The Gallop Government sought responses from power generators in October 2004 to supply up to 420MW in 2007 – and received 2,742MW in offers.

Energy minister Eric Ripper said the interest was a sign that the Government's plan to encourage private power generators into the electricity market to compete with state-owned utility Western Power was working.

"There has been an overwhelming response from companies offering a wide range of options – including renewable energy, gas, coal and other fuels - to meet the State's future needs," he said.

The proposals will now be part of a capacity "auction" to be held in October this year, Ripper said.

Tender processes were also well advanced for a new base-load power station to be operational by late 2008, according to Ripper.

He said as part of the Government's electricity market reforms, a powerful new Government owned body – the Independent Market Operator – would have responsibility for overseeing the operations of the competitive market and procuring more capacity if needed.

"The IMO, which was established on January 1, will publish a statement of opportunities in July, based on the latest available information, to determine the details of the capacity to be auctioned," he said.

"The IMO will effectively pay power producers for the extra electricity capacity needed. After the initial auction this year, the IMO will periodically conduct further capacity auctions as required."