PepsiCo sells bottled water under the brand, Aquafina. (Associated Press)

Water conservation groups say the City of Montreal should increase how much it charges companies to turn its cheap tap water into bottled water for a profit.

Last year, the beverage giant PepsiCo began pumping municipal water into its Pepsi-QTG plant in Ville St. Laurent. The company filters the water and then bottles it under the brand name Aquafina.

The Polaris Institute and Quebec's Coalition Eau Secours said the City of Montreal isn't charging companies like PepsiCo enough money to use municipal water as the basis for its bottled water product.

"They're taking it from my tap and turning it into bottled water at a huge markup. There's a problem with that. That's a joke," said Richard Girard, a researcher at the Polaris Institute, an independent, non-profit group that advocates for clean water in Canada.

According to the City of Montreal, the Pepsi-QTG plant in Ville St. Laurent used a little more than 540 million litres of municipal water in 2009.

The water was used to make not only Aquafina, but also other products including 7UP and Mountain Dew.

According to the City of Montreal, PepsiCo pays about $2 for every 1,000 litres used.

The rate is determined based on the size of the water main to the plant, usage and a top-up fee for being a bulk user.

Coalition Eau Secours president Maryse Pelletier said water is a public resource and should not be sold to companies for profit.

"We want the city to charge a lot more because we as citizens pay for that water, the purification of that water," said Pelletier.

City says water rates are fair

City executive member Alan DeSousa, who also represents Ville St. Laurent on council, sees no problem with how much PepsiCo pays.

"We do charge them what I think is a fair price," said DeSousa, noting that breweries and companies such as Bombardier also fall into the bulk users category.

"These charges are always looked at year after year to make sure we are charging what we believe to be a fair price."

He said PepsiCo's use of Montreal's water should be a source of pride, not controversy.

"I'm thrilled that the City of Montreal's water is being used by companies. If there is one sign of success of good quality water, is that companies are actually taking it and bottling it," he said.

He said if people think bottled water costs too much, they should just drink tap water.

The company also uses local water sources in Mississauga, Ont., and Vancouver, B.C.