Prior to landing in a large paddock, the pilot advised the passengers that the balloon would touch down after it passed a dead tree about half way along. The passengers assumed the pre-briefed crouched position and braced themselves for the landing. Just after the balloon passed the dead tree one of the passengers observed two power cables running across the flight path five metres in front of the balloon. The pilot was alerted and almost simultaneously, the balloon's suspension cables struck the power line. After contact the balloon slid along the conductors for approximately 30 metres, pulling them downwards, until the basket contacted the ground. One passenger reported receiving an electric shock causing the pilot to order an evacuation and he and two passengers left the basket. The pilot was later observed reaching towards the balloon from outside the basket. Both the pilot and the passenger, who had remained in the basket, were electrocuted. Fire subsequently destroyed the balloon. The power cables ran across the paddock in a single span with a distance between the poles of 366 metres. The supporting poles were in adjoining paddocks and hidden by trees. The type and layout of the cables made them very difficult to see. Evidence indicates the pilot was not aware of the location of the power line prior to the flight, and he did not see them until just prior to impact and at that point it was too late to avoid them. The retrieval crew were following the balloon and did not arrive at the landing site until after the accident. The power cables made contact with the uninsulated, inadequately bonded envelope suspension cables attached to the two forward corners of the basket. There was some evidence that a lack of bonding may have caused an electrical potential difference across the basket which in turn led to the shock reported by the passenger. It could not be determined which of the metal components the pilot and passenger were touching when they were electrocuted. Injuries received by the pilot and damage to the fabric covered metal parachute vent line, indicated that it was probable that the pilot touched the vent line allowing the current to flow to ground. The fabric cover on the vent line was insufficient insulation for the magnitude of the current involved. Each of the power cables was protected by a fuse and although both these fuses worked, the failure sequence did not prevent the two fatalities. Had both cables been earthed earlier in the sequence, it is probable that the fuses would have blown thus protecting the balloon's occupants. The actions of the pilot and passengers indicated a lack of knowledge of safety practices to be used when in the vicinity of high voltage power cables.