A federal appeals court has ruled against Potomac Electric Power Co. in a dispute with the Environmental Protection Agency that could end up costing Pepco's customers as much as $100 million.

The cost upheld an EPA order that Pepco either install costly pollution-control gear on a new power plant under construction at Chalk Point Md., or burn only expensive low-sulfur oil at the plant.

In either case, the plant or the fuel bill for it will go up and Pepco will pass the extra costs on to its customers.

Pepco yesterday notified the D.C. Public Service Commission of the Fourth Circuit Court of Appeals' decision, which was issued a week ago.

The utility company said it plans to ask the court to reconsider its order and if that fails may try to take the case to the U.S. Supreme Court. Pepco Vice President Alan Kirk II said the company will also ask EPA to grant an exemption from its rules for the plant or to change the rules.

Pepco's dispute with the EPA involves 10-year-old regulations that closely restrict air pollution emissions from new sources.A Pepco press officer said company officials estimate that in the "worst case" complying with the regulations could cost the company's customers as much as $100 million, including the $50 million scrubber to remove pollutants from the plant's exhaust.

D.C. People's Counsel Brian Lederer criticized Pepco for fighting with the EPA and said the adverse ruling is further evidence that Pepco should not be building a new power plant that burns oil.

The plant is the last major electric generator in the U.S. being built to burn oil and Lederer for months has insisted it would be cheaper for Pepco to change the design of the plant so it can burn coal.

By fueding with the EPA, Lederer commented, Pepco executives "boxed themselves in, unfortunately its at our expense."