Tariffs should be reasonable and affordable, for the people who use these services.
Based on a sliding scale, so that everybody gets the basic amount free, then pay increasingly higher tariff amounts, for the amount of water or electricity they use. These higher-volume tariffs are essential, to cover the free basic supply to those who only use a little, to survive.
Policy to deal with poor households that cannot afford to pay anything
Fair to the municipality, to recover most (or all!) of the costs of providing the service to the people, so that the tariff income can pay for staff salaries, water pipe repairs, and to repay Eskom for their bulk supply of electricity to your municipality.