The blaze erupted on Portland Street, just outside the town centre, at midday today.
Firefighters were called to incident and used hose reel jets to extinguish it as fire was coming from the ground.
Western Power have had to cut the power to the street until 7pm to isolate the electrics at the incident - affecting 100 properties.
Portland Street is home to an industrial estate with a number of construction businesses.
A spokeswoman for Western Power said: "I can confirm we have had a fault on a piece of equipment in Portland Street, Walsall
"Engineers are on site carrying out repairs, and to enable them to work safely, electricity has been turned off for just over 100 customers.
"We hope to get the power back on by 7pm tonight and we apologies for any inconvenience."
West Midlands Fire Service spokesman Matthew Smith said: "We had a 999 call at 12.03pm to reports of a manhole cover that had exploded and fire was coming from the ground.
"We sent two crews, one from Bloxwich and one from Willenhall, with 10 firefighters in total.
"Six firefighters used breathing apparatus and two Co2 extinguishers, one hose reel jet and one covering jet.
"The fire spread to the door of a property and caused minor damage.
"All people in the property have been accounted for, and it's been left in the hands of Western Power who have isolated the incident."