All Water supplies contain varying amounts of dissolved air. The air dissolves in the water when it is stored in open dams and reservoirs. Air is more soluble in cold water than it is in hot water. Ordinary tap water contains more dissolved air when cold than it can contain when hot. You may have noticed how bubbles of air form on the inside of a saucepan of water when it is heated. This is because as the water becomes hotter, it cannot contain as much dissolved air, so the air precipitates out of the water.
Also, water under pressure will contain more dissolved air than at atmospheric pressure. This is similar to how a bottle of soda water stores gas until the bottle is opened and the gas is released. Air dissolved in cold water entering the water heater remains dissolved when the water heats, because it is under pressure. As soon as the pressure is reduced, by opening a tap, air, in millions of tiny bubbles, is released with the water. Therefore, the water has a milky appearance because of the presence of all these bubbles.
This milky appearance is harmless and quickly disappears as the air bubbles rise to the surface. If soap is used while the water is still milky in appearance, the air bubbles become trapped in the lather. This may lead to complaints the water is hard. If soap is not used until the water clears of the air bubbles, then the “hard water” effect does not take place. The Milky water appearance often occurs when pipe services are new and clean or in areas close to a reservoir or dam. This appearance tends to disappear in old pipe services where the oxygen in the dissolved air is consumed by pipe corrosion.