Governor Mike Easley says local governments should charge higher prices for residents who use more water than necessary.
Easley made the recommendation during a meeting of the North Carolina Drought Advisory Council as a way of curtailing water use.
The governor says a resident's water bill is one reminder of the need to conserve resources.
Easley urged a cut of 50 percent in October and usage dropped about 30 percent but has begun to climb.
The U.S. Drought Monitor report said about two-thirds of the state is under the most intense category called exceptional drought. The rest of the state are in extreme or severe drought.