WaterNSW wants to be granted the permanent right to pump water from Chaffey Dam out of the Peel River, in a future severe drought.
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Installed as an emergency measure in 2020, the 33-kilometre pipeline is designed to extend the supply of water in the dam by reducing the amount of evaporation and other water losses in the river.
The government agency applied for "long-term approval" for the operation of the pipeline, whenever Chaffey Dam drops below 20 per cent full, in July.
"The use of the pipeline will potentially reduce water flow in the river, which may impact the environment downstream of the dam," WaterNSW said, in a report.
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David McKinnon, from the Tamworth Water Security Alliance, said there was no doubt about it that use of the pipeline would come at an environmental cost.
"The thing that comes to mind is this ridiculous word 'possible' impact. That is just a really ridiculous statement, there would be a devastating impact, which has to be measured against the requirement for community water," he said.
"To me all it spells is the chronic need for recycled water, so this event is not going to happen."
Mr McKinnon said he doesn't necessarily oppose use of the pipeline as a last resort, but water authorities need to take steps to improve water security before the next drought takes place.
Irrigators are the other group that can be denied access to water when the river doesn't flow.
Several draw water from the Peel either for household use or to water livestock or irrigate.
But Peel Valley Water Users Association President John Richards said most users of river water wouldn't receive irrigation allocations in such a serious drought anyway.
"I don't think the irrigators would actually oppose the idea of a licence being granted when Chaffey Dam was under 20 per cent," he said.
"Where it might be interesting, and we'd need to understand the implications, would be if they wanted to apply for a licence to use that pipeline at dam levels greater than 20 per cent, which they haven't done."
He said the practice would likely have a "very small impact on commercial irrigation", and households could get potable water from small pools in the otherwise dry riverbed.
"In the native system that river wouldn't flow all the time, anyway," he said.
The 100 gigilitre dam provides most of the potable water for the city of Tamworth.
In an ordinary year, the water simply travels 40km down the river to the Calala Water Treatment Plant, but this costs between 13,000 and 17,000 megalitres per year, according to the WaterNSW document.
"This is equivalent to more than twice Tamworth's annual water demand," it says.
WaterNSW was granted a temporary authorisation to pump water through the pipeline in 2019, and used it for about six weeks in 2020.
In its planning documents, the water authority estimates that a drought severe enough to require use of the pipeline would only take place every 10 or 20 years.
Tamworth Regional Council was approached but declined to comment.
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