Lake Nillahcootie was constructed to harness the flows of the Broken River to meet irrigation, domestic and stock, and urban water supply requirements.

In previous years when Lake Nillahcootie was assured of filling to capacity, water could be released in accordance with a target volume determined for filling Lake Mokoan. This operation optimised water harvesting between the two storages and would normally occur during winter and spring months. With the decommissioning of Lake Mokoan, this is no longer required.