The ESB and the Commissioner for Electricity Regulation, Mr Tom Reeves, are understood to be near agreement on the final details of an auction of 400 megawatts of power generated by the State-owned company.

The auction, crucial to the opening of the market which was deregulated last February, will enable independent suppliers to sell power to major industrial users before privately-owned generation plants are built.

Mr Reeves originally planned to hold the auction in May and some groups who hope to bid for power have expressed dissatisfaction at the slow rate of progress.

Consortiums who plan to build power stations are expected to use the "virtual" supply market which the auction will create to secure business with electricity users before they begin generating their own power.

While the discussions between the ESB and Mr Reeves are near an end, there have been conflicting reports as to whether the parties have agreed a reserve price for power.

The ESB proposed an indicative reserve price range of £9,500-£11,000 per megawatt per calendar month and a supply price of £14.70 per megawatt-hour, but its rivals complained that this was too high.

Although it is thought Mr Reeves will secure a reduction, it is still unclear how much the ESB is willing to yield. Its chief executive, Mr Ken O'Hara, has said the power will be auctioned at a cost to the ESB and the company is believed to have adopted a strong negotiating stance.

The auction could proceed later this summer if the expected agreement is reached. The ESB will be entitled to bid for its own power in the auction.

In a related development, the passage of the Gas Allocation Bill through the final stages of the Oireachtas last week means that Mr Reeves will be able to allocate gas capacity on the Bord Gais network this summer to the groups who propose building power plants.

The process, which will begin this month, is necessary because Bord Gais has insufficient capacity to supply all the proposed generation stations. Its excess capacity can supply only a combination of plants generating up to 800 megawatts.

Mr Reeves's allocation, expected in August, will be made on a "first to commission" basis based on milestones passed in advance of the construction of plant.

Separately, the non-implementation of an employee share option plan (ESOP) agreed in 1997 which would grant up to 5 per cent of the ESB to its workers has emerged as a critical issue in the negotiation of new transformation agreement. The company's management want to reduce its workforce by a quarter, to 6,000 from 8,000, as it gears up for competition in the newly liberalised market.

A 1997 change programme tied with the proposed ESOP saw its workforce reduced to 8,000.