Why do we pay water rates?

The rates you pay for water may seem large. After all, water can be abstracted from the environment free of charge. Why is there a price on water, and which costs do the rates cover?

Two types of rates are charged to consumers: connection fees and those based on water consumption.

When a property joins a water distribution network, a connection fee is charged to cover the installation work and water meter as well as the costs of expanding the water supply network. This explains why the connection fees are relatively large.

Once the property has been connected, the water utility starts charging a basic rate and a metered charge. The basic rate covers the maintenance of the water treatment plant and water distribution network, whereas the metered charge is based on water consumption and covers the costs of turning raw water into tap water and supplying it to the consumer.

Similarly, wastewater charges go towards paying for the costs of organising and providing wastewater services.