However, the final contract will not be awarded until September next year with construction expected to take around three years.

Of the final seven proposals three are thought to coal-powered plants and four gas-based projects with the contenders to be shortlisted by August 6th.

“Both coal and gas-fired plant was nominated by the proponents in their expressions of interest submitted in the first stage of this process,” said Western Power chairman Neil Hamilton.

"It is important that there is competition between fuels and within fuel categories. In this way, Western Australia will get the best generation technology and Western Power the best price to minimise the total delivered cost of electricity.”

Development of the 300MW plant is already a year behind schedule due to political bickering with the extra power originally planned to hit the South-West grid in 2007 to meet expected demand and ensure reliable power supplies.

Western Power now says it needs the power station by the end of 2008, mostly because of additional power expected to come from new players, such as Alinta's co-generation power plant.

The state utility said it would buy the electricity from the new baseload power station for up to 25 years, although variations to the power purchase arrangements could be made according to changes in the market conditions.

The electricity will be distributed to almost 880,000 customers around the South West Interconnected System, which runs from Kalbarri to Kalgoorlie and Albany.

Last year, Western Power selected Transfield Services to build a new 260MW peaking plant to supply electricity at peak demand times to maintain reliable power supplies.

That power station is being built at Kemerton Industrial Park near Bunbury and will be available from October 2005.