Chaffey Dam water releases explained: Environmental releases can continue as part of pipeline deal signed by Water Minister Melinda Pavey

The agreement made with Environment Minister Matt Kean is set out in four stages in a document obtained by the Leader.

While it means there's no mandate to release water when the dam levels drop below 19.9 per cent, the state government's allocation of environmental flows will still be accrued in the dam much like a bank account.

Priority will go to town supplies where drought has an adverse impact, a spokeswoman for Ms Pavey said.

"The regulatory flexibility required to get this pipeline constructed in less than half the time usually required was no simple undertaking," she said.

"The importance of securing Tamworth's water supply could not be delayed.

"Understandably there was much public conjecture about this project, including the manner in which the river could be sustained while the remaining bulk of the dam storage was effectively reserved for town supply."

That water must be released if ordered by the North West Biodiversity Conservation Division (NWBCD) in consultation with the Peel Environmental Water Technical Advisory Group (PEWTA).

The amount of water that can be held back in the account all depends on how little water is left in the dam.

The first trigger point is when the dam is 20 per cent full, when the new multi-million dollar pipeline will be switched off and Tamworth's drinking water will return to the Peel River and be subject to transmission losses.

At that point WaterNSW must make a minimum release of three million litres for the environment everyday, regardless of inflows or recent rain.

When the dam drops between 15 and 19.9 per cent, Tamworth moves into phase two, when the pipeline can be used but the 3ML of environmental water releases are no longer mandatory.

Instead, those 3ML are accumulated in an account up to a maximum of 1095ML per year and must be released whenever the NWCBD orders it at the volume, timing and rate directed.

Emergency water releases can also be made on top of the water that is held in the dam account.

When the water situation at Chaffey Dam grows even more dire, between 10 and 14.9 per cent full, the plan enters phase three.

The environmental water that can be held in the state's account drops from 3ML each day to 1.5ML, with a maximum of 550ML that can be accrued for the year.

At this stage environmental releases can still be let out of the dam if they are ordered by the NWCBD, along with bulk emergency water releases to keep the river alive.

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When the dam level drops below 10 per cent, Tamworth residents will be forced onto a 100L per person, per day limit.

That's phase four, at which point there's no requirement for WaterNSW to accrue environmental water in the dam for the state government, but it must still make an emergency release if one is ordered.

As part of the deal, environmental water that has been accrued but not used can't be transferred from one phase to another as the dam level drops or rises.

That means that at each new stage the amount of water in the state government's account will be 0.

The pipeline authorisation conditions will expire on October 1.