The Independent Pricing and Regulatory Tribunal has announced new rate pegs for 2022-23.

The rate peg is the maximum percentage amount a council can increase its general income for the year.

In 2021-22, the statewide rate peg, or ceiling, was 2.6 per cent. Councils can choose if they apply the maximum amount, and which types of rates they increase to achieve the total increase. Most generally take up the maximum allowable.

But IPART has set rate pegs for each council ranging from 0.7 to 5.0 per cent. The rate peg varies based on a variety of factors, but for the first time incorporates an area's population growth.

For instance, the rate peg for Lake Macquarie council is 0.7 per cent, but is 1.2 per cent for Newcastle council, where the city's population increased more between 2019 and 2020. The rate peg for Cessnock and Maitland is 0.7 per cent, while for Port Stephens it is 1.2 per cent.

Newcastle's CEO Jeremy Bath said the changes would have "significant repercussions" on "service levels".

"IPART's undercooked rate cap will reduce our forecast income by $1.4 million," he said.

"Compounded over the next ten years, this will cost the city more than $15 million.

"Councils had been forecasting a rate increase of 2 per cent in line with the 2 per cent mandated increase in staff salaries for next year, so to be told we can only increase rates by half this amount is a significant blow to our budget."

Lake Macquarie council CEO Morven Cameron said her council would be $1.9 million worse off in 2022-23, which will "hinder our ability to deliver the kind of infrastructure and services our community expects".

"Over 10 years it will reduce our income by $21 million," she said. "If council wanted to increase its income by $20 million, we'd quite rightly undertake months of consultation.

"Yet IPART has been able to make a decision that will result in a $20 million negative impact on our city."

Mr Bath said IPART had made its determination "using incorrect costing assumptions", citing its conclusion that the cost of fuel had "fallen by more than 2 per cent, when the Australian Bureau of Statistics states that automotive fuel has increased by 7.1 per cent during the past 12 months".

Tribunal chair Carmel Donnelly said: "We have developed a way of incorporating population growth into the rate peg that balances the need to ensure councils are financially sustainable, while protecting ratepayers from excessive rate rises."

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