Global bond rating agency Standard and Poor's has lowered the borrowing rate for the newly-created Central Alabama Water system.Concerns about the public utility's weakening liquidity, aging assets and substantial reorganization of management cited as some of the reasons.Earlier this week, the “CAW's” long-term rating was downgraded from Double-A to Double-A minus.S&P also warned of further cuts within 90 days, if financial transparency is not improved.
Governor Kay Ivey signed the bill that would take control of the water board from the city of Birmingham and moved it to the suburbs and the Governor’s office. Critics complained that the move was racist, since the city was mostly black and the suburbs were mostly white. Birmingham Mayor Randall Woodfin sued over the plan, but a federal judge ruled against an injunction. The move changed the name of the panel from the Birmingham Water Works to the Central Alabama Water board.
Last year, the Associated Press reported how the bill redistributed power from Birmingham city officials — who currently appoint a majority of the nine-person board — to the governor, the lieutenant governor and the surrounding four counties that are also in the board’s jurisdiction. It also reduced the number of board members to seven. Board members approve rate hikes and manage infrastructure projects for the utility’s 770,000 customers.
The state Senate voted unanimously last year to pass the bill, and the House of Representatives approved it along party lines.
“No doubt, this is an important issue to all those residents served by this utility board. The Alabama Legislature overwhelmingly passed SB330, and I was pleased to sign it into law,” Republican Gov. Kay Ivey said in a 2025 written statement.
Proponents of the bill point to frequent rate hikes, old infrastructure and recent scandals. The legislation said that the power transfer will prevent catastrophic events that have happened in cities like Jackson, Mississippi, or Detroit, Michigan.
Opponents say that the restructured board wouldn’t solve the utility’s problems.
“This is a taking of power from the local rate payer by Republican politicians in Montgomery,” Birmingham Mayor Randall Woodfin said in a statement on Wednesday. “We have seen this same thing happen in other cities throughout the southeast. Your water and sewer bill will keep going up.”
Five counties rely on the Birmingham Water Works Board. Over 40% of customers are concentrated in the city of Birmingham, and 91% are in Jefferson County. The new system would give more weight to Jefferson County’s neighboring areas that have only a fraction of the customers, but which house some of the reservoirs that supply the system.
Woodfin and city council members filed a federal lawsuit last year against Ivey, alleging that the legislation “constitutes blatant racial discrimination” because it gives the majority-white suburbs disproportionate influence and takes power away from Birmingham, a majority-Black city where close to half of the utility’s customers live.
Birmingham City Council President Darrell O’Quinn said that the decision exacerbated long-standing tensions in the region.
“Regardless of whether our efforts prevail, the worst, deep-seated fears of the citizens of the City of Birmingham about their suburban neighbors have been confirmed. Old wounds have been reopened. Years of progress have been destroyed,” O’Quinn said.
