If ran into a similar issue with "Hey let's conjure up water" while preparing and I plan on handling it as follows:
While Plugg doesn't trust the PCs, he still needs the water. So he sends them on the island to scout for a water source saying something along the lines. "Once you found a good source, report back to me and I'll send some mates to help retrieve it".
He hasn't made up his mind on how to kill them, so this is buying himself some time while at the same time, potentially getting some scouting info on the island before he kills them.