An error in which Wellington’s water meter users are under-billed this fiscal year 2021/22 has left Wellington City Council with a potential $3million shortfall, a report at the meeting says from next Wednesday’s Kāwai Māhirahira Audit and Risk Board Sub-Committee.
However, commercial and residential users of the city’s water meters will not be affected – the Council proposes to fill the potential revenue shortfall through borrowing rather than attempting to recoup the undercharge.
There are 3151 commercial water meters around the city and 630 residential water meters.
Next week’s sub-committee meeting will consider and vote on the proposal – it will then be considered at a full Council meeting on February 24.
The city council’s chief financial officer, Sara Hay, said the shortfall was the result of a data entry error due to a combination of systems and manual processes. The error was detected at the end of last year.
“This is a very unfortunate situation and I have undertaken a review of our procedures and our verification system to ensure that this does not happen again,” says Ms Hay. In addition, a new rate modeling system has since been implemented to replace the existing Excel models.
Taxpayers with a water meter will have seen a reduction in the rate charged this year compared to last year. If the proposal is approved, the correct charges will appear on the invoice for the first quarter of the 2022/23 financial year – this will be in July.
Ms Hay says new measured fees were set during deliberations on the 2021-31 long-term plan last year – but the fees relating to the 2019/20 financial year remained in place.
Meter users were supposed to pay $2.88 per cubic meter of water, but were actually charged $2.435/m3. In addition, the annual fixed charge rate per water meter connection was supposed to be $160.68, but users had to pay $135.96.
Ms. Hay says the error could result in $3 million in lost revenue for the Council based on actual water usage for accounts measured against budgeted volumes.
Debt financing of any shortfall is recommended given the available administrative efficiencies, costs and uncertainties of initiating a statutory process to override the rate parameters.
She says process and system improvements have been made to prevent such errors from happening in the future. An independent third party is engaged to provide quality assurance that improved processes and systems will work as intended. In addition, a Senior Tariff Expert has been seconded from Auckland Council to work alongside staff to improve capabilities and systems.
The report from next week’s subcommittee meeting can be read here.