Black Hills said it would move ahead with plans to start construction on the $237m plant after it received a greenhouse gas air permit from the EPA, reported The Associated Press.
The new power plant would help in replacing old coal-fired power generation units that requires expensive retrofitting to keep operating.
A part of the plant will be entirely owned by Cheyenne Light, Fuel & Power, while the utility and a subsidiary of Black Hills will also jointly own a part.
Construction of the plant is expected to start in April and it is likely to be operating by the end of 2014.
Based in South Dakota, US, Black Hills is a diversified energy company with utility operations, including Black Hills Power and Cheyenne Light Fuel & Power.
