TOPEKA -- The Kansas Corporation Commission approved a settlement agreement Tuesday morning that will increase residential rates for Kansas Gas customers by an average $2.40 per month.

The hike, negotiated between KCC staff, the Citizens Utility Ratepayer Board, Kansas Gas Service and other intervenors, is less than 43 percent of the increase sought by the utility in its latest rate case. The new rates take effect Wednesday.

Under the settlement agreement, residential customers will see an increase of $2.40 per month, which is a 4.23 percent increase, on average, according to a news release from the KCC.

That includes a $2 increase in the customer charge, going from $16.70 to $18.70 per month. The release did not indicate where the rest of the hike will show up on bills.

The company’s original proposal called for a monthly residential increase of $5.67 or 10 percent. In its application, KGS requested to increase base rates by $45.6 million. The settlement approved today will result in an annual increase of $21.5 million, the release stated.

One issue yet to be decided is whether KGS will be allowed to keep tax savings it has accrued since the Federal Tax Cut and Jobs Act took effect.

In December 2017, the KCC issued an order requiring investor owned utilities to accrue those savings in an interest bearing regulatory account allowing time to study the economic impacts of the new lower tax rates and where appropriate, to pass cost savings on to consumers. KGS asked to retain the accrued savings of $17.9 million to offset its cost of service. Both KCC staff and CURB voiced opposition to the request at an evidentiary hearing in December.

The Commission will issue a decision on the tax savings issue by Feb. 25.

Tuesday's order can be viewed on the Commission’s website at: http://estar.kcc.ks.gov/estar/ViewFile.aspx?Id=296a4df7-658b-4d87-b9a6-fde3a18331ff