Years of under-investment in Aurora Energy's power network - which covers much of Dunedin, Queenstown Lakes and Central Otago - left it in a precarious state.
The company was fined almost $5m this year after too many power cuts between 2016 and 2019.
To fix the network, the company has proposed an upgrade strategy, which it will submit to the Commerce Commission next month.
The draft proposal suggested monthly power bills would need to rise by an average 18 per cent, but Central Otago and Wānaka residents faced 23 per cent price hikes.
Central Otago Mayor Tim Cadogan said in light of Covid-19's economic devastation, those plans needed to be revisited.
"It was obscene even before the current recession or depression that we're now in and now it's beyond obscene, and absolutely unsustainable," he said.
Central Otago and Wānaka's residents faced monthly line charges rising from $59 to $101 by 2024, in comparison to hikes in Queenstown of $45 to $79 and in Dunedin of $33 to $59.
Cadogan said the Central Otago District Council would be pressing the Commerce Commission to ensure the spending was justified.
"There are a number of things we'd like to see the commission do. Top on that list is to make sure absolutely every penny that Aurora is asking for is absolutely needed."
The economic effects of Covid-19 meant Aurora might need to make do with a fit-for-purpose network rather than a "gold-plated" one and he wanted the investment spread over a longer time period, Cadogan said.
Grey Power Central Otago president Margaret Hill said those on fixed incomes, particularly pensioners, would be most affected.
"They're going to have to give up something. Is it going to be food? Is it going to be doctor's visits? Just to keep the power in their houses," she said.
In an area renowned for bitter winters, that could mean greater health costs and illness.
The community was angry, Hill said.
"Why has it got to this stage and why should we have to pay such huge amounts to fix their mistakes?" she asked.
The manager of Queenstown community support agency Happiness House, Robyn Francis, said the Queenstown Lakes and Central Otago districts needed time to recover from the economic hit of Covid-19 before residents could pay higher costs.
"People are already crushed and in a dire situation with unemployment and not being able to meet their costs, including power and rent," she said.
Millions of dollars in dividends were paid over years to the ouncil.
Queenstown Lakes deputy mayor and Wānaka resident Calum MacLeod said Dunedin benefited from the cash while the network decayed, and the city's council needed to front up to help fix it.
"It's an issue that's been brought about by an over-extraction of dividend and under-investment in the facility. And if you actually looked at where the dividend has gone you'd be fair to say the dividend wasn't paid in Wānaka, so it's been unfairly affected."
Aurora would not front for an interview, but a spokesperson said the company had updated its plans after reviewing feedback from customers when formal consultation closed this year.
"We have also recently assessed our plans in light of the expected impacts of Covid-19 and made adjustments accordingly," the spokesperson said, though details were not provided.
"We continue to update our thinking and will work with the commission post our submission as the longer term effects of Covid-19 become clear.
"Our application including our final proposal and 2020 Asset Management Plan will be publicly available on our consultation website and will include a summary of customer feedback and how we have addressed that feedback in our final proposal.
"A consistent theme has been that customers agreed that essential work is necessary, but customers are concerned about the proposed price increase and we have those views clearly in mind as we have finalised our proposal.
The plan would be submitted to the commission on June 12 with the public getting another opportunity to have its say.
The commission's decision would come into effect April next year.
The council's general manager finance and commercial, Dave Tombs did not direcly address the prospect of capital injection into the upgrade or repaying the dividend. "The council continues to work with Dunedin City Holdings Ltd to develop the strategic direction of each of its subsidiaries," his statement to RNZ said.
"The Commerce Commission's review of Aurora's customised price-quality application will have an significant impact on Aurora's long-term planning and it would not be appropriate to comment on any such planning until the results of the Commerce Commission's review are known."
Dunedin City Holdings Limited's chairman Keith Cooper, said: "There is no subsidy between Aurora's three network pricing regions. Prices reflect the long-term costs of providing infrastructure and ongoing maintenance in each pricing region.
"This targeted allocation approach is consistent with the Electricity Authority's pricing principles, which Aurora Energy as a regulated business is required to comply with.
"Queenstown, Wānaka and Central Otago are also growing fast. This drives new investment needed to meet growing demand for new electricity connections.
"We understand that Aurora Energy is reviewing the impact of the Covid-19 situation on the region's economy and is adjusting its planning assumptions and investment timing decision, accordingly."
