A fire sparked by exploding electrical equipment in a basement transformer room forced the closing of the sold-out Washington Hilton Hotel and burned unchecked for nearly two hours yesterday morning because firefighters refused to go into the room without knowing if toxic PCBs were involved, fire officials said.

Late in the day, hotel officials said that because of damage to the building's electrical system, the hotel would not reopen for the night, creating a massive logistical problem by forcing the hurried relocation of the 3,800 persons staying there.

Most of the guests are here for the Youth Congress '85 convention and were attending a conference at the Washington Convention Center at the time of the fire.

Organizers said convention-goers would be housed for the night at 19 other hotels around the city. A hotel spokeswoman said last night that guests should expect to return to the Hilton, at 1919 Connecticut Ave. NW, after noon today.

Of the approximately 100 guests in the hotel at the time of the fire, several who were interviewed by The Washington Post said they did not hear any internal fire alarms sound while firefighters and hotel workers were making room-to-room evacuations. Fire officials waited nearly two hours for hotel management to confirm that their tranformers did not contain polychlorinated biphenyls (PCBs), which emit deadly dioxins when they burn.

Mary McLaughlin, a 27-year-old vacationing Bostonian, said she smelled smoke in her eighth floor room and heard fire engine sirens but no fire alarms.

"We called downstairs to the operator and she said, 'Don't be alarmed, it's just a small fire in the kitchen, that's all.' I just stayed in the room and watched more fire engines come," McLaughlin said. She opened her door and saw a hotel employe in the hallway. "I told him you could smell smoke. He said, 'Ma'am, it's in the first floor in the kitchen -- you can't smell smoke up here.' " All guests in the building were eventually evacuated safely.

"At no time in this building was any guest in any type of danger," said William H. Edwards, the hotel's general manager. "There were no PCBs, and the fire department had the blaze completely under control at all times." Edwards said there was a delay of more than an hour in sounding the building's fire alarm because there was no danger of the fire spreading and no smoke was seeping to the upper levels of the hotel, which is at Connecticut and Florida avenues NW.

Many guests, however, said that fumes that spread through the 12-story hotel's ventilation system shortly after the fire began, alerted them to the fire well before any alarms rang. Fire officials ordered all firefighters coming into contact with the fumes to wear protective clothing and respirators until the blaze was extinguished about 12:30 p.m. and the transformers were inspected.

The hesitation of fire officials to send firefighters into the transformer vault underscores a quandary facing officials across the nation: Although manufacture of PCB was banned in 1977, hundreds of thousands of PCB transformers are still in use.

Fire officials said the cause of the blaze, which did about $250,000 in damage, is under investigation. "We're not sure if a circuit breaker overloaded or just a short started in there because of a mechanical problem," one fire official said.

Officials said the blaze started shortly before 10:30 a.m. in the 1,154-room hotel's main electrical vault, located in the south wing three floors below the main lobby.

Edwards said the fire was discovered by the hotel's watch engineer, who went to investigate "loud noises" emanating from the room and discovered smoke coming from circuit breakers and other electrical switching gear. Edwards said the engineer notified the hotel's managment, which, in turn, called the D.C. Fire Department.

Fire department spokesman Ray Alfred said that firefighters quickly confirmed that the blaze was confined to the electric vault; they were ordered not to go inside and extinguish the blaze until electric power was shut off.

He said the firefighters were also ordered to avoid contact with the fire and fumes until hotel officials could confirm that there were no PCB transformers inside that might be giving off dioxin, which the EPA has called "one of the most toxic substances known to man."

"As long as the whole room is energized, there's triple trouble," Alfred said. "Our guys could get electrocuted when they put water on it, and the other two problems are associated with a fire in the sub-basement level," which he said were intense heat caused by the lack of ventilation and the possibility of a burning transformer giving off deadly fumes.

Two workers from the Potomac Electric Power Co. arrived about 40 minutes after the blaze was reported, acoording to Pepco spokesman Tom Weele. He said their delay in arrival was probably caused by required cleanup work at the sites they were leaving and because of traffic conditions. "You can't just leave exposed wires and things like that" before going somewhere else, he said. "We got there as fast as we could."

At 11:20 a.m., a Pepco transformer team was dispatched to the hotel, and by 11:55 a.m. the workers had cut power to the hotel from six 460-volt transformers behind the building, he said.

In the meantime, hotel officials attempted to determine what kind of transformers were located in the basement, but did not find out for certain until the hotel's chief electrician arrived on the scene from his home in Maryland, according to Edwards.

Alfred said that at about 12:15 p.m., after the electricity was shut down and the hotel had confirmed that it used only dry transformers -- which do not contain PCB -- to reduce the 460-volt power in the Pepco lines to 220 volts, firefighters entered the 40-foot-by-100-foot vault. From that point, it took 15 minutes to extinguish the blaze.

Alfred said that 134 firefighters and 52 emergency vehicles responded to the fire. Two firefighters suffered minor injuries and were taken to the Washington Hospital Center, where they were treated and released.

"If this was a PCB situation, based on our knowledge of other places where PCB fires have occurred, we would have had some big problems on our hands. And the hotel would have had some big problems," Alfred said.

Fire officials, who discovered leaking PCB tranformers in the Smithsonian Institution about two weeks ago, have since said that they will send firefighters into a building where there's a PCB fire only in order to make rescues.

"If it's PCBs, we're taking every precaution. PCBs are absorbed through the skin -- that's the danger," Alfred said yesterday. "The concern of a PCB fire would be the long-term health effects on our personnel," which include the possibilities of liver damage, sterility, birth defects and cancer.

Part of the problem, Alfred said, is that the fire department does not know what private buildings in the District have PCB transformers. The D.C. Fire Department's Hazardous Materials Unit maintains a list of government buildings with such transformers, but there is no inventory of private buildings because notification is voluntary, he said.

New regulations issued by the U.S. Environmental Protection Agency, require that the location of all PCB transformers be registered with local fire departments by December.

The EPA, alarmed at the health threat posed to the public and to firefighters by PCB and its deadly byproducts, has ordered the removal of high-voltage PCB transformers by Oct. 1, 1990. By that same date, low-voltage transformers cooled by PCB will have to be modified to give additional protection against fires.

In the meantime, fire officials must weigh the risk of exposing firefighters to the poisonous fumes against the danger posed to public safety by such precautions as yesterday's two-hour delay.

Confusion lingered over how the guests were notified of the danger, and it dominated their conversations as they gathered around police barricades outside the hotel.

"We were having a staff meeting downstairs and smelled the smoke . . . . We never did hear a fire alarm," said John H. Sather, 33, of Anoka, Minn., an organizer of the Youth Congress '85, which had booked approximately 3,700 teen-agers -- four to a room -- into the hotel.

"Chandeliers shook, lights started blinking, people in the hallways were rushing around -- there was a buzzer on an elevator where somebody was stuck -- that's the only bell I heard," Sather said yesterday.

Edwards, the general manager, said that there was originally no threat from the fire or smoke and that hotel officials decided not to order an evacuation. However, he said, after conferring with a fire chief on the scene about an hour after the blaze broke out, it was decided to order an evacuation as a "precautionary measure."

When Lauren Smith of Cleveland looked out of her family's 10th floor room above the hotel entrance yesterday morning and saw smoke billowing out of a door, she didn't wait for officials to act.

"At first my husband said it was steam, but it didn't look like steam. Nobody seemed too concerned -- there was nobody out saying there was a fire or anything," Smith recalled. "But we have babies, so my husband and I thought, 'Let's just go; why take chances?' " The family left the hotel and went sightseeing, Smith said, and didn't learn until late yesterday afternoon that the "steam" was indeed smoke.

Hotel spokeswoman Renee Subrin said "we expect the problem to be resolved in the course of the night and power to go on by the morning."