That arc doesn't appear to be coming from the pole mounted transformer...
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Agreed-looks like the cut-out/fuse. I have learned to just interpret non-electricians terminology and found trying to correct it usually gets you no where. Any time a light blinks it is a "short" in the wiring. Really? A short should typically make me reset a breaker before the lights comes on, more likely (and a far more common fault) is a loose connection/bad contacts on switch/socket, etc.
This
is a very graphic demo of the power of an arc flash. Imagine standing in front of a disconnect switch when that happens! That is an area non electricians often take too casually-overload tripped? I'll just open the cabinet and reset it-WITH the start circuit energized so the motor starts right up, fuse blown-just pop in another one-don't bother turning anything off. There is more energy available at the main breaker of your home than in the chamber of most loaded guns-it really should get the same respect. "They" called this a transformer explosion-it was an explosion-but people cannot imagine a fuse exploding being this dramatic, even though that is reality.
It also demonstrates the type of fault arc flash breakers are made to stop. I am sure there was appropriate OCP ahead of this fault-but it was an arcing fault not a short or overload, so normal OCP does not detect a problem.