The 3,300 union members who work for the Potomac Electric Power Co. have notified the company that they are terminating their contract as of 1:03 a.m. tomorrow, officials said yesterday.

The action clears the way for a strike if the union and the company fail to work out a contract to replace the three-year pact that expired May 31, according to Pepco representative Nancy Moses.

"But there has never been a strike in the history of the company, and we are hopeful of a settlement this time," Moses said.

Terry Cross, president of Local 1900, International Brotherhood of Electrical Workers, said it is "up to the company" to negotiate a settlement.

Local 1900 and Pepco have been unable to agree on wages and benefits, Cross and Moses said. Job classifications, job content and shift changes also are in dispute, Cross said. Negotiations are scheduled to resume this afternoon, Moses said.

Union members, who represent 63 percent of the company's employes, typically work in power plants, install and maintain power lines, read customer meters and serve as customer representatives, Moses said.

Representatives of the union met with Pepco from about 2 p.m. Saturday to about 1 a.m. yesterday, officials said.

"There is a no-strike provision in the existing contract," Moses said. "Their notice terminating the contract removes the barrier for a strike."

Three years ago when talks between the union and the company reached a stalemate, the union delivered a similar notice of contract termination, Moses said. There was no strike, however, and about a month after that termination notice was delivered the two sides reached an agreement and signed a new contract.