The musical opens with the entrance of Officer Lockstock, a tough-talking beat cop who doubles as the play's narrator. Apologizing for the fact that the show opens with too much exposition, Lockstock explains how a terrible water shortage has crippled the Gotham-like city he serves, forcing the government to outlaw practices which might otherwise waste the precious resource. With the help of the street urchin Little Sally, Lockstock goes on to explain that to conserve water, the citizens must now use the public, pay-per-use amenities owned and operated by Urine Good Company - a private corporation to which the government has assigned this public utility. Citizens who try to circumvent the peeing fee by going in the bushes or some other such place risk severe punishment. Offenders, Lockstock says, are sent to Urinetown, a mysterious place where many have been sent but from whence no one ever returns.
Early morning at the poorest, filthiest urinal in town. Old Man Strong, a poor man, argues with the urinal manager, Penelope Pennywise (also known as Penny). He doesn't have enough money for the peeing fee this morning, and with a crowd of customers behind him clamouring for their turn, he asks Penny to give him a break. Penny refuses. Old Man Strong appeals to his son, Bobby Strong, who serves as Penny's assistant. The law is the law, however, and Bobby finds himself powerless to contradict it. Unable to contain himself any longer, Old Man Strong relieves himself right there on the pavement. Officers Lockstock and Barrel enter and arrest Old Man Strong, hauling him off to Urinetown.
Meanwhile, at the corporate headquarters of Urine Good Company, Caldwell B. Cladwell, the evil president of the urinal monopoly, discusses the timing of the next round of fee rises with Senator Fipp, a corrupt politician who fears the effects Cladwell's pricing policy will have on the population. Their discussion is interrupted by the return of Hope Cladwell, Caldwell's sweet-hearted daughter, just home from university. Cladwell introduces Hope to his staff, welcoming her as the newest employee of the corporation. Taking a moment to bask in the wealth and power they've accumulated, the staff praises Mr. Cladwell even as Cladwell praises himself.
Later that day, having disposed of the troublesome Old Man Strong, Officers Lockstock and Barrel discuss the horrors the trip down to Urinetown entails. Hope arrives on her way home from her first day at the office, and then Bobby joins them, having finished his shift after the late-night rush. After a few words of advice about suspicious appearances, the cops leave the kids to get to know each other. Tormented by his father's recent arrest, Bobby asks the beautiful newcomer for guidance.
Arriving for work the next morning, Bobby is confronted with news of the latest round of Cladwell's price rises. Penny shouts down the protests of her customers (now unable to meet the required fee), commanding them to pay up or step aside. Bobby's mother, also short the required cash, stands before Bobby asking if she'll be turned away, too. Still tormented over having stood by while his father was taken to Urinetown, and emboldened by Hope's words of optimism, Bobby seizes the moment and opens the amenity for the people to pee for free. As Bobby rallies the poor Penny warns Bobby that he ? and everyone ? will surely pay for what he's done.
Back at Urine Good Company headquarters, Cladwell learns of Bobby's insurrection at the urinal. Vowing dire consequences for Bobby and the rebels, he and the police head to the urinal to suppress the uprising.
Once at the urinal, Cladwell orders the cops to sort things out, but not before Bobby can initiate the obligatory Act One Finale. Hope realises her words mistakenly inspired Bobby to start a revolution. Bobby realises Hope is a Cladwell, and the poor realise they're no match for Cladwell's cops; so Bobby kidnaps Hope to allow the rabble to escape the punishment promised by Cladwell.
As the new act begins, Hope is tied to a chair at the underground secret hideout of the Rebel Poor, Cladwell is on the move demanding his daughter's recapture, Bobby is making his way through the city with his mother spreading word of the coming Revolution, and Little Sally barely evades capture by Officer Lockstock.
Hungry for revenge and certain that it's only a matter of time before they're all captured and sent to Urinetown, Hot Blades Harry and Little Becky Two Shoes insist that the rebel poor kill their hostage. Bobby enters, horrified at how vengeful the poor have become. He tries to cheer them with more positive thoughts. Penny arrives with a message: Cladwell is prepared to consider the rebels' demands, he wants to meet with Bobby. Bobby agrees.
At Urine Good Company headquarters, Bobby and Penny arrive to negotiate a settlement to the standoff. Bobby wants to trade Hope's safe release for a total revocation of Cladwell's cruel and oppressive peeing fees. Cladwell refuses, offering instead a large cash bribe to Bobby if he'll convince the rebels to return to the established order. Bobby refuses, so Cladwell orders Bobby's arrest, ordering Officers Lockstock and Barrel to take the troublemaker away to Urinetown. Penny, desperate to protect Hope, reminds Cladwell that this double-cross could mean certain death for his daughter. Cladwell, ever cold-hearted and power-obsessed, dismisses the danger and orders the expulsion anyway.
In spite of her loyalty to UGC, Penny can hardly believe the depth of Cladwell's evil. She wonders why she ever listened to him? Subsequently, Senator Fipp, Hope, and Bobby ask the same question as they ponder their fate at Cladwell's hands. At the same time, Officers Lockstock and Barrel hustle Bobby off to his doom ? a long fall off the roof of UGC headquarters. Bobby realises too late that there is no Urinetown after all. Execution, not exile, has been the fate of those brave enough ? or desperate enough ? to break the town's strict peeing laws.
Back at rebel headquarters, Little Sally recounts Bobby's longing last words for Hope. The poor are at first grieved by Bobby's death, then filled with lust for revenge. As they prepare to do away with Hope, Penny stops them, shocking everyone with the revelation that she is Hope's mother. Hope, deeply moved by this news and disgusted by her father's betrayal, convinces the rebels to let her help them overthrow the despicable Caldwell B. Cladwell.
Under Hope's protection, the rebels make their way through the shattered streets to the headquarters where Cladwell directs the continuing crackdown. Suddenly outnumbered in his lair, Cladwell and his henchmen are overthrown in a stunning coup. Cladwell is led away to his own trip off the roof of the UGC headquarters rooftop, but not before Penny and Cladwell confess their sorrow ? or lack thereof ? for the lives they led.
With the blessing of the battle-weary population, Hope takes control of the monopoly, opening all the amenities to all the people, to pee for free whenever they like, for as long as they like. Her utopia is short-lived, however. Officer Lockstock enters, as he did at the beginning of the show, to explain that Hope's idealism depleted all the water reserves. As evil as Caldwell B. Cladwell was, he had actually effectively rationed the water resources.
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