The birds are mistaking the electricity poles in East Anglia and south-east England for trees, the UK Power Networks said.
Woodpeckers often return to the same spot so the escalating damage can result in power cuts or the need to replace the posts, the BBC quoted the company as saying.
The utility company is currently testing a wood filler containing a scent that repels the birds.
About 25 per cent of the pole can be lost to the damage, but if the holes are not filled rot can set in leading to further problems.
"There is... Some thought that the woodpeckers are attracted to certain poles because they vibrate at a frequency similar to where mites nest," the company said.
Ian Cameron, head of innovation at UK Power Networks, said in an attempt to deter the birds from coming back to their old holes to search for insects or worms, they have been trialling a new product developed in the US.
The new resin, which is a blend of natural oils, had been trialled successfully in the Brighton area for several years before being rolled out across the network, he added.
The company found the filler deterred the re-occurrence of damage on the same pole and was a safe and environmentally friendly way of encouraging the woodpeckers to go elsewhere.
Although woodpeckers are thriving in the UK, with their population increasing in the last 20 years according to the British Trust for Ornithology.
A spokesman for the Royal Society for the Protection of Birds said: "If woodpeckers are damaging poles in certain areas, the proposed measures seem a sensible and cost- effective way to prevent further damage without harming this popular bird.
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