Southwestern Electric Power Co. will continue building a coal-fired power plant in Arkansas even as the utility challenges a court decision overturning a key construction permit for it.

The unit of American Electric Power Co. (AEP) said Monday it is asking the state supreme court to review an appeals court decision issued last week overturning approval for the $1.6 billion plant. The utility has already spent more than $700 million on the plant, which is set to supply power in Southwestern Electric's three-state service area.

The utility said it's continuing work while the appeal is pending because it would be more costly to stop and then restart construction. It is unclear how long the appeals process will take.

Southwestern Electric said it followed standard procedure in seeking and winning approval for the plant, with the state utility commission issuing a certificate of environmental compatibility and public need in late 2007. Construction started a year later after the utility received its air permit.

The 600-megawatt plant, known as the John W. Turk Jr. Power Plant, is being challenged by property owners and hunting clubs near its site, a utility spokesman said.

-By Mark Peters, Dow Jones Newswires; 212-416-2457; mark.peters@dowjones.com

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