Central Arkansas Water CEO Tad Bohannon Keeps Ratepayers Tapped In

by Arkansas Business Staff  on Monday, Mar. 20, 2017 12:00 am  

Tad Bohannon, CEO of Central Arkansas Water of Little Rock (Jason Burt)

Tad Bohannon, born and raised in Dallas, came to Arkansas to attend Hendrix College and, except for a short stint in St. Louis, has been in Arkansas ever since. After practicing law for more than 20 years, Bohannon was unanimously appointed CEO of Central Arkansas Water in January 2016. CAW, the state’s largest public drinking water system, has an annual operating and capital improvement budget exceeding $64 million.

CAW serves more than 400,000 consumers in 18 cities and communities.

CAW recently combined with Maumelle Water Management. Tell us a little about that.

The consolidation is going really well. CAW started construction of the new transmission line to connect with Maumelle earlier this year. The project should be completed by February 2018. CAW assumed operational control of Maumelle’s water system on March 1, 2016. Maumelle customers were facing huge rate increases to pay for system replacements and upgrades. The study done prior to consolidation demonstrated that combining the two systems made long-term economic, water supply and operational sense.

What are the biggest challenges facing CAW?

CAW’s challenges are the same as the rest of the industry. Nationwide, there is a lack of public appreciation for the value of water. Everyone wants clean water; they just don’t want to pay for it. That said, CAW’s rates are some of the lowest in the state and the nation.

CAW has an aging workforce; capturing the depth of knowledge retiring is a daunting task, and recruiting or training skilled replacements is challenging.

There is a shortage of funding for capital improvements, including replacement of aging infrastructure. Much of CAW’s infrastructure was constructed between 1890 and 1960, and it needs to be replaced. CAW must increase the amount of pipe replaced every year to catch up and then stay ahead of the pipe reaching the end of its life cycle. This problem is not unique to CAW or the water industry. CAW is in a better position than many utilities, but we must continue to increase our funding for infrastructure replacement.

CAW’s greatest challenge is finding alternative revenue streams, funding mechanisms or solutions other than raising rates. Most of CAW’s costs are fixed. Therefore, increasing the customer base reduces the pro-rata share of costs and further consolidations benefit all ratepayers.

How long will CAW’s water sources — Lake Maumelle and Lake Winona — be sufficient to supply the utility? Are there plans to tap other sources?

CAW’s existing water sources will suffice for 60 years or more. CAW is finalizing an agreement for Lake DeGray to nearly double our existing water supply. We are always exploring additional water sources to assure sufficient capacity and redundancy to meet our customers’ needs for years to come.

Has the crisis in Flint, Michigan, had any impact on CAW or the water utility industry in general?

Our customers know that CAW provides exceptional water. CAW took steps to the limit the amount of lead within the water long before the EPA adopted the Lead & Copper Rule. Therefore, the crisis in Flint had very little impact on CAW. The crisis has caused us to reaffirm our continuing commitment to public health and outstanding water quality.

How did you get involved in this field?

My first project as a law clerk in 1988 was researching an issue for Little Rock Municipal Water Works. I have been interested in issues faced by municipal water providers ever since. The transition to management occurred fairly naturally as my knowledge increased.

 

 

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