The story is been through many hands. Here is what I know from the tales.
It supposedly happened in Sacramento CA
Other than that this is what I can tell you from watching the video.
It was a distribution transformer of good size in a substation.
There was a fault outside of the transformer, probably a cable or switch that failed. (That large white arc you see at the start of the clip).
The arc could have been caused by equipment failure or vandalism (chain over the fence onto energized equipment).
Most likely that arc had been going on for a while, since fire trucks were already on the scene, along with a video camera.
Protection equipment failed, something should have quickly (a fraction of a second) opened up de-energizing that transformer and whatever it was feeding.
Since the transformer was feeding into that fault, it was WAY overloaded.
Transformers are filled with mineral oil.
The transformer overheated, was probably arcing and breaking down inside.
It got so hot that the oil spewed out of the transformer (that spray that looked like a fire hose, was oil!)
When transformers have internal arcing it produces acetylene gas.
Then the transformer went BOOM!
Luckily I have never seen a failure like that in person at work. Probably would be best for my mortality if I kept it that way : )
Attention: TDR Forum Junkies 
One big blast and fire took care of that dead short 
