Just to clarify the situation a little further. The water utility is apparently replacing the street mains and it turns out that the non-metallic lines being run may be temporary in nature until the project in that area is completed and they then revert back to the metallic service lines before moving on to the next neighborhood. However, during the interim period which might be a month or longer, the metallic services for all premises within the block(s) affected are apparently being disconnected inside the basement wall between the wall and the water meter in order to allow for the temporary non-metallic water service liens to be connected into the water meter and premise piping. If no other grounding electrode exists connected on the premise side of the water connections, then by isolating the metallic water service, the premise is left with no grounding electrode. True that as long as the electric service grounded conductor (neutral) is intact and not compromised, a problem may not arise or be apparent. However, given the general age and conditions of the area, there is no guarantee that a problem may not exist or some other fault condition arise that having a compliant grounding electrode system might otherwise help in mitigating the risks. Some of the comments alluded to a tendency to place too much faith and emphasis in having an earth ground electrode and from a technical perspective there may be differing views. However, if that is exactly what the code expects and has required for countless editions, then why would one not stand behind those basic requirements.
I have spoken with a very well known and highly respected IAEI instructor within our state whom indicated that similar situations have occurred in other jurisdictions and that the isolation of the premise grounding electrode can be a potentially serious situation which needs to be elevated to higher authorities whom can bring all involved to a mutual understanding and agreement on the matter. To me, the simple solution is for the water utility to maintain a jumper across the open circuit to the existing metallic water service lines as a means of maintaining the intent of the code requirements during the period of temporary arrangements however they have stated that the metallic water service lines should not be used as a premise grounding electrode which is in conflict with both current and past NEC requirements. They are taking a position that because of their work, the premise owner or others should be expected to take on the burden and cost of hiring an electrician to install a new grounding electrode system. Without some sort of regulatory or AHJ mandate, this is not something that most premise owners will either understand or agree with much less be willing to shoulder the permitting and contractor costs that may be associated with doing the work.