Farmers say a tributary feeding the Wairoa River has turned "dark grey and gludgey" and is threatening their animals' water supply.
"Tonnes" of silt was released from the Waihi Dam in the past four months due to a September flood which filled Lake Ruapapa, and damaged the sluice gates at the bottom of the dam, run by Eastland Group.
This then feeds into the Waiau River - which in turn flows into the Wairoa River.
Wairoa farmer Sheena Martin said local residents relied on the river for stock water.
The silt meant pumps of a water scheme shared on the Waiau by four properties to supply stock water were unable to operate, with one pump left "completely destroyed".
"We've got no stock water and our supply water levels are starting to drop", Ms Martin said.
"We've just got our fingers crossed that the weather stays fine ... we may be in quite a lot of trouble."
Ms Martin said: "There's no excuse for them not letting us know to turn the pumps off, they know there's a water scheme here."
Hawke's Bay Regional Council (HBRC) chairman Fenton Wilson said he was still flumoxed how the situation had happened.
Mr Wilson said Eastland Generation (of Eastland Group) operated the dam under a consent and if they were exceeding those conditions they needed to fix any issues "ASAP".
While the HBRC would work with the company, Mr Wilson said: "It is Eastland's issue 100 per cent, they're the guys causing it so they need to fix it.
"There's a bit of a gap between what I think should be happening and what they're doing."
Eastland Group chief executive Matt Todd said the September flood had damaged the sluice gates at the bottom of the dam "to the point where they were unable to operate".
The company was trying to engage specialist dam engineers, but Mr Todd said until these engineers were engaged he could not provide a timeframe in which the gates would be fixed.
"We know we need to fix the problem, and I apologise to any residents who have been inconvenienced."
Mr Todd said they had been trying to fix the problem since September and the silt level was more pronounced now because there were more people around.
After managing to get one gate open in early December the amount of silt going into the Waiau River had increased, but had needed to remain open due to safety issues with the level of Lake Ruapapa.
He said the HBRC would have liked to issue an abatement notice to close the gate, but the two groups had agreed over the holiday period that gate would be kept open.
Mr Todd said they had "spent two and a half months getting the gate open so we were reluctant to close it again."
He said: "I'm not trying to dodge the fact there is silt going into the river system.
"At this time of year there is not much water coming down ... what is coming down is carrying silt."