Leakage target setting in England and Wales is currently based on Companies' assessments of economically optimal levels of leakage (ELL). ELL is determined at the point where the cost of undertaking a marginal increment of leakage control is equated with the marginal cost of the water saved. Recent work has involved reviewing Companies' ELL methodologies and providing detailed assessments of the variables, which influence both the cost of leakage control and the cost of water. These include the environmental and social costs of both leakage and leakage control, 'background' leakage (or policy minimum), and the natural rate of rise in leakage (NRR). The extent to which leakage naturally grows over time (NRR) is of central importance to a leakage management strategy because leakage management costs are significantly affected by the need to overcome NRR and the level of growth can be an indicator of underlying asset condition.

Recent work includes the monitoring of leakage growth rates in supply zones, in order to gauge how leakage growth varies over time and which key characteristics influence rates of growth. The results of this empirical analysis can then be utilised to generate functional relationships, which will predict leakage growth patterns under a variety of different circumstances. This information will help to more accurately determine the real unit costs of leakage management and economic leakage levels, as well as aiding the achievement of an appropriate balance between CAPEX (asset replacement) and OPEX.

A major component of any Water Company’s balance of inputs and outputs is Unmeasured Domestic Consumption. On-going work involves the use of water-flow measurements and other data, including demographic information, to provide statistical estimates of Per Capita Consumption (PCC). These estimates play an important role in any water-balance process, within company defined ‘zones’, designed to identify possible leakage.