ITC Holdings Corporation (
Q3 2011 Earnings Conference Call
October 27, 2011 11:00 AM ET
Gretchen Holloway – IR
Joseph Welch – Chairman, President and CEO
Cameron Bready – EVP, Treasurer and CFO
Kevin Cole – Credit Suisse
Jay Dobson – Wunderlich Securities
Neil Kalton – Wells Fargo Securities
Welcome to the ITC Holdings Corp. Third Quarter Conference Call and Webcast.
Previous Statements by ITC
» ITC Holdings CEO Discusses Q2 2011 Results - Earnings Call Transcript
» ITC Holdings CEO Discusses Q3 2010 Results - Earnings Call Transcript
» ITC Holdings Inc Corp. Q2 2010 Earnings Call Transcript
» ITC Holdings Corp. Q1 2010 Earnings Call Transcript
At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator instructions). As a reminder, this conference call is being recorded.
I would now like to turn to the conference over to Gretchen Holloway. You may begin.
Good morning, everyone, and thank you for joining us for ITC’s 2011 third quarter earnings conference call.
Joining me on today’s call are – Joseph Welch, Chairman, President and CEO of ITC and Cameron Bready, our Executive Vice President, Treasurer and CFO. Last night, we issued a press release summarizing our results for the third quarter and for the nine months ended September 30th, 2011. We expect to file our Form 10-Q with the Securities and Exchange Commission today.
Before we begin, I would like to remind everyone of the cautionary language in the Safe Harbor statement, which can also be referenced on slide two for those of you participating in the webcast.
Certain statements made during today’s call that are not historical facts, such as those regarding our future plans, objectives, and expected performance are considered forward-looking statements under Federal Securities Laws. While we believe these statements are reasonable, they are subject to various risks and uncertainties and actual results may differ materially from our projections and expectations. These risks and uncertainties are described in our reports filed with the SEC such as our periodic reports on Forms 10-Q and 10-K and our other SEC filings. You should consider these risk factors when evaluating our forward-looking statements.
Our forward-looking statements represent our outlook only as of today, and we disclaim any obligation to update these statements except as maybe required by law.
At this time, I’d like to turn the call over to Joe Welch.
Thanks, Gretchen, and good morning, everyone. We are once again pleased to report solid operational and financial performance. Our results for both the quarter and for the year-to-date period continued to position the company to successfully deliver on our goals and objectives for yet another year.
Further, these results have once again strengthened our track record in demonstrating our capabilities as a best in class operator while also successfully executing on our financial commitments, which includes significant growth in our capital program by investing in critically-needed transmission infrastructure projects.
From an operational standpoint, we are particularly pleased with how our transmission system performed during the stressed conditions of this past summer, resulting from record high peaks due to unusually warm weather and a series of severe storms that moved across the regions. These conditions serve as a critical reminder of the important of the operational strength of our system and the overall reliability of the transmission grid.
The reliable service experience on our system during these months and resulting absence of issues or disruptions to our customers continue to demonstrate the value of our capital investment and answers as the differentiating factor for ITC.
I would emphasize that our performance during these conditions is in no way a surprise to us as our system performed consistent with all of our expectations and design specifications. We view our operational excellence as not only critical to our core operational platform, but also as a key enabler and differentiating factor as we pursue growth through our development and other strategic initiatives.
The resulting competitive advantage from our unrelenting focus on operational excellence manifest themselves by distinguishing ITC as an established and successful transmission owner, operator and developer. From our perspective, the overall landscape for transmission grid remains quite favorable as evidenced by both a continuing recognition of the critical need for transmission investment as well as the supportive regulatory environment for transmission expansion.
In terms of the outlook opportunity, the fundamental premise remains intact. We need significant investment in our nation’s transmission infrastructure in order to support ongoing system reliability as well as our long-term energy goals. This premise was true when Congress passed the Energy Policy Act of 2005, and it remains true today.
While transmission has certainly gained much attention over the recent years, we have yet to see a significant amount of transmission actually built, largely due to the long lead time and regulatory process required for the projects. The issues that we face today around the investment needs of the transmission grid are the same threshold issues that we faced in 2005, and in the preceding years and decades before that.
The first core issue is the investments required for the grid just to maintain the reliability of the existing infrastructure. The reliability issues that we face today are largely the result of the historical underinvestment in transmission which dates back close to 30 years. While there are many ways to frame these severe underinvestment trend, some supporting compelling data is the historical disparity between distribution investment and transmission investment, which can be demonstrated through a much steeper, linear investment curve for distribution investments dating back to 1980 and a relatively flat linear investment curve for transmission investment for the same period.