According to a tweet from the New York Police Department, a transformer exploded at the utility company's Astoria location just after 9 p.m.
LaGuardia Airport lost power and air traffic was suspended as a result of the explosion.
La Guardia Airport was closed temporarily as the explosion was brought under control.
Rikers Island has also had to use backup generators to keep their power running.
The Metropolitan Transit Authority said power outages were affecting 7 trains.
This photo shows blue light over NY, as seen from Manhattan Borough of NY on Thursday, Dec. 27, 2018.
Thursday night lights: A fire at a power plant caused the sky to flash an eerie blue over New York City. 'Please avoid 20th Ave & 31 st'.
Meanwhile, the power cut hit New York's LaGuardia Airport, which warned travellers to be prepared for delays.
Twitter users captured the blue glow from the explosion. 'Passengers are able to de-plane via stairs.
Inbound flights were held at their point of origin during this time.
CBS Newspath senior producer Heather Scott reported from Astoria that the sky turned "super bright blue" and it "looked like daylight outside".
The blow-out led to about 50 power outages. Folks all the way out in Jersey City reported seeing the flashy lights.
A man named Nick Riccardo shared a video of the actual explosion as it took place outside his window.
The source of the bluish light was apparently a transformer explosion, the NYPD said.
"You could see it from the precinct, and the precinct is about a half-mile away", he said.
"Astoria got one of the craziest gender reveals", another joked alongside a video of the blue sky.