An agreement struck between the Newport Water Division and its customers would still increase water rates, but by a little less than what the division had initially sought. Last February, the division filed an application with the state Public Utilities Commission to implement a two-phase rate hike. The three entities outside the city that get their supply from the division subsequently filed motions to intervene in the process. Newport Water sells water directly to residential and commercial customers in the city and town of Middletown and sells water wholesale separately to Naval Station Newport and the Portsmouth Water and Fire District, which services almost the entire town. The settlement agreement between all four parties was submitted to the PUC on Sept. 18.