Central Alabama Water Crisis: A Deep Dive into Finances, Defamation and Future Stability
Alabama’s largest water utility, Central Alabama Water (CAW), is facing a turbulent period marked by a downgraded bond rating, accusations of financial mismanagement, and a legal battle over public statements. The recent actions by S&P Global Ratings and the subsequent fallout reveal a complex situation with potential long-term implications for the utility and its customers.
The Downgrade and Its Roots
On February 11, 2026, S&P Global Ratings lowered CAW’s long-term rating from ‘AA’ to ‘AA-’ and placed it on CreditWatch with negative implications. This decision stems from “weakening finances” that have developed over several years, coupled with aging assets and a substantial reorganization of management. S&P’s report specifically points to a weakening liquidity position as a key concern. The agency has requested further financial documentation and warned of potential further downgrades or even withdrawal of the rating if information isn’t provided within 30 days.
Blame Game: Former Managers Demand Retraction
CAW’s response to the downgrade, however, sparked a legal dispute. The utility attributed the financial issues to practices under its predecessor organization, the Birmingham Water Works Board (BWB). This prompted a demand for retraction from attorney John Somerville, representing former BWB managers Mac Underwood, Michael Parker, and Barry Williams. Somerville alleges that CAW’s statements were defamatory, falsely blaming prior management for the S&P downgrade. The letter specifically challenges CAW’s claim that the downgrade was directly linked to the previous administration’s financial decisions, stating that S&P’s report does not support this assertion.
Financial Issues: A History of Concerns
According to both S&P Global and CAW, the financial difficulties predate the transition from BWB to CAW. CAW stated that the BWB had consistently exceeded its operating expense budget and allowed unbilled and lost water to accumulate to high levels. These issues were a key factor in the Alabama Legislature passing SB330, which dissolved the BWB and created CAW in November 2025. The reorganization of management, cited by S&P, appears to be a direct consequence of these long-standing financial concerns.
Current Management’s Response and Future Plans
Jeffrey F. Thompson, CEO of Central Alabama Water, acknowledged the S&P concerns but stated that the current management team was aware of them and actively working to address them. Steps taken include pausing the project at Lake Purdy Dam for reevaluation and hiring Jacobs Engineering Group as a consulting engineer, as required by Act No. 2025-297. Management plans to present revised operating and capital expenditure budgets in March, aiming for more fiscally conservative adjustments. The goal is to establish a path toward long-term financial stability.
The Lake Purdy Dam Project: A Point of Contention
The Lake Purdy Dam project has become a focal point in the dispute. CAW’s press release highlighted the pause of the project as a positive step, implicitly criticizing the previous management’s approach. However, Somerville’s letter argues that the former BWB management had a “fiscally responsible plan” to improve aging assets like the dam, which experts have warned poses a risk of failure.
Legal Precedent: A Previous Settlement
This isn’t the first legal challenge for CAW. Somerville previously represented Mark Parnell, the former attorney for the water board, who successfully sued CAW claiming wrongful termination and defamation. That lawsuit resulted in a $2.4 million settlement, suggesting a pattern of legal disputes surrounding the utility’s management and public statements.
Frequently Asked Questions
- What caused the S&P Global downgrade? Weakening finances, aging assets, and a substantial reorganization of management.
- Who is demanding a retraction from CAW? Attorneys representing former Birmingham Water Works Board managers Mac Underwood, Michael Parker, and Barry Williams.
- What is CAW doing to address the financial concerns? Pausing the Lake Purdy Dam project for reevaluation, hiring a consulting engineer, and preparing revised budgets.
- What was the outcome of the Mark Parnell lawsuit? A $2.4 million settlement.
Pro Tip: Stay informed about local utility issues by regularly checking the websites of Central Alabama Water and S&P Global Ratings for updates.
Did you know? The Alabama Legislature intervened to restructure the water utility due to ongoing financial concerns with the Birmingham Water Works Board.
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