Dominion Virginia Power asked state regulators Friday to approve the first fuel rate increase in two years as fuel prices and customer demand for electricity are projected to increase by July 2014.

If approved by the Virginia State Corporation Commission (SCC), the monthly 1,000 kilowatt-hour bill for the typical Dominion residential customer would increase by $2.36, from $108.39 to $110.75. The increase would occur July 1, pending the annual review and decision by the commission.

The fuel rate, which comprises about 25 percent of a typical residential bill, pays for the natural gas, coal, uranium and biomass the company purchases to generate electricity for its 2.3 million Virginia customers. Base rates and special charges for approved new power projects, energy efficiency measures, and transmission make up the remainder of the bill.

The company earns no profit on what it collects for fuel and passes any cost savings or increases directly to customers, a release stated. Domini...