Upside-Down Logic: compelling water agencies to spend more money conserving ‘paper water’ than real water, requiring meter replacement program that are NOT cost-effective in the real world

If your general manager prefers spending more money to conserve “paper” water than real water, they’ll love the CUWCC staff proposal (see it here).

BMP 3 Section A.3

Section A.3 of the proposal tells us that water agencies must value an acre-foot (AF) of “apparent losses” at their retail water rate ($700 to $1,000 an AF or more).

What are “apparent losses”? basically, this refers to water that was put to beneficial use but not recorded as such. The most common form of “apparent losses” are probably meters that under-read how much water went through them (i.e., they under-read how much water was actually consumed.) For example, if your customers consumed 10,000 AF of water in one year, but due to meter under-reading, you only recorded 9,500 AF consumed, then you had 500 AF of “apparent losses.” These apparent losses are also known as “paper losses” because its not like the water was really lost the way it would have been had the water leaked from a water main - this water was consumed and put to beneficial use by the customer. To put it another way, by reducing meter under-reading, little to no real water is conserved.

BMP 3 Section A.4

The proposed BMP 3 Section A.4 would require water agencies with an ILI (see Problem #1) of 3.0 or greater to use the CUWCC Avoided Cost spreadsheet to see if it would be cost-effective to reduce the paper losses, when those paper losses are valued at the retail rate.

If the CUWCC spreadsheet says that an aggressive meter replacement program would cost less than the paper losses it would eliminate, when those paper losses are valued at the retail rate, then your general manager must implement the more aggressive meter replacement program.

The upside-down nature of the CUWCC staff proposal would force retail water agencies to spend more money “conserving” an AF of paper water than an AF of real water. Go figure.

In summary: by requiring water agencies to place an artificially high value on “conserving” paper water as an input to the CUWCC’s Avoid Cost model, this proposal will likely force some retail water agencies to implement an overly aggressive meter replacement program that is not cost-effective in the real world.

-Matt Lyons, Long Beach Water Department

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This entry was posted on Wednesday, June 4th, 2008 at 11:54 am and is filed under CUWCC Group 1. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.