Dominion Virginia Power announced Tuesday it will seek permission from the State Corporation Commission to raise electricity rates to cover increased fuel costs effective July 1.

The company said under the proposal the average residential customer, who uses 1,000-kilowatt-hours per month, would see his or her bill increase $16.61 to $107.20.

Under law, money raised for the fuel costs would go directly to paying energy costs. Dominion would not profit.

“The market prices of fuel used to run our power stations — coal, natural gas, fuel oil and uranium — have risen by more than 200 percent in some cases since fuel rates were last fully aligned with market conditions in 2004,” David A. Heacock, president of Dominion Virginia Power, said in a statement.

Dominion would need approval from the SCC to raise its rates. It last raised them in 2004 by 4 percent because of increased fuel costs.

Dominion has proposed a number of options to mitigate the impact of increased rates on Dominion customers. The company has proposed deferring $697 million of fuel costs, which would be collected over three years starting in 2009.

Dominion has also proposed allowing small businesses and nonprofit organizations equalize payments throughout the year, an option similar to the Budget Billing offered to some residential customers. The company has also said it would make it easier to enroll in Budget Billing.

The company has also agreed to contribute an additional $5 million to its EnergyShare program, which provides emergency grants to residents who need help paying heating and cooling bills. It says it would also work with social services agencies to help promote energy efficiency for senior citizens and low-income customers.