Eggborough Power Station near Selby, North Yorkshire, will provide extra capacity to the grid next winter.
A spokeswoman for the firm said the deal would safeguard the jobs of 85% of the workforce for a year.
The 53-year-old coal-fired plant was due to stop generating in March.
Power will be supplied as part of the National Grid's Supplemental Balancing Reserve scheme, which is designed to provide extra electricity in the event that there is insufficient capacity in the market to meet demand.

25 April 2016 Last updated at 00:09 BST
Jackie Stokes, of Burton-upon-Trent, said she spent Â£9,500 on implants in Hungary and endured four years of pain before being told the treatment had been unsuccessful.
She said: "It has left me feeling like I have been assaulted, butchered and robbed of my life savings."

The Cardinals took the lead through Matt Robinson's third goal of the season, a fine long-range effort.
Gateshead levelled just before half time though, Ryan Bowman converting a penalty after James Curtis was fouled by Brian Saah.
Robinson was denied by Gateshead goalkeeper Sam Russell late on as neither side could find a winner.
The result leaves both sides near the middle of the table, with Gateshead eight points from the play-offs with three games to play and Woking safe from relegation despite a winless run that stretches back to January.
Woking boss Garry Hill told BBC Surrey:
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"You are always happy with a point but you want to win games and I felt over the 90 minutes if any team was going to win or deserved to win it was going to be us.
"The frustrating part was in the last five games we have been 1-0 up and 2-0 up in those ones. We are giving away cheap goals and we've invited teams back in the match from experienced players."
A Yorkshire power station that was due to close with the loss of up to 262 jobs has signed a new 12-month contract to supply electricity to the National Grid.
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A woman who spent her life savings on dental implants that had to be removed says she feels "butchered" by her dentist.
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Woking's winless run in the league extended to 13 games after Gateshead came from behind to earn a point.