I have had this problem. It is a real issue: I have many cities in my region and this has only happened with one of them. I was more than a little frustrating. Fortunately, the fix was easy once I finally figured it out.
I will also mention a separate water issue that frustrated me for a time and then fixed easily; this issue was the water equivalent of 'brown-outs' popping up despite tons of overfunding of water.
Pipes bursting
The city was one of my son's first endeavors so the water was underfunded for a long time, plus the piping was chaotic and overabundant. The whole town needed an overhaul and this occurred as I went at it
I could not 'fund' my way out of it.
I could not add extra pumps or towers to any avail.
THE FIX: on pause, I simply wiped out all the pipes in the city and built new ones. Didn't cost much and the problem is gone.
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Water 'brown-outs'
In one of my premier cities, I started getting small water brown outs, requiring exit without saving or destroying the few affected buildings as they were quickly abandoned.
I had millions of Simoleans so I way overfunded the water. Problem still occurred.
I finally realized I had all my water pumps in one area, and it was across the river from the 'brown-outs'.
Easy fix: put a pump on the far side of the river.
Learned that though one can cluster powerplants, clustering water pumps can lead to the water 'brown-out' issue.
Makes sense as water does need water pressure...
