Does a citizen in the city have to utilize city water services if they choose to use a well?

No you do not have a right to refuse service. This property belongs to the landlord and only he  can decide whether you can use other services. Since your lease states you must maintain utilities, you must maintain city water and must reimburse your landlord for any expenses incurred by him as a result of your water being shut off. He may need to pay to have it turned on in his name and if he does, it would be considered as it is already a material breach of your lease. He has given you the 7 day notice so to put you on notice to either correct the situation or move. Either way, please keep in mind that should you move out, you would still be held liable for any rents owed in your lease up to the end of the lease unless he finds a new tenant. He must mitigate his damages, so he must attempt to find a new tenant, but until he does, you would be responsible for the monthly rent.