A State Liberal MP says Collie's coal industry is in crisis as one of the Western Australia's biggest electricity generators moves to ensure it has the power to take control of a loss-making coal mine.

Key points: There are concerns for employment and energy stability amid rumblings a WA coal mine may be in dire strife

There are concerns for employment and energy stability amid rumblings a WA coal mine may be in dire strife One of the mine's customers, which supplies WA's biggest electricity grid, is investigating its step-in rights

One of the mine's customers, which supplies WA's biggest electricity grid, is investigating its step-in rights The mine's woes have intensified due to a surge in renewable energy output

The Japanese owners of the Bluewaters power plant commenced an application in the Supreme Court yesterday to shore up their step-in rights over beleaguered Griffin Coal.

Bluewaters declined comment, although it is believed the company is not set to invoke the step-in rights and is merely seeking to confirm their validity.

Griffin has been bleeding money ever since it was acquired from the wreckage of former tycoon Ric Stowe's failed business empire in 2010 for $750 million.

Despite a significant step in recent years to trim the workforce and reduce costs, it is understood Griffin has been losing up to $6m a month.

The combined losses, along with the refusal of Griffin's lenders to chip in more money, have fuelled speculation about the miner's ability to trade.

Renewable energies are putting pressure on the coal industry in Western Australia. ( ABC News: Anthony Pancia )

Dire situation

South West MLC Steve Thomas said Bluewaters' action suggested the situation in Collie was getting worse as soaring levels of renewable energy output sent demand for coal plummeting.

Dr Thomas said the financial position of Griffin was a serious concern, given the critical importance of Bluewaters to the state's biggest electricity grid.

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The power plant has a capacity of 400MW, and typically provides about 10 to 15 per cent of the electricity in the South West electricity grid.

He estimated the capital and operating losses incurred by Griffin over the past nine years were as much as $1.3 billion.

"I'm very concerned that we are now coming to the crisis point in relation to the viability of Griffin Coal," Dr Thomas said.

"I am hearing across the board that the community and industry have concerns that this company can't last too far into next year.

"This is a company that's been losing significant amounts of money for a long time."

Electricity supply safety concerns

While Mines and Energy Minister Bill Johnston said he would not be drawn to comment on Griffin's commercial viability, he insisted the situation in Collie would not jeopardise WA's electricity system.

Mr Johnston said the State Government has plans in place to ensure there were no disruptions to electricity supply in the event one of the coal mines failed.

"What I can assure West Australians is that we've got every scenario covered regardless of what happens with the private sector operators in the electricity system," Mr Johnston said.

WA's other working coal mine, Premier Coal, also in Collie, is owned by Chinese company Yancoal.

At the heart of Griffin's problems is the low price it receives for the coal is sells — a figure that is believed to be below the cost of production despite a controversial price rise negotiated in 2012.

Though the miner sells the bulk of its coal to Bluewaters, the power plant provides electricity to major industrial customers including State-owned utilities power retailer Synergy, and the Water Corporation.

Mr Johnston said he was unable to comment on whether the Government would indirectly support a price hike for Griffin.

Dr Thomas said Synergy's own financial troubles — it reported a record $650 million loss in the past financial year — showed a price rise made little sense and would be difficult to justify.

He said the Government's biggest goal needed to be the security of electricity supply.

The local shire estimates a quarter of the 5,000 people employed in Collie work in the coal industry. ( ABC News: Anthony Pancia )

Families feeling the strain

The Construction, Forestry, Mining and Energy Union's mining and energy secretary, Greg Busson, said the dire financial position of Griffin was weighing on workers and their families.

Mr Busson called for the company to clarify the situation, saying it was crucial the workforce knew where it stood coming into Christmas.

"There have been some rumours gathering momentum over the last couple of weeks about the stability of Griffin Coal," Mr Busson said.

"I've asked for Griffin Coal to have a state of the nation meeting with their workforce, lay it on the table and tell people where things are at good or bad so they can at least understand some of these rumours that have been going around."

Griffin has been contacted by the ABC.