Hydro Development Ltd (HDL) said Solid Energy has lodged a notice of appeal against consents for its Stockton Plateau Hydro Scheme.
The move has been signalled by state-owned Solid Energy, which wants to use the water for its own scheme.
HDL won resource consent to build its scheme, allowing the company to harness tributaries of the Ngakawau River.
The plan consists of using polluted water from the coal mines on the Stockton Plateau and channelling it through tunnels, reservoirs and power stations, to generate power before discarding it in an ocean outfall offshore.
HDL said today that the notice of appeal repeated Solid Energy's unsubstantiated concern that the scheme would constrain mining activity.
"This appeal is using taxpayers' funds to frustrate an innovative private sector initiative," HDL said.
Implementation of the project would proceed despite these frustrations.
Solid Energy has said its proposed scheme would be $70 million cheaper than HDL's estimated construction price tag of $200m.
The HDL scheme is expected to provide a continuous power supply of about 20 megawatts, with output up to 50MW for shorter periods during and following rainfall.
The company estimated construction would create about 50 jobs.
