Hunter Water says it is committed to engaging with the community to determine the best way to secure the region's long-term water supply.
Community engagement began this week for land holders who could be affected if a new satellite dam is built near either Chichester or Grahamstown dam.
A potential new dam is part of a range of options, including a Newcastle desalination plant, expanding the proposed Belmont desalination plant and the increased water recycling that are currently being canvased as part of a review of the Lower Hunter Water Plan.
Consultation will continue throughout this year before a recommendation about the preferred portfolio of options is made to the government next year.
"Our goal is to have a plan that reflects community values. The challenge with something as complex as long-term water planning is that there are a diversity of views in the community," Hunter Water chief investment officer Darren Cleary said.
"It is about exploring those views and understanding what people think. Obviously we have to weigh that up against the social, economic and financial factors associated with the options. But the community views will absolutely be central to that decision making."
The first potential dam site would allow a 230 gigalitre on-river storage to be built upstream of Chichester Dam.
The dam would be filled with flows from Chichester River and serve as a storage expansion of the existing dam.
The other potential site at Limeburners Creek is about 10 kilometres north of Grahamstown Dam.
The site, which could hold 160 gigalitres, is being assessed as a potential off-river storage filled via pumped flows from Grahamstown Dam.
It would provide a supplementary supply during times of extreme drought or, if a direct pipeline to Grahamstown water treatment plant was installed, an alternative supply to Grahamstown Dam.
The sites were identified by the CSIRO as being the most suitable locations for new small water storages in the Lower Hunter.
"We didn't have any active options under consideration. We went back to first principles and engaged the CSIRO... to screen dam options," Mr Cleary said.
"One of the reasons we did that was that we wanted to make sure that we were challenging our assumptions about dam sites, where they would be and to make sure that we did it robustly."
Consideration will also be given to the construction of a desalination plant at Walsh Point in Newcastle or expanding the size of the proposed Belmont desalination plant.
"The Walsh Point site has a number of characteristics that are more favourable in terms of its location in relation to our bulk water assets and power, but we need to do further investigations to weigh up the two sites," Mr Cleary said.
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