No two cities are the same. There are many factors that impact the cost of providing municipal water, such as the age of the system and the availability of surface water. Rates can only be set to reflect each system's costs of providing the water and related services.
Unlike a private water company, there are no profits generated in a municipally owned system. Revenue from the rates collected by the City cannot be used for unrelated expenses, such as costs of police, fire, or parks. The individual fees that are charged must be representative of the services received. This means one category of customers cannot pay for higher costs associated with a different set of customers.