"The impact on our water supply purification process has been costly, with increased expenditure being necessary to ensure a drinkable water supply of adequate standard for the community," said Mr Power.
Wairoa council engineering manager Jamie Cox said discolouration caused by high sediment levels because of the silt discharge from the dam was being chemically managed.
"Despite additional expense, we have been able to adequately maintain drinking water storage for the reticulated supply to Wairoa and Frasertown.
"The increased costs are ongoing and likely to be in the tens of thousands of dollars per annum."
Mr Cox said silt from the dam is in the waterway so may continue to be washed down after the sluice gates are closed.
It was difficult to estimate how long that would continue, but the council's monitoring system would show when water quality returned to normal, he said.
Mr Power said he was disappointed with how the dam's owners had initially dealt with the spill.
He says Eastland Group did not immediately tell the council it had lost control of the dam or that "massive sediment discharges" would affect Wairoa's water supply and recreational use of the rivers.
"The company refused to supply the council with even the most rudimentary information."
He said he and Mayor Craig Little met with Eastland executives, who did not "appreciate the scale and seriousness of the environmental damage" the spill caused.
"Because of the increased costs to the council and our ratepayers to ensure quality drinking water to our community, we will be seeking compensation and recovering these costs from Eastland Group," Mr Power said.
However, Eastland Group chief executive Matt Todd said he believed the company has managed the Waihi dam appropriately and effectively but had had no no test results from the district or regional councils.
"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."
Eastland Group last week received resource consent from HBRC to repair damaged sluice gates, and that work is now under way.
An amphibious excavator was to arrive on site today and suction pumps were in action yesterday, he said.
"Once the build-up of silt and debris is removed from behind the dam, repair work will begin on the gates themselves. We are focussed on getting the gates fully closed and the dam operational as soon as possible."
Mr Todd said gabion baskets -- cages filled with rocks -- have been installed downstream from the dam, and he urged anyone affected by water quality issues to call networks general manager Brent Stewart on (06) 869-0700.
The company's 5MW hydroelectricity station on the Waihi River has not operated since the gates were damaged in September last year.
An abatement notice from HBRC halted repair work due to the silt flowing into the Waiau River. The notice required the gates to be closed but damage to one of the gates is preventing it being fully closed.
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