Customers of Alabama’s largest water utility could see their bills increase next year. The Central Alabama Water Board of Directors voted Friday to recommend changing its rate structure to a flat fee based on usage.
That would increase monthly bills by up to almost $5 for about 90% of residential customers, according to a presentation by the utility’s financial advisor. The 10% of residential customers who use the most water would see their bills go down – by up to $47.
Board member Jeff Brumlow said of the options the board discussed, he likes a flat rate the best.
“We don't penalize large families,” he said. “It does hurt smaller families some that use less water. They'll pay a little bit more, but it's not a significant amount more.”
Peiffer Brandt, president and CEO of Raftelis Financial Consultants, presented three residential rate-structure options, and then board members asked questions.
One option is to keep the current structure, which has three tiers based on usage, with those who use more paying more per gallon. In addition to the flat-rate option, a third option would feature a minimum charge for all residential customers. That option would lower bills for customers who use the least water while increasing them for those who use more.
Brandt emphasized that changing the rate structure is not the same as changing rates. That discussion will come later. He said all three rate-structure options are revenue neutral – meaning they shouldn’t significantly increase or decrease income for CAW.
But Brandt told the board the flat-rate option would provide greater revenue stability, which the utility needs. It has been facing financial challenges and significantly cut its budget and staff earlier this year.
After the meeting, board Vice Chairman Phillip Wiedmeyer said the flat-rate structure is the most equitable option, and it will improve cash flow and CAW’s financial standing.
“So to me, it's a win-win,” Wiedmeyer said. “It's a win for the customers – everybody's paying the same. And it's a win for the organization.”
CAW Chief Executive Jeffrey Thompson said the move also would benefit the utility by changing from a structure that disincentivizes water use. He said tiered structures like the current one are meant to limit water use in systems where water is scarce. CAW is unusual in that it has plenty of water, he said.
“We are not supply constrained,” Thompson said. “We are not treatment constrained. We have significant excess capacity. We're blessed with that. By having a much higher level at higher usage levels, we are effectively disincentivizing people from utilizing the resources that the utility has.”
The board will decide later this year whether to implement the flat-rate structure. It would go into effect on Jan. 1. The utility’s leaders said they are working to schedule a workshop later this month in which board members will discuss the possibility of a rate increase.
Two board members voted against the new rate-structure recommendation. One of them, Jarvis Patton Sr., said he wanted to discuss the rate structure as well as a rate increase in a workshop before making recommendations.
CAW hires staffing firm to supply temp workers
Also on Friday, the board approved an agreement with Talon Hiring Solutions to provide temporary workers on an as-needed basis for its customer service department.
The utility cut nearly a quarter of its workforce, with layoffs affecting all departments, earlier this year. Its in-person payment center closed as a result.
At Friday’s meeting, Patton repeatedly asked the new human resources director managers introduced whether CAW has sufficient staff.
“Our staffing is based on our baseline needs,” said Carmen Bussey, the HR director. “It's not designed to address the peaks that arise as different things occur within the business. So we thought it would be irresponsible to staff based on the highest possible situation when that's not going to be the case the majority of the time.”
“So your answer is no,” Patton responded.
He later asked how much the temporary-worker service would cost.
Brian Lewis, CAW’s chief people officer, replied there was no fee for the agreement the board approved, but board members have access to a document that breaks down the cost of the temporary employees the utility could use.
WBHM asked a CAW spokesperson for that cost information and has not received it.
“I would also say that this is a recruiting opportunity,” Lewis said. “If we have hard-to-fill roles, they can be our agent.”
He said CAW also works with two other recruiting firms.
