This article begins by discussing a water main extension financing policy presented by the AWWA Committee A3.D – Water Main Extension Policy. The article discusses the fact that an extension‐financing policy must first meet the practical problems of answering reasonable demands for new service and providing future capacity. A way must be found to finance water main extensions that is within the means of the new customer as to cash outlay, and within the means of all customers as to their general water rate. The rate at which new customers are being added is a key consideration. A city with a debt‐free system and a surplus can carry out a more liberal extension policy than that city which triples its customers in 15 years. Many of the larger, older cities had a practically debt‐free system when the boom began, with nearby cheap sources of supply. Availability of primary raw water and the type of service area are important factors. The semiarid Southwest and West face a much more expensive expansion problem than areas of abundant rainfall or prolific groundwater reserves. A sprawled city averaging three houses per acre, each with a green lawn, offers a far more expensive extension problem than row houses. But, in any city which is growing rapidly and requiring extensions, all customers must share partly in the cost of extensions or the cost to individual new customers will be exorbitant. When the extension boom passes, all customers will share in refunds in the form of reasonable water rates.