The prospect of annual demands to raise utility rates has opened a new debate over the way the District of Columbia regulates the electric, gas and telephone companies.

The problem is that the D.C. Public Services Commission has taken an average of 17 months to decide its last three major rate cases.

If -- as utility excutives say is inevitable -- soaring energy costs will require annual reviews of rates, the PSC could quickly become a permanent victim of regulatory lag.

The solution, says the District of Columbia Bar Association, is to rewrite the law under which the PSC had had 10 months to study the application for higher rate, the Bar Association has recommended.

To make it possible to meet that deadline, the lawyers added, the PSC staff should be beefed up with at least 14 new professionals -- three new lawyers, four auditors, five accountants and two engineers.

The Bar also recommended the PSC be give its own legal staff, independent of the city's corporation counsel, which now serves as the law firm for all city agencies, including the PSC.

Drafted by a committee of lawyers specializing in utility work, the Bar Association's recommendations have been forwarded to the D.C. City Council, which already is juggling one hot utility potato.

The council has tabled for the time being an ordinance that would limit the budget of the D.C. People's Counsel, the city government agency set up to represent consumers in utility rate cases.

The measure was introduced by council chairman Arrington Dixon, whose wife Sharon is director of Consumer Affairs of Potomac Electric Power Co.

People's Counsel Brian Lederer contends the bill is a not-verysubtle attempt by Pepco to get even with Lederer and his staff for their successful campaign to block Peopco's latest rate request.

Pepco contends the People's Counsel has an unregulated franchise pay for his fights with the utility companies. Under present law the People's Counsel's budget is paid by assessing the utility companies for whatever Lederer spends without city council review. The utility then pases the cost on to its customers.

The prospects for that measure at well as the Bar Association's plan to restructure the PSC are linded to what is likely to become another utility controversy -- the possible appointment of Lederer to the Public Service Commission.

His performance as People's Counsel suggests Leader would be an activist PSC commissioner, a striking contrast to the legalistic, almost judicial demeanor of chairman Elizabeth Patterson or her predecessor Ruth Hankins-Nesbitt.

Lederer is being considered to replace Commissioner William Stratton, now regarded as the most experience, most knowledgable person on the PSC.

As people's Counsel, Lederer has complained recently about the inordinate delays in recent PSC rulings. It took the commission 17 months to decide on telephone rates the last time it considered them, 19 1/2 months to analyze Washington Gas Light's last big rate request and nearly two years to decide the Pepco case.

Under the Bar Association's PSC reform plan, utility companies would give the PSC a month's notice of their plan to raise rates. The PSC could either allow the rate increase to go into effect after 30 days or suspend the new rates for up to nine months.

At that point -- whether the commission had reached a decision or not -- the rate increase would go into effect. If the PSC later decided the rate hike was not justified, then, the utility would refund the amount it collected to its customers. The Bar points out that 44 of the 49 state utility regulatiory agencies work that way now.

The deadline not only gives the regulators an incentive to act promptly, it also assures the utilities they will not have to wait for badly needed revenues, argued the committee headed by attorney William C. Bort.

One of the critical questions in the plan -- and one the Bar would leave to the PSC -- is how any excess charges would be refunded to the customers. Would each customer get a check or would rates be rolled back temporarily? Nor does the Bar answer the question of whether customers should get interest on any overpayments.

In a minority report to the Bar's Public Utilities Law Committee, attorney Gaillard T. Hunt points out that "refunds are least likely to reach those consumers who can least afford to lose them, those who move, sublet, etc."

There is dissent within the bar too on the issue of building up the Psc's staff to speed its decisions. "The time has pased with any complaint regarding the efficiency of government can be met with the automatic response of "hire more people" complained attorney Howard C. Anderson, another committee member.

Despite the dissents, the Bar Association has endorsed the committee's report and drafted the necessary city ordinance to implement it.

The price that Washingtonians pay for heat, lights, telephones and taxis will be determined ultimately by how well that bill fares and what happens to People's Counsel Leader, whether he is promoted to the PSC or put under control of the City Council.