So, how does the law lie?

Fergus O Brien of Atkins Water looks at use of illegally taken water

Water taken illegally and unbilled is one of the water delivered components that water companies report each year on line 22 of table 10 of the Ofwat June return. An accurate assessment of each component of the water balance is an important element of water companies' annual reporting process and is crucial for ensuring water balance and leakage calculations are robust.

Water taken illegally and unbilled is not specifically defined by Ofwat but the June Return Reporting Requirements and Definition Manual states: "Illegally taken water should only be reported here (for example, line 22 of the June return) and included in the water delivered total if it is based on actual occurrences, using sound and auditable identification and recording procedures. If it is not based on these it should be classified as distribution losses."

Most water companies have teams and processes in place for identifying and recovering missing revenue. One issue relating to estimating illegal consumption is that, once specific customers are identified, they are either back-charged for the water consumed and/or disconnected from the system.

The volumes can then be legitimately added to the water supplied report and accounted for. However, this information cannot be robustly used to extrapolate an estimate of illegal consumption among all customers unless the customers are randomly selected. In most cases, water company teams focus on specific customers or locations likely to have been undercharged.

As companies approach their economic level of leakage (ELL) it is important they understand the element of water taken illegally and unbilled in the water balance to ensure they are managing their leakage control as efficiently as possible. Water companies have approached estimation of illegal consumption in a variety of ways. Some companies derive estimates of illegal consumption from surveys of non-domestic customers, focusing on issues such as consumption through un-metered fire mains and meter bypasses. Other companies used surveys in order to identify domestic properties missing from their billing file or inappropriately billed.

levels of illegal use Several companies reported volumes of water taken illegally from fire hydrants in the highway and another reported illegal consumption based on a survey of void (empty) properties which showed a large percentage of these could be occupied. Four water companies reported significant levels of illegal use in 2002, accounting for between 0.5-1.2% of distribution input.

Some of the companies which reported levels of illegal consumption, although included in their final water balance, were challenged by Ofwat's reporter. Their concerns often focus on the robustness of the approach taken to estimate illegal consumption in the first place. Issues such as how representative the survey sample is or the assumptions used in the estimation process have been quoted as concerns. It should be noted that not all of these approaches are applicable in every case. For example, some methods of calculating per capita consumption as part of the Table 10 submission may take account of void property consumption automatically.

Atkins is currently providing services in the UK that involve assisting water companies with identifying illegal use in order to generate a robust, auditable figure of estimated illegal consumption. The work starts by grouping customers by type and then surveying a random selection of each group. Site inspections follow and the results reported are used to estimate losses for the entire group. Provided the sample is truly random and large enough, the results can be extrapolated to calculate illegal consumption for all customers in that group, with a statistically defined level of confidence and accuracy.

Stratifying customers into groups or types also means survey teams can concentrate on specific customer types, such as schools and colleges, rather than being tempted to look at specific customers or locations. More importantly, if the survey findings are to be extrapolated robustly to all customers in a particular group, the actual consumption found should be reasonable for the types of customers being surveyed - you should not compare losses found on a major industrial site with those in a hairdressers.


It should be emphasised at this point that water companies may not expect to find many cases of genuine theft.

Many cases are examples of water being used unbilled unknowingly or even where the customer is awaiting some billing action from the company themself. Whether the consumption is genuine theft or not, arriving onto the customer's site and declaring you are looking for water theft is generally unproductive and probably does not fit in with a company's desire to improve its customer service. Taking a more circumspect approach means you avoid irritating customers who are not taking water illegally, find it easier to deal with those who are doing it inadvertently, and will not alert those who are engaged in genuine theft. This approach has worked well for known customers who are being undercharged but it does not take account of customers who are missing from the billing file in the first place. The main random surveys need to be backed up with different approaches. Finally, surveyors involved in such investigations must clearly understand their role is to report what they find.

They should not feel under pressure to manufacture illegal consumption and reporting a clean bill of health for the customers in the group is a positive conclusion. It shows a company they are managing their customer billing well and will help ensure a robust water balance estimate. Most illegal consumption is found as a result of issues such as:

  • properties, typically older, large dwellings that have been converted to multi-occupancy but are still being billed as a single dwelling,
  • unmetered fire mains being used for consumption other than firefighting purposes. Fire mains and firefighting equipment may also be found to be leaking on the customer's premises and if these are to be included in the estimates of illegal consumption, then the surveyor should be clear about what can be classified as consumption and what should be included in 'supply pipe losses',
  • fire hydrant use by highways and jetting contractors without licensed standpipes,
  • meter bypass valves that have been opened or that are passing,
  • properties missing from the billing files,
  • meter installation problems leading to inaccurate meter readings or meters that have stopped functioning,
  • meters that are reported as read but are actually being estimated,
  • old industrial sites with rapidly changing, new or temporary industrial developments,
  • void properties in run-down areas awaiting regeneration that have had their water fittings vandalised.
random checks

Random surveys can be carried out in a variety of fashions. However, the most productive approach appears to be to examine the entire site, check the meter and its log, identify all connections and consider the apparent usage on site compared to the billed volumes. Standard leakage detection equipment has been found to be useful, but surveyors also made use of:

  • digital cameras to record every instance of suspected illegal consumption as they are found,
  • strap-on flowmeters to allow flows to be monitored in specific locations,
  • laptops to allow them to download logger reading,
  • network and site plans.

A spin-off of the surveys has been improving company records, increasing revenue, identifying leaks and picking up cases of customer-side leakage which, although it is metered, may not be logged and may be appearing on the night-line for that DMA. One effect of society changing and developing over the last five-ten years is that the nature of water use has become more complex. This, in turn, means accurate quantification of leakage will become more involved.

For example, assumptions relating to legitimate night use will need to allow for the increased consumption associated with 24-hour working and technology allowing use of water, using devices at times of lower tariffs.

Money invested by water companies providing high-level assistance with the breakdown of the water balance is a valuable investment to ensure instances of legitimate billed or unbilled domestic or commercial use are all accounted for; leakage detection resources are targeted appropriately; the MLE reconciliation is to the required accuracy limits; and that assumptions once made within the water balance to calculate the water balance components are still appropriate.

a successful process

The outcome and success of investigations to identify and quantify illegal use, in itself, is reliant upon a comprehensive understanding of the water balance. The types of use that may or may not be justified depend upon what assumptions are made in the calculation of components such as billed consumption and supply pipe leakage. A robust approach and experienced network of staff, who are able to identify clues on site that suggest that not all the water used is currently accounted for, makes this a successful process



Click a keyword to see more stories on that topic, view related news, or find more related items.


You need to be logged in to make a comment. Don't have an account? Set one up right now in seconds!

© Faversham House Group Ltd 2004. edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.