TAMWORTH water bills could increase by "$2000 to $3000 a year" because of the new Dungowan Dam, the state's opposition water spokesman has warned.
Although that figure could be inflated, there will be some increase to water bills, as the NSW government will be forced to recover the cost of the $480-million investment over the coming decades.
Who foots the bill will depends on who owns the dam, opposition water spokesman Clayton Barr said.
If it's the state government, the burden will be shared between irrigators, Tamworth residents and other Dungowan Dam water users. If the government "gifts" the infrastructure to Tamworth Regional Council, it will be forced to increase water rates to cover future maintenance and repair costs.
In December, the Leader revealed the two parties had decided to put a pin in the ownership discussion and instead focus on getting the dam started.
"I think the decision to go ahead without resolving the ownership question is a massive error of judgement for all concerned," Mr Barr said.
"At the very least, they have to depreciate the asset over the next 60 years, which means over the next 60 years, they have to pass on $480 million worth of charges.
"That's a conversation we need to have with people of Tamworth: are you happy to possible have an extra $2000 to $3000 a year on your water bill? That's a massive amount for any household.
"When the wall needs to be rebuilt or repaired in 60 years, council has to be sitting on the repair money needed in 60 years time."
Mr Barr said Peel Valley irrigators already faced some of the highest water rates in the state.
"Historically, mass storage dams have been about 80 per cent funded by irrigators," he said.
"80 per cent of Dungowan is $390 million in cost, fees and charges that will be passed on. That's a really big conversation we need to have, but we can't without resolving the question of who will own the dam."
Mr Barr said the new dam was a "knee-jerk" reaction from a "government desperate for an announcement".
"They've done no homework and failed to be transparent with the people it will impact most," he said.
The Leader asked NSW Water Minister Melinda Pavey if any cost recovery modelling had been done, however she did not respond.
Ms Pavey has promised pre-construction work will start on the new dam by the end of the year and the business case will be completed by 2022.