The council applied to the Independent Pricing and Regulatory Tribunal (IPART) for a 6.8 per cent rate rise, 4 per cent above the 2.8 per cent rate peg limit permitted for local councils.

The special variation, above the rate peg, will be applied exclusively to mining companies.

It will generate an extra $400,000 for the council in the 2011-12 financial year, which will be spent on roads.

The council had applied for a permanent special variation increase, however IPART approved the rate rise for one year only.

“We found that Muswellbrook Shire Council’s application did not demonstrate a need for a special variation for more than one year, given that a number of roads in the council’s program of works would benefit only specific mines,” an IPART report said.

“We consider that these works could be funded by agreements with individual mining ratepayers rather than a special variation to be funded by all mines.”

The council must use the special variation for reconstruction works on Carramere and Blakefield Roads, Muswellbrook.

“These roads have deteriorated due to mining activity and are used by trucks from several mines and not just one mine,” the report said.

“The reconstruction works, in our view, are suitable to be funded through an increase in rates that are paid by all mines in Muswellbrook Shire.”