Eletropaulo (ELPL6.BR), the provider of electricity for the city of Sao Paulo, may be fined up to 6 million Brazilian reals ($3.6 million) by Brazil's consumer protection agency after a recent blackout left two and half million people without energy, the agency said Wednesday.

Tuesday's blackout was caused after problems at a substation operated by Cia. de Transmissao de Energia Eletrica Paulista, or CTEEP as the transmission company is known. A transformer overheated due to the substation working close to its capacity of 1,200 megawatts, causing an automatic shutdown, the consumer protection agency known as Procon said on its website.

Eletropaulo, which is liable for damages in the case of outages, may be fined if the agency finds it violated consumer protection codes, Procon said.

Because the substation continues to operate close to capacity and a backup station is set to come online only in 2012, CTEEP can't guarantee that other blackouts won't occur, Procon said.

Representatives from Eletropaulo and CTEEP weren't available to comment when contacted after business hours.

Tuesday's blackout was at least the second in the country in less than a week. It left the area around Paulista Avenue and in the Vila Olimpia and Itaim Bibi neighborhoods, where many of the nation's major banks and brokerages have headquarters, without energy for more than an hour. Last week, problems at a substation in the country's northeast left eight Brazilian states without power for as long as five hours.

-By Paulo Winterstein, Dow Jones Newswires; 55-11-3544-7073; paulo.winterstein@dowjones.com
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