In October 2018 The Department of Planning, Industry and Environment engaged WaterNSW to investigate the possibility of the pipeline following a recommendation by Infrastructure NSW which the proposed two-way system.

The pipeline's proposed route has been released as part of the final business case being prepared for WaterNSW by the environmental and engineering consultancy GHD.

The preferred option has the pipeline running adjacent to the current line between the lake and the water treatment plant along the Eastern boundary of Mount Macquarie, before diverting left after approximately four kilometres to Carcoar Dam.

There are two versions of this preferred route, one with the two-way pipeline simply going over the lower parts of Mount Macquarie to Carcoar Dam, while the other follows the same route but is partially tunnelled straight through the mount.

Due to physical distancing restrictions the proposals were put on display during a video summit in which 40 people participated.

A review of environmental factors is due to be completed by WaterNSW in mid-2020, with a final business case due at the end of the year.

Lake Rowlands is operated by Central Tablelands Water and its chairman David Somervaille said that the tunnel concept would have an operational advantage.

"If they tunnel it, it means that the level of the pipeline will be much lower so the water pressure doesn't get so high during pumping," he said.

A surprising part of the plan is that this diversion to Carcoar Dam could become a new two-way pipeline to Blayney's water treatment plant.

"The study is looking into it joining the existing raw water pipeline from Lake Rowlands to the water treatment plant where it would undergo treatment and filtration before being distributed throughout the network," Mr Somervaille said.

A spokesperson for WateNSW said recreational access and use of Carcoar Dam would continue, and the pipeline could be a boon for those at the lake.

"The water levels in Carcoar Dam are likely to remain higher for longer with the transfers of water, which will benefit recreational lake users," the spokesperson said.

"There will need to be access restrictions placed in a small area of the lake around the new water outlets for public safety reasons."

The spokesperson said modelling will continue to analyse potential pipeline sizing, pumping rates and long term benefits for the system, and confirmed water would only be transferred from Lake Rowlands when there is adequate storage and water supply levels available at both facilities.

"These studies include looking at how the two way pipeline can also transfer water back from Carcoar Dam to the urban water supply network," the spokesperson said.

"This will result in efficient, long-term storage of available water and provide a benefit of increased operational flexibility for urban and rural water supply in the Belubula valley."

The route will go through private property, but the WaterNSW spokesperson said landowners were being consulted and would have input on the final route.

"The community and stakeholder feedback ... has informed the development of the proposed option for the pipeline route," they said.

"The final business case development involves thorough stakeholder consultation with landowners potentially affected by the proposed pipeline.

"WaterNSW is working with landowners that have properties within the study area of investigations, in a timely and proactive manner."