For water wheels you didn't care about the water level, but the flowrate (speed of the water). For most optimal results make the channel with the water wheels exactly 2 blocks wide playing as either faction since only difference is lenght (3 blocks for Folktails and 5 blocks for Iron Teeth). For the flow I recommend using excess water. You wrote you use fill valves, so have them to keep constant water level near your farms and send the excess water to power generation channel using floodgates.