"We know the district council is taking steps to address the issue and is keeping Horizons staff appraised of progress. It is a complex problem but the district council is in breach of regional rules around air quality and, as the regulator, we need to act accordingly," Dr Peet said.
He said if the city council was unable to get rid of the smell within four weeks, Horizons would look at why that was.
"There are a range of further enforcement actions we can take, but we certainly won't be hitting them with an automatic fine."
He declined to say what those further actions might be.
Dr Peet said the council had identified that unusually large amounts of trade waste entering its plant had resulted in the recent widespread smell.
"We understand that Wanganui District Council will be ensuring that the industries discharging industrial waste to the plant do not exceed the conditions set in their consents with the district council.
"However, the plant has had a number of problems since it opened, which mean that it has not being functioning as it should.
"This raises the fundamental question of whether the plant, as it is currently designed, can cope with even normal consented amounts of industrial and domestic wastewater and, if not, what needs to be done to fix it."