Fact Sheet: Central Alabama Water Rate-Setting Workshop

The workshop allowed the board to review current and potential rate structures.

For Immediate Release: Friday, May 29, 2026

Notes to media:

• Click here to download a PDF of the presentation.
• Broadcast and print quality charts are available for download at the bottom of the fact sheet.

Quote from Tommy Hudson, Chairman of the Board of Directors
“Our goal is to operate Central Alabama Water as efficiently and effectively as possible for all customers. Today’s workshop helped us have a better understanding of all the components of our current rate structure and what options are available. The goal is for any rate structure to be built from the bottom up and accurately reflect our financial needs and operational trends.”

About the workshop

• Central Alabama Water’s Board of Directors held a rate-setting workshop.
• The workshop allowed the board to review current and potential rate structures.
• The board heard a presentation from Raftelis Financial Consultants. 
• The workshop was an informational session. The board did not take any official action.

Background

• Central Alabama Water (CAW) released historical operational and financial data March 11, 2026.
  • Click here to read the press release.
  • Click here to download a PDF of CAW’s filing on the Electronic Municipal Market Access (EMMA) system.
• The data shows that over the past several years, the volume of water sold decreased (see Figure 1 on page 6 of the filing) while expenses increased (Figures 3 and 5 on pages 7 and 8 of the filing).
• Rate increases lead to increasing revenues (Figure 2 on page 7 of the filing) to cover both capital expenditures and increasing operating costs.
• Revenue increases resulted from rate increases rather than the utility selling more water.
• CAW’s board voted in December 2025 not to raise rates. Click here to read more.
• In March 2026, the board approved revised budgets for 2026 with reduced operating and capital expenditures. Click here to read more.

Current rate structure

• All Central Alabama Water customers pay a fixed charge and a volumetric charge.
• The fixed charge is based on the size of the water meter for all customers.
• Non-residential customers pay a uniform volumetric rate.  
• Residential customers pay volumetric rates based on a three-tier rate structure (inclining block structure). The rate per CCF paid at each tier increases as consumption rises.  
  • Tier 1: 0-3 CCF
  • Tier 2: 3-12 CCF
  • Tier 3: Greater than 12 CCF
• Water usage is measured in CCF which stands for Centum (or hundred) Cubic Feet.
  • One CCF equals 748 gallons.
• From 2019 to 2024, the board increased Tier 2 and Tier 3 rates to a significantly greater extent than the Tier 1 rates:
  • Tier 1: 3.3% per year or 17.5% over six years
  • Tier 2: 10.5% per year or 64.7% over six years
  • Tier 3: 14% per year or 92.4% (almost doubling) over six years
• Tiered rate structures (inclining block structures) are often used by water utilities that have supply constraints.
  • CAW has a surplus supply of water and treatment capacity.
    • 289 million gallons per day of raw water capacity.
    • 189 million gallons per day of treated water capacity.
    • Average daily production of 110 million gallons.
    • Peak one-day demand of 148 million gallons in 2024.
    • Storage tank capacity of 75.2 million gallons.
  • The present residential rate structure disincentivizes the use of water even though CAW has more than enough capacity to meet demand.
• To date in 2026, CAW has sold more water than in the same period in 2025 and revenues are up year over year.
• However, 2026 revenues are below budget to date even though usage is above budget because customers have consumed less water in the highest rate tier than forecast.

Potential rate structures

• The rate structure options presented to the board included:
  • Keeping the current rate structure.
  • Lowering the rate differential between the tiers.
  • Moving residential customers to a uniform rate.

Below charts created in Datawrapper that allow you to view the source data and embed the charts in your website.