Sept. 12 (Bloomberg) -- A power failure in Los Angeles, the second-largest U.S. city, darkened downtown and several nearby cities, trapping people in elevators, disrupting refineries and snarling traffic.

The blackout started around 12:35 p.m. local time, and almost all who lost power had it restored by 2 p.m., said Kim Hughes, a spokeswoman for the Los Angeles Department of Water and Power, the nation's largest municipal utility.

Power was lost in an area with about 2 million people after a worker with the utility accidentally overloaded a transmission line, tripping circuit protectors, Hughes said. Overloading the line caused an automatic shutdown of other lines to prevent damage to equipment.

``We wanted to put too many cars on the wrong freeway,'' Hughes said. ``The system put the brakes on.''

Parts of Southern California also lost power last month. Grid operators shut power to some customers on a rotating basis on Aug. 25 after problems with a transmission line owned by the Los Angeles power agency left the area short.

The region does not have adequate power generation or transmission capabilities to maintain an adequate cushion during periods of peak demand, the California Energy Commission said earlier this year. Below normal temperatures kept demand well below peak levels today.

Investment in power plants has slowed on uncertainty about the direction of the state's electricity industry, four years after an energy crisis resulted in blackouts for millions of people, said Peter Navarro, a professor with the University of California at Irvine.

Refineries

``Capital investment in new power plants is not happening to the degree it should,'' Navarro said in a telephone interview. ``Neither the governor nor the legislature nor the public utilities commission has created a long-term energy policy.''

Today's blackout affected industrial facilities such as Valero Energy Corp.'s Wilmington oil refinery, which shut down after losing power, according to spokeswoman Mary Rose Brown. The refinery has a capacity of 77,000 barrels of oil a day out of California's total capacity of about 2.03 million barrels.

A Royal Dutch Shell Plc refinery, also in Wilmington, was disrupted as well, said spokeswoman Cecilia Moreno. Power at the Shell facility was restored in about 30 minutes, she said.

Trapped in Elevators

``We thought it was terrorist attacks,'' said Joleo Monsalud Jr., 30, a salesman at United Mobile Phones, a cell-phone store on Wilshire Boulevard near Beverly Hills. ``I called my wife just to be sure.''

The Los Angeles County Sheriff's Department has received no reports that the power failure is related to terrorism, said Paul Patterson, a spokesman for the department.

Jason Lindeman, 34, said a co-worker at Shoolery Design in Los Angeles was trapped in an elevator as power was lost for about 30 minutes.

``She looked freaked out,'' Lindeman said. ``She didn't know what happened.''

Didn't Spread

The power failure affected people in downtown Los Angeles, Hollywood and the San Fernando Valley, Hughes said. More than 350,000 people were without power in Burbank, Glendale and surrounding areas in the valley, Captain Bill Lynch of the Glendale Fire Department said in an interview.

Traffic was snarled in some parts of the city when signals were disabled.

``There are sporadic traffic signals blacked out in the downtown area,'' said Deana Lay of the California Highway Patrol. ``There is not massive gridlock.''

Other parts of Southern California, including Pasadena and Walt Disney Co.'s theme parks in Anaheim, were unaffected. The power failure also did not threaten electricity supplies in the rest of the state, said Gregg Fishman, a spokesman with the California Independent System Operator, which oversees the power system in most of California other than the city of Los Angeles.

The port of Long Beach, the country's second busiest port, was not experiencing any power loss, said Dawn Covarrubias, a spokeswoman with the port's maintenance division.

Operations at Los Angeles International Airport were normal and no flights were interrupted, airport spokeswoman Gaby Pacheco said. Air traffic controllers were using emergency backup power, according to Donn Walker of the Federal Aviation Administration.

Edison International's Southern California Edison, a utility which provides electricity to parts of the region not covered by the Los Angeles municipal utility, said its customers weren't affected.

``The areas we serve are fine,'' said Susan Heard, a spokeswoman for Southern California Edison.

-- With reporting by Sonja Franklin and Ian McKinnon in Calgary, Bruce Blythe and Christopher Martin in Chicago, Alex Armitage, Greg Baumann and Daniel Taub in Los Angeles and Richard Schwartz and Jim Polson in New York. Editors: Siler, Reichl, Dieterich.

To contact the reporter on this story: Greg Chang in San Francisco at gchang1@bloomberg.net

Last Updated: September 12, 2005 19:25 EDT