The cost of local residential telephone service is leveling off with an increase of less than 2% in the past year, following years of sharp increases, according to a Federal Communications Commission report. The report found the average monthly charge for single-line, residential service with unlimited local calling was $12.19. Federal and state subscriber line charges and taxes brought the average monthly bill to $16.41, compared to $16.13 in October, 1986. Of 95 cities surveyed, the lowest local monthly rates were in Alaska and in Phillipsburg, N.J. The highest rate was in Huntington, W. Va.