NEW YORK, Jan 12 (Reuters) - American Municipal Power-Ohio Inc (AMP-Ohio) picked Bechtel Power Corp to build a $3.25 billion coal-fired power plant capable of generating about 1,000 megawatts in Meigs County in southern Ohio, the companies said in a release Friday.

The companies said the station will help stabilize electric prices for the 81 municipal electric systems in Ohio, Michigan, Virginia and West Virginia that will receive power from the plant.

They said the project will employ about 1,600 workers during the estimated 4 1/2 year construction period. Once on-line, it will employ 165 full-time workers.

The project remains contingent upon receipt of final permits and successful negotiations of state and local incentives. It has already received air and discharge permits from the Ohio EPA and a certificate of need from the state siting board.

Environmental and community groups are appealing the state EPA permits, though the company can continue to develop and construct the plant during the appeal process.

The plant will use Portsmouth, New Hampshire-based Powerspan Corp's emission control technology, principally to control sulfur dioxide (linked to acid rain), mercury (a neurological toxin) and particulate matter, but also possibly to capture carbon emissions in the future.

Though the technology to capture carbon emissions does not exist yet, Powerspan was able to capture 90 percent of carbon emissions in the laboratory and a commercial pilot of the system is underway at FirstEnergy Corp's (FE.N: Quote, Profile, Research) 525 MW R.E. Burger coal-fired plant in eastern Ohio, the companies said in the release.

A 1,000 coal plant produces about six million tons of carbon dioxide (CO2) per year. CO2 is a greenhouse gas associated with global warming.

"We know that (carbon) is an important issue for the future of coal-fired generation, and we believe Powerspan's technology will get us there faster and more cost effectively than any other process," Marc Gerken, AMP-Ohio President and CEO, said in the release.

AMP-Ohio, of Columbus, Ohio, owns and operates over 500 MW of generating capacity and supplies power to 126 municipal electric systems in Ohio, Pennsylvania, Michigan, Virginia, West Virginia and Kentucky. (Reporting by Scott DiSavino; Editing by David Gregorio)