Pepco customers in Maryland will see rates increase under hikes approved Friday.

The new rates take effect immediately and will add about $2.41 a month to the average residential customer bill, according to the Maryland Public Service Commission. The total increase of $27.9 million is less than half of the $60.8 million Pepco sought when it filed its case in November asking to increase what it charges to distribute electricity.

Regulators also approved a monthly surcharge atop the new rates. The surcharge will begin in January and is meant to cover Pepco’s costs of improving reliability on some of its worst lines that feed power into neighborhoods. The surcharge on the average homeowner bill will be 6 cents a month in 2014, rising to 27 cents a month in 2016 if Pepco meets certain milestones.

Consumer advocates at the Maryland Office of People’s Counsel decried the decision to approve a Pepco surcharge that gives the utility money upfront for future improvements.