The Office of the People's Counsel yesterday told the District Public Service Commission that Chesapeake & Potomac Telephone Co., which has a $56 million rate request pending, should instead lower its residential and business charges.

"The testimony we have filed today shows that C&P's rate request is wholly unjustified," said Frederick Dorsey, who represents the consumer view in rate cases. Dorsey, who has been in office little more than a year, last August asked the PSC to dismiss the C&P rate case.

"Not only should C&P be denied its current request, but our analysis indicates that the company received more than it needed from the last increase granted by the Public Service Commission," Dorsey said.

C&P, which asked for a $78.5 million rate increase last August, has reduced the request to $56.3 million. The original request would have raised residential rates by an average of 153 percent and business rates by an average of 12 percent. Under the modified request for additional revenue, C&P has not yet submitted a new rate design.

The phone company also seeks to impose charges for a dial tone, in addition to charging for telephone usage. Under the original rate request, for example, unlimited metro calling, which now costs $12.49 a month, would rise to $27.75 a month -- $13.42 for dial-tone service and $14.33 for usage.

Dorsey said existing phone rates actually should be lowered by $6.9 million, and offered several reasons for freezing or lowering rates. First, he said, C&P does not need an increase in its return on equity, currently 13.5 percent.

Dorsey also said he was not convinced rate payers were not subsidizing the building of a cable television system by C&P in the District of Columbia, nor that C&P had presented an accurate financial picture to the PSC or shown it was passing refunds from American Telephone & Telegraph Co. at the time of the Bell System breakup through to rate payers.

He also objected to C&P's proposal to separate local service into usage and line charges. "The so-called dial-tone line charge is just a warmed-over proposal for local measured service, which District customers and the PSC have overwhelmingly rejected in the past," he said. C&P officials could not be reached for comment late yesterday.

The Maryland Office of the People's Counsel also asked for a $58 million reduction in Maryland telephone rates earlier this week. C&P of Maryland has requested $118 million in increased rates.

Meanwhile, the D.C. commission is considering a proposal to require C&P to issue new customer bill inserts showing how much residential phone rates would increase under its rate request.

Officials said PSC Chairman Patricia M. Worthy had proposed drafting a new bill insert, together with citizens' group representatives, and requiring C&P to send it out to its D.C. customers.

The proposal was in response to citizens' group protests last week that a C&P bill insert and a PSC public notice about the C&P rate request were misleading because they did not state how much residential rates would rise.