Wairoa District Council will be seeking compensation from the Eastland Group for the damage caused to the Waiau River.
Council's chief executive Fergus Power said that as a result of the structural failure of the Waihi Dam's sluice gates sediment levels in the river had spiked dramatically.
"Sediment levels approximately 1000 per cent higher than normal were detected in the Waiau River water by [council] staff managing the Wairoa Water Treatment Plant," he said.
It would appear, he said, that the management and directors of Eastland Group initially failed to appreciate the scale and seriousness of the environmental damage caused by this event.
"Because of the increased costs to council and our ratepayers to ensure quality drinking water to our community, we will certainly be seeking compensation and recovering these costs from Eastland Group," he said.
The dam has been discharging silt into the Waiau River since December after a sluice gate was damaged in a storm.
The regional council issued an abatement notice on Christmas Eve and January 6 requiring the gate to be closed but damage prevented this.
Wairoa Council's engineering manager Jamie Cox said the increased turbidity, or high sedimentation, associated with the silt discharge from the Waihi dam was being managed with a chemical to clean the water.
"Despite additional expense we have been able to adequately maintain drinking water storage for the reticulated supply to Wairoa and Frasertown," he said. "The increased costs are ongoing and likely to be in the tens of thousands of dollars per year."
Mr Power said that, regrettably, Eastland Group did not immediately alert the council to the fact it had lost control of the dam.
"Council has a direct interest in this matter as a result of the impact of this event on our community, and due to the fact that the municipal water intake for the townships of Wairoa and Frasertown is located downstream of the dam," he said.
"The impact on our water supply purification process has been costly, with increased expenditure necessary to ensure a drinkable water supply of adequate standard for the community." He said massive sediment discharges to the Waihi stream would inevitably impact upon Wairoa's water supply, as well as upon recreational use of the rivers.
"The company refused to supply council with even the most rudimentary information related to this event, such as a copy of the notification of the event as provided to the [regional council]."
Mr Power and Mayor Craig Little met representatives from the company earlier this month "to outline the steps being taken by Eastland Group to regain control of the dam."
Eastland Group chief executive Matt Todd said he believes the company has managed the Waihi dam appropriately and effectively.
"We are doing all we can to repair the damaged sluice gates, caused by extreme weather last year, in accordance with resources consents from Hawke's Bay Regional Council," he said.
He said an amphibious excavator, one that can be used in wet and dry areas, would arrive on site tomorrow, and suction pumps were in action yesterday.
"Once the build-up of silt and debris is removed from behind the dam, repair work will begin on the gates themselves," Mr Todd said.
"We are focussed on getting the gates fully closed and the dam operational as soon as possible."
He said gabion baskets, a wall made of stacked stones held together with wire, had been installed downstream from the dam.
Mr Power said discharges from the Waihi dam are regulated by the Hawke's Bay Regional Council.
"The [regional council] was contacted and investigations confirmed the dominant source of the excessive contamination of the Waiau river as being the structural failure of the sluice gates of the Waihi dam," he said.