TAMWORTH Regional Council's future stake in Chaffey Dam remains unclear with the water minster brushing aside questions about discontent with the current arrangement.
The council is preparing to make a submission to the Natural Resources Commission's (NRC) review of the Peel water sharing plan which was seen as "flawed" in its current form.
The council's draft submission has labelled the current plan, and the way water from Chaffey was allocated, as flawed.
It also doesn't provide "adequate" water security for the city, according to the council draft.
The new pipeline, which Ms Pavey was in Tamworth to launch, also rated a mention with concerns about who would actually have access to the newly saved water.
The pipeline is aimed at negating "transmission" losses.
"How the water presently stored in the dam for losses but no longer required is dealt with will have serious consequences for the water security of Tamworth," the council's draft said.
Ms Pavey said the water saved by the pipeline would be for "the town".
She said all water sharing plans in NSW would be reviewed in due course.
"We'll go through those processes, we have to finalise and amend all water sharing plans right across the state," she said.
The minister side-stepped questions about whether the council should be entitled to a greater allocation from Chaffey and emphasised the need to expand Dungowan Dam.
"Going forward, I want to secure a better Dungowan storage," she said.
"That's what my focus is on, building a better storage."
Tamworth's councillors will discuss and vote on a submission to the NRC at Tuesday's ordinary meeting.
The report on the submission highlighted what could be a "ludicrous" outcome from the pipeline's construction.
"It would seem ludicrous for the NSW government to spend an estimated $40 million on a pipeline to secure Tamworth's water supply only for the water sharing plan to then erode that security by allocating water previously held for losses to other uses," it said.
Currently, the council needs to release the double the volume of water it needs for the city to account for transmission losses in the river.