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A $3.4m accounting blunder by Wellington City Council has left households facing surprise rates top-ups next year, after an error saw ratepayers undercharged for the capital’s sludge levy.

The error was included in rates bills sent out in August and November this year and works out to an average of $40 per ratepayer, but ranges from between $3 and $100 undercharged per bill.

Commercial ratepayers have been undercharged between $500 and $5,000 each, an average of $1,200 per levy payer.

A council spokesman said it legally cannot waive or absorb the cost and the undercharge will have to be footed by ratepayers in their February and May rates bills next year, so it can be passed on to the sludge facility’s funding entity.

The Council’s chief strategy and finance officer Andrea Reeves said the error was discovered during a quarterly reporting review and the council “took immediate action” to investigate.

“We want to sincerely apologise for this error,” Reeves said.

“To prevent this happening again, stronger internal controls have been put in place, including additional review steps.”

Wellington City Council chief financial officer Andrea Reeves. Photo / Supplied

February rates bills will include personalised information about the undercharge, Reeves said, and no penalties or interest will be applied.

The mistake happened when the levy was uploaded into the billing system, the council said.

“Some amounts were entered as GST-inclusive instead of GST-exclusive, and an incorrect fixed charge was used.”

What is the sludge levy?

In 2024, Wellington City Council included a special sludge levy to rates bills, to help fund its first-of-its-kind under-construction sludge minimisation facility.

The project has faced its own financial challenges, with a potential $83m budget blowout revealed earlier this year.

Sewage sludge is a natural and unavoidable by-product of the process of treating wastewater.

A render of Wellington City Council's new sludge treatment plant. Image / WCC

The city produces more sludge than it can currently deal with, leading the city council to approve the construction of a new sludge minimisation facility at Moa Point near the airport in late 2022.

The facility was initially budgeted to cost $200m, but climbed to $400m by the time it was approved in 2022, before being raised again to a budgeted $428m in June 2023.

The budget blew out again in August this year when councillors were told the cost of the project grew to between $478m and $511m.

 is a Wellington-based journalist covering Wellington issues, local politics and business in the capital. He can be emailed at [email protected].