BC Hydro crews restored power to half of the 2,200 downtown customers affected by the blackout by Tuesday morning. (CBC)

A failed splice in a cable at an underground vault that triggered a fire and massive power outage in Vancouver's downtown core Monday could leave some customers without power through Wednesday, BC Hydro says.

A splice — the joining of two or more cables — shorted out and burst into flame, damaging 14 circuits inside the underground vault, Gary Rodford, the utility's vice-president of field operations, said Tuesday.

The blackout, which happened on Monday morning, led to the loss of telephone service at a number of downtown buildings Tuesday morning and up to 60 buildings could be without phone service shortly, Telus said Tuesday.

Hydro crews worked around the clock to inspect the damage and restore power to approximately 2,200 downtown customers who were left in the dark after the blaze cut off power to a five-block radius.

BC Hydro says a splice, the joining of two or more cables together, failed and burst into flame, damaging 14 circuits inside an underground vault in downtown Vancouver. (CBC)

"We know it's a failed splice. We don't know what caused it to fail at this point," Rodford said Tuesday. "We know it wasn't overload. We know it's been in service for a long time."

By Tuesday morning, half of the customers affected by the blackout had their power restored, said Susan Danard, a BC Hydro spokeswoman.

Telephone company Telus said battery and diesel power systems were in place when the power went out Monday. However, as the outage continued, those systems began to fail.

Any building losing telephone service should contact Telus, which will send technicians there as soon as it can, the company said.

Traffic in the downtown core returned to normal Tuesday after crews managed to restore all traffic lights — except the one at the intersection of Dunsmuir Street and Burrard Street — by 7 a.m. PT.

Key transit services, including buses, SkyTrain and SeaBuses, were also running normally Tuesday morning.

Businesses running on BlackBerrys and cash

In the heart of the financial district many workers were taking the power failure in stride, happy to enjoy the summer weather.

On Howe Street, Kennedy Kirk and his colleagues at Contact Financial were enjoying the sunshine and doing business by cellphone from the sidewalk.

"[We are] doing a lot of the BlackBerry thing, and you know, we're going for a coffee, and it's what time, 7:30? Normally we'd be on the phone jamming away right now, so you know, take an easy day if you've got it, right?" Kirk said.

Flames shot out a manhole in Downtown Vancouver Monday when an underground fire caused an explosion. (Submitted by Katja Machler)

A half block away, the doors of the Vancouver Bullion and Currency Exchange were chained shut, but a generator hummed away as employees inside attempted to get the phones and internet working.

Nearby on the corner of Pender and Richards streets, Nazim Khan, the Al-Madira convenience store manager, spent the morning getting rid of perishable items as he waited for power to come back on.

"We throw it in the garbage — hygienic, right? For sale, only gum, candy and smokes. No ice cream, no milk," Khan said.

And with no internet access, no credit card reader or debit machine, and no ATM, it was cash only for customers. Khan estimated he had already lost more than $3,000 in business.

Too early to talk about compensation: BC Hydro

It isn't yet clear how much money the outage has cost local businesses.

BC Hydro said it is too early to talk about what, if anything, the Crown corporation would do to help.

"It's been really difficult for us to assess the cause, which in turn makes it difficult for us to even get into the issue of claims and compensation," Danard said. "It's just so early in the process."

Danard played down questions that the incident shows how vulnerable the city's power grid could be when Vancouver hosts the Winter Olympics in 2010.

"Reliability for the Games is a very important issue, and in some ways that's almost an easier task for us," she said.

"Those are new venues that are being built, but we're building not just primary feeders but back-up feeders, so there will be alternate feeders that we can switch to should one feeder go down."

Vancouver police were out in full force overnight Monday, as many downtown buildings were without lights or security systems, but there were no reports of break-ins.

Police said Tuesday they will maintain additional patrols until the power is fully restored.

With files from the Canadian Press