A fixed fee reflects the cost of bringing water to your house, before you turn on the faucet. A fixed fee is charged to cover system costs that occur whether a customer buys one gallon or 1,000 gallons of water. Examples of fixed costs include debt service payments and investments in infrastructure (water and sewer pipes, valves, etc).
The fee is based upon the size of the meter. A larger meter increases the ability to make larger demands on the system, and therefore, costs more.