The Minneapolis water system is losing nearly four times as much water as it told the state just two years ago.

That's a loss of more than 3.1 billion gallons annually, meaning it's water that the city treats but cannot bill to customers. Some of it leaks out of aging pipes, some is used for firefighting and public works, but the city can't say where all of it is going.

Two years ago, the city told the Minnesota Department of Natural Resources in a water-supply plan that it was losing 4 percent of the water pumped into its system. It said that its rate was less than half of the standard set by the DNR and a national trade group.

But according to an internal analysis by city finance officials, released by Internal Audit Director Magdy Mossaad on Wednesday, the real figure is 15.75 percent. That means that bill-paying homeowners and businesses subsidize the cost of treating an extra gallon of water for every six gallons they do use.

The new numbers were calculated by Bernie Bullert, who took over as Minneapolis water chief after the 2009 report was issued.

"My belief is the old figure is not accurate, that there is a mistake in the calculations. That's why I really dug into it," said Bullert, who worked for St. Paul's water utility for 35 years, the last nine as director.

His goal is to lower the city's water-loss figure to 10 percent, the level recommended by the American Water Works Association. That's a tall order, he said, given the age of the city's water system, which began service in 1867. But Bullert recalled that St. Paul cut its loss figure from almost one in every four gallons in the 1980s to under 10 percent.

"I'm doing everything I can think of," he said.

The revised water-loss figures are contained in a city audit of water billings, which Mossaad pronounced in generally good shape. But he also urged that the city keep better track of its water production and use.

For example, the city measures how much water flows into its Fridley and Columbia Heights treatment plants but not how much flows out. By 2012, the city plans to start measuring how much treated water is pumped into the system.

Some of the water loss is inevitable: City crews use the water for fighting fires, flushing hydrants and doing street and sewer work. Mossaad recommended that water officials look into the feasibility of monitoring this use.

Some water is lost to leaks too small yet to detect; larger ones can be detected with listening devices. When there's a leak in the water main, the city often installs a new epoxy lining to seal it. About one-quarter of the city's mains have been relined, but with funding reduced, the job would take another 75 years at the 10 miles per year relining schedule that Bullert hopes to maintain.

Property owners also fix about 300 breaks annually in service lines.

The city is also checking the accuracy of water billings by testing several thousand meters serving large water users. The city has about 98,000 water customers.

Steve Brandt • 612-673-4438