PLAINFIELD - Plainfield-based Duke Energy Indiana says a settlement agreement regarding savings from the federal Tax Cuts and Jobs Act has been approved. The Indiana Utility Regulatory Commission has given the OK for the deal, which lays out how Duke Energy will disperse the savings to consumers.

The utility says consumers will see an average reduction in their electric rates of 5.6 percent by 2020. While the exact amount of savings will vary by the type of customer, average residential customers using 1,000 kilowatt-hours each month will save $7.33 on their electric bills, according to Duke Energy.

Duke Energy reached the settlement with the Indiana Office Utility Consumer Counselor and various consumer groups in late June. Duke Energy Indiana President Melody Birmingham-Byrd calls the deal an important agreement.

"The commission’s approval allows us to begin passing along savings to customers immediately and ensure they see the benefit of the new federal tax law," Birmingham-Byrd said in a news release. "It’s a unique opportunity to lower electric rates and help offset other costs."

The utility says it began reflecting the lower federal tax rate in customer bills earlier this year. The settlement agreement reduces base rates in September to reflect the lower tax rates and also includes refunds of accumulated deferred taxes in 2018 and 2020.