The city wants to impose a 19.25% tariff increase for both water and sanitation services.
This emerged when the council tabled its draft budget for the 2017-2018 financial year yesterday.
Currently, the city gives free water to all households to a maximum of 6,000 litres a month but is now proposing ending the concession.
Only houses valued at R400,000 or less will get free water.
The budget also proposes discontinuing free sanitation services except to properties worth R400,000 or less.
Mayor Patricia de Lille said Cape Town's dams were down to 17.3% usable water.
Mayoral committee member for finance Johan van der Merwe said the drought was one of the major factors the city had to consider when putting together this year's budget.
He said the tariff increases would fall most heavily on Cape Town residents who failed to comply with the city's water restrictions.
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