Irving Paper plugs into provincial energy rebate

A New Brunswick government fund set up to help the province's six paper mills has been helping one a lot more than the others, a CBC review of the program shows.

Irving Paper in Saint John has received most of the money from the program, which has already cost millions more than expected.

Last year, Finance Minister Victor Boudreau announced a two-year, $16-million rebate program to help New Brunswick's six paper mills deal with rising energy costs, which the forest industry blames as a major contributor to its economic woes.

But the program was structured to subsidize only electricity and, as it turns out, that has helped one paper mill a lot more than the others.

According to information obtained by CBC News, the province's fund provided Irving Paper $6.5 million this year to subsidize its energy costs, more than 60 per cent of the entire program's funding.

In fact, Irving Paper got triple the amount of the next biggest recipient, Fraser Paper in Edmundston and 13 times more money than the struggling mill in Nackawic.

Boudreau said the program wasn't set up to help Irving Paper more than other companies but that's just the way it worked out since the mill is the most electricity-intensive in New Brunswick.

"The mill in Saint John, for example, we know uses an awful lot of energy and so when its based on the formula, it's automatic I guess that they would get the amount they received," Boudreau said.

The subsidy program has cost taxpayers more than $10 million so far and although it's on track to exceed its original budget by several million, the province says it has no plans to stop that from happening.

When Boudreau announced the tax rebate program for the paper mills in July 2007, he stipulated that to be eligible for the cash, the mills must be running as of March 31, 2008, they must be producing at 85 per cent of their previous year's output and they must not be behind in their property taxes.

This fall, Jim Irving, owner of the Irving mills,pointed out the plant consumes more electricity each year than the entire province of Prince Edward Island, a fact that allowed Irving Paper to grab most the energy assistance fund.

Mary Keith, the vice-president of communications for J.D. Irving, said the company spent $500 million in the last decade to stay competitive in an industry that has been hammered by high-energy costs, a strong Canadian dollar and a weak U.S. market.

"Every cent of the property tax rebate has been reinvested in energy efficiency projects at the paper mill," Keith said in an e-mail statement.

"Irving Paper's current efficiency projects will generate $10 million in spending with local contractors."

Keith said the company has eight engineers dedicated to improve energy efficiency in its forestry operations.

The challenges faced by major players such as Irving Paper are also being felt by some of the province's smaller mills.

Workers at the AV Nackawic mill got bad news this week after management informed the union executive that they are contemplating a four- to six-week shutdown in December to deal with a weak global economy.

Peter Vinall, president and chief executive officer of AV Nackawic, cited high energy and chemical costs as part of the challenge his mill constantly battles.

The rebate wasto be available only on the power consumed in the actual paper-making process to offset increases in the cost of electricity. The fundsare to be paid back through a rebate on property taxes.

"Energy costs are always a battle," he said.