The province spent close to $50 million to buy 10 Vestas turbines for its East Point wind farm in 2007, including a five-year warranty and maintenance package at a cost of $1 million a year.
The warranty came into effect in the spring of 2008, when trouble emerged in the gear boxes of the turbines.
They had to be replaced in each turbine. Vestas paid for the repairs, but the turbines were down for months, so there were increased costs because of the lost electrical generation.
"What the agreement was when we purchased these ones was, if they're down for any amount of time because of this new technology you're using, you will have to pay us what we would have been getting from Maritime Electric," Energy Minister Richard Brown told CBC News.
Brown said the turbines are now working fine. The warranty runs to 2012, but Brown said the province intends to extend it.
"Once the five years is up we'll sign a year-over-year warranty or maintenance agreement with them. If anything happens then they come in and fix it up at that time," he said.
Brown said the $1.2-million payment will likely be reinvested into more wind turbines in the future.