Cost-Saving Ideas: Evaluate the Efficiency of Your Water Delivery System

Establishing an effective water accounting system is a necessary first step in controlling water losses and reducing water system costs.

The Federal Environmental Protection Agency (EPA) has established an industry goal of 10 percent for unaccounted water system losses. A water accounting system helps to track water throughout the system and identify areas that may need attention, particularly large volumes of unaccounted-for water.

Calculate unaccounted-for water losses and related costs

Unaccounted-for water is the difference between water produced (metered at the treatment facility or produced) and metered use. It results from source meter errors, customer meter under-registrations, accounting procedure errors, illegal connections, malfunctioning distribution system controls, storage tank overflows, theft and underground leaks.

You can save money by decreasing unaccounted-for system losses. Follow the steps below to determine if your water system has more unaccounted for losses than the EPA standard and calculate how much this may cost your municipality.

A. Identify and quantify all water sources to calculate the number of gallons produced by your municipal water system annually. List each source and amount (in gallons) and add the amounts to calculate the total.
B. Identify and quantify all metered uses to calculate the number of gallons of authorized water used. List use and amount to calculate the total.
C. Identify and estimate all authorized unmetered uses. (Include unmetered public buildings, firefighting, main flushing, water quality and other testing.) List use and amount to calculate the total.
D. Calculate unaccounted-for water. Add B and C and subtract the total from A
E. Calculate unaccounted-for water percentage. Divide D by A.
F. Determine how close you are to the industry standard for unaccounted-for water. Subtract 10 from the amount calculated in E.
G. Calculate the value of excess unaccounted-for water. Multiply A and F. Then multiply that result by your current water rate.

Perform a cost-benefit analysis

Now that you know what your current situation costs, you should perform a cost-benefit analysis of different cost savings options.

  • Detailed water audits
  • Meter replacement
  • Better billing and accounting software
  • Infrastructure replacement
  • Better internal controls to adequately measure unmetered usage
  • Reductions to authorized unmetered use
  • Distribution system controls

Take action

Make sure you have adequate information to determine the best course of action.

After eliminating inadequate records and miscalculations, implement control systems to make sure better production and delivery information can guide investment decisions about meter replacements, infrastructure upgrades and other improvements.

Remember to periodically reassess your water distribution system.

Evaluate your water usage reporting and accounting system

You need adequate and accurate records to effectively manage your water system operations. Ensure that your system includes:

  • Controls to avoid mathematical errors in calculating daily gallons produced.
  • Controls to avoid errors in transferring daily production records to monthly reports.
  • Sufficient production records for extended periods of time.
  • Water accounting and billing software that provides annual consumption totals for each customer.
  • Summary format reports about consumption.
  • Correct usage calculations.
  • Adequate records about authorized unmetered use that allow managers to identify and address potential problems.
  • Amounts estimated closely enough to permit managers to detect and correct water system losses.

Maintain timely and reliable information about your water system's production, metered use, estimated authorized unmetered use and estimated water losses in order to monitor and evaluate the effect of your policies and efforts to identify areas needing improvement.

Be sure to also periodically inform the governing board about the information provided by the water accounting system and that it’s acted upon as necessary.


Please read the following audit report: Water Accountability (2015M-300)

Updated 2016