Central Alabama Water credit rating downgraded, financial crisis could impact consumers

S&P Global lowers utility's credit rating to AA- amid concerns over aging assets, cash reserves, and management changes

Published on Feb. 11, 2026

Got story updates? Submit your updates here. ›

The credit worthiness of Central Alabama Water, the state's largest water utility, was lowered by S&P Global today from AA to AA-. The rating agency cited the utility's aging assets, lowered cash reserves, and major management and organizational shifts as factors behind the downgrade. The downgrade could affect the utility's ability to borrow money through bonds to fund capital projects, and potentially lead to economic development consequences. Central Alabama Water officials blamed the previous board leadership for the utility's financial troubles, but former board members pushed back, saying they had strengthened the utility's financial position before their departure.

Why it matters

The downgrade of Central Alabama Water's credit rating raises concerns about the utility's long-term financial stability and its ability to fund necessary infrastructure upgrades. This could ultimately impact consumers through higher water rates or reduced service quality if the utility is unable to secure financing for critical projects. The political and leadership changes at the utility also highlight the challenges of managing a large regional water system.

The details

S&P Global placed Central Alabama Water on CreditWatch with negative implications, meaning there is at least a one-in-two chance the rating could be lowered further within the next 90 days. The agency said it will likely withdraw the rating entirely if the utility does not provide requested financial and planning documents within 30 days. Key issues cited include the utility's aging assets, lowered cash reserves, and major management changes after the state legislature seized control from the previous Birmingham Water Works Board in 2025. The current utility CEO blamed the previous board for overspending and failing to address water loss, but former board members disputed this, saying they had strengthened the utility's finances before their departure.

  • On May 2025, the state legislature seized control of the utility and reorganized it into a regional board.
  • In January 2026, the current board replaced the utility's longtime financial advisor, Terminus Municipal Advisors, with Porter White & Company.
  • In September 2026, Central Alabama Water has a $62.7 million debt payment due.

The players

Central Alabama Water

The state's largest water utility, formerly known as the Birmingham Water Works Board, that is now under a regional board after the state legislature seized control in 2025.

Jeffrey Thompson

The CEO of Central Alabama Water, who blamed the previous board leadership for the utility's financial troubles.

Tereshia Q. Huffman

The former chairwoman of the Birmingham Water Works Board, who disputed Thompson's claims and said the previous board had strengthened the utility's financial position.

Larry Ward

The former finance chairman of the Birmingham Water Works Board, who also disputed Thompson's claims about the previous board's management.

Sungho Park

A University of Alabama assistant professor of public policy and administration who conducted an independent analysis of Central Alabama Water's finances.

Got photos? Submit your photos here. ›

What they’re saying

“While this action is serious, it does not come as a surprise to the current management team. We were aware of S&P Global's concerns, had similar concerns of our own and are working to address them.”

— Jeffrey Thompson, CEO, Central Alabama Water (al.com)

“Under our board's leadership, and with the guidance of our financial advisor, Terminus Municipal Advisors, we strengthened the utility's financial position achieving an AA+ credit rating, reducing overall indebtedness, and lowering annual debt service payments.”

— Tereshia Q. Huffman, Former Chairwoman, Birmingham Water Works Board (al.com)

“When our board concluded its service, reserves were fully funded, and we had a comprehensive financing plan in place to address critical infrastructure needs — including improvements to the Lake Purdy Dam and the replacement of aging water lines — without an immediate rate increase and without negatively impacting our credit rating. The subsequent downgrade will ultimately increase costs for customers for years to come.”

— Larry Ward, Former Finance Chairman, Birmingham Water Works Board (al.com)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Central Alabama Water to refinance the $62.7 million debt payment due in September.

The takeaway

The downgrade of Central Alabama Water's credit rating highlights the challenges of managing aging water infrastructure and the importance of sound financial planning. The political and leadership changes at the utility have exacerbated these issues, raising concerns about the long-term stability and affordability of water service for consumers in the region.