The first thing I would ask questions about is the meter reading policy. We have seen problems around here when the water company "winged it" meaning they estimated the reading rather than actually going by and reading it. If they were underestimating, then sooner of later they would read the meter and the bill woudl be a catch-up. Finally the city council here prohibited the practice of estimating bills.
Failing that, you have a mystery. Your word against theirs. I would appeal the bill, worst case ask for a 12 month payment plan. Ask them to compromise on the amount. Nose around and see if anyone else in your area has received a surprise bill!