Unions at Bord na Móna meet tomorrow to consider issuing strike notice after members voted by a big majority for industrial action.
A prolonged strike could disrupt electricity supplies, but a spokesman for the ESB said yesterday there was no immediate threat of that happening.
Bord na Móna currently supplies peat to just one ESB power station, at Bellacorick, Co Mayo, but two new peat-burning stations are due to begin operating shortly.
The strike threat arises from the peat company's failure to pay the second half of a six per cent increase agreed with unions earlier this year.
The first phase, of three per cent, was paid after workers balloted in favour of the deal in March, with the second phase due six months later.
However, the deal was contingent on unions engaging with the company in "meaningful negotiations" on improvements in productivity.
In a statement yesterday, the company said it was currently engaged with the unions on the productivity measures required to fund the pay award.
"Discussions are continuing and the company hopes that these talks will be brought to a successful conclusion shortly.
"It must, however, emphasise that any additional award above the national wage agreement must be funded through productivity."
Mr John Bolger, an ATGWU official and vice-chairman of the Bord na Móna group of unions, said the company was securing productivity improvements on an ongoing basis through non-replacement of workers.
Nearly 200 of his union's members, for example, based at Oweninny, Co Mayo, were to be made redundant early next year.
The company has about 2,000 employees, about a quarter of whom are seasonal workers and the remainder full-time staff.
The ESB spokesman said a prolonged strike could delay commissioning of the company's new peat-burning stations at Lanesborough, Co Longford, and Shannonbridge, Co Offaly.
This could in turn result in power shortages during the peak winter period, he said.