The District of Columbia's Public Service Commission has proposed an order that would require the Potomac Electric Power Company and Washington Gas Light to make residential energy inspections free of charge and begin an experimental program to help owners buy storm windows and other energy-saving improvements through low-interest loans.

Pepco currently provides energy audits in the District for a charge of $15, sending inspectors to residences to identify practical energy conservation measures, while the gas company does no energy audits in D.C.

The PSC's proposal would require them to perform the audits at no charge, although the cost of the audits would eventually be incorporated in the rates all customers pay.

"We conclude that on balance a zero Residential Conservation Service audit charge is preferable," a hearing agent whose recommendation formed the proposed order concluded. "A free RCS audit will stimulate the maximum customer response and make RCS audits most accessible to low-income customers."

The PSC can accept, modify or reject the proposed order.

The utilities had argued in favor of a $15 charge, the maximum charge allowable under the federal energy conservation program that the proposed order is designed to implement.

"If a person can't or won't pay $15, how serious will that person be about conservation?" said Paul Young, a gas company spokesman.

A charge provides a test of a customer's earnestness, he said, adding that free audits could trigger a flood of requests that would burden the company.

"What we're afraid of is--that because it's free--people will ask for it, additional expenses will be tacked on, and with questionable results."

Young said that WGL estimates that the audits actually cost from $125 to $150, because of labor costs involved in a two-to-three hour inspection. Figures from PSC documents put actual audit costs for Pepco at approximately $72.

The proposed order calls for no-charge audits to be provided for six months, after which the utilities will be required to conduct a pilot loan subsidy program. WGL and Pepco would make energy conservation loans available at 50 percent of the prevailing mortgage rate, with further details to be resolved by the PSC.

Hearing agent Edwin E. Huddleson III suggested that the minimum loan should be $500 with a maximum set at $3,500 for single-family dwellings and a maximum of $800 per unit in multifamily buildings. He made no suggestion about the length of such loans, what security should be required and how much money should be set aside for the loans.

The proposed order is designed to implement a federal program, adopted in 1980, aimed at encouraging the installation of energy-saving devices in existing houses and apartment buildings.

Maryland has adopted a program that allows the utilities to provide the audits for a $15 charge. Virginia has no program, having opted to join in the federal program, which is not yet in operation.

D.C. People's Counsel Brian Lederer, who hailed the proposed order as "a major breakthrough," said that it was a step toward systematic treatment of conservation as an alternative to costly construction.

"It's got to be systematic," said Lederer. "Clearly if you do something to your house, it will save money and energy, but if the utility doesn't know about it they will build more capacity.

"Conservation has to be accorded equal weight--from an engineering point of view construction and conservation are equally feasible solutions," Lederer said. "It's just that the utilities have chosen to capitalize one and not the other."

Young warned that providing the audits and loans would add to the rising cost of electricity. Lederer said they may not if they eliminate the need for additional capacity.

The hearing agent concluded that "while avoided capacity costs are not readily apparent, there will be avoided energy costs to both WGL and Pepco from the . . . program. Yet the exact magnitude of the savings, and whether there will be net savings to the utilities . . . is far from clear at this time."

He said the utilities "will have the burden, in future cases, to support their claim that the net cost burden . . . on them is such that for this reason the commission should terminate any RCS utility financing program."

April 23 is the deadline for comments on the proposed order. After that the PSC must decide whether to adopt it as its final order. The District's energy office must also adopt a state plan that must be approved by the federal Department of Energy, incorporating the provisions of the order.

Pepco spokesman William H. Jones said that the electric company's conservation specialists will begin meeting today to draft responses to the proposed order. Pepco has provided approximately 4,000 professional energy audits and another 8,000 do-it-yourself audit questionnaires, he said.