Company project manager Andy Matheson said studies for the $NZ250 million, 100MW plant - to be built near its Westport mines - should be finished by the end of the year. At present New Zealand's only coal power station is Genesis Power's duel-fueled (gas or coal) 1000MW Huntly station.

Matheson said building a new station on the West Coast would reduce lines losses on the long national grid lines across the Southern Alps and defer the need to increase the capacity of those TransPower-owned grid lines.

Tauranga-headquartered TrustPower supplies most of the electricity to the isolated region and owns the five most northern power stations in the South Island. It is also planning a 60MW hydro station near Greymouth and a three-station 115MW project near Blenheim further north near the east coast. Spokesman Graeme Purches said TrustPower would be interested in working with the government-owned Solid Energy.

The government has said it will pay up to $NZ200 million for "reserve" power - either new plants or existing stations - to be kept in available during times of cold dry winters and low hydro lake levels.