Performance Period Metering

Yes to the latter - If I were in your shoes, I would actually document both ways. Your primary documentation path should be the Option 2 path that is based on your inability to show metered water consumption for July. But you can provide full transparency and really give the reviewer reason to feel confident about your approach by also providing your meter data to date and indicating what you think it tells you about likely consumption rates. But your situation is definitely not uncommon and I wouldn't be concerned about the disconnect between credits being problematic.