How do tap fees typically relate to the cost of connecting new customers to the system?

Tap fees typically relate to the cost of connecting new customers to the system by being set at a rate that usually exceeds the actual connection cost. This is because tap fees are designed to cover not only the immediate expenses associated with the physical connection but also the broader costs of infrastructure development, including maintenance, upgrades, and the expansion of the utility system to accommodate new customers.

By establishing tap fees that surpass the direct connection costs, utility providers can ensure that the existing customers do not bear the financial burden of new connections. This practice helps in generating revenue that can be allocated toward future enhancements and sustainability of the service, thus supporting the long-term viability of the utility system.

In contrast, other options do not align with this typical financial structure. For instance, stating that tap fees exactly equal or are less than the connection cost would imply that new customers are not contributing adequately to the infrastructure and ongoing service needs. Waiving tap fees for new customers is generally not a standard practice, as it would place a disproportionate financial responsibility on existing customers. Hence, the correct option accurately reflects the common approach in utility financial management.