ITC Holdings Inc Corp. (ITC)

Q2 2010 Earnings Call

July 29, 2010 11:00 a.m. ET


Gretchen Holloway - IR

Joe Welch - President & CEO

Cameron Bready - SVP & CFO


Neil Kalton - Wells Fargo Securities

Dan Eggers - Credit Suisse

Stefka Gerova - JP Morgan

Jonathan Arnold - Deutsche Bank

Jay Dobson - Wunderlich Securities



Good day ladies and gentlemen and welcome to the ITC Holdings Inc Corp, Second Quarter Conference Call and Webcast. (Operator Instructions), I would now like to introduce your host for today's conference Ms. Gretchen Holloway, Ma'am you many begin.

Gretchen Holloway

Good morning and thank you for joining us for ITC's 2010 second quarter earnings conference call. Joining me on today's call are Joseph Welch, Chairman, President and CEO of ITC and Cameron Bready our Senior Vice President, Treasurer and CFO.

Last night we issued a press release summarizing our results for the second quarter and for the six months ended June 30th 2010. We expect to file our Form 10-Q with the Securities and Exchange Commissions today. Before we begin I would like to remind everyone of the cautionary language contained in the safe harbor statement.

Certain statements made today during today's call are non-historical facts such as those regarding our future plans, objects 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 to uncertainties and actual results may differ materially from our projections and expectations.

These risks and uncertainties are discussed in our report filed with the SEC such as there 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.

With that I would like to turn the call over to Joe Welch.

Joe Welch

Thanks Gretchen, we are pleased with yet another quarter very strong results and with our overall operations and physical performance for the first half of the 2010. ITC continues to deliver on our commitments to our customers and shareholders by successfully executing our five year plan which is premised around capital investments capital investments of around $3 billion in transmission infrastructure to improve reliability, facilitate access to all generation, including renewable resources, reduce congestion and improve efficiency and lower the cost of delivered energy.

As we have emphasized previously, ITC's capital investment and maintenance program directly support our mission of best-in-class performance for all of our operating subsidiaries. Achieving and maintaining best-in-class performance is critical to ITC's overall business strategy as a transmission only company, as it reflects our ability to improve and maintain the reliability of transmission system we operate.

We believe that our best-in-class performance serves as a differentiating factor for ITC and provides an important building block for our development efforts and desires to meaningfully participate in the build out of the regional transmission projects. The improved reliability we have released through out investments has once again been demonstrated through the results of the 2010 SGS Statistical Services Transmission Reliability benchmark study.

For the second year in a row, both ITC transmission and METC rank in the top decile for sustained outages. In addition both companies continue there strong performance related to momentary outages, with ITC transmission ranking in the top decile and METC raking in the top quartile of the of the performance.

These results represent considerable improvement over ITC's results in 2006. The first year in which ITC participated in the study and in the year of which we acquired the METC transmission system. The 2010 study results also reflected considerable improvement at ITC Midwest, with a 46% reduction in sustained outages in the prior year for the potions of the system which have voltages of 69 kV or above.

With the reduction of outages, ITC Midwest moved up to the second and third quartile of performance for sustained and momentary outages respectively, which is a substantial improvement in just one year. While we are pleased with the overall improvement, we have seen at ITC Midwest our two years of ownership we are still early in our capital investment cycle for this system and much work remains to achieve our goal of best in class performance for ITC Midwest.

None the less, these study results continue to demonstrate the positive impacts of ITC's investment in the transmission system. In addition to the benchmarking study results ITC's operational excellence was further demonstrated through the reliability of our system under stress conditions over the past couple of months due to both the extreme heat experience in Michigan, in early July and the severe storms which have consistently made there way through the Midwest region this summer.

Even under these stress conditions, ITC systems demonstrated outstanding performance unlike some of the reports you may have heard regarding transmission systems in other areas around the country. Our performance during the past couple of months is particularly impressive given the fact that electrical demand in Michigan reached its highest level since 2007.

We have also experienced several major storms in our operating areas this summer some of which produced high winds and tornados. One example of the challenges that resulted from this weather included isolated tornado damage to ITC transmission lines serving the Fermi nuclear power plant in Monroe, Michigan. ITC Transmission was able to restore these facilities which are necessary for the safe operations of the nuclear plant in less than 24 hours due to the impressive actions of our operations team along with our well designed restoration protocols. ITC successes to date around best-in-class performance and proven reliability continue to validate the importance of executing on our capital and maintenance plans.

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