During the slow descent from approximately 300 feet, the hot air balloon hit powerlines. The pilot stated that as the balloon descended, the winds shifted and the forward speed of the balloon was reduced. Instead of continuing past the powerlines, the gondola of the balloon descended between the powerlines and the envelope of the balloon became entangled in the wires. A post impact fire ensued, resulting in substantial damage of the envelope and gondola. The pilot stated that there were no mechanical anomalies with the balloon prior to the accident.