Government and Te Mana Uira O Araura (TMU) have entered into an agreement aimed at addressing immediate fuel cost pressures while putting Aitutaki’s electricity service on a more sustainable footing for the future.
Under the agreement, Government has approved temporary financial support of up to $700,000 for TMU to assist with the significant increase in fuel costs experienced between April and July 2026 and help maintain a reliable electricity supply for Aitutaki.
The funding will come from the Energy Response Support Fund, already provided for in the 2026/27 Government Budget, and is a one-off payment rather than ongoing Government funding.
As part of the agreement, TMU will implement a previously approved 20 per cent increase in electricity tariffs, effective from the September meter reading.
TMU Chair John Baxter said the tariff adjustment had not been taken lightly but was necessary to ensure the longer-term financial and operational sustainability of Aitutaki’s electricity supply.
“We are very conscious that any increase in the cost of electricity has an impact on households and businesses, and this was therefore not a decision that TMU has made lightly,” Baxter said.
“However, fuel remains a significant component of the cost of generating electricity in Aitutaki and the pressures we have experienced mean an adjustment is necessary if we are to continue providing a reliable and sustainable electricity service.”
Baxter said the temporary Government support was important in helping TMU manage the exceptional fuel cost pressures it had faced in recent months.
“We appreciate Government’s support in helping TMU through the immediate situation, while at the same time recognising that relying on Government assistance whenever fuel prices rise is not a sustainable long-term solution.
“TMU has an obligation to ensure Aitutaki continues to have a secure and dependable electricity supply, not just today but into the future.”
Deputy Prime Minister and Minister for CIIC, Hon. Albert Nicholas,said the one-off support recognised the essential nature of electricity services to the Aitutaki community while providing time for a more sustainable approach to be put in place.
“Electricity is an essential service for the people and businesses of Aitutaki. This support addresses the immediate pressure created by the significant increase in fuel costs, but importantly the agreement also puts in place clearer arrangements for how these pressures will be managed in the future.”
Under the agreement, TMU will work alongside the Ministry of Finance and Economic Management (MFEM) and the Cook Islands Investment Corporation (CIIC) to better manage fuel costs, identify opportunities to reduce costs and improve the efficiency and sustainability of electricity services.
Regular reporting will enable TMU’s financial position and progress under the agreement to be monitored.
A clearer mechanism will also be established for responding to movements in fuel costs, with electricity pricing to be periodically reviewed as fuel pricing conditions change.
“This is not about setting a tariff and forgetting about it,” Baxter said.
“We will continue to review pricing as conditions change, including movements in fuel prices. Those changes will be taken into account as part of future tariff reviews.”
Baxter said increasing renewable energy generation was also critical to improving the resilience of Aitutaki’s electricity system and reducing its dependence on diesel.
“The TMU Board is committed to working with Government and development partners to continue investing in renewable energy,” Baxter said.
“Currently around 20 per cent of Aitutaki’s electricity is generated from solar, following completion of Stage 1 of Government’s renewable energy project.
“TMU has developed plans for Stage 2 which, when implemented, would increase solar generation to around 70 per cent of Aitutaki’s electricity supply.
“This will significantly improve the resilience of our electricity system, reduce our exposure to international fuel price movements and provide the foundation for better and more sustainable electricity pricing for Aitutaki power users over the longer term.”
Government, TMU and CIIC said the agreement provides a pathway for addressing the immediate financial pressures while strengthening the sustainability and reliability of Aitutaki’s electricity service over the longer term.