Hunter Water is seeking to double the capacity of the proposed Belmont desalination plant and make other key changes to its design.
Chief executive Darren Cleary said Hunter Water had submitted a modification to its environment impact statement, which, if approved, would allow the plant to produce up to 30 million litres of drinking water a day during extreme drought.
By comparison the existing Sydney desalination plant is capable of producing 250 million litres per day.
"Our investigations into a Drought Response Desalination Plant at Belmont have informed changes we believe offer greater reliability, improved efficiency, technical feasibility and still deliver value for money," said Mr Cleary on Friday.
Hunter Water has also proposed modifications to the plant's seawater intake to incorporate a direct ocean seawater intake system.
The new intake would involve piping seawater from about a kilometre offshore.
"Planning work indicates this system would perform considerably better across relevant criteria, including reliability, efficiency, feasibility and cost, than the originally proposed approach of collecting seawater in wells underneath Nine Mile Beach," Mr Cleary said.
"Our investigations show the increase in plant capacity would have relatively modest environmental impacts which can largely be managed through the design and implementation of mitigation and management measures, while providing additional water security to our region during extreme drought."
Hunter Water describes the plant as an "on-the-shelf insurance policy" that would provide the Lower Hunter with added water security if storage levels dropped to critical levels.
It had previously said the plant would be switched on when water levels dropped to 15 per cent.
It is anticipated the Department of Planning will place the amended environmental impact statement on public exhibition later this year.
Hunter Water is also reviewing the Lower Hunter Water Security Plan.
The revised plan will address risks and opportunities related to population growth, new technology and climate variability.
Two areas which have been identified as potential sites for a new 160 gigalitres dam include Upper Chichester, upstream of the existing Chichester Dam, and Limeburners Creek, east of Clarence Town.
Walsh Point, located in the Port of Newcastle, has been earmarked as a possible site for a future desalination plant.
Consultation about the options will continue throughout this year before a recommendation about the preferred portfolio of options is made to the government next year.
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