Performance Contracting Finances Water Loss Reduction Program

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The economic impact of municipal water loss is frequently overlooked but can be significant. The city of Kingsport, Tennessee, is upgrading its water infrastructure with automated metering reading (AMR) and leak detection systems using a performance contract. Over the course of the 17-year performance contract term, the AMR and leak detection systems are expected to generate more than $15 million in savings.

By Craig Hannah

The economic impact of municipal water loss is frequently overlooked but can be significant. It can cause extensive infrastructure damage, deplete natural resources, and waste chemicals and energy used to treat and pump water.

A municipality in the northeast corner of Tennessee’s Tri-City region is taking a cost- and energy-efficient approach to improving its water distribution system. The city of Kingsport is the first municipality in the state to upgrade its water infrastructure with automated metering reading (AMR) and leak detection systems using a performance contract.

In 2008, Kingsport conducted a water audit to account for all of the water supplied by the city utility. The audit revealed that the city was losing approximately 1.2 billion gallons of water annually because of leaks and breaks in its distribution system. City leadership looked to Johnson Controls, an energy services company (ESCO), to help diminish its water losses and create a healthier, greener community.

Water loss is categorized in two ways: real losses and apparent losses. A real loss occurs when water physically escapes from the distribution system and never reaches the end-user. An apparent loss is classified as such when water is delivered to the end-user, but the utility is unable to bill for it. The most common causes for apparent losses include inaccurate water meters, improperly sized and typed water meters, billing system errors, and theft of service. Both real and apparent losses can be mitigated through automated leak detection and AMR and advanced metering infrastructure (AMI) systems.

Since Kingsport installed the new leak detection system, more than 116 distribution line leaks and breaks have been found and repaired.

Performance Contracting

Although implementing a water loss management system offers municipalities environmental, operational and energy cost savings, it’s often an expensive endeavor. To finance these improvements without raising taxes, issuing revenue bonds, or dipping into reserve funds, the City of Kingsport used performance contracting.

The budget-neutral strategy enabled the city to reduce its utility, operational and maintenance costs and its carbon footprint, while using the increase in billable usage and the reduction in operational and maintenance expenditures to fund the upgrades. The ESCO that implemented the water loss management program guarantees the benefits and will repay the city the difference for any benefits that have not been realized.

Over the course of the 17-year performance contract term, the AMR and leak detection systems are expected to generate more than $15 million in guaranteed benefits. Designed to reduce energy costs in public facilities, energy savings performance contracts with qualified ESCOs include engineering services, equipment installation and commissioning.

Leak Detection

To reduce its real water losses, Kingsport installed an automated leak detection system that identifies and prioritizes leaks within the distribution system for repairs without disrupting the municipality’s day-to-day activity. The system identifies leaks and breaks in pressurized water lines by measuring noise and vibration levels that radiate through pipes in the infrastructure. Measurements can be captured because some of the energy from the water is transformed into both an audible noise and a mechanical vibration.

Electronic leak sensors are permanently mounted on service lines upstream of the water meter. The sensors detect leaks by recording vibration frequencies each night between midnight and 4:30 a.m., when system pressure is at its peak, and usage and ambient noise levels are at a minimum.

Leak detection data is transmitted via radio frequency to a mobile collector, then uploaded onto a secure, customized website where it is analyzed by the system manufacturer. Once the data has been analyzed, the website displays a map of the city, labeled with colored balloons that represent the leak status of a particular sensor. A red balloon signifies a probable leak site, a yellow balloon denotes a possible leak site, and a green balloon indicates that no leak is present. This data can be exported into a spreadsheet and sorted according to the severity of each leak. The city uses this information to prioritize the dispatching of leak repair crews to sites.

City crews then use correlators to locate the source of a leak or break to within an approximate three-foot radius. Before repairing a leak site, the repair crew confirms the results of the correlation by using a ground microphone. Using a correlator and ground microphone enables the crew to only excavate a small area, providing for minimal disruption of traffic, the use of fewer resources, and a quicker repair of the leak.

Since Kingsport installed the new leak detection system, more than 116 distribution line leaks and breaks have been found, leading to repairs that now prevent the loss of nearly 1,200 gallons of treated water per minute. The system has been online and operational for nearly 26 months, resulting in annual water, energy and chemical savings that are making a positive impact on the city’s budget.

Kingsport crews use correlators to pinpoint line breaks, which minimizes the size of the repair excavation.

Metering System

With the goal to also minimize apparent water losses, Kingsport replaced its aging, inaccurate water meters with new meters connected to a mobile AMR system. The system virtually eliminates human error by enabling city workers to read meters remotely from their vehicles.

To ensure the distribution and billing systems are in peak operating condition, the ESCO allocates engineers to review Kingsport’s systems data on a quarterly basis. A performance assurance engineer also monitors and analyzes the data, identifying accounts that appear to have either abnormally high or low billed usage, or accounts that generate conditional alarms, which may signify periodic spikes in usage or daily busy periods.

Water Loss Management

While water utility and municipal spending is on the rise, water resources in the U.S. are becoming increasingly scarce. With water becoming a more valuable commodity, it is now more important than ever for municipalities to consider smart water management strategies.

According to a recent survey from the U.S. Environmental Protection Agency (EPA), at least 36 states are anticipating local, regional or statewide water shortages by 2013. At the same time, many municipalities are challenged to perform required upgrades to comply with EPA regulations, conduct necessary infrastructure upgrades to maintain system performance, and ensure needed system enhancements to continue to maximize utility and city services. Funding these system and service enhancements is often the most significant challenge.

Implementing a comprehensive water loss management program through performance contracting provides municipalities with a fiscally responsible way to meet environmental and community goals. As Kingsport demonstrates, the installation of leak detection and AMR systems can help cities and towns realize significant operational and maintenance savings, improve energy efficiency and increase billable water usage. Through achieving significant cost and energy savings, the city is showing other communities around the country the benefits of implementing similar water conservation solutions.


About the Author: Craig Hannah, P.E., serves on Johnson Controls water technology team. Hannah volunteers on the AWWA Water Loss Control and Customer Metering Practices Committees, and his research has been published in numerous industry publications. He earned a Bachelor of Science degree in Aerospace Engineering from Texas A&M University and a Master’s degree in history from Texas Tech University.

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