According to state officials, dam safety requirements have become stricter since the 54m high dam was constructed in 1979. The main purpose of the dam is to regulate the flow of the Peel river and to augment the water supply to the city of Tamworth.

In February 2004 a contract was awarded to add a 1.8m high concrete barrier to the dam wall. The long-term strategy aims to improve dam safety, environmental outcomes, flood mitigation and water supply reliability. The NSW Government could decide in the future to increase the dam’s current maximum capacity of 62,000Ml. If this occurred, overall dam upgrade costs could exceed $20M.

Tenders have also been called for a hydroelectric power scheme to be built at the dam. It is one of eight new projects being put to tender by the State Government.

Hydro power is already in use on the Styx river on the Northern Tablelands and at Pindari dam near Ashford. Chaffey dam is among the last of New South Wales’ 17 water storages to have been offered power generation capacity.