S&P stabilizes Central Alabama Water’s credit outlook

BIRMINGHAM, Ala. (WBRC) - S&P Global Ratings Monday removed Central Alabama Water (CAW) from “CreditWatch Negative” and changed its outlook to “Stable” while affirming its AA- bond rating.

The move comes 3 months after S&P downgraded CAW’s bond rating and placed the utility on CreditWatch Negative over concerns about its “weakening liquidity position, aging assets, coupled with a substantial reorganization of management.”

“CAW’s leadership team is pleased that S&P Global positively acknowledged the actions CAW is taking to improve its financial situation,” said Jeffrey F. Thompson, CEO of Central Alabama Water in a press release. “Difficult decisions were required to move the system in the right direction operationally and we still have a long road ahead to become the system our community and customers deserve. S&P Global’s validation of the actions taken so far is an indication that we are headed in the right direction.”

In its rationale, S&P Global cited the revised operations and maintenance budget and capital budget CAW adopted in March. Both budgets reduced expenditures while meeting the utility’s most pressing needs.

CAW management is scheduled to present its revised budget plan at a board meeting Tuesday.

When S&P Global downgraded CAW’s bond rating in February, it said the action was based on weakening finances at Alabama’s largest water utility that developed over several years. The ratings agency warned at the time it could withdraw its rating of CAW debt completely if the utility did not provide requested documents and information regarding future financial and capital planning within 30 days.

Thompson and a new management team assumed leadership in November and warned the CAW board in December they would be back with significant changes to the 2026 budget in the first quarter.

Since November, the executive team has taken steps to improve the utility’s financial outlook and limit negative impact on customers by reducing operating costs. CAW’s leadership team and board are adhering to a policy of ensuring the system’s operational costs are appropriately managed before considering the implementation of rate increases for residential and commercial customers in the future.

Thompson’s leadership team paused work on the Lake Purdy Dam project after questioning its necessity.

“Every decision at CAW is focused on the long-term best interest of the system and its customers,” Thompson said. “We are proud that S&P Global recognizes the fiscally responsible work our team is achieving every single day for customers across our service area. We look forward to the work ahead and will continue to take steps to improve CAW and provide our customers with the world-class water utility they deserve.”

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