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

2 Agenda Who We Are: ITC Holdings, ITCTransmission Who We Are: ITC Holdings, ITCTransmission How ITCTransmission is Improving the Transmission System How ITCTransmission is Improving the Transmission System The Value of Independence 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 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 Independence On May 12, 2006, ITC Holdings announced that it had signed a definitive agreement to purchase the Michigan Electric Transmission Company (METC). 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. 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) 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). METC and ITCTransmission are members of Midwest Independent Transmission System Operator (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 Founded March 2003 May 2002 HeadquartersNovi Ann Arbor System Peak Load 12,745 MW 9,841 MW Service Area Southeastern Michigan Lower Peninsula of Michigan Square Miles 7,60018,800 Total Transmission Miles More than 2,700 Approximately 5,400 Stations – Owned and/or Housing 120kV > Equipment Transmission Structures 16,000+43,000+ Interconnections1621 Membership Midwest ISO 2005 Ratebase $613 million $396 million Employees ITCTransmission/METC Comparison

7 What Is Our Business? 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. 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. 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. We Serve as the Conduit Between Generation and End-Use Customers

8 Transmission is Our Only Business ITCTransmission focuses on ownership, operation, maintenance, and construction of transmission facilities as a single line of 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. 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 is a small part of overall electric bill (5-7% ) but makes or breaks reliability. Transmission enables competition within more costly segments, especially generation. 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. Because of our singular business focus, we are aligned with customers. Customers benefit from transmission investment by: Customers benefit from transmission investment by: —Improved reliability —Reduced congestion —Increased access to generation. (1) Source: EIA Annual Energy Outlook 2005 (1)

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

10 How ITCTransmission is Improving the Transmission System

11 Industry 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 Costs Transmission investment has lagged while the transmission system continues to be put under increasing stress. Demand Growth Growth in electricity consumption Annual demand has doubled since 1980 Underinvestment Decline in transmission investment From , 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 ITCTransmission Strengths Follow a stringent planning process to identify and implement projects that provide the maximum value to our customers. 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 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 Focus on bigger picture and the interactions between transmission and other power supply segments Invest in preventative maintenance. Invest in preventative maintenance. Strategic contracting agreements with construction and maintenance contractors and equipment providers. Strategic contracting agreements with construction and maintenance contractors and equipment providers. Forward thinking union relationships. Forward thinking union relationships. New rules to promote efficiency New rules to promote efficiency Full support of apprentice program Full support of apprentice program

13 Improved Maintenance ITCTransmission’s maintenance methodology is simple: invest in prevention. ITCTransmission’s maintenance methodology is simple: invest in prevention. ITCTransmission has realized approximately 30% increased efficiency improvements in maintenance costs. 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. 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”. Based on 2004 benchmarking data, ITCTransmission achieved best-in-class status for “Ratio of Preventative Maintenance vs. Corrective Maintenance”. Activity Prior Ownership Thru July 2006 Breaker Inspections Bus Inspections Relay Complete Periodic Maintenance Tower Inspections ,4411, Tower Painting ,0953,5000 Infrared Inspections Transformer DGA Line Clearance / Corridor Mowing95% 105% 100% (3 yr. cycle)80% Field O&M Expense$15.5 M$22.1 M$21.4 M$96 M$12M

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

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

16 Maintenance Activities High resolution fly-over photography identifies minute details: High resolution fly-over photography identifies minute details: Worn conductor material; Worn conductor material; Loose, missing bolts or pins; and Loose, missing bolts or pins; and Cracked insulators. Cracked insulators. Using thermography, ITCTransmission can identify “hot spots” on our system that may cause potential problems or failures. 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. 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 Facilitated interconnect for major auto manufacturer in Facilitated interconnect for large oil refinery plant expansion in Facilitated interconnect for large oil refinery plant expansion in Customer Outreach Quarterly Partners in Business meetings 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. 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. ITCTransmission has reinvested to improve the transmission system – $41 million (1) 2003 – $41 million (1) 2004 – $81.5 million (1) 2004 – $81.5 million (1) 2005 – $117.8 million (1) 2005 – $117.8 million (1) Projected 2006 – approximately $145 million (2) 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. 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, (2) ITCTransmission Form 10-Q for the quarterly period ended June 30, 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 ITCTransmission delivers top quartile performance in key reliability measures —Goal is best-in-class system performance. Average Circuit Sustained OutagesAverage Circuit Momentary Outages Source: 2006 SGS Transmission Reliability Benchmarking Study

20 The Value of Independence

21 Benefits of Independence Benefits of Independence Benefits of Independence Increased customer focus Increased customer focus —Increased reliability —Reduce congestion —Lower overall cost of delivered energy. Enhances non-discriminatory access 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 Share no interest in the generation and distribution services —Singular focus on transmission Better positioned to make needed transmission investment Better positioned to make needed transmission investment Employees prohibited from having any financial interest in a market participant. 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. The independent transmission company business model promotes grid reinvestment and superior benefits to customers. Proven, successful business model Proven, successful business model First publicly traded First publicly traded Significant reinvestment in grid Significant reinvestment in grid Increased reliability Increased reliability