Mt Piper generates up to 15 per cent of the State's energy and is supplied by the adjacent Springvale Mine, which earlier this year encountered problems with lower yields. Leading to owners Centennial Coal seeking approval to allow coal to be hauled from Clarence Colliery by road up until December 2020 as an immediate solution to a supply problem.

Springvale is scheduled to close in 2024 - nearly two decades before the end of Mt Piper's operational life - and the recent issues have expedited the search for long-term alternatives. Which could include sourcing coal from Ulan or beyond.

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Earlier this year the NSW Government announced $500,000 for the 'Kandos to Gulgong Line Reinstatement Feasibility Study', a Fixing Country Rail project, which is scheduled to commence next month. And in January EnergyAustralia received approval to modify a proposed rail coal unloader at Pipers Flat, originally approved in 2009 but not built.

Currently the station is fed by conveyor belts from Springvale. However, the unloader would connect to the Wallerawang-to-Mudgee rail line and enable them to source coal from other mines.

An EnergyAustralia spokesperson said that options are being explored, because "Mt Piper is critical to the reliability of the state's electricity system".

"In the past, there were six mines able to supply coal to Mt Piper - now it's just one, the nearby Springvale mine," the spokesperson said.

"We have faced significant disruptions to our operations due to coal supply issues over recent months which have directly impacted our ability to generate into the electricity market. Mt Piper has generated around 40 per cent less than the same time last year.

"Continuing to source coal from the Lithgow region is our preferred option to meet Mt Piper's operating life to 2042. But with current coal supply difficulties, we need to consider alternatives to mitigate the risks to Mt Piper from single-mine supply - our customers depend on it.

"We are working with the New South Wales government and Centennial Coal, owner of the sole mine supplying Mt Piper, to source alternate coal, to ease constraints on the power station. We are also exploring long term approaches, including a rail uploader at Mt Piper to enable transporting coal from other regions in NSW."

The Kandos to Gulgong line was closed in 2007. With the Rylstone to Kandos link re-opened last year, following a $1.1 million project to reinstate the line.

A Transport for NSW spokesperson said that the feasibility study will look at a number of potential uses for the local rail line.

"The Kandos to Gulgong feasibility study will assess the economic viability of potentially re-opening the line, considering a range of operational options including freight and passenger rail," the spokesperson said.

At their meeting on Monday night, Lithgow City Council raised no objections to a Centennial Coal plan to supplement the Mt Piper coal supply in times of emergency. As a long term solution they identified the most viable option would be to modify the Lidsdale Coal Loading facility to allow it to receive rail shipments of coal from the company's other mining operations.