A new report released by Central Alabama Water describes the financial and operational catastrophe that the new board inherited from Birmingham Water Works (BWWB), further strengthening the case for the legislation that overhauled the utility.
The report provides an overview of the BWWB operations from 2001 to 2024, prior to the passage of Act No. 2025-297.
"The financial and operating trends help explain why the Alabama Legislature passed and Governor Ivey signed Act No. 2025-297," CEO Jeffrey F. Thompson said in a written statement. "These negative trends over more than 20 years will take time to correct. The report shows the challenges we face as we work to provide our customers a world-class utility."
The report begins with an outline of the legislation, detailing changes to the board's composition as well as requirements for good governance that refocus on responsible fiscal operations that prioritize customers.
There are four key points detailed in the 49-page report that align with the legislation's language.
Since 2001, the amount of treated water not billed to customers has increased 129%. In 2024, more than 53% of treated water was not billed to customers.
This demonstrates increasing leaks in the system, and customers either are not being billed or are being billed for less water than they consume.
Since 2001, residential water rates have increased by 354%, while inflation has increased by 79%.
This demonstrates that revenue increases were driven by rate increases, not by customer growth or consumption.
From 2019 to 2024, the utility's operating margin decreased 27%. In 2024, the dollar impact of the reduction in operating margin from 2019 amounted to approximately $30 million.
The report also highlights that administrative and general expenses, as a component of operating expenses, are noteworthy ($51.6 million in 2024) and have risen by 69.5% since 2021 ($30.5 million in 2021).
The report cites the legislature's second finding, which justified the need for corrective action. Below are the 5 laid out in the bill:
(1) Competent and efficient management of municipal water works boards potable and raw water systems is strategically important to the health, safety, and economic viability of this state and local governments and the well-being of residents thereof.
(2) Failures in the management of water systems lead to unreasonably high rates that oppress residents and are a barrier to economic development that is vital to improving job opportunities.
(3) Failures in the management of water systems may lead to catastrophic events such as those that have occurred in California; Jackson, Mississippi; Richmond, Virginia; and Detroit, Michigan. Such events may prevent hospitals, fire departments, and other emergency services from operating effectively and result in catastrophic loss of life, property damage, and adverse financial consequences.
4) Failures of management are more likely to occur in water works boards described in Section 11-50-300, Code of Alabama 1975, where the power to appoint a controlling number of the members of a board of directors is vested in a municipality whose voting residents comprise a fraction of the individuals served by the municipally controlled water works board.
(5) Transfers of substantial funds by Alabama municipal water works boards to municipalities appointing all or a majority of their board of directors have been approved by the Alabama Supreme Court in defiance of a founding principle of the United States of America that there should be no taxation without representation.
The statement from Central Alabama Water notes that current management is working to stabilize these long-term trends and lay the groundwork for improvement. The revised 2026 budget is scheduled to be presented to the Board of Directors on March 20.
To connect with the author of this story or to comment, email [email protected]
Don't miss out! Subscribe to our newsletter and get our top stories every day or become a member to gain access to exclusive content and 1819 News merch.
