Central Alabama Water cuts 2026 capital budget by 53%, prioritizes urgent dam repairs

Central Alabama Water cuts 2026 capital budget by 53%, prioritizes urgent dam repairsTo avoid rate hikes and build cash reserves, the utility has adopted an austere revised budget that zeroes in on critical vulnerabilities at the Lake Purdy Dam and aging distribution networks that left 53% of treated water unbilled in 2024.

The board approved a revised 2026 capital budget of $34.9 million, down from the originally approved $75.7 million, alongside a $16.1 million reduction in operating expenses.

Approximately $7.7 million is allocated to immediate short-term safety measures at the high-hazard Lake Purdy Dam, where previous construction was halted midstream.

The budget includes $4.2 million for water loss mitigation to address aging galvanized and cast iron pipes.

Capital reductions will be partially offset by $14.5 million in external funding, including State Revolving Fund (SRF) loans expected to close in April.

Central Alabama Water (CAW) has drastically pared back its 2026 spending, approving a revised capital budget of $34.9 million—a 53% reduction from the $75.7 million plan adopted in December 2025. Presented during the board's March 20 meeting, the austere financial plan avoids user rate increases while eliminating 225 positions to achieve $16.1 million in operational savings. The utility expects the revised budget to generate approximately $21.9 million in additional cash flow, ensuring full funding for a $63.8 million revenue anticipation bond payment due September 1, 2026. Despite the broad cuts, the utility is fast-tracking $7.7 million for urgent safety measures at the Lake Purdy Dam. According to an interim report presented by Jacobs Engineering, the high-hazard dam was left vulnerable after a previous construction contract was paused midstream, leaving spillway training walls partially demolished. Stantec has been hired to design short-term restorative measures, including rebuilding the left and right training walls and installing scour mitigation. The contractor is expected to return to the site in late March to resume work. Another major priority preserved in the budget is a $4.2 million allocation for water loss mitigation. The utility's Chief Reliability Officer noted that over 53% of the water treated in 2024 generated no revenue. Funding will target comprehensive leak surveys and the replacement of severely degraded infrastructure, including 225 miles of galvanized steel pipe and 351 miles of unlined cast iron pipe that have far exceeded their expected lifespans. To further aid revenue recovery, the board approved a $766,000 contract extension with Empire Pipe and Supply to replace aging commercial water meters. The $34.9 million net capital expense will be partially supported by an estimated $14.5 million in external reimbursements, including a State Revolving Fund (SRF) loan expected to close in April.