Councils are set to receive $5.5 million for a pipeline connecting Orange to Cowra.
A pipeline already exists, however mayor Reg Kidd said it was currently only one-way.
"We're looking at making it a two-way pipeline," he said.
Cr Kidd said the pipeline could connect to the Lachlan River supply.
We're looking at making it a two-way pipeline.Mayor Reg Kidd
However, he emphasised the pipeline, similar to the recently-completed pipeline to Carcoar, would only be used in emergencies.
The pipeline has so far supplied water to Spring Hill from Suma Park Dam, but no water from Carcoar has gone into Orange's storage.
Cr Kidd said drought was only one emergency consideration, along with contamination and algal blooms.
"We're a long, long way from that but we've always got to be prepared for that actually happening," he said.
Also like the Carcoar pipeline, the project would likely be a partnership with Central Tablelands Water.
He anticipated more funds would be needed from the partners to bring it to fruition.
However, former Mudgee irrigator turned Orange resident Bruce Haigh said the measure was too short term and the same emphasis on solar panels needed to be extended to household water tanks.
"We need to be looking to recycling," he said.
He said the pipeline linking Perth to Kalgoorlie was a good example of a link which worked, but the town would cease to exist without it.
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