Around 10:30 a.m. Thursday the smoke started billowing from manholes on 2nd and Walnut and 3rd and Market streets.
It quickly spread underground through many of the buildings nearby.
"We heard like a rumble and I walked down and there was black smoke coming from the manholes and also red smoke, it was like really weird," Phil Perkins, Positano Coast restaurant manager, said.
100 customers lost power including residents in the Society Hill Towers apartment complex.
"I'm worried about my elderly neighbors because it's hot and they can't do anything," resident Sonja Pacho said.
Residents say they had heard there was a transformer fire underground, although PECO says that hasn't been confirmed.
The fire department said the problem was multi-faceted and it was working for hours monitoring the carbon monoxide levels in houses and neighborhood businesses.
Crews told Action News they were checking buildings one at a time to make sure they didn't have to order anyone to evacuate.
The loss of power in this hot day meant a loss of business for many popular lunch spots including the Pagoda Noodle Cafe.
The owners estimated they lost $2,000 worth of food and another $2,000 worth of business.
But many residents were thankful the Society Hill Sheraton offered them a cool room and a free meal.
"If we had been stuck outside it would have been very bad. I don't know where we would have gone," resident Paula Cheatle said.
By later Thursday afternoon, most customers had their power restored.
The cause remains under investigation.