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UPDATE 2-Bush calls for upgrading US electricity grid

(Updates throughout, adds background)

By Adam Entous

THOUSAND OAKS, Calif., Aug 15 (Reuters) - U.S. President George W. Bush on Friday called the worst blackout in North American history a "wake-up call" and said he would push to upgrade the nation's electricity grid to head off future breakdowns.

Bush was briefed by Treasury Secretary John Snow about how financial markets were holding up and the White House said Health and Human Services Secretary Tommy Thompson was contacting hospitals in affected areas to make sure they had all the supplies they needed.

"I view it as a wake-up call," Bush told reporters during a visit to the Santa Monica mountains, adding that the massive blackout was "an indication we need to modernize the electricity grid."

Federal, state and local officials are still trying to pinpoint the cause of the breakdown, but had acted quickly on Thursday to reassure the public that terrorism was not involved.

Bush said investigators needed to find out why the outages cascaded so quickly through much of the northeastern United States and the Canadian province of Ontario, knocking New York City, Detroit, Cleveland, Ottawa, Toronto and a host of smaller cities back into the pre-electric age.

"We need to take a look at what went wrong, analyze the problem and come up with a solution. We don't know yet what went wrong but we will," Bush said.

So far, the White House has received only one aid request, for an electric generator in New York City, which Bush said federal officials were working to deliver.

He said a sweeping energy bill, working its way through Congress, took into account the need to modernize the grid.

The blackouts could factor prominently in negotiations between the House of Representatives and Senate in September to finish the legislation -- the first U.S. energy policy re-examination in a decade and a top Bush priority.

The president did not say whether he thought changes would be needed or how much it might cost.

The House Energy and Commerce Committee on Friday launched an investigation into the cause of the outages.

The focus of the energy bill has been on a controversial plan from the Federal Energy Regulatory Commission to rewrite power grid rules and require U.S. utilities to join super-regional grid groups. But that focus could shift to system reliability in the face of the blackouts.

The industry needs about $50 billion to $100 billion in new investment, according to the Electric Power Research Institute, an industry funded group in Palo Alto, California.

Former Energy Secretary Bill Richardson said much of the U.S. electricity system was 50 or 60 years old and it was showing its age. "We're a superpower with a third-world grid. We need a new grid," said Richardson, who now serves as governor of New Mexico.