Private Service? Benjamin Franklin founded the Union Fire Company in Philadelphia in 1736 Multiple fire companies existed by the 1750 s Fire companies aligned with insurance companies; gave preference for fire extinguishing to subscribers of the insurance company The fire mark was mounted to the building so fire fighters would know who subscribed to the insurance company Source: HankeringforHistory.com Water was carried by hand from supplies from private wells or from Philadelphia s two major rivers Benjamin Franklin: Firefighter Source: thehistoryblog.com Fire Mark for the Philadelphia Contributionship Source: philly.curbed.com 6
7 Fire Plug circa early 1800 s Fire companies (usually volunteers) would dig up the cobbles down to wooden water mains, chop into the wooden main, and place the hoses from their pumpers. After fighting the fire, they'd seal the main with a "fire plug." They'd dig up the plug during the next fire, not having to cut into the main again. Large cities had competing companies who would charge after-the-fact for putting the fire out. (The nastier ones would charge before-the-fact, while you were not in a negotiating mood.) If there was a plug near the fire, companies sent their biggest goons to guard it from the other companies. The goons were called "plug-uglies," which is where that term originated. (Source: Wooden Water Main with Fire Plug Source: thfirehydrant.weebly.com 7
8 Beginnings of Water Supply in North America Philadelphia first community water system in the US (1801) Water flowed from Center Square Pumping Station into a distribution system of wooden pipes into the City, to the homes and businesses of individual subscribers to the system, or to public hydrants, from which anyone could draw water for free. At its launch, the system supplied 63 private residences, four breweries, one sugar refinery (subscribers) and the public hydrants. The wooden water mains proved to be the first leakage problem in the US Center Square Waterworks in early Philadelphia Fairmount Water Works City water distribution system by
9 Customer Service Line Ownership & Responsibilities Today Customer water meter located in meter pit outside of building premises (Fig 1): metering and customer ownership start at this location typical for the majority of water utilities in the US Customer water meter located inside building premises: metering occurs here (Fig 2). Ownership transition may be: At the curbstop: typical for most US utilities, or Customer may own entire line: typical for a minority of utilities and a poor policy for leakage management Figure 1 Figure 2 Graphics source: Ronnie McKenzie, WRP Pty Ltd. However, any change in ownership policy must be carefully considered by the water utility! 9
10 Speed and Quality of Leak Repairs Quickly implementing repairs is critical. Repairs should be: Timely Safe in execution and water quality Lasting Customer Service Line policy: who holds the responsibility for service line repair utility or customer? Water utilities that have policies for customers to arrange for service line repairs incur longer leakage run times than policies that are less reliant on customer action Policies for customer arranged repairs often result in poor public relations since many customers aren t aware of this responsibility, and are reluctant to take on a large surprise expense Leaking customer service piping Water/Sewer Lines & Responsibilities Source: Philadelphia Water 10
11 Leakage Levels in North America Water Research Foundation Project 4372b (2014) Water Audits in the United States: A Review of Water Losses and Data Validity 1,636 water audits in state/regional agencies found: Annual Real (leakage) Losses of 297 billion gallons Annual Real (leakage) Loss Cost Impact of $619 million (excessive production costs) World wide, the majority of leaks, and annual leakage loss volumes, occur on customer service lines, not on water mains; except for systems with a very low service connection density - Allan Lambert Allan Lambert (UK) IWA WLTF Chair the world s foremost authority on leakage management 11
12 Leakage Control: How low to go? The target leakage level varies for each system depending on: The production cost of water for the utility* The cost of leakage control activities that are envisioned The ideal target is conceptually known as the Economic Level of Leakage (ELL) Software from the Water Research Foundation (Project 4372a) exists to help determine this level & Source: tntisland.com *or the customer retail rate, if source water is scarce 12
13 Customer Service Line Leakage: Where do we Stand Today? Leakage is high in US water utilities The majority of leak events and leakage loss volumes occur on customer service lines In many water utilities, policies on ownership/maintenance of customer service lines may have been established many decades ago, and do not take into account today s realities of: Timely, effective leak repairs Good public relations Water utilities should explore the variety of options for improved service line management and improved customer relations 13
14 SUEZ A Perspective on Real Loss Mitigation and How It Impacts Customer Satisfaction Laurent Carrot, VP & GM New Jersey Operations
15 SUEZ in North America Revenue $1.3 billion $ 7.4 million people served 3,400 employees 15 water utilities 78 PPPs 16,000 sites equipped 15 HomeServe ACE panel discussion
16 SUEZ Owned Utilities in New Jersey at a Glance Serving over 1 million residents in over 75 towns 98% Water 5 dams 10 plants 65 wells 2% Sewer 3 plants 420 employees in 7 locations 16 I
17 Real losses impact The Real Losses Paradox 17 I HomeServe ACE panel discussion Customer dissatisfaction
18 Two Perspectives on Real Losses Customer Perspective Utility Perspective Property damage High personal bill Disruptions Water rate increase Reliability of service Cost of service Water supply needs 18 I HomeServe ACE panel discussion
19 Improving Customer Satisfaction Limit Disruptions Reduce number of service interruptions by proactively replacing pipes and service lines subject to ruptures Reduce time of service interruption due to leak repairs Reduce Bill impact of an Inside Service Leak Give rebates on high bills due to a leak Encourage customers to enroll into an insurance program Educate, Educate, Educate 19 I HomeServe ACE panel discussion
20 Improving Real Losses at SUEZ Focus approach on areas with highest leakage Combine smart grid tools to make a difference (sectorization, AMI, acoustic leak detection) Streamline pressure management Pressure reduction and pressure stabilization Balance Operational Costs vs Investments Workforce efficiencies drive leak repair down Data based analysis drive pipe replacement prioritization 20 I HomeServe ACE panel discussion
21 MG / year Improving Real Losses at SUEZ: it works! NRW volume evolution - Hackensack system % BG I HomeServe ACE panel discussion
22 Stemming the Flow of Revenue Water Going Down the Drain Darin Kamradt AWWA National Conference June 21, 2016
23 Stemming the Flow of Revenue Going Down the Drain Who is WaterOne Cost of Leakage Cost of Leak Repair Cost of Replacement Balanced Decision Making Page 23
24 WaterOne Single Purpose Entity Quasi-Municipal 7 member elected board Serve All or part of 18 cities Near Kansas City No wholesale Size 272 square miles 425,000 residents 145,000 customers 42 nd largest city Page 24
25 WaterOne Two Treatment Plants 200 million gallons per day Page 25
26 WaterOne Annual Budget Long-Term Capital 7% 2016 $110.6 Million Annual Pay-go Capital 23% Operations & Maintenance 48% Debt Service 22% Page 26
27 Economics of Real Losses WaterOne s Numbers Cost of Leakage Cost of Leak Repair Cost of Replacement Page 27
28 Cost of Leakage Variable Operating Costs Electricity (Power) Chemicals $0.55 per 1,000 gallons Capital Cost Larger Treatment Plant More Storage Larger Water Mains $3.5M per 1 mgd Page 28
29 Cost of Leak Repair Emergency Repair $7,500 per Break 40% of Cost is Pavement Repair Disruptive Leak Detection Program Repair Less Disruptive Less Expensive Scheduled Page 29
30 Cost of Replacement Cost per Foot $135 per foot $713,000 per mile $1.7 Billion to replace all distribution mains Page 30
31 Decision Making Customer Expectations Low Water Rates Low Real Losses Cost effective strategies for Real Losses Given: Resources are constrained 1. Look for the Leaks OR Don t Look 2. Fix the Leak OR Don t (Let it Leak) 3. Replace the Pipe OR Don t (Let it Break) Page 31
32 Decision Making Leak Detection Acoustic leak detection costs vary Patience is a virtue Most leaks find the surface Most leaks are boring Page 32
33 Decision Making Leak Repair Let it Leak? Crazy Talk! Remember those costs Main break repair = $7,500 Variable cost of making water = $0.55 / 1,000 gal $7,500 = 13.6 million gallons of water Page 33
34 Decision Making Leak Repair Spend $7,500 to save on power and chemicals Question: Good Investment? 1/16 60 psi 1,000 gpd Economic payback = 37 years 1/8 60 psi 3,800 gpd Economic payback = 10 years Customers expect us to fix it! Page 34
35 Decision Making Pipe Replacement Let it Break? Crazy Talk! More Numbers Main break repair = $7,500 Pipe replacement = $135 / foot $7,500 = 55 feet of replacement Page 35
36 Decision Making Pipe Replacement Question: Good Investment? Break rate higher than average Break rate of 25 per 100 miles of main per year 0.25 breaks per mile per year OR One break every four years per mile OR City block is 1/8 mile = one break every 32 years Page 36
37 Decision Making Pipe Replacement Replace 1 city block of pipe 660 feet x $135 per foot = $89,100 Economic payback = 380 years One break per block per year Thirty-two times average Economic payback = 12 years Customers expect us to replace it! Page 37
38 Effective Decision Making Good Asset Management includes more than just the economic analysis. Every utility needs to know their own costs. Can we manage customer expectations? Yogi Berra Baseball is 90% mental and the other half is physical. Non-revenue water decisions are 90% economic and the other half is based on what the customers expect us to do. Page 38
39 Summary Remember 3 Things 1. WaterOne is near Kansas City 2. The best economic decision is often NOT what customers expect 3. Yogi Berra was a genius Page 39
40 Non-revenue water ADVERTISING AND PUBLIC BUY-IN Richard Spafford, Director of Engineering Merchantville-Pennsauken Water Commission
41 MERCHANTVILLE PENNSAUKEN WATER COMMISSION OVERVIEW Service 50,000 customers in 4 towns Groundwater system 5 water treatment plants 6 elevated water towers 90 year anniversary 41
42 PLANNING Identify the problem areas Leak detection Paper records Determine funding sources 42
43 LOCAL PUBLIC SUPPORT Support for financing infrastructure replacement Customer letters Town hall meetings Local impact only needed to reach all rate payers 43
44 REACHING ALL CUSTOMERS Meter replacement program Four letters to all customers Taught leak detection on meter Educated consumer on water usage and lost water 44
45 REVERSE 911 PROGRAM Call / text system to most residents Most customers in system Immediate main break information and public health concerns Quick, small messages but could not overuse Difficult to get out longer messages 45
46 FACEBOOK Facebook Gained users starting with historic pics Used historical society for research and help Flushing messages Importance of main replacements Capital upgrades Education of system Water loss Customer help 46
47 EDUCATION OF OWNERSHIP Actively addressing our leaks Needed to get to customer owned leaks Educate public of their ownership Expense of repair 47
48 SERVICE LINE PROTECTION Investigated multiple companies Educated customers on ownership Low income, older homes (100+) Galvanized services being replaced Affordable compared to large repairs 48
49 CAMPAIGN IMPROVEMENT Customer calls Facebook feedback HomeServe reports 49
50 SUMMARY Communicate long range plan Public buy in through all currently available channels Q & A 50
51 George Kunkel, Principal Kunkel Water Efficiency Consulting 51
52 Recap of Presentations: Key Points Perspective on the roles and responsibilities of the water utility and the customer have shifted over time Yet, utility policies on the ownership and maintenance responsibilities for customer service lines may have been established many decades ago: Are these policies relevant today to address leakage and provide good customer service? Leakage is high is North American water utilities The majority of leaks/leakage volume occurs on customer service lines The economics of each utility should be assessed individually to drive the leakage control strategy 52
53 What New Options Exist for Water Utilities and Customers? Technology: modern technology empowers customers accurate and detailed customer data is available from Advanced Metering Infrastructure (AMI) Systems Innovative leak detection technology finds hidden leaks better than ever Cost: do customers have an affordable options for managing their responsibility to maintain and/or replace their customer service lines as they fail? Policy: are existing policies outdated and not cognizant of today s goals for asset management and enhanced customer service? Polices should be mindful of: Types of service lines Timely, effectiveness of repairs/renewal Overall economics Customer satisfaction Source: lovetoknow.com 53
54 Thank you! Questions?
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