CA WATER COMMISSION: Update on development of water loss audit regulation, Water Storage Investment Program timeline

With the passage of SB-555 in October 2015, all urban retail water suppliers in the state are required to submit a validated water loss audit annually to the Department of Water Resources (DWR) beginning October 2017.  As a result of the legislation, DWR is developing regulations for the requirements for water loss audits and their submission.

The 9-member Commission is statutorily charged with approving any new regulations developed by DWR, so at the February meeting of the California Water Commission, Todd Thompson with DWR’s Division of Statewide Integrated Water Management briefed the Commission on the development of the regulation.

In 2015, as a result of the passage of SB-555, a section was added to the water code requiring DWR to establish regulations for validated water loss audits.  The statute requires DWR to establish what agencies need to do to perform an audit, what they need to do to validate an audit, who is qualified to validate an audit, to provide technical assistance and to set up a portal to submit reports annually.

The statute also defines a role for the State Water Board, requiring them to set performance standards for losses in distribution systems after two years of data of validated water loss audits.  The Board will also be providing technical support such as training water utility agencies to perform audits and validation; the Board has been working with the California-Nevada section of the American Water Works Association on that.

Urban retail water suppliers with 3000 or more connections, or that purvey and treat water for public consumption of 3000 acre-feet or more, will be required conduct an audit on their distribution system for losses, and perform validation on the audit to make sure the data is good and that the audit reflects their system and their operations.  The agencies will be submitting those audits to DWR for review and for posting on DWR’s website.

Mr. Thompson said there were many reasons to conduct a water loss audit.  “It’s really the first step in a series of steps that lead to benefits,” he said.  “One of them is conservation; water loss audits are the first step to determining where a utility can conserve water on the source water side.  It also can increase revenue by telling the water agency or the utility where they can better account for their money because maybe their meters are not adequately reflecting the water that’s being used, so they can increase the revenues that way.  Or they can reduce their losses so that they can get money for water that they are losing otherwise.”

It can reduce their operations costs by being more loss-minded in trying to mitigate losses as they will have to do less treatment for the water,” he continued.  “It can reduce their liability as leaks can lead to contamination of the water system.  It can also lead to damage to the infrastructure because a leak will excavate itself and sometimes it will damage roadways and buildings.  And of course, just better management of the system will lead to better public confidence in the utility and better infrastructure management.”

A water loss audit looks at what’s going into the distribution system against what’s being used for authorized consumption; the difference is what’s being lost, either through leaks or from apparent losses such as meter errors or water theft.

Mr. Thompson said the statute prescribes that the methodology to be used is the AWWA standard for water loss; there is the technical guidance manual and associated software that is also prescribed in the statute to be used.

He presented an example of a portion of the spreadsheet, noting that you enter the water supplied, the authorized consumption, and the spreadsheet will calculate the water losses.  The spreadsheet can accommodate different units of measure such as acre-feet or millions of gallons per day.

Validation involves a third party looking at the quality of the data.  “They do that by looking at the records on flows, how those are calculated and put into the spreadsheet because there are potential errors there,” said Mr. Thompson.  “They are looking at management practices, interviewing staff, looking at meter calibration records and things like that.  It basically is just a way to determine the accuracy and uncertainty in the audit itself.”

The audit will give a score for data validity; a score of “1” is very low; less than 25% of the sources are metered, the rest of them are estimated; there’s really no calibration going on.  At the opposite end, an “8” means all sources are metered, calibration is done annually, and less than 10% of the meters that they use in their supply systems are plus or minus 5%, which is a fairly tight management system.

In terms of developing the draft regulations, Mr. Thompson said they have the benefit of a very strong statute that was very prescriptive to base the regulations from.  In addition, they held three stakeholder meetings with public and private water utilities represented as well as environmental groups and water associations, like the Cal Nevada section of the AWWA.   They have also had extensive internal review.

Mr. Thompson then went through the structure of the regulation which has seven sections.  The first section is the intent of the regulations.  The second section is definitions to help with the clarity standard for the Administrative Procedures Act.  Third section is when the audits are to be reported and the frequency in terms of the duration; he noted that the water utility can use either use the calendar year or their fiscal year, whichever they choose.

The fourth section is how to conduct validation.  The fifth section states the technical qualifications for the water loss audit validator; he noted that the California-Nevada section of the AWWA is developing a certificate program that eventually will be the qualifications.  The last two sections outline what is required in the reports and what DWR will be doing in terms of reviewing the reports.

In terms of schedule, they expect to have the regulation to the Office of Administrative Law in March, which will start the 45-day public comment period.  The public hearing would then be in April; at the May Commission meeting, they would be returning to the Commission for consideration of the regulation.


Commission staff presented a draft timeline for the Water Storage Investment Program.  The Water Storage Investment Program regulations are currently still under review; they anticipate that process finishing in early March.  At that point, they will open up the solicitation and application period.

Application period
  • The application period is shown in blue on the timeline.  Staff are currently working on a one-pager for prospective applicants, a regulation guide to help the public walk through what’s in the regulations, and application instructions to submit applications online.
  • They will be developing a web portal to post the applications and other documents online for public viewing.
  • They are planning a workshop for March 30th to walk through the application with prospective applicants.
  • After the workshop, they are planning on providing topic-focused webinars to further help applicants with their applications.
  • They will also be compiling FAQs which they will make available online.
Application review period
  • The application review period, shown in pink on the timeline, will be from August to December 2017.
  • It will be a multi-agency complex review process; they are working on an Memorandum of Understanding with CDFW and State Board to define how the review will occur and how all pieces of the review will be incorporated and coordinated.
  • The Commission may be called upon to deal with eligibility issues or other issues that are identified that the Commission will need to make a decision on.
  • They are also looking at ways to streamline the review period, which might include having the applicants come in and make a presentation on their projects.
Commission Decision Process
  • Shown in purple on the timeline; from January to June of 2018
  • Multiple meetings will be required to make all the determinations.
  • The first determination is the final public benefit ratios; staff will put out the public benefit ratios, applicants can appeal, staff will provide a response and then come before the Commission for a determination.
  • Once the public benefit ratios have been determined, staff will give a full technical review with the preliminary scores; then the Commission will determine the final scores.
  • Once the final scores have been determined, staff will bring back preliminary information on the maximum conditional eligibility amounts as laid out in the regulations.  The Commission will then determine the maximum conditional eligibility amounts that will be assigned to the projects.
  • Once the maximum conditional eligibility determinations have been made, the applicants then go and get the requirements that they need according to statute, such as their final permits, their final CEQA documents, the contracts they’ll need for non-public stakeholders, the non-public cost share portion and the agency contracts.  They obtain those documents, and return for the final decision.  This part of the timeline is variable as it’s based on how fast the applicants can gather that information and return.

For more information on the Water Storage Investment Program regulations, click here.


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