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A 30% discount is currently applied to bills of customers who cut their water usage by at least 20%.
Under the new discount regime consumers who cut back but to a lesser extent will also benefit.
From Thursday, clients who use 10-14.9% less will receive a 10% discount, and those cutting usage 15% or more will be entitled to the 20% rate.
Sabesp will compare usage with average consumption from February 2013 to January 2014, according an Arsesp release.
Bill-payers in state capital São Paulo as well as in 42 other cities and towns are eligible.
As of Thursday, Cantareira – the state's main water supply system – was operating at 3% of capacity. Sabesp is currently boosting levels by extracting more "dead volume" water from the system. The procedure should be completed this month.