What happens to old Dungowan dam, how much water do we get from the new one?

Tamworth Regional Council water director Bruce Logan said early investigations revealed the expanded 22.5-gigalitre dam would increase the city's yearly water capacity by about six gigalitres.

On an average year without water restrictions, Tamworth uses about 10 gigalitres.

Mr Logan said the future of the current dam wasn't clear, but there were some safety issues.

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"One of the reasons the new dam is required is to address some of the safety issues with the old one," he said.

"Just because we are putting a new dam in downstream doesn't immediately rule a line through the safety concerns with the existing dams."

Mr Logan said a number of options had to be investigated, but he was confident the dam would still exist in some form.

"I don't think we will end up with a fully decommissioned dam, it's expensive to decommission a dam if nothing else," he said.

"We may for instance remove the spillway gate, which would reduce the capacity of the dam by half to around 3000 megalitres and we would leave that water in storage for use for the city, or something else."

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It's also possible the current dam is used for a pump hydro scheme. A feasibility study in to the project is underway, which could produce twice as much energy as the Liddell power station.

The new dam will be located about three and half kilometres away from the current one.

When it's full, the edge of the new dam is expected to lap against the wall of the current dam.