Has the District's People's Counsel -- the man who fights off rate hike requests from Pepco, C&P Telephone and Washington Gas -- become the "paymaster" for scores of private lawyers he hires to help him?

That's what D.C. Court of Appeals Judge John Kern said in a dissenting opinion last week in which he noted that in less than three months in 1981 the People's Counsel submitted bills to Pepco for more than $1 million for outside lawyers.

Kern described those bills as "electrifying," and said they certainly should shock utility customers -- that's us -- who will fork over the money in the form of higher rates. He said that when Congress created the office of People's Counsel (run by mayoral appointee Brian Lederer) it never intended that the office (which had a staff of five people in 1981) would be shelling out fat legal fees to Washington law firms to help it make its cases.

But Chief Judge Theodore R. Newman and Associate Judge Julia Cooper Mack disagreed and said Congress must have had outside lawyers in mind when it said the utiliy companies would pay for the People's Counsel's "litigation expenses." Anyway, they said, consumers pay everybody's legal bills--for attorneys arguing for higher rates (the utilities) and for those against (the People's Counsel).

Newman and Mack pointed out that Congress, in putting a lid on the overall cost of the regulatory process, also capped legal fees and that limit has not been exceeded.

The majority did say, and Kern agreed, that the Public Service Commission has the authority to review People's Counsel expense vouchers for outside lawyers to make sure they are reasonable -- authority the People's Counsel had challenged.

Lederer, who was out of town and not available for comment last week, has long asserted that the results of his office's legal work are worth the cost. For example, he has pointed with pride at a 1979 case in which Pepco requested $44.8 million in rate hikes but got only $5.8 million and at the same time was forced to stop a longstanding practice of billing customers for construction work underway. The $400,000 legal bill submitted for that case, Lederer said, was a "pretty good investment."