The Water Mill is an Industrial Craft 2 generator. Water Mills can generate EU either through the use of Water Buckets or Water Cells being placed inside their GUI, or by being placed in a body of water.
Internally, the Water Mill's tank will hold four buckets of water. Using their internal storage, Water Mills produce 1 EU/t. If placed in water, either still or flowing, the Mill will generate EU passively, at a rate of 0.01 EU/t per block of adjacent water. Assuming one block is used for cable, the maximum EU one Water Mill can generate is 0.25 EU/t.
The Water Mill's GUI features two slots. The top slot can be used for recharging tools and batteries (though this purpose is better served by a Charging Bench). Water Buckets or Water Cells are placed in the bottom slot of the GUI.