15A to 20A breaker and adding ground wire
Two wire circuits may be retrofitted with ground wires (equipment grounding conductors) but the latter must go all the way to the breaker panel, or to a fat ground wire (grounding electrode conductor) between panel and ground rod/water pipe (your choice of routing path). The National Electric Code seems to say that each receptacle or other device needs its own EGC back to the panel for this retrofit but I interpret that as multiple devices on the same branch circuit can use the same retrofit EGC via pigtails, taps, or daisy chaining.
You may not add on to (extend) such a circuit; new wiring must have EGC in the same cable as the circuit conductors, all the way to the panel. I.e. string new Romex, 12-2 with ground.
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Last edited by AllanJ; 12-24-2012 at 08:40 AM.