The threat of strike action by ESB workers now appears to be receding, with union representatives indicating that an agreement may be reached in the row over the terms of deregulation of the electricity industry.

Mr Paddy Reilly, secretary of the ESB group of unions, said yesterday he was "more optimistic that a resolution was in sight" following a meeting of union representatives to discuss draft proposals agreed by the Department of Public Enterprise and the ESB.

It is understood the draft proposals will see the ESB retaining ownership of the assets of the transmission system, although it will be run independently by a new company. Workers will remain within the umbrella of the ESB under the proposals.

The proposals also include a plan to replace two peat generating stations in the midlands with more efficient and environmentally friendly stations, which conform to EU standards and regulations.

Union representatives had been concerned about the proposals to establish an independent company, which would run the transmission lines in the national grid, and the effect this would have on jobs. A proposed ballot of members for industrial action was postponed earlier this week to allow ESB management and the Department of Public Enterprise to agree a set of proposals.

A tripartite meeting between ESB management, union and department officials is expected to take place today to finalise the draft proposals.

If the draft proposals are finalised, the ESB unions are expected to meet tomorrow to consider the deal.

From Saturday, 28 per cent of the electricity market will be liberalised enabling more than 300 of the ESB's largest customers to source power from alternative suppliers.