Commuters face two years of gridlock at the Adamstown gates if Eraring Power Station is fuelled with coal from the Upper Hunter, unions claim.
Miners from the Myuna and Manderlong collieries, which have traditionally supplied Eraring, demonstrated at the gates on Thursday afternoon.
The colliery's owner, Centennial Coal, remains locked in a protracted negotiations with Origin Energy about the supply of coal for the next two years.
A new supply contract is necessary following the state government's decision to keep the coal-fired generator open for two years beyond its planned August 2025 closure date.
Origin could receive up to $450 million to keep the plant running at half of its capacity.
In addition to the potential loss of 1000 jobs, the union estimates up to 2400 additional goods train movements per year would be required to transport coal to the power station via crossings at Islington and Adamstown.
"Traffic in Newcastle and across the Hunter is already a nightmare," Collieries' Staff and Officials Association lead organiser Belinda Giblin said.
"It makes no sense to add thousands of extra train movements every year when there is a productive, efficient coal mine with 350 highly trained professionals literally connected to Eraring by conveyor belt."
"For more than four decades we dug coal at Myuna and Mandalong to fuel Eraring. It's worked since 1982 and it can work for the next 24 months during the extension."
An Origin Energy spokesman said the union's claims about the impact on the local rail network were inaccurate.
"Today, Eraring receives around 80 per cent of its coal supply via rail, so claims that there will be thousands of increased rail movements per year are significantly overblown," he said.
He said Origin remained in discussions with Centennial Coal and remained hopeful that an agreement could be reached that was broadly consistent with the terms secured for other coal supply agreements.
"Locking in higher priced coal when there are other cheaper domestic sources available risks putting upwards pressure on wholesale electricity prices for NSW customers. Origin enjoys strong support from a range of NSW coal suppliers, and we are proud of the ongoing jobs these agreements support in the Hunter region."
Centennial Coal has listed other consequences of losing the Eraring supply deal.
These include "over $360 million of lost royalties and payroll tax for the NSW government over the next four years", a "direct six-fold multiplier effect on the 6000 indirect jobs in the area".
Lake Macquarie MP Greg Piper previously said he was hopeful Origin and Centennial could reach a deal.
"It's just in everybody's interest, in my view, for it to be with Centennial," he said.
"Hopefully Centennial can give a bit more thought to their costings and for Origin to consider that as well. We have to look after the workforce that has looked after us."
