UPDATE 1-Texas sees higher costs to reap wind power

(Recasts paragraph 1, adds earlier cost estimate, 10-11)

HOUSTON, April 2 (Reuters) - The price tag to build new power lines to bring plentiful wind power to Texas' biggest cities could range from $3 billion to $9 billion, the state's electric grid operator said in a report filed with regulators on Wednesday.

Following legislation passed in 2005, the Texas Public Utility Commission began working to speed up construction of high-voltage transmission lines to tap into abundant supplies of renewable power.

Texas leads the nation by far in the number of installed wind turbines, according to the American Wind Energy Association. About 5,000 megawatts are in operation now and the state grid agency expects at least 6,900 MW of wind power to be online in the next couple of years.

But wind farms are located across a wide swath of sparsely populated west Texas, far from Dallas, Houston and San Antonio, where electric demand is concentrated.

After identifying the areas with the best potential for new wind generation, the commission ordered the Electric Reliability Council of Texas (ERCOT) to design routes to move an additional 5,100 MW to as much as 17,500 MW to the state's big cities.

"The wind generators and the transmission owners have been waiting for this report," said Calvin Crowder, president of Electric Transmission Texas LLC, a joint venture formed by American Electric Power Co (AEP.N: Quote, Profile, Research, Stock Buzz) and MidAmerican Energy Holdings, a unit of Warren Buffett's Berkshire Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) (BRKb.N: Quote, Profile, Research, Stock Buzz), to invest in new transmission projects in Texas.

The boom in Texas wind generation has already created congestion on the existing grid, leading to some service disruption and recent wholesale price volatility.

Market sources said the current issues could be exacerbated by additional wind development that occurs before new power lines can be built in about four years.