A NSW regulatory body has put the state’s water recycling industry at risk.

The Independent Pricing and Regulatory Tribunal (IPART) has changed its pricing model in a way that stakeholders say could increase bills “by 1,000 per cent”.

IPART sets the cost of wholesale water from Sydney Water, and now says it will introduce a “retail minus” tariff from next year.

Flow Systems operates water recycling schemes at some major developments including Central Park in inner Sydney.

Company founder Terry Leckie says he buys fresh water wholesale from Sydney Water, but that the IPART determination will increase his bill astronomically.

“It means that we are unlikely to continue with Central Park,” Mr Leckie said.

“It's unlikely that we will be able to promote these kind of innovations in water.”

The City of Sydney is concerned about the ramifications too.

“We've got three major projects in Barangaroo, Central Park and Green Square where recycled water is vital to deliver a liveable city,” the Council's sustainability director Chris Derksema told reporters.

“This determination puts those projects at risk and not only those but future development in the city.

“This IPART decision could kill the recycled water industry here in Sydney.”

Professor Stuart White - Director of the Institute for Sustainable Futures at University of Technology Sydney – is also concerned about the consequences.

“As we've seen in the electricity industry where the uncertainty was the death knell for investment we run the risk of that happening here,” Professor White said.

“So when the next drought comes ... we won't be ready.

“In 50 years' time, it's inconceivable that we will just be throwing water away so recycling it become really important.”

NSW Water Minister Don Harwin has launched a review, but it is not expected to be completed by the time the new pricing model comes into effect on January 1 next year.