Lake Hāwea locals have made it clear the water's not going down without a fight, as Contact Energy pushes for fast-track approval to drop the lake's level.

The company has proposed reducing the lake's minimum operating level from 338 metres to 336m above sea level - and, in extreme circumstances, dropping it as low as 330m - to boost renewable energy generation and help safeguard electricity supply.

It lodged a referral application with the government in June to enter the proposal into the fast-track consenting process.

On Thursday night, nearly 300 people packed into a public meeting, where 12 speakers set out what they feared were potentially "devastating" impacts on the community and its drinking water.

Otago Regional Councillor Michael Laws pledged he would do his bit to stand against the "rapacious gentailer" of Contact Energy - and urged residents to do likewise.

"I cannot stress enough to you this evening, the danger that all of you, and we, are in as a community from this particular project. And the incredible opposition you're going to face from Contact Energy," he said.

"Do not underestimate for a moment, the fight or the battle that we will be required collectively to put up."

Otago Regional Councillor Michael Laws. PHOTO: RNZ / Katie Todd

It was standing room only as farmers, retirees, families and community leaders took notes, nodded and cheered.

Queenstown Lakes District Councillors Cody Tucker and Niki Gladding also spoke of the fight ahead.

"We all share your concerns ... there's going to be real detrimental impacts that this community's going to have to find the resources for," Tucker said.

"We need to stop it at this stage. It's really important that this does not get referred," Gladding said.

Contact Energy said the proposal was still at an early stage, and formed part of its wider $2.3 billion investment in renewable energy.

But residents said a shift to their shoreline simply could not happen.

Lake Hawea is currently 340 metres above sea level. PHOTO: RNZ / Katie Todd

Local farmer Jerry Rowley recalled the "unmitigated disaster" of the 1970s when a drop in lake levels prompted widespread dust storms, and a "scene of desolation".

He read from a book about the event.

"The huge residue of silt sweep and the vast dust storms had a profound effect on the people living here. Not only physically, but mentally," he said.

Residents at the meeting also spoke of their fears about the impact on groundwater, citing a 2023 report prepared for Otago Regional Council (ORC).

It found that if Lake Hāwea's water level dropped to 330m, it would likely fall below a critical geological threshold, disconnecting the lake from the aquifer and causing a substantial decline in groundwater levels that would lead to the widespread failure of many bores.

That could in turn leave hundreds of Hāwea Flat residents without drinking water, said meeting organiser and local farmer Erynne Fildes.

"We will all run dry, in simple terms. So we all need to unite as a group and lobby to council and central government to have this stopped from heading down the fast-track route," she said.

Lake Hāwea township. PHOTO: RNZ / Katie Todd

Hāwea Flat resident Rachel Brown asked if people should really have to trade access to drinking water for electricity.

"What does Contact Energy define as an emergency, as extreme conditions? Running out of drinking water is the extreme conditions," she said.

Contact Energy told RNZ it understood the importance of water access - and it planned to work with experts to carefully weigh up benefits and risks.

Head of Hydro Generation Boyd Brindson took the hot seat at the meeting to urge the community to work with his company, not against it.

"This is about security of supply. It is about security of supply for New Zealand's electricity. Is electricity more important than water? That's a really good question. Absolutely not. And it's certainly not [about] shareholder returns. We'll agree. We'll all agree in this room on that, that's clear," he said.

"What it is about, is making sure that we actually get the balance right in New Zealand. We can no longer in this country rely on gas to keep the lights on, to keep our industries running, to keep our homes warm."

Brindson told residents the lake would "seldom" be at the end of the operating range, and was unlikely to ever drop as low as 330m.

The lake at 340m - Contact Energy's Boyd Brindson said it was unlikely to ever drop as low as 330m. PHOTO: RNZ / Katie Todd

He asked residents to think of it like an "insurance policy" for New Zealand.

Brindson said depriving people of their drinking water would not happen.

"I'd suggest that if a substantive application is made and we can't resolve that issue, then I'd imagine it's very unlikely to be successful. Simple as that," he said.

His address was at times interrupted by interjections and angry murmurs from the crowd.

In a statement, ORC's general manager environmental delivery Joanna Gilroy confirmed the council had flagged the 2023 drinking water report with Contact Energy.

"Council has discussed the report with Contact Energy and included this in our pre-application advice to them and in our comments to the EPA," she said.

In a further statement to RNZ, Brindson said Contact Energy had asked Minister for Infrastructure Chris Bishop to consider if its proposal qualified for the fast-track approvals process.

"If the minister sees the benefit to the energy system, we may then be given approval to submit a full application. We will then work with experts to carefully weigh up the benefits and environmental and community risks of the proposal to determine whether to proceed with a formal fast-track application," he said.

"If Contact proceeds with a substantive application, we will work closely with local communities and stakeholders throughout the process."