With regard to the printing of the services of municipally-owned water systems, a detailed presentation and evaluation of the policies and practices is made followed by municipal water utilities and an in-depth analysis of the demand and cost elements of the water pricing problem. Seven recommendations for developing appropriate water rate structures are made. The demand basis for rate structures is criticized as an approach to rate making, and an efficient and equitable method of determining rates with current technologies in which a modified marginal cost basis with rates based upon engineering estimates of peak and off-peak incremental costs is suggested. (WRSIC abstract)