(a) Definitions. Unless otherwise indicated, in this section the following terms shall have the meanings assigned.      
        (1) Allowed apparent loss--A unique number for allowable apparent loss calculated for each utility.       
        (2) Annual real loss--A unique number calculated for each utility based on the utility's real loss on an annualized basis.       
        (3) Apparent loss--Unauthorized consumption, meter inaccuracy, billing adjustments, and waivers.       
        (4) Average system operating pressure--System operating pressure in pounds per square inch calculated using a weighted average approach as identified in the American Water Works Association M36 Manual.       
        (5) Validation--The process of examining water loss audit inputs to identify and correct inaccuracies in water loss audit data and the application of methodology to evaluate and communicate the uncertainty inherent in water loss audit data.       
        (6) Executive Administrator--The executive administrator of the Board.       
        (7) Mitigation--An action or actions taken by a retail public utility to reduce the amount of total water loss in a system. Mitigation may include a detailed water loss assessment, pipe or meter replacement, or addition or improvement of monitoring devices to detect water loss.       
        (8) Real loss--Loss from main breaks and leaks, storage tank overflows, customer service line breaks, and line leaks.       
        (9) Retail public utility or utility--A retail public utility as defined by Texas Water Code §13.002.       
        (10) Service connection density--The number of a retail public utility's connections on a per mile basis.       
        (11) Total water loss--The sum of a utility's real loss and apparent loss.       
      (b) A retail public utility that provides potable water shall perform a water loss audit and file with the executive administrator a water loss audit computing the utility's system water loss during the preceding calendar year, unless a different 12-month period is allowed by the executive administrator. The water loss audit may be submitted electronically.      
        (1) Audit required annually. The utility must file the water loss audit with the executive administrator annually by May 1st if the utility:                  (A) has more than 3,300 connections; or                   (B) is receiving financial assistance from the board, regardless of the number of connections. A retail public utility is receiving financial assistance from the board if it has an outstanding loan, loan forgiveness agreement, or grant agreement from the board.         
        (2) Audit required every five years. The utility must file the water loss audit with the executive administrator by May 1, 2016, and every five years thereafter by May 1st if the utility has 3,300 or fewer connections and is not receiving financial assistance from the board.       
        (3) The water loss audit must be performed in accordance with methodologies developed by the executive administrator based on the population served by the utility and taking into consideration the financial feasibility of performing the water loss audit, population density in the service area, the retail public utility's source of water supply, the mean income of the service population, and any other factors determined by the executive administrator. The executive administrator will provide the necessary forms and methodologies to the retail public utility.       
        (4) A water loss audit must be performed by a person who has completed water loss audit training developed by the executive administrator. The executive administrator will make such training available without charge on the agency website and may also provide such training in person or by video.       
        (5) Effective January 1, 2025, a utility required to submit a water loss audit annually as described in paragraph (1)(B) of this subsection or that is applying for financial assistance will be required to have its most current water loss audit validated within three months of submittal or prior to consideration of a request for financial assistance from the board. The executive administrator will validate the submitted water loss audit in conference with the retail public utility. Alternatively, the utility may elect to have the water loss audit validated by a person other than the executive administrator. Should a water loss audit be validated by a person other than the executive administrator's staff, validation must follow TWDB's validation guidelines and be performed by a person other than the person submitting the water loss audit, who has completed water loss audit validation training and is certified to conduct such validation.       
      (c) The executive administrator shall determine if the water loss audit is administratively complete. A water loss audit is administratively complete if all required responses are provided, the audit is completed by a person who has been trained to conduct water loss auditing as described in subsection (b)(4) of this section, and the audit has been validated as described in subsection (b)(5) of this section. In the event the executive administrator determines that a retail public utility's water loss audit is incomplete, the executive administrator shall notify the utility.     
      (d) A retail public utility that provides potable water that fails to submit a water loss audit or that fails to correct a water loss audit that is not administratively complete within the timeframe provided by the executive administrator is ineligible for financial assistance for water supply projects under Texas Water Code, Chapter 15, Subchapters C, D, E, F, G, H, J, O, Q, and R; Chapter 16, Subchapters E and F; and Chapter 17, Subchapters D, I, K, and L. The retail public utility will remain ineligible for financial assistance until a complete water loss audit has been filed with and accepted by the executive administrator.     
      (e) The following thresholds shall apply to certain retail public utilities:      
        (1) For a retail public utility with a service connection density more than or equal to 32 connections per mile:                  (A) Apparent loss expressed as gallons per connection per day must be less than the utility's allowed apparent loss.                   (B) Real loss expressed as gallons per connection per day must be less than 30 gallons per connection per day.         
        (2) For a retail public utility with a service connection density less than 32 connections per mile:                  (A) Apparent loss expressed as gallons per connection per day must be less than the utility's allowed apparent loss.                   (B) Real loss expressed as gallons per connection per day must be less than 57 gallons per connection per day.         
        (3) For a utility that has a volume of wholesale water sales that flow through the retail water distribution system:                  (A) Apparent loss expressed as gallons per connection per day must be less than the utility's allowed apparent loss.                   (B) Real loss, expressed as gallons per connection per day and including a wholesale factor that takes into account the wholesale water volume, must be less than the applicable real loss threshold described in subsections (e)(1)(B) or (e)(2)(B) of this section.         
      (f) If a retail public utility's total water loss meets or exceeds the threshold for that utility, the retail public utility must use a portion of any financial assistance received from the board for a water supply project to mitigate the utility's water loss. Mitigation will be in a manner determined by the retail public utility and the executive administrator in conjunction with the project proposed by the utility and funded by the board. On the request of a retail public utility, the board may waive the requirements of this subsection if the board finds that the utility is satisfactorily mitigating the utility's system water loss. The request for waiver should be addressed to the executive administrator and include information about the utility's current or planned activities to mitigate their water loss and their source of funding for that mitigation.     
      (g) The Board will provide technical assistance to retail public utilities to conduct water loss audits required to be submitted to the Board and to apply for financial assistance from the Board to mitigate a retail public utility’s water loss.      
        (1) A retail public utility required to conduct and submit to the executive administrator a water loss audit in accordance with the provisions of this subchapter may request from the Board assistance to:                  (A) conduct a water loss audit as required by this subchapter; or                   (B) apply for financial assistance from the Board to mitigate a retail public utility system’s total water loss, as determined by a recent water loss audit.         
        (2) In complying with the requirements in paragraph (1) of this subsection, the Board may contract with or partner with other entities as permitted by law to conduct the water loss audit of a retail public utility or contract with or partner with other entities to assist with an eligible retail public water utility's application to the Board for financial assistance to mitigate a system's total water loss, as determined by a recent water loss audit.       
      (h) The executive administrator shall prioritize technical assistance offered by the Board according to the criteria identified in Texas Water Code §16.0121(k) including:      
        (1) the water loss audits submitted to the Board;       
        (2) the population served by the retail public utility;       
        (3) the system integrity of the retail public utility as evidenced by the quality of data submitted in its water loss audit; and       
        (4) other relevant factors as determined by the Executive Administrator.       
      (i) The executive administrator shall publicly post on the Board's official website a summary of:      
        (1) the information included in the water audits required by Texas Water Code §16.0121(b) and §16.0121(b-1) according to category of retail public utility and according to regional water planning area;       
        (2) the measures taken by retail public utilities to reduce water loss; and       
        (3) a list of those retail public utilities receiving technical assistance as established under subsection (g) of this section, including details related to use of the Board's financial assistance to mitigate a retail public utility's total water loss.       
     Source Note:        The provisions of this §358.6 adopted to be effective December 6, 2004, 29 TexReg 11366; amended to be effective February 15, 2012, 37 TexReg 708; amended to be effective February 12, 2014, 39 TexReg 769; amended to be effective December 10, 2014, 39 TexReg 9592; amended to be effective May 25, 2016, 41 TexReg 3743; amended to be effective February 14, 2018, 43 TexReg 777; amended to be effective March 1, 2023, 48 TexReg 1134; amended to be effective November 30, 2023, 48 TexReg 6919