HELENA -- A Thompson Falls power plant proposing to burn coal and wood waste has had its latest air-quality permit changes denied, state officials announced Friday.

The state Department of Environmental Quality said Thompson River Co-Gen's plant is not able to meet emission standards for nitrogen oxide and sulfur dioxide.

Barry Bates, a partner in Thompson River Co-Gen, said the company plans to resubmit its permit application, with more information on how it can meet the emissions standards.

"It's a bump in the road for us and disappointing," he said Friday. "It's very disappointing that, with the efforts we've made to work with the state that we're at this juncture of having to reapply."

The plant at Thompson Falls would produce 10 megawatts of electricity, sell electricity to a local lumber mill and then sell the excess on the open wholesale market.

The partnership has been negotiating to sell power to Spokane-based Avista, a utility serving eastern Washington and northern Idaho.

Bates and other partners have been working on the plant since 2000. It employed 14 people last year before shutting down in October after some test runs of the plant.

The company asked for a modified air-quality permit last November to address some emission problems that showed up during the start-up period.

Local conservationists and others have opposed the plant's permit.

Dave Klemp, air-permitting supervisor for the Department of Environmental Quality, said Thompson River wanted a higher limit on emissions for sulfur dioxide and nitrogen oxide, but the state wouldn't agree.

The plant can resubmit the permit with changes or go back to its original permit, whose requirements it hasn't been able to meet.

Bates said the company will resubmit the permit, and that he expects a full public process and review by the state.

"They determined that with the additional information provided over the last two months, it warranted them putting that all in a package and having more public comment," he said.