A faulty gear switch in a substation in York Street resulted in thousands of shoppers being evacuated from buildings across the city.

Aurora Energy confirmed that power being used at the musical festival msfest had nothing to do with the blackout.

The power failed about 11.30am and most power was restored within three hours but some shop owners had to wait until 4pm.

Myer and Village Cinemas were evacuated and many shops were forced to close.

_Car park boom gates had to have bolts removed to let cars out, and and organisers of a show playing at the Earl Arts Centre had to refund tickets to patrons.

There was confusion at intersections with traffic lights down, requiring police to direct traffic.

Priceline workers set up a sale stall outside their shop in the Brisbane Street Mall to avoid losing revenue on one of Launceston's busiest Saturdays.

Swirlz lolly shop owner Graham Tudor was frustrated and said that the situation was unacceptable.

"These things can make or break small business," he said.

"We have lost more than $1000 on our biggest trading day of the year, with msfest on."

Mr Tudor would normally sell 200 milkshakes a day and plenty of icecream, but he said he had lost all his produce.

Aurora public relations officer Denise Barker said that customers could be entitled to make compensation claims.