Water Supply and System Loss in Texas

KVUE reported last week that the City of Austin lost 3 billion gallons of water to leaky or broken pipes in 2012 and another 4 billion in 2011 – at the very time Texas was contending with its worst single-year drought on record.

The station quoted a city spokesperson as saying that Austin has hundreds of miles of old pipe that must be replaced; and it noted that Congress is debating legislation that could provide federal financial assistance for water infrastructure upgrades.

In its session earlier this year, as has been widely discussed, the Texas legislature passed numerous bills aimed at shoring up long-term water supplies.  (For big-picture recaps, check out these blog posts from the Texas AgriLife Extension ServiceTexas Renewable Energy Industries, and Public Citizen).  Three of the bills target the sort of water loss that KVUE uncovered – H.B. 857H.B. 1461 and H.B. 3605.

Significant Losses

The amount of water that systems lose can be significant, in Texas and elsewhere.  According to the Environmental Protection Agency, the average American system loses 14 percent of its water due to leaks alone but losses as high as 60 percent have been reported.

In 2009, the Austin American-Statesman said that Austin lost about 14 percent of its water a year.  For Houston, the figure was 13 percent.  In San Antonio and El Paso – routinely hailed as poster children for water conservation – the numbers were lower (8.2 percent for San Antonio, as of 2007, and 9 percent for El Paso, as of 2008).

But smaller systems generally suffer from higher loss rates than large urban systems, and the Texas Water Development Board (TWDB) has acknowledged receiving loan applications from systems with rates as high as 50 percent.  The board concluded from 2010 audit data that the statewide loss rate for that year was 16.7 percent.

Reasons for Losses

Such losses stem from more than aging pipes.  The 2012 State Water Plan defines system loss as “the difference between how much water is put into a water distribution system and how much water is verified to be used for consumption.”  The plan attributes loss to factors like leaks, overflows, broken lines or theft.

In locations with relatively plentiful water, utilities have traditionally opted not to invest materially in system improvements intended to monitor and reduce loss.  But this lost water represents a potential form of supply.  If systems could retain that water, they could bolster total water supplies.  So long as the marginal cost of reducing loss is less than the marginal production cost of water – which is often the case – systems can achieve cost savings by investing in loss prevention rather than new infrastructure.

But water systems often have imperfect information about the magnitude, location and causes of losses.  According to a 2013 Environment Texas study, utilities have “expressed a large degree of uncertainty in their audits regarding all the ways in which they lose water, including faulty meters that undercount consumption by customers, unmetered consumption such as fore firefighting, and unauthorized consumption.”

Existing Water Loss Laws

In the last decade, the legislature has passed several bills intended to overcome this uncertainty and reduce water loss.  The first was H.B. 3338 (2003), which added Section 16.0121 to the Water Code.  It required retail public utilities to perform a loss audit every five years and file it with the TWDB.  (Section 13.002(19) of the Water Code Water Code defines a retail public utility as “any person, corporation, public utility, water supply or sewer service corporation, municipality, political subdivision or agency operating, maintaining, or controlling in this state facilities for providing potable water service or sewer service, or both, for compensation.”)  Additionally, the bill directed the TWDB to develop standard methodologies for conducting the audits.

At the request of the TWDB, the legislature strengthened the audit requirement, in H.B. 3090 (2011).  It mandated that all retail public utilities receiving financial assistance from the TWDB perform and file loss audits every year rather than every five years.  Retail public utilities not receiving financial assistance could continue to perform and file audits every year.  By TWDB’s estimate, there were about 3,600 retail public utilities in Texas at that time, with about 200 receiving financial assistance.

H.B. 857 – Loss Audits

This session, the legislature passed H.B. 857, which further expands the auditing requirement by directing all retail public utilities serving more than 3,300 connections – regardless of whether they receive financial assistance from the TWDB – to perform and file audits every year.  Indeed, the only exemption to this annual requirement is for retail public utilities that serve fewer than 3,300 connections and do not receive financial assistance; and even those utilities must continue to conduct loss audits on a five-year basis.  (As originally introduced, the bill did not include any exemptions.)

Utilities may conduct the audits as paper exercises, and a desktop approach could allow greater imprecision than a field audit.  Still, there is much to be gained from the amendment, which TWDB backed: “TWDB believes that all retail public utilities would benefit from annual water loss surveys.  Municipal water conservation is expected to account for about 7 percent of new water supplies (about 650,000 acre-feet per year) by 2060 in the state water plan.  Measuring – and ultimately addressing – water loss will help achieve those conservation goals.”  The Natural Resources Committee report for the legislation further explained that improved auditing would help utilities to identify and repair losses before they worsen and impose greater costs.

H.B. 3605 – Loss Mitigation

Another bill passed this session – H.B. 3605 – requires that all retail public utilities that lose more water than permitted under a TWDB threshold must put a “portion” of the financial assistance they receive from the TWDB toward loss mitigation.  The bill instructs the TWDB to promulgate regulations regarding loss threshold and mitigation financing but does not set parameters for those regulations.  The threshold for acceptable loss could be as high or low as TWDB sets it.  So could the “portion” of financing that the agency requires to go toward loss mitigation.

(The superstar water bill from the 2013 session – H.B. 4, which would create two funds to provide financial assistance for water infrastructure – requires that a portion of monies be allocated to conservation projects.  To the extent that water loss mitigation is considered a form of conservation, H.B. 4 funds earmarked for conservation could go toward loss mitigation projects.)

H.B. 1461 – Customer Notice

Finally, H.B. 1461 directs TCEQ to adopt a rule requiring that retail public utilities notify their customers of water losses reported in water audits.  The utilities must provide this information with annual consumer confidence reports or with the bills immediately following the filing of water audits.  This disclosure requirement could increase public awareness of system losses and encourage accountability for loss rates.

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