TWEED rate payers won't be contributing to the $1.5 million increase in the Tweed Shire Council's electricity bill.

A new three-year energy supply contract sees council's peak energy charges increase by 325%.

A council spokesperson has confirmed the increase in electricity costs has been allocated for the 2017-18 budget and said ratepayers won't be affected.

"The budget allocation for electricity is already set for 2017-18, as the $1.5 million doesn't exceed the available funds for this purpose,” the council spokesperson said.

"If electricity charges went up more than expected next year, the money would likely be reallocated from program budgets, rather than an increase in rates and or charges.”

Council's director of engineering David Oxenham said during the Thursday, May 18 meeting that the reason for the increase in energy costs was the result of a number of factors, including the recent closure of the Hazlewood Power Plant in Victoria.

"We were pre-warned of the increase,” he said. "In previous years, we've had a drop in our energy. This latest tender indicates a significant rise of 9 cents for off peak and 15 cent for peak energy charges.”

A council spokesperson said council aimed to keep energy costs to a minimum.

"Council is actively investigating cost-effective energy efficiency and renewable energy opportunities at these sites to guard against the impact of rising energy costs on council's ability to deliver services within our limited/available budget,” they said.

What the contract covers

The new energy supply contract with Momentum Energy will provide electricity to council's large sites, including:

The Murwillumbah Art Gallery

Water and sewer pumps

Council operated swimming and aquatic centres

Murwillumbah Community Centre

Murwillumbah Civic Centre

Tweed Regional Museum

Tweed unmeteredstreet lighting

Murwillumbah works depot