Updated: 2:15 p.m. ET

(Bloomberg) -- Puerto Rico declared a state of emergencyThursday as authorities worked to restore electricity to almost 1.5million utility customers a day after a power-plant fire causedwidespread blackouts.

Governor Alejandro Garcia Padilla, who announced the state ofemergency on his Twitter account, said about half of the island’smain utility clients should have electricity by Thursday afternoon.Power to some 130,000 users had been restored by early morning.

“The expectation is that by tomorrow service will be restored,”he said during a press briefing in San Juan. “Because the system isso old, setbacks could occur.”

Fire at substation

The Puerto Rico Electric Power Authority said on Wednesday that ablaze at a substation of the Aguirre power plant in the southeastof the island triggered the outage. The fire at the powerplant, which generates about 30 percent of the island’selectricity, tripped a safety mechanism that automatically shutdown the system, bringing down two 230,000-volt transmission lines,Garcia Padilla said.

The outage forced the government to close schools and cancelclasses at public universities. It also knocked out water servicefor 340,000 customers of the Aqueduct and Sewer Authority.

$9 billion debt

The blackout comes as the utility known as Prepa, its bondholders,insurance companies and fuel-line lenders are working on a dealthat would reduce the utility’s $9 billion debt load through a bondexchange. The Aguirre power plant faced the risk of fines andclosure earlier this year after it failed to install scrubbersneeded to meet federal standards for toxic emissions.

Prepa is the largest U.S. public power provider by customers andrevenue, according to the American Public PowerAssociation. The planned debt restructuring would allowthe utility to modernize its system and reduce its reliance on oil,which produces most of its electricity.

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