Crews worked all morning and afternoon to get the power back for residents. Town manager Bruce Radford said the substation served as the main power station for Apex.
Officials said the fire damaged one of the transformers at the substation.
"What we have is two transformers that together serve the Town of Apex and the one that caught on fire is hooked together, so we cannot energize the second one until we get it out of the system," said Progress Energy spokesman Garrick Francis.
Fire crews brought in a foam pumper truck from RDU International to help put out the electrical fire. The fire was extinguished just before 7 a.m. Its cause is not yet known, although Progress Energy officials said they do not believe the incident was caused by over-capacity.
Officials said it may be several days before they find out what was the cause of the fire.
Progress Energy restored power to its 4,700 customers, which are served by the substation, by noon.
Witnesses said they heard a loud explosion around 5:24 a.m. and saw flames shoot high into the air.
"The flames on this transformer that had apparently blown were probably 40, 50, 60 feet high. So we just parked in the parking lot across the street and rolled down the windows to see what was going on and we could actually feel the heat from it," resident Steve Martin said.
People staying at a nearby motel were evacuated as a precaution.
Traffic was detoured from Highway 55, south of the intersection at U.S. 1., but it was later reopened.
The Apex Community Center at 53 Hunter Street was used throughout the day as a shelter.
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