Sandakan Municipal Council officers demolished 20 structures near Taman Kenari, about 15kms from town in an hour-long operation headed by enforcement chief Irman Tajudin Edy.
The operation went without hindrance as security personnel had earlier swept through the area and detained the occupants comprising illegal immigrants.
Council senior assistant enforcement chief Sairin Abdul Rahman said 16 staff were involved in the operation with help from the police and Sabah Electricity Sdn Bhd.
Fireman Apolos Jeremos was electrocuted while battling a bushfire near the squatter settlement on Monday.
Apolos was believed to have died when the fire hose he was holding came into contact with live cable of an illegal connection between a sewerage pump house of the housing estate and the squatter settlement.
Sabah Electricity general manager (asset management) Muhamad Nazri Pazil said there were power thefts at 111 squatter settlements involving about 10,000 houses around Sabah.
Most rampant were in in Kota Kinabalu, Sandakan, Lahad Datu, Semporna and Tawau, he said adding that SESB carried out over 100 operations on the illegal connections a year.