Norwich — Norwich Public Utilities natural gas customers will see a reduction in their monthly bills, thanks to a provision in the recently approved state budget that exempts the city-owned utility from the state Gross Receipts Tax, NPU officials announced Tuesday.

NPU has approximately 10,000 natural gas customers, and the average residential customer will see a decrease of approximately 4% on their bill each month. Commercial customers will see a decrease of 5%. The tax cut goes into effect on July 1, and NPU currently is working to have the tax cut incorporated into its billing system.

“Our local legislative delegation has delivered for our customers in a big way, and we appreciate their time and effort on this important issue,” NPU General Manager Chris LaRose said in a news release Tuesday.

As a municipally owned entity, NPU is a nonprofit organization and therefore tax-exempt, with one exception before last week. NPU, the only municipal gas company in Connecticut, paid the Gross Receipts Tax on the natural gas that is purchased for its customers. Over the past five years, NPU natural gas customers have paid more than $4.5 million to the state through this tax.

LaRose specifically thanked state Reps. Emmett Riley, D-Norwich, and Kevin Ryan, D-Montville, and state Sen. Cathy Osten, D-Sprague, all of whom represent Norwich. LaRose said the legislators, “clearly understand the significance of providing tax relief for our natural gas customers, many of whom continue to struggle financially as the (COVID-19) pandemic continues.”

Norwich-area legislators worked to include a provision in the state budget that now exempts municipally owned natural gas companies from the Gross Receipts Tax.

The tax relief for NPU customers comes as energy costs continue to rise dramatically for NPU and utility companies everywhere, NPU officials said in the news release. NPU is preparing to raise its Purchased Power Adjustment and Purchased Gas Adjustment — or costs that utilities directly pass on to customers — to address the rising costs of wholesale electricity and natural gas used by its customers, NPU officials said.