New Jersey regulators have approved a $40 million rate increase for American Water customers, about a third of what the utility requested when it originally filed its request more than a year ago.

Monthly bills will increase $2.76 to $56.34, or 5.2 percent for a typical New Jersey American residential water customer using 6,000 gallons a month, according to a settlement approved Monday by the New Jersey Board of Public Utilities.

For all customers combined, rates will go up about 6.2 percent. The new rates go into effect immediately.

The water utility initially requested an increase of $129.3 million, or 17.5 percent, which was revised down to about $117 million to reflect lower corporate federal taxes after Congress approved the Tax Cuts and Jobs Act.

When no agreement was reached after nine months, the company was allowed to impose a provisional rate increase of $75 million on June 15. In the settlement approved Monday, New Jersey American agreed to refund the amount it over-collected from each customer for the last four months, plus interest, in an upcoming one-time bill credit.

While most residential water customers will receive a 5.1 percent increase, some customers in areas more recently acquired by the utility, such as Haddonfield, may experience greater increases as their rates are brought closer into line with the broader population of customers.

Sewer rates will increase on average about 6.3 percent under the agreement, which was negotiated with the BPU's staff and with customer advocates.

In a prepared statement, the company expressed satisfaction with the rate agreement.

New Jersey American has 631,000 customers across the state, and 41,000 wastewater customers.

New Jersey American Water is a subsidiary of American Water Works Co. Inc., the nation's largest water utility, which is moving its headquarters from Voorhees to Camden.