The New Brunswick government's special power subsidy for paper mills has run $1.3 million over budget in the last two years, CBC News has learned.

'We do not want to see investment leave the province to those other jurisdictions.'— Finance Minister Greg Byrne

The provincial government's high energy use tax rebate has cost taxpayers more than $17.3 million over the past two years. Not only has the program run over budget, but it has been extended for a third year.

Finance Minister Greg Byrne said the extra cash helps to keep high-paying forestry jobs from leaving the province.

"We are competing against other jurisdictions with lower-cost electricity, jurisdictions like Quebec, for example. We do not want to see investment leave the province to those other jurisdictions," Byrne said.

The biggest portion of those energy rebates has gone to forestry giant J.D. Irving Ltd., which has received $11.4 million for its Lake Utopia mill, Reversing Falls mill and Irving paper mill in Saint John.

That means the three Irving mills have received an average of $15,000 a day in electricity subsidies for the past two years.

Meanwhile, Edmundston's Fraser Paper has received $4.1 million and AV Cell in Atholville and AV Nackawic have split $1.8 million.

When the New Brunswick government announced the tax rebate program in July 2007, it stipulated that to be eligible for the cash, the mills would have to be running as of March 31, 2008, producing at least 85 per cent of their previous year's output and not be behind in their property taxes.

Rebate credited for economic boost

Mary Keith, a spokeswoman for J.D. Irving, said last year that the rebate has helped keep jobs at its mills during the downturn in the forest sector.

"We think that rebate has provided a significant return on the investment in terms of jobs," Keith said.

"The local employment, the purchases from local suppliers, it's provided millions of dollars into the local economy and continues to do that."