Hunter Water is investigating potential sites for new dams and desalination plants as part of a review of the region's long-term water plan.
Sites at Upper Chichester, and Limeburners Creek, east of Clarence Town, are being explored for potential new dams.
Hunter Water is also investigating the possibility of expanding the size of the proposed desalination plant at Belmont, and building a second desalination plant at Walsh Bay, in the port of Newcastle.
The water authority has released a map identifying a number of potential sites for supply and demand options that have been shortlisted for further investigation, as part of the Lower Hunter Water Plan review.
Hunter Water said it was working with the community and the state government on the review.
The aim is to ensure the region has a sustainable supply of water in the decades to come, as well as during times of drought.
Hunter Water's chief investment officer Darren Cleary said all options were being investigated, with the review now at the stage where potential sites would be explored in more detail.
"We've been through a rigorous process to look at all of the options available to us that could help reduce the amount of water we use and to supplement our existing drinking water supplies," Mr Cleary said.
"We've identified a number of potential sites for further investigation. Aside from continuing to invest in water conservation and leakage reduction, no decisions have been made about which options will be included in the revised plan. It's important we do this work now to understand their technical feasibility, as well as the environmental, social and financial aspects.
"We're considering potential new sources of water to enhance our existing supplies such as dams, desalination, groundwater and water sharing.
"We've worked with the CSIRO using a spatial mapping tool to shortlist possible dam locations. From a list of thousands of potential sites, we've identified two areas for further investigation including one at Upper Chichester, upstream of our existing Chichester Dam, and another at Limeburners Creek, east of Clarence Town.
"We'll also be exploring increasing the size of the proposed desalination plant at Belmont, as well as a potential site for a plant at Walsh Point, located in the Port of Newcastle.
"We'll continue investigating a potential groundwater source known as a palaeochannel below the Tomago Sandbeds and ways to increase our capacity to share water with other regions, including enlarging existing dams outside of our area of operations."
Hunter Water was also looking at ways to reduce demand such as stormwater harvesting for irrigation of playing fields, potential recycled water schemes for use on a range of public facilities and in industry, as well as other water conservation programs, he said.
"The severe drought that we are experiencing reinforces the importance of considering all options for our region's long-term water security. During the life of this plan we will engage with our community to understand their views about indirect potable reuse (adding highly-purified recycled water to our raw water supplies prior to the final water treatment process), as a potential option.
"We're committed to making sure our community is informed and engaged as we investigate the feasibility of all of these options. Over the coming months we'll be working with our new Community Liaison Group, hosting forums and information sessions, and attending public events where our community can learn more about the options,"
For more information about the Lower Hunter Water Plan and options being considered, visit: yourvoice.hunterwater.com.au/water-future