Councillors question expense increase
Southland District Councillors have questioned a $250,000 increase in the management fee for the Stewart Island Electrical Supply Authority.
The issue was raised at a Finance and Audit Committee meeting yesterday when the committee was presented with a financial forecast that predicted the council was looking at a deficit of $4.5 million.
The SIESA management fee had increased by $249,905 as part of the contract renewal process.
Councillor Paul Duffy asked if the increase was going to have a significant effect on the power price.
‘‘I’m wondering if making a case to government for some assistance with that is an option.’’
Chief executive Steve Ruru said there was work under way to assess the long-term sustainability of the contract and work to identify possible cost savings.
Duffy said he assumed it would be a long process to do the review.
Council group manager of services and assets Matt Russell said the review had been ongoing for a number of months but he had received a draft report with proposed outcomes.
In terms of the impact on the cost of power, Russell said there were sufficient reserves within SIESA to absorb the costs.
‘‘That won’t be an unlimited source, hence the need to complete this work in a timely fashion and improve the long-term sustainability.’’
Central government was involved in that discussion, Russell said.
Councillor John Douglas asked what was the percentage of the $250,000 increase in operating costs and if the council was working out why it was so large.
Ruru said it was related to commercial contract negotiation issues and suggested the committee go into public excluded to discuss it further.
The meeting then moved into public excluded.
When the meeting opened again, independent committee member Bruce Robertson sought a clarification of the report.
The report said the roading team indicated no changes to be included in the October forecast, as some projects were still in a development stage or under early construction, and it was too early to tell the impact on the budget.
Robertson asked if that meant there were no changes to forecast or if the there were changes but they were unknown.
Russell explained that there were some changes on the horizon that staff were not able to pin down.
An example was a roading rehabilitation programme going out for tender but the staff did not have information around responses, the cost or the timing, Russell said.
There had been some changes since the October forecasting process that would be included in the February forecasting process, he said.
‘‘I’m wondering if making a case to government for some assistance with that is an option.’’ Councillor Paul Duffy