State regulators have approved an agreement that cuts a rate increase sought by Virginia Natural Gas by more than half.

The State Corporation Commission says in a news release that the agreement gives the company an $11.3 million rate increase. Virginia Natural Gas had sought a $25.1 million increase.

The average residential customer will pay an additional $3.47 a month.

Customers who paid higher interim rates that went into effect Oct. 1 will receive refunds with interest.

Parties to the agreement included the company, the SCC staff and the Attorney General's Office.

Virginia Natural Gas serves more than 275,000 customers in southeast Virginia.