To meet increasing water consumption with limited water resources, management approaches that transfer water between purposes must be improved for sustainable development. This entails an urgent requirement for appropriate water resources management within water-energy interaction if the severe water shortage occurs occasionally. This study evaluates hydropower generation policies of a cascade reservoirs system in the Be River Basin in terms of security of water supply and energy production. The Generalized Water Allocation Simulation Model (GWASIM) was applied to simulate the water use of a complex system of hydropower generation and water supply. Two water allocation scenarios and six alternatives defined by varying monthly generating hours were modeled and compared. The results demonstrate that a compromise between hydropower generation and water supply can be negotiated to reduce the severity of water shortages. Different monthly hours of hydropower generation among alternatives shows an effect on improving power production and reliable water supply. This study provides overall insight into the performance of a multi-purpose cascade reservoirs system. It will provide a foundation for improving future study of reservoir operations in meeting the increasing demands of water and energy of Vietnam.