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Albany's long wait for connection to the State's main gas supply appears over, with a coalition of energy giants firming as the backers of the $135 million, 350km pipeline to the former whaling town.

WA's generator Verve Energy and gas retailer Alinta Energy are the latest companies to join the rush, with Canadian powerhouse ATCO already in talks with the State Government over its involvement in the project.

The participation by the three parties would solve a range of problems that have undermined the venture in the past, by combining a major industrial customer at the Albany end (a new power plant run by Verve), with a gas retailer for households (Alinta) and a company that can run the associated gas infrastructure (ATCO).

Grange Resources last year rejected a Government bid for it to use gas to power its magnetite iron ore project, which has since been shelved amid financial troubles.

Premier Colin Barnett confirmed that in addition to a capital contribution from Verve towards the spur gas pipeline from Bunbury to Albany, and a tiered gas subsidy, the State's utility would also eventually build a small-scale gas-fired power station in the southern port town.

"Our intention is that we would make some mix of an upfront capital contribution and then an ongoing subsidy - as the usage of the gas goes up the subsidy would go down," Mr Barnett said. "The problem with the Albany pipeline is there is no one big customer.

"So it is intended that Verve will build a 30 or 40 megawatt gas plant there at some stage, so that would become a customer. The gas station would also (help) to stabilise the South West Interconnected Grid and that makes it easier to introduce renewable energy onto the grid." He would not give details about the costs or timing of the Verve plant, but the Government is understood to be finalising an announcement on the project before the March election.

The venture has become an election campaign issue, with Labor saying it would not build the pipeline and instead direct the money to other projects. Mr Barnett has also been under fire for breaking a 2008 pledge to build a bigger $450 million pipeline in his first term.

ATCO Australia chief financial officer Brian Milne confirmed that ATCO, which owns more than 13,000km of residential pipeline in WA, remained in talks with the Government over its involvement.

Alinta chief executive Jeff Dimery said as the State's only reticulated household gas retailer it would be interested if the chance arose. "We wouldn't be pursuing the ownership of the pipeline but clearly we would be interested in any potential customers that might connect in from a retailing or gas sales perspective," Mr Dimery said.

"I would just imagine that households in Albany would be gazetted customers on a (regulated) tariff . . . and no doubt would look to join the Alinta customer base."