ITC Transmission’s Presentation to PJM Industrial Coalition

1. John Anderson Anne Jinks Tom Wrenbeck September 13, 2006 ITCTransmission’s Presentation to PJM Industrial Coalition

2. Agenda • Who We Are: ITC Holdings, ITCTransmission • How ITCTransmission is Improving the Transmission System • The Value of Independence

3. Who We Are: ITC Holdings, ITCTransmission

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

5. Expanding Model Based on Independence Service Territory Map • On May 12, 2006, ITC Holdings announced that it had signed a definitive agreement to purchase the Michigan Electric Transmission Company (METC). • Once the transaction is complete, ITC Holdings will own the two primary transmission companies in Michigan, covering most of Michigan’s lower peninsula. • Largest independent transmission company (1) and 10th largest transmission company overall in the U.S. in terms of transmission load served. (1) • METC and ITCTransmission are members of Midwest Independent Transmission System Operator (MISO). (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. ITCTransmission/METC Comparison

7. What Is Our Business? We Serve as the Conduit Between Generation and End-Use Customers • ITCTransmission, subsidiary of ITC Holdings,operates contiguous, fully-regulated, high-voltage systems that transmit electricity to local electricity distribution facilities from generating stations throughout Michigan and surrounding areas. • First independently owned and operated U.S. electricity transmission company. • In June 2001, ITCTransmission was split from Detroit Edison and became a separate legal entity under DTE Energy. • In February 2003, ITCTransmission became independent through acquisition by ITC Holdings Corp. • On July 26, 2005, ITCTransmission’s parent company, ITC Holdings Corp., became a publicly traded company – “ITC” on the NYSE.

8. Transmission is Our Only Business • ITCTransmission focuses on ownership, operation, maintenance, and construction of transmission facilities as a single line of business. • There is no internal competition for capital – it is dedicated for prudent transmission investment. • Transmission is a small part of overall electric bill (5-7% ) but makes or breaks reliability. • Transmission enables competition within more costly segments, especially generation. • Competition can reduce costs on the supply side. • Congestion attributable to inadequate capacity can be very expensive and impact environment when efficient generation cannot be used. • Failures, when local, affect much more load and/or industry • Cascading failures are extremely costly. • Because of our singular business focus, we are aligned with customers. • Customers benefit from transmission investment by: • Improved reliability • Reduced congestion • Increased access to generation. (1) (1) Source: EIA Annual Energy Outlook 2005

9. Company Achievements – A Series of Firsts • ITCTransmission was the first to gain conditional FERC approval for innovative rate structure. • ITCTransmission was the first to gain conditional FERC approval for a capital gains tax recovery mechanism. • ITCTransmission was the first to gain FERC approval for operation of an independent transmission company under a Regional Transmission Organization (RTO). • ITCTransmission is the first truly independent transmission company. • ITC Holdings Corp. is the first independent transmission business to go public.

10. How ITCTransmission is Improving the Transmission System

11. Industry Background Transmission investment has lagged while the transmission system continues to be put under increasing stress. • 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 Underinvestment Demand Growth Outage Costs Growth in electricity consumption Annual demand has doubled since 1980 Decline in transmissioninvestment From 1975-2000, transmission investment has fallen by $2.5 billion per year (2) (1) • Estimated investment required to modernize the grid: • $50 - $100 Billion (3) 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.

12. ITCTransmission Strengths • Follow a stringent planning process to identify and implement projects that provide the maximum value to our customers. • Focus is on the need for reliable and cost effective infrastructure for end use electrical customers • Focus on bigger picture and the interactions between transmission and other power supply segments • Invest in preventative maintenance. • Strategic contracting agreements with construction and maintenance contractors and equipment providers. • Forward thinking union relationships. • New rules to promote efficiency • Full support of apprentice program

13. Improved Maintenance • ITCTransmission’s maintenance methodology is simple: invest in prevention. • ITCTransmission has realized approximately 30% increased efficiency improvements in maintenance costs. • In 2004, ITCTransmission spent $21.4 million on maintenance, effectively saving $6.4 million due to increased efficiency. • Based on 2004 benchmarking data, ITCTransmission achieved best-in-class status for “Ratio of Preventative Maintenance vs. Corrective Maintenance”.

14. Maintenance Activities Physical Inspections 1,441 towers inspected vs. prior 5-year annual average of 952 Helicopter Inspections Conducted in Spring & Fall – 1,620 miles of transmission lines inspected in 2004

15. Maintenance Activities • Vegetation Management 510 miles of transmission line corridors were cleared. Activities included cutting, trimming, hydro-axing and herbicide. Before After

16. Maintenance Activities • High resolution fly-over photography identifies minute details: • Worn conductor material; • Loose, missing bolts or pins; and • Cracked insulators. • Using thermography, ITCTransmission can identify “hot spots” on our system that may cause potential problems or failures.

17. Stakeholder Initiatives • Industrial Customer Substation Routine Inspections • Inspection of all connected equipment performed using thermographic imaging. Ability to identify faulty equipment which helps prevent outages at key industrial substations. No routine inspections performed previously. • Industrial Customer Specific Projects • Facilitated interconnect for major auto manufacturer in 2003. • Facilitated interconnect for large oil refinery plant expansion in 2005. • Customer Outreach • Quarterly Partners in Business meetings • Open forum to communicate company and industry activities. • Individual quarterly meetings with large industrial customers to discuss reliability and other issues. • Review of performance data to identify potential weak areas on the system and address in a timely manner.

18. Reinvestment in the Grid • ITCTransmission has reinvested to improve the transmission system. • 2003 – $41 million (1) • 2004 – $81.5 million (1) • 2005 – $117.8 million (1) • Projected 2006 – approximately $145 million (2) • In addition to reliability benefits provided by our capital projects, it is estimated that the 2004 – 2005 capital improvements provide economic savings of approximately $100 million to customers. This is in excess of the annual carrying cost of these projects. 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 Performance ITCTransmission delivers top quartile performance in key reliability measures Goal is best-in-class system performance. Average Circuit Momentary Outages Average Circuit Sustained Outages Source: 2006 SGS Transmission Reliability Benchmarking Study

20. The Value of Independence

21. Benefits of Independence • Benefits of Independence • Increased customer focus • Increased reliability • Reduce congestion • Lower overall cost of delivered energy. • Enhances non-discriminatory access • ITCTransmission operates without favoring one market participant over another and has no incentive to do so and is not influenced to do so. • Share no interest in the generation and distribution services • Singular focus on transmission • Better positioned to make needed transmission investment • Employees prohibited from having any financial interest in a market participant.

22. Summary • The independent transmission company business model promotes grid reinvestment and superior benefits to customers. • Proven, successful business model • First publicly traded • Significant reinvestment in grid • Increased reliability