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.
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.