Could someone be stealing it? That happened to me at my rental one month. Caught the bastards with a game camera.
Agreed. Boy, if you could prove it, wouldn't that approach felony theft with that amount of money involved?
"Make restitution, or I'll file on you.''
The trouble is, now that they've seen the water company people out there, and you fussing around the meter, they're probably aware that you've spotted the problem and will lay off, at least until next summer.
Don't know the weather out there, but do people drain their pools for the winter? If you can correlate empty-pool / dry pool with low bills / high bills, you might have a start toward proof. Or at least claim you have proof when you approach them for restitution.
If you can provide some kind of evidence, you might approach the water company again with the idea that they forgive the debt because you don't want to go after the neighbor legally, since you're not there, and they might commit vandalism on your property while you're gone. Some folks' minds work that way: "He turned me in, so I must exact vengeance on him."
I'm sure you're not the only one who's been in that boat, so I would ask the water people how they've handled that kind of problem in the past.