Page 193 - Water Loss Control

Contr olling Appar ent Losses—Capturing Missing Revenue and Data Integrity 167

III. Customer Meter Accuracy Testing
III-a. The water audit for CWC estimates that customer meter inaccuracy caused under-registered
consumption worth $665,096 of revenue during the audit year. This amount represents the majority of the
revenue recovery potential in CWC. During the water audit process CWC undertook customer meter testing
on a sample of meters—50 random residential meters and 5 random large (industrial, commercial, and
agricultural) meters. The findings of this meter testing were extrapolated to the entire meter population to
determine an estimate of the entire apparent losses attributed to customer meter inaccuracy. Based upon
the value of this testing, the CWC Manager determines to continue such testing on an annual basis; both to
continually gauge meter accuracy, and to also observe the rate of long-term degradation in accuracy with
increasing cumulative consumption. CWC does not have its own meter testing facility, therefore they utilize
contracted testing services. The metering supervisor and one staff person participate by identifying meters
for testing, rotating meters from customer properties, and performing the administrative and analysis work.
III-b. Staffing & testing service costs, including wages and benefits for CWC personnel
Number of CWC Staff 2
Supervisor cost, $/hour 35.00 $/day 280.00 # of days 3 Cost, $ 840.00
Service worker cost, $/hour 27.50 $/day 220.00 # of days 15Cost, $ 3,300.00
CWC Staff Cost, $ 4,140.00
III-c. Estimated Costs of Meter Testing Program-55 annual meter tests
Meter Testing Services cost, $/small meter 35.00 Cost for 50 meter tests, $ 1,750.00
Meter Testing Services cost, $/large meter 250.00 Cost for 5 large meter tests, $ 1,250.00
Meter Testing Service Cost, $ 3,000.00
III-d. Total cost for annual meter testing program, $ 7,140.00

IV. Revenue Protection Program Summary
IV-a. The total cost of the two components of the initial revenue protection program are given below:
Customer Billing Process Analysis,$ 24,024.00
Annual Meter Testing Program, $ 7,140.00
Total Revenue Protection Program Cost, $ 31,164.00
IV-b. Economic level of revenue recovery
During its first year of its new revenue protection program, CWC anticipates spending $31,164 to launch the
program. In order to recover the cost of this program, CWC would need to recover revenue equal to this
amount. By applying the composite customer retail billing rate of $3,945/Mil Gal of customer consumption,
an equivalent volume of consumption can be determined, as shown below:
$31,164.00
Breakeven Recovery Volume = --------------- = 7.90 Mil Gal
$3,945/Mil Gal
If CWC’s initial revenue protection efforts recover merely 7.90 mil gal of consumption, then the revenue
protection program will have paid for itself in its first year of operation. This level is only 3.8% of the total
apparent losses of 208.22 mil gal quantified in the water audit. Since apparent losses are valued at the
customer retail rate, recovering these losses can be highly cost-effective. CWC has strong potential to more
than recoup its first year revenue protection program costs in its first year. If this level of revenue recovery is
met or exceeded, then CWC will be well on its way to creating a very cost-effective apparent loss control and
revenue enhancement program.

FIGURE 11.7 (Continued)

and unauthorized consumption. Data from the water audit should be evaluated
to assess the relative impact that each component exerts on the water utility. In
the CWC example in Fig. 11.7, CWC estimates that very little unauthorized con-
sumption occurs in its system, so this component is not included in its initial
revenue protection program.
As shown in Figure 11.7, the cost impact in lost revenue to CWC due to appar-
ent losses is $838,360, which is 8.7% of the total annual operating cost of $9,600,000.