A cluster of households near Byron Bay is counting the cost of a major power incident that damaged hundreds of thousands of dollars worth of electrical appliances.

Essential Energy confirmed 34 houses at Ewingsdale lost power on June 29, caused by fault in the power lines described as a "burnt neutral". 

Residents told the ABC the power went out around 10am, but it was not until later in the day when power was restored to each household that things went awry. 

Many heard a loud bang and reported smoke and the smell of burning coming from power points, extractor fans, and other household appliances.

Resident Amy Skene said she and her daughter were home when an Essential Energy crew came to turn their power back on at the power board.

"The three guys came in and helped me pull it outside because they said, 'This is not good'."

The Skenes estimate the cost of damage to their appliances at more than $100,000, though they are expecting this will be covered by their insurer.

Compensation woes

Some of their neighbours have not been so lucky as they continue to wrangle for compensation from their insurers and Essential Energy.

In a statement, Essential Energy said it had provided letters to assist with any insurance claims and, as a gesture of goodwill, had offered affected customers a payment to help with repairs or insurance policy excess costs.

The company said its records showed the network assets were inspected and maintained in accordance with procedure with no relevant defects identifiable at the time of last inspection.

Resident Chris Lonergan said he lost around $20,000 in appliances including all his air conditioning units, pool equipment, internet equipment, and household appliances.

Mr Lonergan said the impact was "anxiety generating" as he needed the internet to work from home and his family continued to shiver through winter with no heating.

He said he questioned Essential Energy's claim that it had limited liability for the damage.

Mr Lonergan said he managed to get $1,500 from the company to cover his insurance excess.

They also issued him with a letter noting there were wind gusts of up to 35 kilometres per hour on the day of the incident.

Mr Lonergan said this was enough for his insurer NRMA to then agree to approve his claim.

"They were initially saying, 'It's not storm damage, and you are not covered for accidents, so see you later'," Mr Lonegan said.

The ABC spoke with other residents whose claims had been knocked back by their insurers, including AAMI which is part of Suncorp Insurance.

In a statement, Suncorp Insurance said a power surge was generally not covered under its policy unless it was the result of an extreme weather event such as a storm or bushfire.

"In this instance, the Bureau of Meteorology had no record of any extreme weather event in that area at the time of the power surge," it said.

Protecting your home

Byron Bay electrician Geoff Bensley said neutral was a safety feature that prevented power from trying to find an unsafe earth.

He said neutrals could be compromised through corrosion or other damage.

Mr Bensley said appliances could be damaged if voltage increased by 50 volts above the standard power supply of 240 volts.

He said residential power supplies could be fitted with a voltage dependant relay that cut power when it detected high voltages.

He said the device was common for commercial premises but generally not installed in houses as they cost upwards of $1,000.

Power boards with surge protectors can also prevent damage to appliances.

Limited liability

The New South Wales Energy and Water Ombudsman said the National Energy Retail Law allowed NSW energy distributors to limit their liability as part of their customer contracts.

Generally, these contracts state that "they are not responsible for supply events that are outside of their control, including technical limitations, random failures on their distribution system, system demands and other incidents including accidents, weather conditions, and the acts of other persons".

A spokesperson for the Insurance Council of Australia said some policies did cover for loss in the event of a power surge and customers were encouraged to shop around and carefully chose the policy and inclusions that suited their needs.