More than three months after Gillieston Heights and Chisholm were set to be connected to recycled water, the suburbs are still on drinking water only.
Hunter Water says it encountered "technical complications relating to the reliability of the newly constructed recycled water treatment plants for Chisholm and Gillieston Heights", meaning the transition to recycled water from drinking water has not been made.
It comes as the region's dam levels have plummeted to their lowest point in more than two decades, bringing Level 1 water restrictions into effect as the widespread drought rages on.
A Hunter Water spokesperson said because the recycled system is separate to the drinking system, residents will be charged at recycled water rates - 30 cents cheaper per kilolitre than drinking water - and that the network is exempt from restrictions, despite the water not actually being recycled.
Related: Huntlee - the town that won't dry up
"These technical issues have had no impact on the safety or quality of water supplied through the drinking and recycled water networks, or on the cost to our customers," the spokesperson said. "We want to remind our customers that the water from their purple pipes should only be used for non-potable purposes."
But Gillieston Heights resident Anthony Wells said he and others in the community were "quite disgusted given much of the state is in severe drought that a water provider company would even suggest we pretend it was recycled."
"With news that some towns across the state are reaching day zero with no access to drinkable water it goes against the whole every drop counts mantra," he said.
Mr Wells said while he was aware the water was not recycled, there were some residents who were of the belief that they were connected to the system as recycled water is listed on their bills.
"There is definitely confusion in the community," he said.
It comes after Hunter Water announced in April that recycled water would be available for washing clothes, flushing toilets, washing cars or watering the garden from May 6 in Chisholm and May 30 in Gillieston Heights via "purple pipes" connected to homes.
It was meant to "take pressure off the drinking water system", Hunter Water managing director Jim Bentley said at the time.
Letters were sent to all 1100 recycled water customers in Chisholm and Gillieston Heights last week to provide an update on the project.
Hunter Water says it hopes to have the recycled water system online before summer.