Temporary fuel surcharge to ease pressure

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The cost of fuel has risen considerably over the last 12 months, following Russia’s invasion of Ukraine, and coupled with global supply chain challenges.

In the Cook Islands, at its peak, the price per litre for fuel was close to double compared to what it was in November last year.

This has had a huge financial impact on power supply entities Te Aponga Uira (TAU) and Te Mana Uira o Araura (TMU).

After several months of watching and seeing what fuel prices are doing globally and fuel market dynamics, whilst absorbing the shock to consumers, both TMU and TAU have decided to unfortunately advise that they will need to pass some of these huge cost increases onto consumers.

Fuel is a significant cost for both Te Aponga Uira and Te Mana Uira o Araura, and the increases are having a significant impact on the financial position and future financial sustainability for both entities.

Both entities are proposing a fuel surcharge in the near future, to ease the burden of the fuel increases, noting an intention to only recover a part of these extra costs.  

Te Mana Uira o Araura is proposing a 15 per cent fuel surcharge from its October meter reading/invoicing while Te Aponga Uira will be formally announcing its fuel surcharge in the coming days.

The fuel surcharges have and will be reviewed by the Ministry of Finance and Economic Management economics team, to verify that the surcharges are reasonable under the current cost and fiscal conditions.

It is important to note that the fuel surcharges are expected only to be temporary and fuel prices will be reviewed regularly to determine when the surcharges will be able to be removed.

John Baxter, chair of Te Mana Uira Araura, says it was not an easy decision in terms of introducing the surcharge, though a necessity to ensure the power company can continue to deliver power sustainably into the future.

Te Aponga Uira chair Mata Nooroa also acknowledges the difficult decision especially in light of the significant discounting of electricity to consumers during COVID-19.  The support to the community of around $14m which was unprecedented and thoroughly appreciated by Rarotonga and Aitutaki, had a significant financial impact on both entities, preventing both entities in continuing to absorb these fuel cost increases.

Cook Islands Investment Corporation chairperson Michael Henry says the use and reliance of fossil fuels and diesel to generate power on both Rarotonga and Aitutaki, has in recent years lessened with the nationwide renewable program that has been implemented across the Pa Enua and to a lesser degree Rarotonga and Aitutaki.

Our renewable energy investment is good for consumers and obviously the environment, though there is still some way to go to be better insulated from “those cost shocks”, he says.

“Pleasingly, the government has some very clear plans to increase Rarotonga’s renewable energy targets from 16 per cent to around 35 per cent and Aitutaki from 25 per cent to around 75 per cent in the next 12 to 24 months.”

Customers are being thanked for their support and understanding.

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