Hey, I just found out where all of California's power went.
Make sure to click the picture, and turn your sound up! There's also some cool info about high power electricity equipment.
I also just found an explanation of what's happening in layman's terms. I'll paste it below (credit: MetaFilter
If you look closely at the beginning of the video (first few frames), you can see 3 sets of switches opening. Each switch is two horizontal bars that are swinging away from each other, one with a ball on the end, the other with a receptacle for that ball. The massive arc occurs across one of these switches as it opens.
These switches had a whole lot of current flowing through them. lalas has the right analogy, it's like a lot of water flowing very fast through a pipe. Over at the right of each switch is a massive inductor (behind the truck). Inductors have the property that the current flowing through one cannot change instantaneously (because of ugly magnetic effects with weird Greek letters and such).
When the switches open, there is no longer a path for the inductors' current to flow, but it can't stop immediately. Instead, it continues flowing, building up a massive voltage. There are a lot of electrons sort of jammed up against the end of the now-open switch, and they would really much rather be on the other side. Think water pressure, what happens when you quickly shut off a high-flow-rate pipe? Pressure builds up and there can be a physical jolt of some sort in the pipe.
In a pipe, there is nowhere for the water to go, unless the pipe bursts. With electricity, it can go through nearly anything if it has enough motivation (voltage). So this massive voltage builds up until it rips apart the molecules in the air and creates a path for the current to flow.
In short, it's like instantaneously shutting a valve in a very high-flow pipe, then having the sudden buildup of water pressure break through the valve.
It happened because one of the two horizontal gray things to the right of the switch closest to the camera failed. Those are supposed to split the voltage over themselves, so each takes half and the switch itself gets none while it's opening (I think)."