I don't think a lot of things about that area are intended. This update is very buggy and a lot of things are not working as they should or missing from the game. Maybe you have those Boots that electrify water and blood surfaces or maybe it's just a random bug. I don't know, but that area is a bit of a cancer.
- The fire out-right refuses to be put out. It instantly reignites even if you drop a water barrel or cast rain
- The fire spreads during a conversation
- The passage way under the walkway to the Zhentarim Hideout is also obstructed by reigniting fire
- Benryn sometimes refuses to move all together
- Doors are inconsistently buggy
- And a few other things
Personally I'd make it like this:
- Fires spread at the beginning only, but can be put out afterwards
- Putting out all fires gives an inspiration point
- And naturally bugs fixed regarding that place
