Customers of Interstate Power and Light Co. eventually will pay higher natural gas service costs under a rate increase approved by the Iowa Utilities Board (IUB).

A settlement agreement approved by the board allows the utility’s permanent annual revenue from natural gas service rates to increase by $10.5 million (4.8 percent), but it also includes tax credits that will reduce customer rate impacts over the next three years.

With the tax credits in place, a typical residential natural gas customer should pay about 39 cents less per month for the next three years, but then see an increase of about $3 per month.

The rate changes apply only to the natural gas service portion of customer bills and not to the cost of the gas itself, which the utility passes on to customers dollar-for-dollar.