The additional area will be used for the construction of a coal haul road that will connect its existing permit area in Mercer County to the Coyote Power Station.
The commission said that it conducted necessary reviews and found out that the application met all the necessary requirements.
Coyote Creek Mine will not conduct any mining operations in the extended area and the road and other support facilities will be reclaimed when mining is completed.
The company is expected to begin delivering coal to the Coyote Power Station next year, and the regulators said that the power plant would use around 2.5 million tons of coal per annum from the mine.
North Dakota PSC commissioner Randy Christmann said: "This permit for the Coyote Creek Mine, along with the approval of Mercer County and land acquisition from landowners, opens the next chapter in lignite mining in western North Dakota.
"For consumers it means the long-term continuation of dependable and affordable power from the Coyote Power Plant."
