The Maryland Public Service Commission yesterday approved a 2.7 percent increase in electricity rates for customers in Montgomery and Prince George's counties.

In addition, the state regulators gave the utility serving the area, Potomac Electric Power Co., the go-ahead to start charging customers different rates at different times of the day.

The time-of-day rates, which will range from about 15 cents a kilowatt hour during weekday afternoons to just a few pennies per kilowatt hour on weekend evenings, will likely go into effect sometime next month, said Steve Arabia, a Pepco spokesman.

Currently, Pepco charges its Maryland customers an average flat rate of 6.6 cents per kilowatt hour, the lowest electricity rate in the state.

Mr. Arabia said Pepco officials were working last night to apply the commission's ruling to their price schedule. The company will announce its new rates in a few days, he said.

Commissioner Lilo Shifter said yesterday the regulators approved a $19.7 million rate increase primarily in order to compensate Pepco for its installation of four new generators at Chalk Point.

Mr. Arabia said that about 38,000 of Pepco's Maryland customers have been receiving two sets of bills for a year, comparing their current flat-rate bills with the time-of-use rates that are about to be applied. Pepco serves several hundred thousand customers in Maryland.

Pepco asked for permission to charge people more during peak demand hours because the company said that it costs more to provide power during those times and because higher prices might encourage people to conserve during high-demand periods.