Tranz Rail and Genesis, the state-owned power company, say they are close to reaching a deal for transporting imported coal to Huntly.
Genesis has taken to importing coal from Indonesia and Australia, shipping it to Tauranga, then transporting it to the Huntly power station, which was built at thatlocation because of its proximity to the Waikato coal fields.
The Huntly station - New Zealand's largest thermal electricity generator - can be fired with coal, natural gas, or a combination of the two fuels. As the Maui gas field runs down, Genesis has been burning much more coal.
Tranz Rail managing director Michael Beard said a proposal for transporting up to one million tonnes of coal a year was being studied.
This would mean two trains leaving Tauranga each day, laden with 1500 tonnes of coal each.
The two companies expect to sign a contract within two weeks and start transporting the coal next July.
The first trial shipment arrived in Tauranga last month and was taken by truck to a depot at Matamata.
