Power system operational records [1] for the past fifteen year period were examined and it can be inferred that double circuit outage of 220kV transmission line between Kothmale and Biyagama {KB line) switching stations is the reason for many of the blackouts that have occurred in the past. It has been noted that many of the total failures that occurred in the past were initiated by multiple lightning strokes on the KB line. Though total failures caused by the KB line outages became less during the last period of four years it is a timely requirement to focus more attention again on the total system failures caused by the KB line outages because the 150MW new hydro power station is scheduled to be commissioned in 2010 in Upper Kothmale and the power generated at this power station is planned to be dispatched to the main load centres using the same transmission line. In this study, system behaviour at steady state as well as transient state was analysed at different contingencies of the KB line in order to find out the root cause for resulting total failures. System was analysed with PSS/E software..Power system analysis tools such as Load flow, fault analysis, and stability studies were extensively utilized to understand and describe the events observed during system failures. System investigations reveal that the probability of outage of both circuits of the KB line due to simultaneously occurring faults in both circuits is extremely low. Simulation results suggest that the total failures are initiated by the disconnection of one circuit of the Kothmale-Biyagama line due to a fault and the disconnection of the remaining circuit within a small time period due to voltage instability experienced in the system. The system voltage instability following outage of one circuit of the KB line is justified by reviewing PV and PQ curves of some selected busses. By analysing the simulation results, recommendations are made to overcome future blackouts.