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That is common here too. If the area has water shortages or enough people tapped into the aquifer, it is not uncommon for a water district to take over the groundwater management. You pay them for water, but in return, they are responsible for maintaining the aquifer for contamination monitoring and making sure that the water level doesn't decrease too much (otherwise people's well go dry). Around here, many areas have had recharge projects implemented to maintain the groundwater levels since more water is being pumped out than what is going back into the ground. Paying for the water cover that (but it is MUCH cheaper than being on city water!).
As for the water bill...while we haven't left on the water for that long that I can remember, we used to have grass that had to be watered 3 times a day everyday. I am sure it adds up to far more water than what you lost in the 8 hrs. Our bill dropped in the range of $25-$35 a month by replacing our grass with drought tolerant landscaping. I don't think that it will be that big of an increase. I am sure the $200 will cover your entire water bill for the month, plus a few bucks on the following month's bill!