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UPDATE 5-Bush says US electricity grid needs upgrade

(Updates with Bush proposals, details from briefing)

By Adam Entous

NEWPORT BEACH, 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 discussed the power crisis for the first time with Canadian Prime Minister Jean Chretien, and the White House announced that the two countries would create a joint task force to determine the cause and come up with possible fixes.

White House spokesman Scott McClellan said Bush supported specific steps to strengthen the nation's transmission grid, such as giving the federal government more authority to control power lines and remove transmission bottlenecks.

Bush was briefed earlier in the day 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 to make sure they had 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."

He called the current delivery system "old and antiquated."

Federal, state and local officials are trying to pinpoint the cause of the breakdown, but they said 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've got to figure out how to make the electricity system have the redundancy necessary so that if there is an outage... it doesn't affect as many people," Bush said.

JOINTLY CHAIRED

The U.S.-Canadian task force will be jointly chaired by U.S. Energy Secretary Spencer Abraham and Canadian Minister of Natural Resources Herb Dhaliwal.

"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.

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

"Obviously something like this isn't going to happen overnight," Bush said. "But it begins to address the problem."

The blackout could feature 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 House Energy and Commerce Committee on Friday launched an investigation into the cause of the outage.

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.