The proposal would be a major boost for the state's coal mining sector, as the envisaged 400 megawatt plant would demand an extra 1.3 million tonnes of coal per annum from Griffin's Collie operations.

But Griffin's plan has a long road to travel.

Today's announcement by Griffin Energy managing director Barry Eldridge was prompted by the company lodging an application with the Department of Environmental Protection.

Government approvals would take around 12-18 months to secure, leading to a 36-month construction period.

Eldridge was very bullish in a teleconference, predicting Griffin is prepared to fund the project internally if discussions with bankers and potential equity partners come to nought.

But Griffin has some major hurdles in front of it.

One is the powerful gas lobby, which has cleverly portrayed its fuel as a "clean" alternative to "dirty" coal over the past decade.

This has enabled gas, mainly from the North West Shelf, to make significant inroads into coal's historical power generation market in WA.

Eldridge claims that a modern, high efficiency coal-fired station is an acceptable environmental alternative to gas-fired plants.

But it remains to be seen whether Griffin can convince environmental lobbyists and policy makers, including Energy Minister Eric Ripper, of that argument.

The other major hurdle is Western Power, the state-owned power utility that currently has a monopoly on coal-fired power.

Eldridge concedes that Griffin's proposal is subject to the government dismantling Western Power's monopoly to allow genuine competition, as has been recommended in the WA government's energy reform process.

A taskforce last month urged that Western Power be separated into independent generating, network and retailing divisions.

If those reforms do go ahead, Griffin believes that its coal-fired power station can produce the "lowest cost power in this state", significantly undercutting Western Power's current prices.

"I have spoken to a number of large industrial customers and we are getting a great deal of support," he said.

However, the plan will falter if the government does an about-face on energy reform.

"If Western Power is not broken up, it is difficult to imagine circumstances where people will come into this state and be prepared to spend significant amounts of money trying to compete with a vertically integrated, government-owned monopoly," he said.

Western Power has estimated that Western Australia will require around 1600MW of new and replacement generating capacity installed by 2010.

Eldridge believes this will allow enough room for a coal-fired station, alongside new gas-fired projects by groups such as AlintaGas.

"We believe that there is room there [in WA] for gas and coal," he said.

Another possible barrier is funding.

Five hundred million dollars is a hefty sum for a private group, even one as big as Griffin.

The group has spoken to potential equity partners, including construction groups and utility companies.

But potential investors may want to hold off until they see the final wash-up of the state's energy reform process.

If Griffin can get the power station concept to fly, against the odds, it would be a boon for coal mining.

The envisaged station will require Griffin to produce an extra 1.1-1.3 million tonnes of coal on top of its existing production of 3Mtpa.

Expanding to the higher rate would cost around $20-25 million, mainly on spending for new shovels and loaders.

"That is not an issue for us," Eldridge said.

"At that rate, we have over 100 years worth of resources."