(Updates throughout)
By David Morgan
NEW YORK, Aug 16 (Reuters) - Life returned to normal on Saturday for millions caught in the worst blackout in North American history, but isolated outages stubbornly continued in communities from Michigan to Connecticut and Ontario, Canada.
Two days after cascading outages cut electricity to several northeastern states, a U.S.-Canadian task force prepared to search for the cause, while utilities scrambled to get power generation back to capacity before the start of the work week on Monday.
"Until the systems are fully up and operational, until the demands start to return to full peak ... there remains the potential for rolling blackouts," U.S. Energy Secretary Spencer Abraham told reporters after speaking to the governors of New York, New Jersey and Connecticut.
"Our first goal is to just get the existing generation back on line. That's going to take some time," he added.
The three states, where an estimated 30 million people were effected by the blackout, called on Abraham for what New Jersey Gov. Jim McGreevey described as "a thorough, complete, agonizing" investigation into the cause.
"Not only (do we need) an investigation into what happened, but more importantly, what are we going to do to prevent this from happening again," McGreevey said.
NEW YORK SUBWAYS RUNNING
The National Electric Reliability Council, a Princeton, New Jersey-based nonprofit company set up after a huge blackout struck the East Coast in 1965, suggested the outage started when transmission lines failed near Cleveland, Ohio.
In New York City, full power returned late on Friday after 29 hours. Subway trains began running on Saturday, while stores and restaurants opened for what they hoped would be their first normal day since the lights went out on Thursday afternoon.
"Finally it's back to normal. I never thought this would happen here," said Marie Matthew, a Haitian-born Manhattan security guard who was making her way home to New Jersey for the first time since Wednesday.
But public officials, warning that were was no guarantee against a recurrence of wider outages in coming days, urged residents to conserve energy by keeping lights, air-conditioners and washing machines switched off.
"We're still in a delicate balance between what we can generate and the demands on the utility grid," said New York Gov. George Pataki, who told reporters that the state's power grid was operating at 43 percent below capacity and meeting demand only by taking in energy from out-of-state.
Airport delays continued, while thousands of stranded travelers stood in line at John F. Kennedy, LaGuardia and Newark Liberty airports hoping to book new flights after hundreds of cancellations.
BOILED DRINKING WATER
In the Midwest, where energy officials believe the blackout began, residents of Cleveland, Ohio, and Detroit boiled their drinking water after the blackout paralyzed water system pumps. But water service returned to all but a few isolated areas.
"Everyone should have water to their house unless there's been some sort of mechanical problem," Cleveland Mayor Jane Campbell told Fox News.
The return of full electricity service to Detroit also raised the prospect that the Big Three automakers would avoid production shortages despite the shutdown of dozens of plants and offices.
But sporadic outages continued in isolated sections of Connecticut and New Jersey, while in Ontario, officials warned of possible rolling blackouts as utility authorities worked to stabilize the region's power grid.
New York officials estimated that the leading U.S. metropolis may have lost $40 million in taxes and paid as much as $10 million in extra overtime during the blackout. The New York Times reported that losses in personal income among 8 million city residents could run as high as $750 million.
The outage that plunged an estimated 50 million people into darkness eclipsed major blackouts which paralyzed eastern cities in 1965 and in 1977. Both times, stricken communities were assured that a similar crisis would not happen again.
Pataki noted the irony that the National Electric Reliability Council was set up to promote reliable energy after 1965. "If ever there was a misnomer, it's the 'electric reliability council.' We did not have reliability," he said.
On Friday, the White House announced that a cross-border task force would investigate the massive blackout following talks between U.S. President George W. Bush and Canadian Prime Minister Jean Chretien.