This article explores the unfamiliar, but increasingly prevalent problem of overcapacity in urban infrastructure systems in regions subject to dramatic socio‐economic restructuring. Taking the case of water supply and wastewater disposal systems in Eastern Germany as an example, it examines firstly how infrastructure overcapacities have emerged since reunification in 1990 as a result both of sharply declining water consumption in the wake of ‘shrinking’ processes and of infrastructure expansion. Secondly, the article analyses what impact chronic overcapacity is having on the governance of water infrastructure systems. This empirical analysis is framed conceptually in terms of the current debate on the changing relationship between infrastructures and the localities they serve. It assesses specifically how far and in what ways the phenomenon of overcapacity in technical networks resonates with the ‘splintering urbanism’ thesis developed by Stephen Graham and Simon Marvin. It argues that the serious technical and economic problems posed by overcapacity are intensifying spatial disparities in service quality and price, and — more fundamentally — are challenging the supply‐driven ‘modern infrastructural ideal’ of universal and equitable water services.