On May 30, 1998, at 0655 central daylight time, a Balloon Works Firefly 7-15, N25491, operated by a commercial rated balloon pilot, collided with powerlines during an approach to a field in Waterloo, Iowa. The pilot and passenger were not injured. The balloon received substantial damage. Visual meteorological conditions prevailed and no flight plan was filed. The 14 CFR Part 91 flight was taking part in a balloon race when the accident occurred. The flight originated in Waterloo, Iowa, at approximately 0637. The accident balloon was part of a balloon rally. The pilot reported he departed Byrnes Park and traveled to a target drop area near the Waterloo Municipal Airport. He reported he "After throwing my baggie I started to burn to get enough lift to clear powerlines. It seems to me we were going parallel with the powerlines along Jordan Street and would have cleared the powerlines on West Airline Highway when a gust of wind took us into the powerlines on Jordan Street." The pilot reported that after contacting the wires the balloon slid horizontally down the wires until the basket came to rest alongside a power pole. He then secured the basket to the pole using a rope and waited for approximately 2 hours until he and the passenger were lowered out of the basket by the fire department. Calm winds were reported in the area at the time of the accident.