Upper Hunter mines and power stations will be able to access up to 85 per cent of their water allocations from July while general irrigators will have their allocations cut to 20 per cent.
Despite drought conditions easing since March, the region's two main water storages Glenbawn and Glennies Creek dams were at 39.1 per cent and 36.7 per cent respectively on Thursday.
The figures are down about 18 per cent on the same time last year.
Hunter Valley Water Users Association vice president Ken Bray said while the likely 20 per cent allocation was significantly lower than this year's allocation of 95 per cent, it was better than what had been predicted.
"The Hunter River has come right up. Only a couple of months ago they were looking at zero allocations," he said.
Water NSW's water allocation statement for May said rainfall in April ranged from average to below average in the Hunter catchment.
"Water for all critical consumptive and non-consumptive needs including major and local utilities, are secure to at least June 2022, assuming the budgeted (minimum) future inflows arrive," the statement said.
Hunter irrigators had their allocations slashed to 8 per cent at the height of the Millennium drought in the mid-2000s.
While a final determination on next year's water allocations is yet to be made, NSW Water said general security licences can expect opening allocations of 20 per cent and high security licence holders (such as mines and power generators) can expect 85 per cent.
"All other higher priority licence holders including local water utilities, major water utilities, and domestic and stock water access licenses can expect full (100 per cent) allocations.
In addition to the 20 per cent allocation, general licence holders will be able to carry over up to 25 per cent of their unused water allocation, meaning some irrigators may be able to access 45 per cent of their total allocation.
"Overall, I think it's a pretty good result considering where we were at," Mr Bray said.
"It looks like Water NSW has taken on board the feedback they have received."
Upper Hunter Mining Dialogue figures show the industry, which has has traditionally relied on ground water and surface water for washing coal and dust suppression, used eight per cent or 15 gigalitres of the 188 gigalitres of water that entered the Hunter River in 2018-19.
The previous year, it used three per cent or 6.12 gigalitres of the 204 gigalitres of water that entered the river.
Bayswater and Liddell power stations use about 62 gigalitres of water annually.
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