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The regulator does both. If the supply volume is adequate, and the supply valve is not partially closed, then the PRV will maintain the set pressure even when water is flowing. If the pressure drops when using water, then the PRV is not opening completely, the supply valve is not completely open, or the supply to the residence is inadequate. Your more important question is whether your fire system is CPVC plastic or copper. If it is CPVC, 150# may to high for safe operation and/or the pressure relief valve should be set at 150# and therefore should be discharging at any pressure surge.: My home has a fire sprinkler system built into it and has a gauge to monitor pressure. The water pressure is unregulated to this system and line pressure is at 150 psi. With the 3/4 valve on the other side of the the system is wide open, the gauge drops to 50 psi. Now, the water supply for my house is regulated at 60 psi (different gauge), with no water running. If I turn on the lawn sprinklers the reading drops to 20 psi. My questions is does a regulator suppose to keep a constant pressure or does it just make sure it doesnt go over the set amount?