Potomac Electric Power Co. has signed contracts to buy methane-generated electric power from a company that will produce power from trash in a Montgomery County landfill.

Utility spokeswoman Nancy Moses said yesterday Pepco signed a 10-year contract for an undisclosed sum with Pacific Lighting Energy Systems, a small California power producer, to buy electric power from a methane-powered generating plant. The methane gas, a product of trash decomposition, will be extracted from Montgomery County's Gude Landfill.

Pepco will be buying electricity equivalent to the power used by about 1,600 Maryland households annually and savings will result from the fact that it will cost less to purchase the fuel than it would to generate it, said Moses. The effort is part of the company's energy management programs aimed at curbing demand for electricity.

California-based Pacific Lighting will operate a 3-megawatt plant and pay a royalty to Montgomery County to extract methane from the county landfill, closed since June 1982. The plant is expected to be in operation by early 1987, said Moses.

Although the power production seems "small compared to what one of our power plants generate, we are encouraged by the fact that someone wants to do it -- we want people to use creative talents to come up with projects like this, deferring our need to build that next power plant," Moses said. The program coupled with other energy management programs is helping to delay construction of a costly new generating plant into the mid-1990s.

In another experimental program, trash will be turned directly into usable power, said Moses. Two environmental companies will design and operate the $1.5 million project, burning solid waste from Montgomery County at Pepco's plant in Dickerson, Md., said Moses.

Montgomery County is funding transportation costs for the solid waste and the Maryland Board of Public Works is providing a grant of $500,000 for the two- to six-month test burn of the fuel. The experiment will take place sometime in May, she said.

Instead of solid waste from the county's "transfer center" being dumped into a a landfill, the waste will be turned into "refuse-derived fuel" at a plant near Baltimore and then combined with soft coal to be burned at Pepco's 556-megawatt generating plant. Pepco is providing all necessary instrumentation and equipment modification for the project, as well as writing up a report on the results.

"This project would potentially reduce fuel costs because the trash would be cheaper than coal when coal transportation costs are factored in," said Moses. "If it helps reduce fuel costs, then it will reduce a customer's fuel portion of their bill." Pepco has no estimates of fuel savings at this time, she said, but Baltimore Gas & Electric Co. has realized savings through an identical program.

In addition to fuel cost savings, "the county is struggling with dealing with solid waste and it may prolong the life of their landfill out at Laytonsville Md. because it just means that much less going to the landfill," she said.

In another program, Pepco recently filed with the District Public Service Commission seeking to expand energy management programs in the city. The PSC must approve Pepco's plans to expand mandatory commercial time-of-use rates, which charge businesses more or less money depending on the time of day they use electricity. Three hundred businesses now pay the rates, but Pepco plans to have 20,000 commercial customers systemwide paying the rates by the early 1990s.

Pepco also filed to expand voluntary residential load control programs in which Pepco cycles electric water heaters and air conditioners on and off during the summer to cut down on demand, and similar voluntary governmental load curtailment programs, said Moses.

Pepco estimates it will save $3 million annually in avoided costs through the expanded time-of-use programs. Pepco estimates it will save about $6.7 million per year through expanding commercial and governmental curtailable load programs. The utility hopes to enroll 100,000 residential customers into the voluntary residential load control program, saving an estimated $2.2 million per year.