An error in which Wellington’s water meter users are being undercharged during this 2021/22 financial year has left Wellington City Council with a potential $3 million revenue shortfall, according to a report to the upcoming 2 February meeting of the Council’s Kāwai Māhirahira Audit and Risk Subcommittee.

However the city’s commercial and residential water-meter users will not be affected – the Council proposes to make up the potential shortfall through borrowing rather than attempt to recover the under charge.

There are 3151 commercial water meters around the city, and 630 residential water meters.

Next week’s subcommittee meeting will consider and vote on the proposal – it will then be considered at a full Council meeting on 24 February.

City Council Chief Financial Officer Sara Hay says the shortfall was the result of a data-inputting error through a combination of systems and manual processes. The error was detected late last year.

“This is a very unfortunate situation and I have undertaken a review of our procedures and checking system to ensure that this doesn’t happen again,” Ms Hay says. Furthermore, a new rates modelling system has since been implemented to replace existing excel models.

Ratepayers with a water meter will have seen a reduction in the rate charged this year when compared to last year. If the proposal is approved, the correct charge will appear on the first-quarter invoice for the 2022/23 financial year – this will be in July.

Ms Hay says new metred charges were set in last year’s 2021-31 Long-term Plan deliberations – however charges relating to the 2019/20 financial year remained in place.

Meter users were supposed to be charged $2.88 per cubic-metre of water but were in fact charged $2.435/m3. Additionally the annual rate for the fixed charge per water meter connection was supposed to be $160.68 but users were charged $135.96.

Ms Hay says the error could result in a $3 million revenue loss for the Council depending on actual water usage for metred accounts versus budgeted volumes.

Debt funding any shortfall is recommended given the administrative efficiencies available, over the costs and uncertainties of initiating a statutory process to replace the rates settings.

She says process and system improvements have been made to prevent such errors occurring in the future. An independent third party is being engaged to provide quality assurance that the improved processes and systems will work as intended. In addition, a senior rates expert has been seconded from Auckland Council to work alongside staff to improve capabilities and systems.

The report to next week’s subcommittee meeting can be read here.

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