Water bills across the Birmingham region could climb again in 2027, with Central Alabama Water’s board endorsing a proposed universal base rate for consideration at a future meeting. The change, which utility officials say is needed to stabilize revenue and shore up depleted reserves, would add somewhere between $3.52 and $4.90 to most monthly bills.
The utility, which serves roughly 770,000 customers across five counties, kept rates flat in its 2026 budget and planned a budget revision. As reported by AL.com, Central Alabama Water must approve its 2027 budget by December 15, and CEO Jeffrey Thompson has told the board it should hold a workshop to continue hammering out the rate structure and budget details before that deadline.
Peiffer Brandt, a consultant with Raftelis Financial Consultants, has said the changes are needed partly to stabilize monthly revenue and bolster the utility's reserves, according to the same AL.com report. That financial strain is not abstract: S&P Global downgraded Central Alabama Water's bond rating from AA to AA- in February, placing the utility on CreditWatch Negative and citing weakening liquidity, aging infrastructure, and inherited budget overruns, according to BirminghamWatch. A lower credit rating can push up borrowing costs, pressure that utilities often pass along to ratepayers.
Decades of Rate Hikes Collide With Leaky Pipes
The push for a new rate structure follows a report on Birmingham Water Works' 2001–2024 operations. The report said that more than 53% of treated water in 2024 was not billed — a 129% increase in unaccounted-for water since 2001, according to 1819 News. BirminghamWatch separately reported that roughly 40% of treated water was lost through leaks.
That same report found residential water rates climbed 354% between 2001 and 2024, even as overall inflation rose just 79% over the same period, the outlet reported. Administrative and general expenses also ballooned by 69.5% from 2021 to 2024, rising from $30.5 million to $51.6 million under the utility's previous management.
Birmingham Board Members Push Back on the New Rate
Birmingham Board Members Push Back on the New Rate Not everyone on the board is on board. Jarvis Patton and Sheila Tyson are the Birmingham-appointed representatives. Annual rate increases were already among the chief complaints raised last year about the old utility. Birmingham board members have raised concerns about the restructuring's shift toward suburban representation and transparency; the closed CEO search also drew disputes, according to BirminghamWatch.
Birmingham residents make up over 40% of the utility's customer base but now hold just two seats on the restructured board, a lopsided arrangement that traces back to Act 2025-297. Alabama Governor Kay Ivey signed the law in May 2025, dissolving the old Birmingham Water Works Board and creating Central Alabama Water as a regional utility — cutting the Birmingham City Council's appointments from six seats on a nine-member board down to one seat on a seven-member board, per the Alabama Daily News. State lawmakers pushed the overhaul after years of complaints about management and rate hikes, leaving the new board with greater suburban representation than before.
Layoffs and a New CEO's Pay Package
The board's new leadership structure itself came with a price tag. Under requirements set by the restructuring law, Central Alabama Water's board was required to hire a CEO, and it hired Jeffrey Thompson in November 2025 at an annual contract salary of $446,118.40 — well above what the old utility's general manager made — and Thompson quickly placed senior managers on administrative leave, BirminghamWatch reported.
Months later, in March, the utility eliminated more than 200 positions, laying off roughly 130 employees and cutting 76 vacant jobs in a move that shed nearly a quarter of its workforce. The cuts were intended to trim costs and avoid an immediate 10% rate increase, but they also drew protests from labor union representatives and community advocates in Birmingham.
Looking further ahead, Thompson told board members in June that the utility holds significant excess treatment capacity and is positioning itself to supply water to large industrial customers, including local AI data centers, according to WBHM. Hoodline has previously reported on the Nebius data center that Central Alabama Water is set to supply with roughly 700,000 gallons of water annually, even as households brace for the 2027 increase.
