When the Energy Department pulled the plug last month on federal energy-efficiency standards for six major household appliances, it also zapped standards already in force in every state, wired into public utility commission rulebooks and spliced into hundreds of state and city building codes.

The action has invited a paperwork battle of mind-boggling proportions, and has set up a classic battle between two alternating currents in the Reagan administration: its free-market philosophy versus its reverence for states' rights.

If the free market wins, unhappy state officials complain that consumers will lose--to the tune of billions of dollars worth of higher fuel bills.

If the states are the victors, appliance manufacturers conceivably would have to market their products under hundreds of sets of efficiency standards.

"If DOE had come out with a national minimum that was fairly substantial, the states would have been tickled to death," said David Conover, an official with the National Conference of States on Building Codes and Standards. "How would it be if all 50 states set up different automobile mileage ratings?"

At issue is the government's duty to set energy-efficiency standards for ordinary appliances as a way of reducing the nation's reliance on imported oil and protecting consumers from soaring energy costs.

The standards were mandated by a 1975 law, signed by President Ford two years after the first Arab oil embargo inspired the nation to inspect its public buildings, its kitchens and its furnace rooms for potential energy savings.

On Aug. 30, after eight years and millions of dollars of research, DOE decided that the standards for five ordinary home appliances wouldn't save much energy, even though refrigerators, for example, account for 3 percent of the nation's electricity consumption, and standards for electric water heaters could shave a quarter of a percent off the nation's total energy use, according to DOE figures. Nor would much energy be saved by standardizing furnaces, freezers and room air conditioners, DOE concluded.

Officials said that a standard for a sixth appliance, central air conditioners, was not economically justified even though it would save significant amounts of energy.

" . . . The marketplace, together with accurate consumer information, is more effective in improving appliance efficiency than are mandatory appliance standards," the department said.

But state energy officials have argued that the appliance marketplace is not a normal marketplace. More than half of the appliances in homes and commercial buildings are purchased by developers and contractors who won't be around to pay the fuel bills.

So, while the DOE was studying the matter for eight years, the states were adopting mandatory standards. From Maine to Hawaii, statewide or local rules on some or all of the common appliances have been put into building codes, added to energy codes or adopted by public utility commissions.

All of those rules have been thrown into limbo by a provision of the 1975 law that says no state or local standard can be more stringent than the federal standard--even if the federal standard is no standard.

And if the Reagan administration is willing to rely on the marketplace for energy conservation, some state officials are still skeptical.

"Federal preemption would thwart California's ability to conserve energy resources, to implement its land-use goals and to save consumers and the state economy as a whole billions of dollars," the California Energy Commission warned recently. "It would do very serious damage to the state."

California already has announced that it will fight to keep its standards, the toughest in the nation, which it predicts will save the state $26 billion in fuel bills by the year 2002.

"We think the standards produce significant energy savings for the California consumer," said Gregg Wheatland, the energy commission's counsel. Wheatland said staff studies show that the standards will eliminate the need for 1,750 megawatts of electrical capacity in California by 1987 and 3,810 megawatts by 2002. A single unit of a typical power plant generates about 1,000 megawatts.

The states have a crucial ally in Congress--Rep. Richard L. Ottinger (D-N.Y.), who chairs the House Energy and Commerce subcommittee on energy conservation. Ottinger, who called DOE's no-standard decision "an outrageous act of consumer fraud," is pressing for legislation that would allow states to set their own efficiency standards.

Even without Ottinger's bill, states have a recourse--they can petition DOE, on their own behalf or on behalf of any of their cities and towns, for a waiver of the "no-standard" standard. But each set of standards would require a separate petition, and every change in a state or local standard apparently would require a new petition.

That adds up to a potential overload of paperwork for DOE's tiny conservation division. Even so, Michael J. McCabe, the division's counsel, said he expected the waivers to be "a fairly easy process."

Conover was less sanguine. "They'll have to have hearings and the whole works," said Conover of the state building codes conference. "How can DOE even begin to do that? All they have is Mike McCabe, two engineers and the legal people."