Two environmental groups and the D.C. People's Counsel have asked the city's Public Service Commission to reconsider a ruling that spared Potomac Electric Power Co. and Washington Gas Light Co. from having to provide low-cost or no-cost loans for residential energy conservation measures.

Last month, the PSC decided that it had no authority to order a utility financing program -- part of the federally mandated Residential Conservation Program plan drafted by the D.C. Energy Office -- unless it was vital to the success of the program. In doing so, the PSC rejected a proposed order by a hearing examiner that would have required the gas and electric companies to set up a pilot program.

Although the PSC turned down the pilot loan program, it adopted an order requiring the utilities to make residental energy inspections free of charge.

The Environmental Defense Fund, the Natural Resources Defense Council and the office of People's Counsel have asked the PSC to review its decision. Pepco and Washington Gas Light oppose the application for reconsideration.

The environmental groups and People's Counsel Brian Lederer argued that the Public Service Commission underestimated its authority when it decided that ordering the subsidized loan program was outside its powers.

The environmental groups, noting that at least 29 utilities across the country make loans at market or subsidized rates, said that the D.C. decision might discourage additional states from setting up similar programs.

"The outcome of this case is, therefore, of national significance," according to papers asking the PSC to take up the issue again.

According to papers filed by Lederer, "Utility financing is absolutely essential to ensuring that . . . as many customers as possible install the conservation measures recommended by the RCS audit."

The utilities oppose a loan program on the grounds that it is not essential to their obligation to provide energy services and that it would add to energy costs.