The pipeline went live on Wednesday and state and federal government approvals mean that now no environmental water will be released until the dam reaches 20 per cent.

It has also stopped transmission losses, but, there are still some kinks that need to be worked out.

Five million litres of water that sat stagnant in the pipeline for six weeks while final approvals were signed off will go to waste, and residents can expect that to happen again under the rule that sees the pipeline switched off every time the dam reaches 20 per cent.

Tamworth Regional Council continues to fight for management of the pipeline, water and waste director Bruce Logan said.

"In the future if this is how it is approved long-term, the water won't be sourced through the pipeline very much at all, only in the worst drought conditions," he said.

"It is council's view that it should be used 100 per cent of the time but that's not what the approval says at the moment.

"We will be talking to the NSW government to have that changed over the next four months or into the long-term, because it's a significant expense and we want to get the benefit of it for as long as we can and as often as we can."

The stagnant water could have been avoided if TRC had management rights. It already operates half, but the new section is under the management of WaterNSW.

The council has run tests on the water stuck in the pipeline and found it is unlikely to be salvageable, Mr Logan said.

"What we're saying to whoever operates the pipeline is that if we are going to shut it down for long periods we should drain the pipeline when we shut it down.

"It's unusual for pipelines to sit with no water in them but given this problem we think it's the only way to address it long term."

Environmental water releases will be held when the dam is under 20 per cent, but will still be owned by the state government to release under approval.

At this stage the 3ML that were released daily, regardless of need, will be held in the dam.

When the dam is between 15 to 10 per cent full, 1.5ML will be stored and beyond 10 per cent environmental water could be used for critical human needs.

WaterNSW assets executive manager Ronan Magaharan said he was proud of the work done to deliver the project in record time and within budget.

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"This pipeline represents a commitment to finding solutions to water security issues in our regional areas," he said.

Water security issues have been of grave concern to the Tamworth public, acting mayor Phil Betts said.

"Overall the community is quite concerned, we have been on Level 5 restrictions for quite some time and we've gotten to the end of the tether," he said.

"This news will give a lot more surety of security."