EXHIBIT 2-C

 

California American Water

 

 

Unaccounted-for (Non-Revenue) Water Evaluation

Monterey District

December 14, 2004

 

Background

 

Ordinance No. 92 of the Board of Directors of the Monterey Peninsula Water Management District Establishing an Expanded Water Conservation and Standby Water Rationing Plan, adopted by the District in 1999, requires California American Water’s (Cal Am) unaccounted-for water (UW)  percentage  to be at or below 7 percent for the most recent twelve month period at the time Stage 2 (or higher stage)  Water Conservation Programs are initiated.   If the Monterey District UW percentage is above 7, the ordinance calls for Cal Am to submit a plan to the General Manager to reduce the unaccounted-for water uses and act on the plan.

 

As of July 2004 the most recent 12-month rolling average UW percentage stood at about 9.8 percent.   This paper reviews outlines the actions Cal Am plans to take over the next 12    months to reduce the Monterey District’s UW percentage as much as is economically prudent within industry standards.  

 

Industry Standards in Relation to Monterey District UW Percentage      

 

The 7 percent target Cal Am is currently required to meet per Ordinance No. 92 is significantly lower than the 10 percent generally viewed as the water industry  benchmark for a well-maintained and operated water system.   The 10 percent benchmark was adopted by the American Water Works Association in 1996 through a study conducted by the AWWA Distribution and Operations Divisions Leak Detection and Water Accountability Committee.  Achieving 10 percent UW is also listed a Best Management Practice for water providers in the Memorandum of Understanding Regarding Urban Water Conservation in California (as amended December 11, 2002).  

 

By water industry and California state regulatory standards, Cal Am is maintaining a high level of water delivery efficiency in the Monterey District.  This is especially true when the characteristics of the Monterey water distribution system are considered.  Given these characteristics (discussed in this paper) it will be difficult to reduce and maintain the unaccounted-for water significantly below 10 percent.   This paper discusses the factors thought to most influence the UW percentage in Monterey and recommends specific actions Cal Am plans to take to reduce unaccounted-for water as much as practicable.

 

 

Monterey Historical Unaccounted for Water Percentage

 

Like many municipal water systems, the reported UW percentage for Monterey District has varied significantly from year to year.   The reported UW percentage has varied from as low as 4 percent to 14 percent over the last 15 years.   Annual UW percentages of  less than 7  percent were reported in years prior to 1997 when improved well production meter test and calibration procedures were initiated.  The pre-1997 data is therefore suspect based on inaccurate production meters. 

 

Annual UW percentage can vary considerably over time in an older water system due to:  1) variation in meter accuracy and maintenance cycles on both the production meter and customer meter side of the system,  2) variations in overall water demand and  large customer usage, 3) changes in estimation procedures and reporting for non-metered usage, and other factors.    It is for these reasons that UW percentage is no longer thought to be the best indicator of a utility’s efficiency in minimizing lost water due to leakage and unaccounted-for uses.   The Water Loss Control Manual (2002, McGraw-Hill Books) and American Water Works Association (AWWA) Leak Detection and Water Accountability Committee recommend that annual volume of unaccounted-for water be used as the measure for water accountability efficiency and not UW percentage.

 

To illustrate why UW percentage can be a misleading indicator of a utility’s efficiency, consider two utilities serving a similar number of service connections and population, and  having water mains in similar condition; however, Utility One water demand is 300 gallons per capita per day, with 200 miles of water mains, and Utility Two water demand is 150 gallons per capita per day with 400 miles of water mains (less dense development).   Water losses from leakage from water mains services as a percentage of total water produced for Utility Two would be approximately four times higher than that of Utility One.  When considering the Unaccounted-for water percentage of the Monterey District and appropriate actions to reduce UW, these types of system characteristics must be considered in developing appropriate UW targets, measures, and additional program efforts.   The Monterey system has approximately 680 miles of water mains and 39,000 connections.  The average per capita consumption of approximately 130 gallons per capita per day is on the low end of the spectrum in comparison with other water systems in the California and the semi-arid western states.   Therefore, the same relative degree of system leakage losses will comprise a higher percentage of total water produced than in water systems exhibiting higher per capita water usage.    

 

   

Past Cal Am Efforts to Control Leakage and Unaccounted-for Water

 

A comprehensive leak detection survey of the Monterey system was conducted from December, 2001 through March, 2002 by Worldwide Water Utility Services.   A survey of 67 percent of the 680 miles of water mains in all areas of the service area was completed.   The results of the survey were as follows:

 

1)                  Only 5 non-surfacing leaks were detected.   The total number of leaks detected was 9.

2)                  Total estimated leakage associated with detected leaks was 49,392 gallons per day, which represented a 0.39 percent reduction in unaccounted-for water.

3)                  Potential for non-surfacing leakage in the Monterey system is minimal due to a preponderance soils high in clay.  The Seaside area is most prone to non-surfacing leaks due to more sandy soil conditions.

4)                  Leak problems exist in the Carmel Valley area , but these leaks generally tend to surface within a short period of time.

 

In general, the 2002 leak survey indicated that system loss through undetected leakage is not excessive.  Most leaks in most areas of the Monterey system surface quickly due to the area’s clayey soils, and are repaired quickly.   Currently, Monterey crews repair reported leaks generally within 24 hours.           

 

 

Monterey District Characteristics Influencing Unaccounted-for Water 

 

Age of System -  Some parts of Monterey District’s water distribution system date back to the early 1900s.   Other parts of the system were constructed much more recently (1970s and later).  In general, however, the Monterey system is relatively old by California and Western U.S. standards.

 

Monterey Per Capita Water Use Rate –  In response to the water supply shortages that have faced the Peninsula for a number of years, Cal Am customers have become very efficient in the their use of water.  The District’s per capita use of 130 gpcd is among the lowest usage rates of any community in California.   The declining trend in water use over the last two decades, while good for the community from an overall water resource standpoint, has the effect of increasing the percentage of unaccounted-for water comprised of leakage from mains and service lines, main and well flushing, and fire hydrant testing, and other estimated uses.

 

Flushing of Mains and Wells to Maintain Water Quality – The Monterey District has an abundance of non-looped water mains (dead ends) due to the hilly topography of the District.  These dead ends require frequent flushing to ensure compliance with state and federal drinking water standards.    Groundwater quality challenges in the area require many wells to be flushed to waste after a period of non-use before the water can be piped into the distribution system.   The District has in place estimation and accounting procedures for these non-metered uses.  

 

System Water Pressure -  Leakage rates from water mains and service lines have been shown  to increase with higher water system pressures.   Due to the large differences in elevation of the Monterey service area in comparison to many other utility service areas, approximately 30 percent of the Monterey District routinely experience system pressures in excess of 80 pounds per square inch (p.s.i.).    The average water pressure throughout the system is approximately 75 p.s.i.   

Meter Size in Relation to Customer’s Usage Patterns as it Affects Meter Accuracy – The Monterey system has a relatively large number of residential customers served with 1.5” and 2” meters.  This is in large part due to local City ordinances requiring the installation of residential sprinkler systems that for larger homes, require larger meters.  These meter sizes, while needed in some cases to supply peak customers demands can lead to metering inaccuracies at the lowest ends of the residential use range that are below the range of optimal accuracy of the meter.  In addition, as meter accuracy declines with age and usage, the accuracy of the low end of a meter’s flow range declines first.   The District currently has 910 - 1.5” and 737 -  2” meters, of which a large percentage serve residences.    The majority of these meters have been in the system less than 10 years.

 

For example, AWWA Manual M6 indicates that the maximum accuracy of measurement for a typical 1.5” displacement meter occurs at a flow of approximately 7-10 percent of the maximum rated capacity of the meter or about 8-10 gallons per minute.   A considerable amount of usage inside a residence and outside can occur at flow rates less than this level (e.g. toilet tank fills, and drip irrigation).  Below this flow rate, accuracy in a new meter will decline up approximately 3 percent.   This problem is compounded in meters that have been in service for a period of time.   For 2” displacement meters, flows below 15 gpm have a lower meter accuracy and a considerably larger range of residential uses will occur below the optimal meter accuracy flow rate.    Many of the 2” meters in the system may be compound meters, which would minimize this potential problem.  However, compound meters have a relatively high degree of inaccuracy at the flow rates at which the meter changes from the smaller 5/8” meter to the larger meter (changeover point).  The meter changeover point varies from meter manufactures and models.   Due to the large number of residences having larger meter sizes in the Monterey District, an analysis of  potential unaccounted-for water volumes related meter under-registration of low flows is warranted.

 

Large Meter  Testing Program (3” and larger) -  The District currently contracts with an outside vendor to annually test and repair all meters 3” and larger.   The results of this testing and repair program should be reviewed to determine the effectiveness of the program and whether changes to the program are warranted. 

 

 

Current Cal Am Practices Regarding Unaccounted-for Water Calculations

 

Non-Revenue Water Use Estimates:  Non-Revenue water use is comprised of estimated uses for fire fighting, main and well flushing, fire hydrant testing, unmetered construction uses, other authorized but non-metered water use, and authorized metered non-revenue use.   Currently, the Monterey District estimates and accounts for the following categories of non-revenue usage:

 

1)                  Main flushing 

2)                  Distribution main leaks

3)                  Miscellaneous Production uses (i.e. filter plant backwash water, well    chlorinator use, turbidimeter use, etc.)

4)                  Fire Department usage

5)                  Inadvertent tank overflow

6)                  ASR Test Injection Use

7)                  Filter Backwash - Metered

8)                  Non-revenue metered and unmetered Cal Am accounts

 

The volume of non-revenue use can vary considerably from month to month.  For the 12-month period ending May 2004, the total non-revenue use was 335.4 acre-feet or 2.2 percent of total water produced.   Of this amount, 159.6 AF of water was used in testing the ASR Injection wells during February and March 2004.   When this well usage is backed out of the calculation, the breakdown of the remaining 175.8 AF of non-revenue water is as follows:

 

            Main Flushing                 3.8 AF           3.8 percent

            Distribution Leaks                     45.6 AF          27.2 percent

            Misc. Prod. Uses *                   66.9  AF         37.5 percent

            Fire Dept. Usage                        1.5 AF            0.8 percent

            Tank Overflows               8.3 AF           4.7 percent

            Backwash -metered                   24.3 AF          13.6 percent

            Non-revenue metered               25.1 AF          14.1 percent

 

*Note:  Currently labeled Miscellaneous Leaks on Cal Am forms

 

This breakdown illustrates relative magnitudes of non-revenue water most of which is estimated.    Several trends are apparent.  Fire Department usage and main flushing comprises an insignificant volume of water.  Therefore, efforts to improve estimation procedures in this area will have limited impact on reducing the overall unaccounted-for water percentage.  Estimates of water losses at repaired main breaks and miscellaneous non-revenue uses at production facilities combined averaged about  9.4 AF per month.    Estimation and accounting procedures in this area should be evaluated for potential improvements.          

 

 

On-going Efforts by Cal Am to Reduce Unaccounted-for Water

 

1)         Customer Meter Replacement Program

 

Cal Am has as an on-going residential 5/8” meter replacement program aimed at maintaining an average meter age of 15 years or less.   The District currently replaces 2000-3000 meters per year, depending on budget and staffing constraints that vary from year to year.     In the late 1990’s through 2003, the company replaced most of the older 1.5” and 2” meters, resulting in an average age of approximately 5 years.  The District’s current replacement program for 1.5” and 2” meters of 300 meters per year, is aimed at maintaining an average meter age of 5 years.  

  

 

 2)        Production Meter Testing Program

 

All well production meters are tested twice a year and recalibrated if necessary to ensure maximum accuracy.  This program is critical in tracking variations in production rates due to well clogging and scheduling well maintenance activities.   Therefore, production figures are considered highly accurate.  

 

3)         Main Replacement Program

 

The Monterey District water distribution system in many areas is over 60 years old and in some areas, mains date back to the early 1900s.   One of the mains  prone to leaks is the Carmel Valley transmission main, which transfers water from the various Carmel River production sources to the Monterey Peninsula.  With an overall length of approximately 24 miles, the transmission main starts at the outlet of the San Clemente Dam and ends in the central Pacific Grove, near the Eardley Pumping station.  The transmission main was up-sized to 24-30-in diameter during the 1930-40 era to meet the demands of the Monterey Peninsula.  Material used for pipe construction was primarily high carbon steel.  Later in 1970s and 1980s, Cal Am used cement lining to prolong the life of the transmission main.  Also, a three mile segment of the main, between Ranch Blvd. and Valley Greens Drive, was replaced in 1995. 

 

In 2003, Cal Am initiated a program for the eventual replacement of the maintenance prone sections of the Carmel Valley transmission main.  These sections were prioritized and divided into twelve segments (see table below).  In 2003, an engineering consulting firm was hired to prepare bid packages and obtain permits for the replacement of the first three segments.  Through a construction procurement process, which was initiated in April 2004, Cal Am awarded a contract for replacement of the first and second segments in July 2004.  Schedules and costs for the first two segments to be replaced in 2004 as well as a tentative schedule for replacing other remaining sections are shown in the following table.  A total of $15.6 million is programmed for design and construction through 2009.

 

 

Segment

 

Description

Approx. Length

(ft)

Design Schedule

Tentative Replacement Schedule

 

ROM Cost

1

Delmonte Ranch to Del Fino (east Carmel Valley Village)

6800

2003-2004

2004

$1,982,000

2

Miromonte Rd to Rancho Fiesta Rd

3100

2003-2004

2004

$900,000

3

Self Ridge to Scarlett Rd.

5600

2003-2004

2005

$2,118,000

4

Scarlett Well Rd. to Rancho Fiesta

6000

2005-2006

2007

$1,700,000

5

Los Laureles Grade to Delmonte Ranch

4300

2005-2006

2007

$1,200,000

6

Oak Meadows Ln. to Los Laureles

4500

2005-2006

2007

$1,300,000

7

Robinson Canyon to Top of Snively Hill

1100

2005-2006

2007

$400,000

8

Del Fino to east of Los Tularis where main dives toward Carmel valley Filter Plant

7000

2006-2007

2008

$2,600,000

9

Ranch Blvd. To Hatton Rd.

5300

2006-2007

2008

$1,500,000

10

PP #1 west to Congress Rd

2700

2006-2007

2008

$800,000

11

Tressle at Viscaino Pebble Beach

200

2008-2009

2009

$250,000

12

Cortez PP –Pebble Beach, 300

300

2006-2007

2008

$350,000

13

Improvements near Begonia IRP

2000

2006-2007

2007

500,000

 

 

 

4)         Improvements Related to Monthly and Annual UW Tracking                  Procedures

 

Cal Am management in June/July 2004 initiated an internal review of water accounting practices.   As a result, accounting work flow changes have been made designed to  streamline the process and eliminate the potential for data entry errors.   Further review of non-revenue water use estimation procedures and accounting practices will be conducted per the recommendations below.   

 

 Conclusions/Recommendations

 

The Monterey District’s  unaccounted-for water percentage for the last twelve-month period is currently reported at about 9.8 percent.   The twelve-month rolling average will continue to vary from month-to-month depending on customer demand and other factors.   Due to the inherent variation in unaccounted-for water as a percent, it is recommended that unaccounted-for water tracking on a water volume basis also be done monthly and annually.

 

The UW percentage experienced in the Monterey system can be reduced through improved accounting practices for non-revenue water usage, improved leak detection and repair, and the on-going Cal Am replacement program for aging water mains.  However, the degree to which unaccounted for water can be reduced in the Monterey system through implementation of the recommendations listed below is unknown at this time.   Based on industry standards, the unaccounted-for water percentage is already at a low level given the characteristics of the Monterey system.   Achieving significant reductions in the UW percentage will be difficult.   The benefits of new programs to reduce main leakage, metering efficiencies, and improve non-metered water use estimation procedures must therefore be balanced with cost and the economic impacts to Cal Am ratepayers.

 

Actions that California American Water will consider take over the next 12 months in an effort to achieve further reductions in unaccounted-for water include:

 

1)                  Begin tracking and reporting the monthly and rolling 12-month non-revenue water figures by volume in addition to reporting the figure as a  percentage of total production.   (Already implemented by Cal Am). 

2)                  Conduct an analysis of potential unmetered water deliveries associated with residential and commercial customers having 1.5” and 2” meters due to meter variances at low flow ranges.

3)                  Conduct an analysis to determine to what degree main and line leaks could be reduced by lowering operating pressures in areas of the system that commonly experience pressures exceeding 80 p.s.i. as well as the distribution system modifications required (Initial analysis completed by Cal Am).   

4)                  Conduct a review of the large customer meter testing program results to determine if more frequent testing and calibration of meters is warranted.

5)                  Conduct a review of main break loss estimation procedures to determine if changes are warranted.  Also review well blowoff water use estimation procedures. (Already completed by Cal Am)

6)                  Review estimation procedures for in-plant water uses now labeled as “Misc. Leaks”.   Consider changing this label to more accurately reflect the types of un-metered uses this category represents.  Consider installing meters on higher volume uses.  (Already implemented by Cal Am).

7)                  Contract with a leak detection company to conduct another comprehensive system leak detection survey, focusing on the Seaside area where soil conditions are conducive to leaks not surfacing.   The estimated cost of this effort is $40,000 to $50,000.  Based on past efforts, this project should not be expected to reduce unaccounted-for water more than 0.25 to 0.5 percent. 

8)                  In consultation with the Monterey Peninsula Water Management District, engage an outside expert on un-accounted for water such as representatives of the AWWA Water Accountability Committee, to conduct an independent review of the Monterey system, and current water accounting procedures used by Cal Am.   Objectives of the study would include review of the current Ordinance No. 92 unaccounted-for water standard and gaining consensus with the District on a more appropriate and attainable UW standard for the Monterey system.   An additional objective would be to gain consensus on  appropriate water accounting methods used to arrive at the UW percentage or a volumetric measure of UW.

 

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