Residents are being warned it might not be the last time the price goes up.
The increase will see the unit price of power on the island increase from 85c to 89c per kilowatt-hour (kWh) in early May.
On the mainland, the price per kilowatt-hour is usually below 25c.
Southland district councillor and Stewart Island-Rakiura Community Board member Jon Spraggon said the board voted on Thursday last week to increase the Stewart Island Electricity Supply Authority’s (SIESA) unit charges by 4c.
It also recommended council approve $250,000 of unbudgeted spending from SIESA’s reserves of $450,000 to help ease the financial pressure.
Diesel-powered generators supply the island’s 400 residents with most of their power — 1,934,955kWh on average a year.
‘‘Everything relies on electricity and the whole island basically relies on diesel,’’ Mr Spraggon said.
The projected 2025-26 annual fuel budget of $893,618 for the generators was based on diesel costing $1.74 per litre.
For the first eight months of the current financial year the average price had been $1.53 per litre, but since March diesel prices for SIESA had ranged from $1.93 to $2.76.
If the price continued rising at recent rates, or even faster, there would not be enough in the budget until June.
Increasing the electricity unit price by 4c and adding $250,000 would mean there was enough money to pay up to $3.51 per litre of diesel.
Council staff recommended the board go for a 15c per kWh increase, which would mean there was more money available to respond to further prices rises, however the board decided to go with a 4c per kWh increase.
Anything higher would trigger a requirement to communicate with each individual customer about the increase, which would create a delay.
Mr Spraggon said the 4c increase would provide a temporary buffer, but might need to be reviewed again.
‘‘It’s only a stop-gap and it’s a temporary thing.
‘‘If we were going to recover our total costs, it would have to have gone up a hell of a lot more than that.’’
He said another increase could be considered if needed.
‘‘We could hold a special meeting in a month’s time and put another 5% on,’’ Mr Spraggon said.
The island’s residents had been accepting of the recommended increase, he said.
‘‘I think the island has realised that it has to occur.’’
Most of the tourism and fishing operators were coping for now, but tighter margins were placing pressure on businesses, particularly for prepaid services. Some operators had introduced freight fuel-factor surcharges to help absorb rising costs.
He said there were concerns tightened household budgets could deter visitors and potentially push the island into a serious economic downturn.
‘‘If people stop travelling ... then it’ll affect us.’’
Southland District Mayor Rob Scott said the council had used Resource Management Act emergency powers for Stewart Island’s energy situation — a move that would help the island’s planned solar generation plant to be built before the end of the year.
‘‘It means ... in particular in relation to the solar farm development ... it can go ahead without resource consent initially.’’
Toni McDonald
