Tap fees are the charges assessed to install a new water or sewer connection to a municipal or privately owned source. A tap fee is assessed according to the size of the piping connection and whether it is for a residential or commercial application. The larger the pipe size connection, the higher the tap fee will generally be. Tap fees are assessed for both new construction and upgrades to existing connections. Tap fees tend to be extremely expensive, so it is essential the connection is properly sized to avoid being assessed at a fee higher than necessary while still having the necessary pressure and flow rate. Municipalities and privately owned service providers establish their own rates, usually based on the cost it takes to generate the water or extract the sewer. Collected tap fees are put into an account to fund future upgrades and maintenance measures in order to accommodate future customers.