Let the original water consumption be $X = Y + Z \quad \to (1),$ where $Y$ is the household consumption and $Z$ is the other consumption.
New water consumption $= 0.75X = 0.8Y + 1.7Z\quad \to (2)$
$(2) - 0.75(1) \implies 0.05Y + 0.95Z = 0$
which means either $Y$ or $Z$ must be negative which is not possible as both of them are consumption amount of water.
So, correct option is D. There are errors in the official’s statement.