The capacity of Grahamstown Dam will be reduced to 90 per cent following a study that found the dam's walls could break in an earthquake.
The risk assessment was undertaken to ensure the region's largest water storage met modern engineering and safety standards and regulatory obligations.
Hunter Water managing director, Darren Cleary, said the dam continued to operate safely in both normal and flood conditions. However, it was critical to take action to reduce the immediate risk to people and nearby properties.
"In response to the report findings, we'll be slowly reducing the amount of water in the dam over the coming weeks to lower its overall storage to around 90 per cent capacity," he said.
"This means we reduce the amount of water that could potentially be released to low-lying areas downstream of the dam's embankments (walls) if they are damaged in the unlikely event of an earthquake."
The reduced water level would be maintained while Hunter Water Water works through the report's recommendations.
It will also investigate additional short-term mitigation measures, such as reviewing its emergency response plan, as well as developing longer-term upgrades to strengthen the dam walls.
"The safety of our community is paramount. I'd like to reassure our community that the dam continues to operate safely under normal conditions," Mr Cleary said.
"The risk assessment has found the largest risk to the dam walls, or embankments, is an earthquake, or a series of smaller ones close to the dam.
The review estimates that the risk of this occurring to the main embankment is calculated to be a 1 in 3,500-year event, or a 0.03 per cent chance of occurring in a single year.
By comparison, the risk of the Myuna Bay ash dam collapsing was calculated as a 1-in-5000-year event.
The risk was enough to trigger the closure of the Myuna Bay Sport and Recreation Centre.
The Grahamstown Dam risk assessment found the earthquake risk had existed since the dam was constructed 60 years ago.
The use of the latest technology in geotechnical engineering, scientific monitoring and computer modelling has allowed Hunter Water and its technical experts to better understand how the dam might respond to a range of rare events.
Port Stephens mayor Ryan Palmer, who was briefed on the risk assessment earlier this week, said he was surprised there were potential issues with the dam's stability.
"We questioned them about the impact of a drought (on the dam's reduced capacity) but the Belmont desalination plant will come online in the next four years to ensure there is enough water," he said.
"I think they (Hunter Water) are being particularly cautious and are taking all of the necessary steps to ensure the people of Raymond Terrace and Medowie are safe in the unlikely event that something happens."
Residents who live around the dam have been advised of the report's findings and invited to upcoming drop-in information sessions.
"I encourage community members to attend if they would like to find out more about the report or ask questions from our dam safety experts. We've also made available on our website a summary report of the findings, as well as the full version of the risk assessment," Mr Cleary said.
For more information or to view the reports, visit www.hunterwater.com.au/grahamstown
