ESB technicians have rejected a £2.1 billion (€2.67 million) plan to upgrade the power network.
Their 70 per cent vote against the plan is the second major setback this week to senior managers at the State company.
Its board decided on Tuesday against seeking a part-flotation. That option was pushed by ESB chief executive Mr Ken O'Hara since last year but was rejected by unions in advance of the meeting.
The unions cited a lack of confidence in management and a report yesterday that certain senior executives had lost confidence in Mr O'Hara was not denied by the company.
Mr O'Hara said in a statement that he was fully supportive of the board's decision and was committed to working with the company's unions.
The ESB accepted, however, that it was disappointed at the outcome of a vote by members of the ATGWU and the Technical Engineering and Electrical Union (TEEU). Those unions recommended acceptance of the package, which included an 18.5 per cent pay increase over the terms of the Programme for Prosperity and Fairness.
The increase was to be awarded over three years in return for greater productivity.
It is thought a major concern of workers was a condition requiring them to report for work on-site instead of to an ESB depot. This meant staff would travel to a site on their own time - they travel on the company's time at present.
An additional element of the plan would have allowed the ESB to hire independent contractors to work on the network.
ATGWU workers rejected the package by 1,035 votes to 310. Workers in the TEEU rejected it by 645 to 427.
The vote means that considerable uncertainty surrounds the ESB's plan to upgrade the State's transmission and distribution system.
Development of such infrastructure is seen as crucial for the National Development Plan and the Government's aim to attract investment. Weakness on the network means no new heavy industry can move into the north-west region.
In addition, serious transmission constraints in Dublin limit the scope for new-generation capacity.
This is regarded as a key element of liberalisation in the market, part of which was opened to competition last February.
The EU Competition Commissioner, Mr Mario Monti, has expressed serious reservations about the pace and structure of deregulation in the market.
