Atmos Energy asked the Kentucky Public Service Commission for $3.3 million in additional revenue but settled for $500,000.

The settlement was announced Thursday and it represents less than one-sixth of a requested increase in its natural gas distribution rates, the PSC said in a press release.

“Under the the terms of the settlement, the monthly service charge for Atmos residential customers will decrease from the current $18.65 to $17.50,” the press release said.

The reduction in the monthly residential service charge includes a reduction to zero of a $2.65 surcharge assessed to pay for an accelerated program to replace aging pipes in the Atmos distribution system, the PSC said. That surcharge was in addition to the $16 base monthly service charge, making the total $18.65, the PSC said.

The delivery charge for gas will rise from $1.32 per 1,000 cubic feet to $1.53 per 1,000 cubic feet.

A call to Atmos Energy spokesman Kay Coomes was not immediately returned on Friday.

The rates agreed to in the settlement do not include the cost of the gas itself, which accounts for about half the total bill. The gas cost is adjusted every three months to reflect – on a dollar-for-dollar basis – the amount Atmos pays for gas on the wholesale market.

Atmos Energy serves nearly 175,000 customers in central and western Kentucky.

The company filed a rate increase request in November, seeking an additional $3.3 million in revenue from gas distribution operations, an increase of about 2 percent. The company asserted that residential customers would see an increase, on average, of slightly more than 2 percent in the base rate portion of their bills.

Under the terms of the settlement, the base rate portion of residential bills will change only slightly, increasing somewhat during months of high gas usage and decreasing slightly when gas usage is low.

The settlement was negotiated by Atmos Energy and the Kentucky Office of Attorney General, which was the only other party to the case. It was submitted to the PSC on June 24.