A $3 million class action against Powercor and its contractor over a St Patrick's Day bushfire that destroyed dozens of Victorian homes has been settled.

The fires swept through Terang in Victoria's southwest on March 17 last year, burning more than 4000 hectares and causing significant damage to homes and farms.

An investigation found one of the fires was sparked when a 50-year-old power pole on a property near Garvoc snapped in high winds. Credit:Christine Ansorge

A class action against Powercor Australia and its pole inspection contractor, Electrix Pty Ltd, was due to begin in the Victorian Supreme Court next month, involving 40 affected residents, landowners and businesses claiming more than $3 million in damages.

However, Maddens Lawyers said on Friday a confidential settlement has been reached with the defendants.