I have both a well and septic, so I totally get it. But if you are connected to public water or public sewer, which often a municipal monopoly for good reasons, and you have limited other choices, the local government places restrictions on the cost of getting hooked up to public water and sewer if there are no alternatives.

In any case, water and sewer are indeed considered necessities and you are unable to sell or convey a house in the state that I live without a functional water or sewage system, whether on public water/sewer or on well / septic. If you have a non-functioning well or non-functioning septic (outhouses are no longer allowed), then you can't sell your house, and also you are in risk of having your own house condemned. So these are indeed necessities.

They're not considered necessities in the sense that the government has to, in general, provide you with a hookup at a reasonable cost. But, as you say, running water and proper sewage may be a zoning requirement to build a house and live on a property just as a variety of other things may be requirements.

I think you can still call them neccessary, but they just aren't public utilities in rural areas. If you have a well, you still have running water. If you have a septic system, the sewage has somewhere to go.

Right. But the context was a comment to the effect of the government providing them at a reasonable price. Which, as you say, it commonly doesn't in many rural or semi-rural areas.