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Uralla's Water Security Study recommends piping treated water from Armidale
Uralla's Water Security Study, released 29 Oct 26, recommends building a pipeline to transport treated water from Armidale. This is viable only if Armidale Regional Council (ARC) obtains external funding for a new water supply from the Oaky river.
Funding for $0.8 billion investment needs convincing Business Case to avoid Dungowan Dam outcome
To obtain this funding, ARC needs a convincing business case. Funding for Dungowan Dam was withdrawn and the project abandoned in 2022 after Infrastructure Australia criticised the business case for not considering non-infrastructure solutions (such as water-saving devices and water charges that encourage conservation).
Business case must consider non-infrastructure solutions, e.g. lower access & higher usage charges to encourage conservation
To maximise the likelihood of obtaining funding, ARC should demonstrate that non-infrastructure solutions have been considered, including implementing fairer charges to encourage conservation. Sydney and Central Coast residents overwhelmingly supported conservation by higher usage and lower access charges. IPART therefore capped residential water access at $228.73 for Central Coast and $96.09 for Sydney.
ARC should do likewise at the earliest opportunity by at least halving access charges and raising the same amount of money from higher usage charges. It should also abandon the paradoxical tariff requiring intensive horticulture to use at least 150 ML this financial year to obtain a 33% discount next financial year while at the same time urging residents to use less water.
Lower access/higher usage charges ease cost-of-living crisis, are fairer, encourage conservation & avoid doubling everyone's water bills if this reduces the cost of a secure supply by 90%
About half ARC's annual consumption 2,400 ML is used by 751 high water users, who (including access charges) pay about $5 per kilolitre (kL), compared to an average of nearly $8/kL for the other 10,000 users consuming the remaining half. As yet, no investigations have been done into whether these 751 users are prepared to pay what it would cost to pipe water from Oaky, which might double their water bills? Or would they consider water saving devices to help them avoid using a lot more water in really dry years than normal years? If the latter, raising the Malpas dam wall could provide a secure supply for decades to come for less than a tenth of the cost, so there's be no need to double everyone's water bills if 90% funding isn't available.
ARC's Water fund has plenty of cash to absorb year-to-year fluctuations
ARC's water fund of $31.571 million – more than enough to absorb any year-to-year fluctuations from lower access and higher consumption charges. In the long run, such charges yield more revenue, especially if consumption approaches the 4,312 ML/year ARC claims we need.
ARC needs fallback plan to first raise Malpas if funding for Oaky not available
With ARC’s water package estimated to cost $800 million, we need a fallback plan in case this large amount of funding isn’t forthcoming. ARC’s planning application should therefore include an option to first raise the Malpas dam wall as stage 1 (estimated to cost $41.1 million in November 2023) and leave Oaky until stage 2.
ARC should release Cost Estimates for all components of construction - repairing Oaky Dam, building the Armidale pipeline, raising the Malpas Dam Wall & extending the pipeline to Uralla
ARC should also release cost estimates for all components of the Planning Application:
1) reinstating Oaky Dam and Hydropower Station, 2) constructing a 54 km pipeline to the Armidale Water Treatment Plant, 3) extending a pipeline to Uralla and 4) raising the Malpas dam wall.
Why this is important
ARC passed a ‘No water, no REZ’ motion on 27 May 2026, hoping to persuade NSW or federal governments to pay for water infrastructure estimated to cost $800 million in August 2026.
Uralla's Water Security Study, released on 29 Oct 26, recommends building a pipeline to transport treated water from Armidale. This option assumes Armidale Regional Council (ARC) will obtain external funding for a new water supply.
In Oct 2026, EnergyCo reported that the REZ would need 95% less potable water than previously thought casting doubt on ARC’s ability to obtain 90-100% funding for its $800 million water package, especially when claimed water needs for Armidale and Guyra of 4,312 ML/year are almost double the maximum of 2,400 ML used in any year since the drought.
ARC’s Planning Application for the new infrastructure includes estimated costs of $290 million for the first stage of the project (listed as: reinstating Oaky Dam and Hydropower Station, constructing a 54 km pipeline to the Armidale Water Treatment Plant, extending a pipeline to Uralla to strengthen regional water security).
The $290 million estimate is surprisingly low, noting ARC’s claim in April 25 that “The estimated cost for the Water Security Package (Oaky Dam restoration, Oaky to Armidale pipeline and the Maplas Dam spillway raising) from Public Works is now in excess of $500 million”. In November 2023, PWA estimated the cost of raising the Malpas dam wall by 6.5 metres at $41.1 million (comprising direct costs of $31.63 million, contingencies of $9.48 million).
Further information is needed about the estimated cost of all components of the work, i.e. 1) reinstating Oaky Dam and Hydropower Station, 2) constructing a 54 km pipeline to the Armidale Water Treatment Plant, 3) extending a pipeline to Uralla and 4) raising the Malpas dam wall (treated as a second stage in the Planning Application).
The secure yield of 3,690 ML per year after raising the Malpas dam wall (under 1 degree of global warming) is 53% greater than our current consumption, which hasn’t exceeded 2,400 ML in any year since the drought.
About half the 2,400 ML is used by 751 high water users, with the remaining 10,000 users consuming the remaining half.
Funding for ARC’s water package could depend on the views of those 751 high water users. Are they are willing to pay the cost of piping water from Oaky, which might double their water bills? Or would they consider water saving devices to help them avoid using a lot more water in really dry years than normal years?
Without a convincing business case including information on willingness-to-pay of the 751 high water users, ARC might not be able to obtain the funding needed for the proposed new infrastructure.
Infrastructure Australia concluded on 5 July 2022 that the benefits of building Dungowan Dam amounted to about 9 cents for every $1 spent. Dungowan’s business case was heavily criticised for not considering non-infrastructure solutions (such as water-saving measures and water charges that encourage conservation). The project was abandoned. Yet 3 weeks earlier, this video from 14 June 2022 shows a NSW Government employee saying there's $600 mill funding from NSW and $675 from the federal government for Dungowan Dam and assuring everyone that the project was still going ahead (04:49).
Secure Water Yields are defined as the amount of water available every year with minimal restrictions (no more than 10% restriction for 6 months out of every 10 years). An example is Run 202 (Yield Studies Report), for Malpas raised by 6.5 metres. If using 5,279 ML/year, more than twice our current use (< 2,400 ML in all years since the drought), Malpas storage would not have fallen below 12,000 ML (~100% of its current capacity) in the 2018/19/20 drought.
Consequently, it would be extremely useful to also model more realistic scenarios with lower consumption in normal years (e.g. current consumption + population growth) plus higher consumption in dry years. Such models might show that Malpas would fill more often than indicated by the secure yield models with constant consumption rates, and that the low cost option of raising the Malpas dam wall might provide a secure supply for many years to come.
With ARC’s water package estimated to cost $800 million, we need a fallback plan in case this large amount of funding isn’t forthcoming. ARC’s planning application should therefore include an option to first raise the Malpas dam wall as stage 1 (estimated to cost $41.1 million in November 2023) and leave Oaky until stage 2.
Consultations by IPART for Sydney Water and Central coast expressed a clear preference with 77% supporting higher usage-based and lower access charges. Residential water access was capped at $228.73 for Central Coast and $96.09 for Sydney.
ARC should implement similar pricing as soon as practical to encourage conservation until we have a more secure water supply. ARC should also abandon the paradoxical tariff requiring intensive horticulture to use at least 150 ML in the current financial year to qualify for a 33% discount next financial year while at the same time urging residents to use less water.
Modelling water needs should also include fairer water pricing to “communicate clearly to customers about the financial and environmental effects of their water usage, encouraging them to use water resources wisely”.
The cost of additional modelling runs with more realistic parameters for normal and dry year consumption and fairer pricing to encourage conservation and is negligible compared with the cost of new infrastructure.
ARC’s Cash & Investment Report to the October 2036 Council Meeting shows the water fund at $31.571 million – more than enough to absorb any year-to-year fluctuations from a lower access and higher consumption charges which, in the long run with return increased revenue, especially if consumption approaches the claimed needs of 4,312 ML/year.
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