The Virginia Electric and Power Co. was granted a $9.8 million rate increase yesterday based on higher fuel costs incurred by the utility in the first five months of this year.

However, Virginia's public utility regulating commission declined to grant Vepco about $40 million more that the utility had said it would need in the remaining seven months of the year.

The increase is expected to raise residential customer's bill by less than 75 cents for every 1,000 kilowatt hours, according to a spokesman for the State Corporation Commission.

The increase was granted after the SCC deducted from Vepco's request $3.28 million the SCC said customers already had been charged as a result of a 1977 nuclear plant shutdown the commission considered avoidable.

According to the spokesman, the commission staff had found that faulty inspection procedures in boiler tubes had caused a nine-day shutdown in November 1977 at Vepco's Surry Nuclear Plant No. 2.

In its opinion yesterday, the SCC called the November shutdown "unacceptable."

The shutdown necessitated the use of more costly fossil fuels, and these costs were passed on the consumers under the old fuel adjustment clause.

Under the fuel adjustment system, utilities won increases after demonstrating they already had spent more for fuel than anticipated.

After some legisators expressed dissatisfaction with what appeared to be a steady round of increases under that system, it was abandoned in favor of the new system that took effect Jan. 1.

Under this system, utilities are asked to project fuel costs for the coming year, and may also win adjustments through quarterly hearings.

Vepco asked at hearings last month for a total $54 million increase based on actual and projected costs. The SCC declined to grant at this time the part of the increase based on projected costs, citing what it described as uncertainty over the availability of electricity generated at Vepco's nuclear plants.

Increasing the share of power generated at nuclear plants generally decreases fuel costs by reducing dependence on expensive coal and oil, utility officials say.

An SCC spokesman also noted that Vepco could renew its request for the increase at the next quarterly hearings.

Two other utilities serving parts of Virginia also asked for fuel factor increases. Both requests were for less than $1 million and both were granted.

Vepco's board chairman T. Justin Moore Jr. said yesterday "we are terribly disappointed" that Vepco was not granted "immediately the full cost of fuel as other utilities were."

A Vepco spokesman said he wished to study the SCC order before commenting on the assertion that the Surry shutdown could have been avoided.