Spokeswoman Dawn Dalley said on Twitter there was a flash in the switch yard at the Holyrood power plant, but there was no issue with the plant or the generating units, and no one was injured.
Crews were trying to determine what caused the problem, and additional resources were sent to the plant located about 50 kilometres southwest of St. John's.
The utility said while some residents reported hearing a bang, there was no explosion or fire at the plant.
Dalley said the loud noise would be normal as steam was released when two generators went offline after the switches were tripped, as a safety measure.
Some customers had been reconnected, but Dalley said until officials know the status of the plant, they won't know how many more customers can be brought back online. She added people who have their power should conserve electricity so more customers can be restored to the grid.
Meanwhile, a Newfoundland Power utility worker was injured Sunday night during power restoration efforts in St. John’s.
A company spokesperson told radio station VOCM the man was in the bucket of a utility truck at the time and was taken to hospital with non-life-threatening injuries.
Meanwhile, residents and businesses throughout Newfoundland and Labrador were told to conserve energy Sunday as the province entered a third day of rolling power outages — a situation the premier said highlights the need for the Muskrat Falls hydroelectric project.
Aging infrastructure, a terminal station fire and a blizzard that ripped through the province Friday night combined to overburden an already stretched electricity grid, Premier Kathy Dunderdale said.
"Everybody has a role to play in this," Dunderdale told a news conference in St. John's.
"We need to become more mindful of energy conservation and we really need to focus on that over the next few days and the next number of weeks."
She said there was "no question" the circumstances that led to the power shortage underscore the need to proceed with Muskrat Falls, a $7.7-billion development under construction in Labrador that has sparked criticism from some who fear energy rate spikes and cost overruns.
"Many of the things that we've talked about over the last four years in terms of reliable, sustainable, predictable, affordable electricity ... we're having to deal with them in the last couple of days," the Progressive Conservative premier said.
NDP Leader Lorraine Michael, who has repeatedly heaped criticism on Dunderdale's support for Muskrat Falls, said there should have been better planning in place to meet the increased energy demands.
"To be saying that they couldn't anticipate the cold weather so soon is just unacceptable. People are really upset here in the province and really want answers," she said in an interview on Sunday.
"We have a critical situation when our energy corporations are not able to meet the needs of the people at any given time."
Both Michael and Liberal Opposition Leader Dwight Ball called on the province's Public Utilities Board to conduct an inquiry on what led to the rolling blackouts and subsequent widespread outages following the terminal station fire.
"There's a lot of questions that will need to be asked in the upcoming days," Ball said in an interview."But the big thing for us is it deal with the current situation."
Newfoundland and Labrador Hydro said a fire broke out at its Sunnyside terminal station around 9 a.m. Saturday after a transformer malfunctioned.
The malfunction, the cause of which is not yet known, came after rotating blackouts were implemented Thursday as utilities tried to cope with increased demand because of bitterly cold temperatures.
At the peak of the power outages Saturday morning, about 190,000 customers were in the dark, Newfoundland Power said. As of midday Sunday, that number dropped to 35,000, though that was subject to fluctuate because of the rolling blackouts.
"We're still at a critical juncture," Dunderdale said.
The St. John's Board of Trade sent a statement Sunday urging businesses to turn down thermostats and conserve energy in any way possible.
The province's Education Department said all schools, including Memorial University and College of the North Atlantic campuses across the island, would be closed until Wednesday.
Ed Martin, president and CEO of the Crown-owned Nalcor Energy, said Corner Brook Pulp and Paper has been supplying its excess power to the utility. He said the paper mill was being compensated for the power, although he did not elaborate.
"Naturally we would compensate them for that because our focus is primarily now on residential customers, the people of the province," he said at the news conference.
Martin said aging infrastructure, namely the thermal generating station in Holyrood, N.L., outside St. John's, N.L., also played a part in the outages and would continue to be a challenge over the coming years as the demand for energy continues to increase.
"I can never promise 100 per cent reliability - these are aging assets," said Martin, adding that the utility has doubled its capital budget to $100 million over the last few years to help deal with the challenges until 2017, when Muskrat Falls is expected to start generating power.
Crews from Prince Edward Island were expected to arrive Monday to help restore power.
— By Aly Thomson in Halifax