Abstract: A system for containing oil in a containment tank received from a transformer bank for a hydroelectric power generating station. A capacitance proximity sensor is mounted at a predetermined height within the tank and is operative to sense the passage of an oil/water interface in close proximity to the sensor to generate an output control signal for controlling a solenoid operated valve for the tank to close the valve and prevent spillage of oil into the environment. Collected water can be drained from the tank to a point where the oil/water interface has been reduced to a predetermined height within the tank, thereby leaving adequate remaining oil containing capacity within the tank in the event of further oil discharge from a transformer.