Potomac Electric Power Co. yesterday challenged the right of the D.C. people's counsel to charge its expenses to utility companies without any review by city regulators.

Pepco filed a suit against the District government charging that a 1984 law allowing the charges against the utilities is "unreasonable and invalid on its face and contrary to the Constitution of the United States, as well as beyond the scope of the legislative power delegated to the District of Columbia government by the Congress of the United States."

Named in the suit are D.C. People's Counsel Frederick B. Dorsey, Mayor Marion S. Barry Jr. and City Council Chairman David A. Clarke.

The suit, filed in D.C. federal district court, stems from legislation passed by the City Council in 1984 that gives the people's counsel, which represents D.C. consumers, the right to assess rate-case expenses against utilities without approval by the Public Service Commission, which regulates utilities. The legislation was passed over a veto by Mayor Barry.

Prior to the legislation, the PSC had the power to deny assessment requests when they were challenged by utilities.

"The Office of the People's Counsel is our opponent and not impartial, yet he is seeking to assess us for expenses and . . . be both the prosecutor and the judge," said Nancy Moses, a Pepco spokeswoman.

"The PSC is the impartial party being iced out of the process. We are being denied due process," Moses said.

Dorsey said, "We are confident that Pepco's suit will fail and that the people of the District of Columbia will continue to have the resources at their disposal for the kind of representation they need to fight for reasonable utility rates before the PSC."

Barry and Clarke had no comment yesterday.

Council member Betty Ann Kane (D-At Large) said the legislation was "perfectly legal" and Pepco's suit "has absolutely no merit."

Expenses that the Office of the People's Counsel incurs during rate cases include attorneys' and expert witnesses' fees. The fees ultimately are paid by District utility customers in rates.

Pepco said the people's counsel's fee for expenses through November 1985 was $495,000. In 1983, the people's counsel charged Pepco $400,000, and in 1984 the agency charged the utility $1.1 million.

Pepco has tried to contest the idea of paying for rate-case expenses before. In 1980, Pepco, Chesapeake & Potomac Telephone Co. and Washington Gas Light Co. challenged the people's counsel's right to assess its expenses against utilities, but the PSC upheld the authority of the consumer agency, together with its own authority to determine the "reasonableness" of its assessments. The D.C. Court of Appeals upheld the PSC decision in 1982.

Then, in an unrelated case on appeal before the court, the D.C. Court of Appeals reversed its 1982 decision and ruled that expenses incurred by the People's Counsel could not be assessed against utilities. That decision gave rise to the City Council legislation of 1984.