HELENA, Mont. - A proposed 250-megawatt, coal-fired plant that could provide power to more than 100,000 people in Montana cleared another hurdle Thursday, obtaining its draft air-quality permit from the state.

Tim Gregori, general manager for the Billings-based electric co-op developing the plant, said the draft permit is a "significant and major step," and that he's hopeful construction on the $515 million plant near Great Falls can begin as soon as early next year.

If that schedule holds, the plant could be built and operating by late 2010 or early 2011.

The permit, which faces public comment and months of review before it can be made final, has strict standards for mercury emissions, said Gregori, general manager of Southern Montana Electric Generation & Transmission Cooperative.

Nonetheless, a spokeswoman for one of the state's leading environmental groups said the plant still would be a major polluter.

"This plant will produce thousands of tons of pollution each year, and that is not clean by any standard," said Anne Hedges, program director for the Montana Environmental Information Center in Helena.

"We oppose the development of coal plants because they are the dirtiest way to produce electricity," she continued. "There are other ways to improve our economy and generate cheap and reliable power. Using coal is not it."

Earlier this year, Hedges' group had negotiated with Southern Montana on the permit's mercury standards. Southern Montana had hoped an agreement could be reached that would prevent MEIC from filing suit to block the plant.

But MEIC broke off those negotiations in late January, saying the co-op's proposals weren't satisfactory.

At the time, Gregori said the co-op is committed to making the plant "a model for the industry in mercury capture."

Hedges said Thursday that MEIC will analyze the draft permit and comment, but that "if it's a coal plant, we have serious concerns."

Gregori said not only does the draft permit already include stringent standards for mercury, but the plant also must comply with whatever mercury rules are drafted by the state Board of Environmental Review.

Those rules may tighten the standards further, he said.

The plant, if constructed, would be the first major coal-fired power plant built in Montana in more than 20 years.

Southern Montana Electric plans to distribute the plant's electricity to five rural electric co-ops that serve 60,000 to 70,000 people in central and southern Montana. These co-ops, along with the city of Great Falls, are financing the plant.

The city of Great Falls also hopes to use its share of the power to serve its 50,000 citizens through a nonprofit municipal power authority.

Bids for construction of the plant's boiler are expected April 10, and a draft environmental impact statement should be out by mid-May, Gregori said.

"We're hoping to have a record-of-decision on the EIS and the air-quality permit wrapped up by year-end or by early 2007," he said. "It's been a long time coming."