ITCITCTransmission’s Transmission’s Presentation toPresentation to PJM Industrial CoalitionPJM Industrial Coalition

John Anderson John Anderson Anne Jinks Anne Jinks Tom Wrenbeck Tom Wrenbeck

September 13, 2006 September 13, 2006

2

AgendaAgenda

Who We Are: ITC Holdings, Who We Are: ITC Holdings, ITCITCTransmissionTransmission

How ITCHow ITCTransmissionTransmission is is Improving the Transmission Improving the Transmission SystemSystem

The Value of IndependenceThe Value of Independence

3

Who We Are: ITC Holdings, Who We Are: ITC Holdings, ITCITCTransmissionTransmission

4

ITC Holdings – Building the FutureITC Holdings – Building the Future

ITC Holdings is the first fully independent transmission company in the ITC Holdings is the first fully independent transmission company in the U.S. and only publicly traded company engaged exclusively in the U.S. and only publicly traded company engaged exclusively in the transmission of electricity.transmission of electricity. Pursuing Energy Policy Act and the Federal Energy Regulatory Pursuing Energy Policy Act and the Federal Energy Regulatory Commission (FERC) objectives to Increase investment in transmission.Commission (FERC) objectives to Increase investment in transmission. infrastructure and scope and size of stand alone transmission companies. infrastructure and scope and size of stand alone transmission companies. Expanding the business model based on independence.Expanding the business model based on independence.

*

* Contingent on FERC approval and closing of the acquisition

5

Expanding Model Based on IndependenceExpanding Model Based on Independence

On May 12, 2006, ITC Holdings On May 12, 2006, ITC Holdings announced that it had signed a announced that it had signed a definitive agreement to purchase the definitive agreement to purchase the Michigan Electric Transmission Michigan Electric Transmission Company (METC).Company (METC).

Once the transaction is complete, Once the transaction is complete, ITC Holdings will own the two ITC Holdings will own the two primary transmission companies in primary transmission companies in Michigan, covering most of Michigan, covering most of Michigan’s lower peninsula.Michigan’s lower peninsula.

Largest independent transmission Largest independent transmission company company (1)(1) and 10th largest and 10th largest transmission company overall in the transmission company overall in the U.S. in terms of transmission load U.S. in terms of transmission load served. served. (1)(1)

METC and ITCMETC and ITCTransmission Transmission are are members of Midwest Independent members of Midwest Independent Transmission System Operator Transmission System Operator (MISO).(MISO).

Service Territory Map

(1) Based on annual electric retail sales in the service territory as found in “Edison Electric Institute Profile: Rankings of Shareholder-Owned Electric Companies”, April 2005 and assuming completion of METC acquisition.

6

FoundedFounded March 2003March 2003 May 2002May 2002

HeadquartersHeadquarters NoviNovi Ann ArborAnn Arbor

System Peak Load System Peak Load 12,745 MW12,745 MW 9,841 MW9,841 MW

Service AreaService Area Southeastern MichiganSoutheastern Michigan Lower Peninsula of MichiganLower Peninsula of Michigan

Square MilesSquare Miles 7,600 7,600 18,80018,800

Total Transmission MilesTotal Transmission Miles More than 2,700More than 2,700 Approximately 5,400Approximately 5,400

Stations – Owned and/or Stations – Owned and/or Housing 120kV > EquipmentHousing 120kV > Equipment

155155 8080

Transmission StructuresTransmission Structures 16,000+16,000+ 43,000+43,000+

InterconnectionsInterconnections 1616 2121

MembershipMembership Midwest ISOMidwest ISO Midwest ISOMidwest ISO

2005 Ratebase2005 Ratebase $613 million$613 million $396 million$396 million

EmployeesEmployees 150+150+ 90+90+

ITCTransmission/METC Comparison

7

What Is Our Business?What Is Our Business?

ITCITCTransmissionTransmission, subsidiary of ITC Holdings,, subsidiary of ITC Holdings, operates contiguous, fully-operates contiguous, fully-regulated, high-voltage systems that transmit electricity to local electricity regulated, high-voltage systems that transmit electricity to local electricity distribution facilities from generating stations throughout Michigan and distribution facilities from generating stations throughout Michigan and surrounding areas.surrounding areas.

First independently owned and operated U.S. electricity transmission companyFirst independently owned and operated U.S. electricity transmission company..— In June 2001, ITCIn June 2001, ITCTransmissionTransmission was split from Detroit Edison and became a separate was split from Detroit Edison and became a separate

legal entity under DTE Energy.legal entity under DTE Energy.

— In February 2003, ITCIn February 2003, ITCTransmissionTransmission became independent through acquisition by ITC became independent through acquisition by ITC Holdings Corp.Holdings Corp.

— On July 26, 2005, On July 26, 2005, ITCTransmission’sITCTransmission’s parent company, ITC Holdings Corp., became a parent company, ITC Holdings Corp., became a publicly traded company – “ITC” on the NYSE.publicly traded company – “ITC” on the NYSE.

We Serve as the Conduit Between Generation and End-Use CustomersWe Serve as the Conduit Between Generation and End-Use Customers

8

Transmission is Our Only BusinessTransmission is Our Only Business

ITCITCTransmissionTransmission focuses on ownership, operation, maintenance, focuses on ownership, operation, maintenance, and construction of transmission facilities as a single line of and construction of transmission facilities as a single line of business.business. There is no internal competition for capital – it is dedicated for prudent There is no internal competition for capital – it is dedicated for prudent

transmission investment.transmission investment.

Transmission is a small part of overall electric bill (5-7% ) but makes or Transmission is a small part of overall electric bill (5-7% ) but makes or breaks reliability.breaks reliability.

Transmission enables competition within more costly segments, especially Transmission enables competition within more costly segments, especially generation.generation.

— Competition can reduce costs on the supply side.Competition can reduce costs on the supply side.— Congestion attributable to inadequate capacity can be very expensive and impact Congestion attributable to inadequate capacity can be very expensive and impact

environment when efficient generation cannot be used.environment when efficient generation cannot be used.— Failures, when local, affect much more load and/or industryFailures, when local, affect much more load and/or industry— Cascading failures are extremely costly.Cascading failures are extremely costly.

Because of our singular business focus, we are aligned with Because of our singular business focus, we are aligned with customers.customers. Customers benefit from transmission investment by:Customers benefit from transmission investment by:

— Improved reliabilityImproved reliability— Reduced congestionReduced congestion— Increased access to generation.Increased access to generation.

(1) Source: EIA Annual Energy Outlook 2005

(1)

9

Company Achievements – A Series of FirstsCompany Achievements – A Series of Firsts ITCITCTransmission Transmission was the first to gain conditional FERC approval was the first to gain conditional FERC approval

for innovative rate structure.for innovative rate structure.

ITCITCTransmissionTransmission was the first to gain conditional FERC approval was the first to gain conditional FERC approval for a capital gains tax recovery mechanism.for a capital gains tax recovery mechanism.

ITCITCTransmissionTransmission was the first to gain FERC approval for operation was the first to gain FERC approval for operation of an independent transmission company under a Regional of an independent transmission company under a Regional Transmission Organization (RTO).Transmission Organization (RTO).

ITCITCTransmissionTransmission is the first truly independent transmission is the first truly independent transmission company.company.

ITC Holdings Corp. is the first independent transmission business ITC Holdings Corp. is the first independent transmission business to go public.to go public.

10

How ITCHow ITCTransmissionTransmission is Improving the is Improving the Transmission SystemTransmission System

11

Industry BackgroundIndustry Background

Estimated costs from August 2003 blackout: $4 - $10 billion

Estimated annual lost production costs to U.S. businesses:

— $46 billion in power outages

— $6.7 billion in power quality issues

Estimated investment required to modernize the grid:

$50 - $100 Billion

Outage CostsOutage Costs

Transmission investment has lagged while the transmission system continues to be put under increasing stress.

Demand GrowthDemand Growth

Growth in electricity consumption

Annual demand has doubled since 1980

UnderinvestmentUnderinvestment

Decline in transmissioninvestment

From 1975-2000, transmission investment has fallen by

$2.5 billion per year

Sources:(1) Edison Electric Institute ( EEI) 2000; figures are quoted in 1997 dollars.(2) Electric Power Research Institute (EPRI).(3) Recent Department of Energy (DOE) study regarding cost of power interruptions to US electricity customers.

(2)

(3)

(1)

12

ITCITCTransmissionTransmission Strengths Strengths Follow a stringent planning process to identify and implement Follow a stringent planning process to identify and implement

projects that provide the maximum value to our customers.projects that provide the maximum value to our customers. Focus is on the need for reliable and cost effective infrastructure for end use Focus is on the need for reliable and cost effective infrastructure for end use

electrical customerselectrical customers

Focus on bigger picture and the interactions between transmission and other power Focus on bigger picture and the interactions between transmission and other power supply segmentssupply segments

Invest in preventative maintenance.Invest in preventative maintenance.

Strategic contracting agreements with construction and Strategic contracting agreements with construction and maintenance contractors and equipment providers.maintenance contractors and equipment providers.

Forward thinking union relationships.Forward thinking union relationships.

New rules to promote efficiencyNew rules to promote efficiency

Full support of apprentice programFull support of apprentice program

13

Improved MaintenanceImproved Maintenance

ITCTransmission’sITCTransmission’s maintenance methodology maintenance methodology is simple: invest in is simple: invest in prevention.prevention. ITCITCTransmissionTransmission has realized has realized

approximately 30% increased approximately 30% increased efficiency improvements in efficiency improvements in maintenance costs.maintenance costs.

In 2004, ITCIn 2004, ITCTransmissionTransmission spent spent $21.4 million on maintenance, $21.4 million on maintenance, effectively saving $6.4 million effectively saving $6.4 million due to increased efficiency.due to increased efficiency.

Based on 2004 benchmarking Based on 2004 benchmarking data, ITCdata, ITCTransmissionTransmission achieved achieved best-in-class status for “Ratio of best-in-class status for “Ratio of Preventative Maintenance vs. Preventative Maintenance vs. Corrective Maintenance”.Corrective Maintenance”.

Activity  

Prior Ownership 1998-2002 2003 2004 2005

Thru July 2006

Breaker Inspections 40 28 82 96 34

Bus Inspections 22 6 51 81 36

Relay Complete Periodic Maintenance 35 10 176 354 136

Tower Inspections 952 857 1,441 1,442 1673

Tower Painting 134 147 1,095 3,500 0

Infrared Inspections 55 153 153 154 81

Transformer DGA 43 43 71 62 46

Line Clearance /Corridor Mowing 95% 95% 105%

100% (3 yr. cycle) 80%

Field O&M Expense $15.5 M $22.1 M $21.4 M $96 M $12M

14

Maintenance ActivitiesMaintenance Activities

Helicopter Inspections Conducted in Spring & Fall – 1,620 miles of transmission lines inspected in 2004

Physical Inspections Physical Inspections 1,441 towers inspected vs. prior 5-1,441 towers inspected vs. prior 5-year annual average of 952year annual average of 952

15

Maintenance ActivitiesMaintenance Activities Vegetation ManagementVegetation Management

510 miles of transmission line corridors were cleared. Activities included cutting, trimming, hydro-axing and herbicide.

Before After

16

Maintenance Activities Maintenance Activities

High resolution fly-over High resolution fly-over photography identifies minute photography identifies minute details:details:

Worn conductor material;Worn conductor material;

Loose, missing bolts or pins; andLoose, missing bolts or pins; and

Cracked insulators.Cracked insulators.

Using thermography, Using thermography, ITCITCTransmissionTransmission can identify can identify “hot spots” on our system that “hot spots” on our system that may cause potential problems may cause potential problems or failures.or failures.

17

Stakeholder InitiativesStakeholder Initiatives

Industrial Customer Substation Routine Inspections Industrial Customer Substation Routine Inspections

Inspection of all connected equipment performed using thermographic imaging. Ability Inspection of all connected equipment performed using thermographic imaging. Ability to identify faulty equipment which helps prevent outages at key industrial substations. to identify faulty equipment which helps prevent outages at key industrial substations. No routine inspections performed previously.No routine inspections performed previously.

Industrial Customer Specific ProjectsIndustrial Customer Specific Projects

Facilitated interconnect for major auto manufacturer in 2003.Facilitated interconnect for major auto manufacturer in 2003.

Facilitated interconnect for large oil refinery plant expansion in 2005.Facilitated interconnect for large oil refinery plant expansion in 2005.

Customer OutreachCustomer Outreach

Quarterly Partners in Business meetingsQuarterly Partners in Business meetings— Open forum to communicate company and industry activities.Open forum to communicate company and industry activities.

Individual quarterly meetings with large industrial customers to discuss reliability and Individual quarterly meetings with large industrial customers to discuss reliability and other issues.other issues.— Review of performance data to identify potential weak areas on the system and address in a Review of performance data to identify potential weak areas on the system and address in a

timely manner.timely manner.

18

Reinvestment in the GridReinvestment in the Grid ITCITCTransmissionTransmission has has

reinvested to improve reinvested to improve the transmission the transmission system.system. 2003 – $41 million 2003 – $41 million (1)(1)

2004 – $81.5 million 2004 – $81.5 million (1)(1)

2005 – $117.8 million 2005 – $117.8 million (1)(1)

Projected 2006 – Projected 2006 – approximately $145 million approximately $145 million (2)(2)

In addition to reliability benefits provided by our capital In addition to reliability benefits provided by our capital projects, it is estimated that the 2004 – 2005 capital projects, it is estimated that the 2004 – 2005 capital improvements provide economic savings of approximately improvements provide economic savings of approximately $100 million to customers. This is in excess of the annual $100 million to customers. This is in excess of the annual carrying cost of these projects.carrying cost of these projects.

$-

$20

$40

$60

$80

$100

$120

$140

$160

2003 (ten months)

2004 2005 2006 (projected)

Investments in Property,Plant & Equipment

Depreciation

Sources:

(1) ITCTransmission Form 10-K for the year ended December 31, 2005.

(2) ITCTransmission Form 10-Q for the quarterly period ended June 30, 2006. Actual amount may vary based on various factors including weather, the amount of work that cam be completed at any one time, material and labor conditions, siting, and other issues.

19

Top Quartile System PerformanceTop Quartile System Performance

ITCITCTransmissionTransmission delivers top quartile performance in key delivers top quartile performance in key reliability measuresreliability measures

— Goal is best-in-class system performance.Goal is best-in-class system performance.

Average Circuit Sustained OutagesAverage Circuit Momentary Outages

Source:

2006 SGS Transmission Reliability Benchmarking Study

0.23

0.38

0.70

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

ITC Quartile 1 Mean

0.23

0.28

0.49

0

0.1

0.2

0.3

0.4

0.5

0.6

ITC Quartile 1 Mean

20

The Value of IndependenceThe Value of Independence

21

Benefits of IndependenceBenefits of Independence

Benefits of IndependenceBenefits of Independence

Increased customer focusIncreased customer focus— Increased reliabilityIncreased reliability

— Reduce congestionReduce congestion

— Lower overall cost of delivered energy.Lower overall cost of delivered energy.

Enhances non-discriminatory accessEnhances non-discriminatory access— ITCITCTransmissionTransmission operates without favoring one market participant over operates without favoring one market participant over

another and has no incentive to do so and is not influenced to do so.another and has no incentive to do so and is not influenced to do so.

Share no interest in the generation and distribution servicesShare no interest in the generation and distribution services— Singular focus on transmissionSingular focus on transmission

Better positioned to make needed transmission investmentBetter positioned to make needed transmission investment

Employees prohibited from having any financial interest in a market Employees prohibited from having any financial interest in a market participant.participant.

22

SummarySummary

The independent transmission company business model The independent transmission company business model promotes grid reinvestment and superior benefits to promotes grid reinvestment and superior benefits to customers.customers.

Proven, successful business modelProven, successful business model

First publicly traded First publicly traded

Significant reinvestment in gridSignificant reinvestment in grid

Increased reliabilityIncreased reliability