Eletropaulo Metropolitana (ELPL4.BR), the distributor serving the city of Sao Paulo, was fined 4.7 million Brazilian reais ($2.9 million) by a consumer protection agency Friday after recent blackouts in the country's biggest metropolitan area.

The fine is related to two blackouts, one last December and another this January. Consumer protection agency Procon said on its website Friday that Eletropaulo failed to provide "adequate and efficient" service to clients, in violation of consumer protection codes.

The January blackout was caused after problems at a substation operated by Cia. de Transmissao de Energia Eletrica Paulista (TRPL4.BR), 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 and leaving 2.5 million consumers without power, Procon said last month.

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.

Eletropaulo said in an email that it is analyzing Procon's decision and plans to appeal the ruling.

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