Nova Scotia Power is refusing to buy coal from Cape Breton, dashing hopes for a local coal mine under development.

Rob Bennett, president and CEO of Nova Scotia Power, said coal from the island has higher levels of sulphur and mercury, making it unsuitable as the utility tries to meet tougher environmental standards.

"It's very difficult to integrate into our existing plans and meet the ever-tightening guidelines that we have. We've committed to reducing our emissions, so it eliminates the immediate use of Cape Breton coals at this point," he told CBC News.

The development of the Donkin coal mine is stalled as the owner looks for a buyer for the ore.

Last week, an official with Xstrata Coal said it made sense to sell coal to Nova Scotia Power, which burns coal at its four generating plants.

The MLA for the area, Alfie MacLeod, said he asked the provincial government to exempt the utility from the rules for four years so the region can benefit from the hundreds of jobs a new mine would bring.

Nova Scotia Power expects to burn less coal in the future, according to its latest plan. The utility said it would replace 10 per cent with waste wood, or biomass, but didn't plan to close its coal-fired plants.