The fuel for the plant comes from the rival Palestinian government in the West Bank which says it has reduced shipments because the Gaza's Hamas government is behind on payments.
"The electricity was cut in Gaza City because of there wasn't enough fuel for the station," said power station official Suheil Skeik.
The plant serves Gaza City and its surroundings, while the remaining million people in the rest of the tiny territory rely on neighboring Egypt and Israel for their power needs.
An engineer said they expected an emergency fuel shipment on Sunday, which would allow them to restart one of the plant's four turbines and supply a few hours of power.
For the past few months the plant has supplied just six to 10 hours of power a day because of the ongoing problems getting enough fuel from the West Bank government.
Residents who can afford it use generators to supplement the shortage and in Gaza City's commercial district roaring generators squat on the sidewalk filling the air with the smell of gasoline.
But a complete power cut is expected to deepen misery in Gaza, where residents have suffered through a sweltering heat wave - severe even by the standards of this hot, dry seaside enclave. Temperatures have soared well over 95 degrees Fahrenheit (35 degrees Celsius) for the past few weeks.
Gaza's rulers, the militant Islamic group Hamas, are meant to collect utility bills and send the cash to their rivals, the Western-backed Palestinian Authority, which use it to buy the fuel.
Palestinian Authority spokesman Ghassan Khatib says Hamas isn't sending enough money, and on average, they were receiving only $1.3 million a month from the distribution company, while they were paying $9 million for the fuel.
"We need some transparency here. There has to be some kind of audit," Khatib said.
Skeik said the plant sent about one million dollars last week, and expected to send another million in coming days.
Although the Palestinian Authority hasn't had a presence in Gaza since Hamas seized power over the territory in June 2007, it receives aid from the international community to pay for part of Gaza's bills.
