SB 555 Water Loss Audit Validation Explained

Every year, California’s urban retail water suppliers file a water loss audit with the Department of Water Resources (DWR). The filing is not just the audit. It is the audit plus a validation, performed by a qualified person, that confirms where each number came from and how reliable it is. Systems that treat validation as a last-minute signature tend to find out in December that their data cannot support the numbers they entered.

This guide explains what SB 555 validation is, who it applies to, what the regulations ask of a validator, and how a system manager can get an audit ready to validate without a scramble.

Where the requirement comes from

Senate Bill 555 (Wolk, 2015) added Section 10608.34 to the California Water Code. It directed DWR to adopt rules for:

conducting standardized water loss audits using the American Water Works Association (AWWA) method in Water Audits and Loss Control Programs, Manual M36, and the AWWA Free Water Audit Software;
validating a water loss audit report before it is submitted;
the technical qualifications of the person doing the validation; and
how reports are submitted to DWR.

The statute defines validating as a process in which the supplier uses a technical expert to confirm the basis of all data entries in the audit and to characterize the quality of the reported data. A validated report must include the name and technical qualifications of the person who validated it.

DWR’s rules for this are the Validated Water Loss Reporting regulations in Title 23 of the California Code of Regulations, beginning at Section 638.

Who has to file

The requirement applies to urban retail water suppliers. DWR describes these as suppliers that serve more than 3,000 connections or produce more than 3,000 acre-feet of water a year.

If your supplier operates two or more separate public potable water systems, the audit is system-specific: DWR requires a separate report for each potable water system (CCR Section 638.5).

Smaller systems below the urban retail threshold are not covered by the SB 555 filing requirement. Many smaller systems still run an M36-style audit because it is the clearest way to see how much treated water is not being billed.

The deadline: January 1, every year

SB 555 originally set an October 1 deadline. AB 1414 (Friedman, 2019) changed it. According to DWR, all urban water suppliers, whether they report on a calendar year or fiscal year basis, submit on or before January 1 of each year, starting January 1, 2024.

Two practical points follow:

Software version matters. DWR states that for calendar year 2022 or fiscal year 2022/2023 reporting and later, it accepts only AWWA Free Water Audit Software version 6.0, together with DWR’s Excel certification templates.
Submittal is through DWR’s WUEdata portal. DWR posts submitted reports publicly so they can be compared across suppliers. Your numbers will be read by people outside your agency.

What a Level 1 validation involves

The regulations require each water loss audit to receive a Level 1 validation (CCR Section 638.3). A Level 1 validation includes an interview with the people who prepared the audit and a review of the completed AWWA Free Water Audit spreadsheet along with supporting documentation.

In practice, the validator works through each input in the water balance and asks three questions:

What is the source of this number? Production meter records, billing system exports, estimates for unbilled authorized use, and so on.
Does the evidence support the value entered? For example, whether production meters have been tested and how meter error was accounted for.
Does the data validity grade fit the evidence? The M36 method grades the reliability of each input. Validation is where grades that are higher than the records can support get corrected.

The Water Research Foundation publishes a Level 1 Water Audit Validation Guidance Manual, which DWR lists as a resource. It is worth reading before your first validation interview.

Who can validate

Under CCR Section 638.4, for reports submitted on or after July 1, 2019, a water audit validator must be an individual certified by the California-Nevada Section of AWWA (CA-NV AWWA) as a water audit validator.

Two rules in that section shape how you plan the work:

Independence. A validator may not validate an audit that he or she helped compile. If one firm prepares your audit, a different certified individual must validate it.
Self-validation is allowed. A supplier may validate its own audit if the person doing the validation meets the certification requirement and did not compile the audit.

CA-NV AWWA runs the Water Audit Validator certification course and maintains a public lookup of certified individuals, so you can confirm a validator’s status before you engage them.

Validation is not the end: performance standards

SB 555 also required the State Water Resources Control Board to adopt water loss performance standards for urban retail water suppliers. The State Water Board says those standards were developed through a rulemaking that became effective in 2023, and it has posted individual system water loss standards (most recently released January 30, 2026).

The State Water Board also requires urban retail suppliers to:

submit a leak registry of breaks, repairs, and estimated water losses every three years. The first registry covers calendar years 2025 through 2027 and is due by January 1, 2029; and
complete system-level questionnaires on data quality, pressure management, and asset management (CCR Title 23, Section 983).

This is why the quality of your validated audit matters beyond the annual filing. The data you file now is the record the state uses when it looks at your system’s losses against its standard. The State Water Board adopted individual water loss performance standards for urban retail water suppliers in 2022 (Resolution No. 2022-0044), so each supplier is measured against a standard of its own.

Common reasons audits are hard to validate

These are the issues that most often slow a validation down. None of them are exotic:

Untested production meters. If source meters have not been tested, the validator cannot support a high data validity grade for water supplied, and every downstream figure inherits that uncertainty.
Billing data that does not match the audit period. Billing cycles that straddle the reporting year need to be adjusted, and the method needs to be documented.
Estimates with no written basis. Unbilled authorized uses such as flushing and firefighting are often estimated. That is acceptable when the method is written down; it is a problem when nobody remembers how the number was produced.
Last year’s grades copied forward. Data validity grades should reflect this year’s evidence, not last year’s spreadsheet.
Starting in December. Validation is an interview and a document review. It needs the people who prepared the audit to be available, and that is hard to arrange in the last two weeks of the year.

A simple preparation timeline

Working back from the January 1 deadline:

Early fall: confirm who will compile the audit and who will validate it, and confirm the validator’s CA-NV AWWA certification is current.
As soon as the reporting period closes: pull production, import/export, and billing data for the period. Gather meter test records.
Before the validation interview: complete the Free Water Audit Software v6.0 workbook and write down the source and method behind every input.
After validation: correct the workbook, complete DWR’s certification templates, and submit through WUEdata before January 1.

Get a quick read on your losses

If you want a starting point before you open the audit software, the free Water Loss Calculator converts your supplied volume and loss estimate into gallons lost per year and per day. The Compliance Deadline Checker shows the January 1 filing alongside your other California deadlines. Both are on the Exodus tools page.

Exodus performs water loss audits using the AWWA M36 methodology, including validation and DWR submittal support. See Water Loss Audit services for how the work is scoped, or contact us to talk through your next filing.

SB 555 Water Loss Audit Validation Explained for California Water Suppliers