Robert Stubbs, 24, of Redcar, was working for social housing landlord Coast and Country Housing in Ayton Drive, Redcar when the incident happened.
The Health and Safety Executive (HSE) prosecuted the social landlord for breaching health and safety law following the incident on 19 November 2009.
Stubbs was using a five-foot steel bar to create a hole for a support stake for a tree, when the bar hit the underground cable from a nearby substation.
The contact created a short circuit which caused a flame to shoot up thirteen feet from the underground cable, injuring Stubbs.
Teesside magistrates heard that Stubbs had let go of the bar he was holding before it hit the cable, but still suffered minor burns. He was taken to hospital and although released he was off work for two weeks suffering from headaches.
HSE's investigation showed that the incident could have been avoided if a suitable and sufficient assessment had been carried out and the proper safety systems put in place by his employer.
Inspectors also found that the company's property maintenance department were fully aware of the risks from contact with underground services and all the proper safety systems were in place, however, this was not the case for those in the estate services team, where Stubbs worked.
Redcar-based Coast and Country Housing pleaded guilty to breaching Regulation 4(3) of the Electricity at Work Regulations 1989 and Regulation 3(1) of the Management of Health and Safety at Work Regulations 1999 at Teesside Magistrates' Court.
It was fined £8,000 and was ordered to pay costs of £2,939.20.
HSE inspector, Laura Gifford, said: "The dangers associated with underground services are well known and it should be assumed that they are present unless proved otherwise. Sensible assessments are vital to highlight hazards that workers may face and to identify ways to control the risks.
"Mr Stubbs suffered minor burns but it could have been a lot worse. Had a suitable risk assessment been carried out to highlight the risks and the proper safety systems put in place, this incident could have been avoided altogether."