The NSW government is risking Sydney's water supply by overruling a court decision that blocked the extension of a coalmine in the Central Tablelands, environmentalists say.
Energy Minister Don Harwin says new laws, to be tabled in state parliament this week, will allow the Springvale mine to continue supplying the Mount Piper power station and put downward pressure on wholesale electricity prices.
Two months ago, the NSW Supreme Court upheld non-profit group 4Nature's appeal against the extension of Centennial Coal's mine, which would have prolonged its operation by 13 years.
The group argued the extension would increase the amount of polluted waste water going into the Coxs River, harming the quality of Sydney's main water supply.
Mr Harwin was asked on Monday if the government was interfering in the NSW judicial process but he argued it was "absolutely necessary to act now to ensure that we have a secure supply of power".
"We're doing what we need to do and we're doing what's in the interest of the people of NSW," he said.
Mr Harwin said discharged mine waste water would be treated in a new plant due to be completed in 2019.
The mine is the sole supplier of coal to the Mount Piper power station which produces more than 10 per cent of the state's electricity.
Owner Centennial Coal welcomed the state government's move saying it would protect more than 600 jobs in Lithgow.
"It secures a coal supply for Mount Piper power station and ensures both Springvale and Mount Piper can continue meeting the energy needs of NSW," chief executive Mick Cairney said in a statement.
But the NSW Greens accuses the government of succumbing to pressure by coal and energy companies.
"The government should let the court do its job as the parties to the case were aware of the consequences of the decision and were prepared to negotiate a sensible set of orders," Greens MP Jeremy Buckingham said in a statement.
Federal Environment and Energy Minister Josh Frydenberg supports the NSW government's move.
"I'm sure that the government is working very hard to get the balance right between the sustainable and environmental practices needed and continuation," Mr Frydenberg told 2GB radio.
NSW Labor leader Luke Foley visited the mine on Monday voicing his support for it to remain open.
But Mr Foley said the mine's continuation should not come at a cost to Sydney's drinking water.
"Labor will not support the weakening of laws that protect the catchment," he said in a statement.
4Nature president Andrew Cox says the state government's decision is "abhorrent" given the mine produces millions of litres of waste water every day.
"We're concerned that special legislation will effectively allow companies like Springvale to continue to pollute Sydney's drinking water catchments," Mr Cox told AAP.
