Kansas Renewable Energy ConferenceSeptember 23, 2008

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Who Is ITC?

ITC was first established in March 2003 when DTE Energy sold transmission subsidiary ITCTransmission

In July 2005 ITC listed on the New York Stock Exchange under ticker symbol “ITC”

In October 2006 ITC closed on acquisition of Michigan Electric Transmission Company, LLC (METC.— METC system covers bulk of remainder

of Michigan’s Lower Peninsula In December 2007 ITC Midwest LLC acquired

all of the transmission assets of Interstate Power & Light Company (IP&L)

Actively seeking opportunities to build, own, operate and maintain transmission in the SPP region specifically Kansas and Oklahoma

All operating utilities are rate-regulated by the Federal Energy Regulatory Commission (FERC)

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The Independent Vision A robust electric transmission system so that every SPP electric customer will

have access to reliable, non-discriminatory, and low-cost energy procured through competitive wholesale energy markets

Similar to the interstate highway system, a more robust transmission system will:

— Enhance transmission system reliability

— Provide equal access to all generation resources including renewables

— Create an efficient and cost-effective transmission system for the consumer

— Ensure low cost energy is available to the regional economy to support economic development and attract business

— Be a market enabler for the SPP Market

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Employee Ownership

In Company

Full Independence,

No Participation in Market

Singular Focus on

Transmission System

Recognized Need for

Transmission Investment

Customers, RegulatorsEmployees,Company,

Shareholders,

Aligned Interests of Stakeholders

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Six Degrees of Transmission

Transmission only represents approximately 7% of the end-use consumer’s electricity bill*, but it provides much more value:1. Reliable energy delivery2. Effective, efficient regional

dispatch of generation3. Competitive wholesale

markets4. Renewable resources5. Demand response

programs6. Economic development

* Source: EIA Annual Energy Outlook 2007 with Projections to 2030

The Industry Today

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Lack of Industry Investment

Costs from August 2003 blackout: $4 - $10Bn

Annual lost production costs to U.S. businesses: $46Bn in power outages $6.7Bn in power

quality issues (3)

(1) According to the Edison Electric Institute (“EEI”). Figures are quoted in 2003 dollars.(2) According to Department of Energy (“DOE”), annual electricity consumption more than doubled from 1975 to 2001.

(3) According to Electric Power Research Institute (“EPRI”).(4) According to a September 2004 DOE study regarding cost of power interruptions to U.S. electricity customers.

Estimated investment required to modernize the grid:

$50 - $100Bn (4)

Outage CostsDemand GrowthGrowth in electricity

consumption

Annual demand has doubled From 1975 to 2001(2)

UnderinvestmentDecline in

transmissioninvestment

$12.8 Bn decline from the 10-year period 1975-1984

to the 10-year period 1992-2001 (1)

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Results

Aging infrastructure Lack of expertise in operating

the system Reduced margin for error in

operating the system Blackouts Increased system losses Lack of infrastructure to

support generation additions such as renewables

Lack of regional transmission capacity to facilitate regional markets

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Landscape Overview Wind energy is the most rapidly growing type of generation resource

— Wind forecasts expect wind generation to grow 6000MW annually for the next 5 years – 5000MW of wind was added in 2007

— The SPP region has some of the most abundant wind resources in the United States— SPP has 36,000MW of new wind generation interconnection requests in

their queue

The current cost recovery protocols for economic transmission projects in the SPP has resulted in construction of very few economic projects

— Lack of transmission capacity is the largest barrier to future wind development in the SPP region

— The wind industry needs SPP to develop a cost allocation methodology that supports the development of transmission for renewable energy

— Assurance of cost recovery for transmission owners is necessary for construction of a reliable and efficient transmission grid

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Renewable Resources

Today’s transmission planning and resource interconnection processes are well suited to support generation that has freedom to site

— In contrast, wind energy sites are dictated by nature

— Typically, the best wind energy sites are distant from the existing transmission grid

Integration of renewable resources is good public policy— States will be dependent on grid to support

renewable resources.— Some will need to export while others will need

to import. ITC favors a clear national RPS which would level

the playing field between these states But……

Transmission service for wind energy is classified as economic

ITC’s VisionEveryday to the EHV

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Everyday to the EHV

765 kV transmission infrastructure is part of a larger vision plan

Like the interstate highway system conceived in the 1950’s, a super regional transmission system will be needed to connect future renewable generation to load centers

ITC has committed to the SPP to build the EHV Overlay project

KS V-Plan is the critical first phase of the EHV Overlay project

Lower voltage projects, like county roads, are a critical part of the transmission system

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Southwest Power PoolProposed EHV Overlay

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ITC’s Vision765kV = Green Power

765 kV reduces line losses, which means less burning of fuel and reduced air emissions— Realize 250 MW in reduced losses on peak— 250 MW is equal to medium-sized coal generator— Enough to power 250,000 average homes

“Losses are related to how heavily the system is loaded. U.S.-wide transmission and distribution losses were about 5% in 1970, and grew to 9.5% in 2001, due to heavier utilization and more frequent congestion.” *

Power transmitted over wire is more resource-efficient than coal transported over land

Power carried greater distances and facilitates renewable resources market

* Source: US DOE - http://www.energetics.com/gridworks/grid.html

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ITC’s Vision765kV = Greater Efficiency

“On-ramps” and “off-ramps” provide for easy generation connections and future transmission integration

Looped, redundant system design ensures higher transmission system availability under a broad range of system operating conditions

765 kV provides greatest capacity increases with least land consumption— One 765 kV facility can carry as much

power as six 345 kV lines— Reduced right-of-way need lowers cost

as well as impacts to consumers and to environment

200 ft. 900 ft.

345 kV 765 kV

Principles on Transmission Investment for Renewable Resources

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Background There is increasing public and private interest in a diversified, sustainable domestic energy

supply for the nation.

Federal and state policies are promoting, and in some cases mandating, the use of renewable energy resources.

Reliably and cost-effectively interconnecting and integrating renewable resources presents unique issues for electric utilities.

Renewable resources can be location-constrained and remote from existing transmission facilities.

Their output can also be variable, which can raise reliability concerns.

Siting and building transmission facilities to support renewable resources often is more difficult and takes significantly longer than the siting and building of the renewable resources themselves.

Overcoming these types of challenges often requires significant investment in transmission infrastructure.

Regulatory uncertainty often frustrate and delay transmission investment.

Federal and state regulatory policies should be aimed at eliminating these impediments, which will allow the timely interconnection and integration of renewable resources into the bulk power system in an efficient and cost-effective manner.

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Transmission Principles Principle #1 - Transmission Planning, Siting, and Permitting

— Transmission planning, including planning for facilities to integrate renewable resources, should be open, transparent, and comprehensive, and take into account local, sub-regional, regional and interregional considerations.

— States should work together to facilitate the expeditious siting and permitting of cost-effective multi-state transmission projects needed to accommodate the development of renewable resources.

— Elimination of conflicts among federal, regional, and state policies on planning, siting, and permitting should be a priority.

Principle #2 - Interconnection Queing— Interconnection queuing policies and procedures should enable the timely and efficient

interconnection of all generating resources, including renewables. — Current processes coupled with a tremendous number of interconnection requests have

resulted in congested and unworkable interconnection queues in some regions. — To alleviate this problem, FERC should consider regional variations to queuing rules

proposed by transmission providers and other stakeholders that are not unduly discriminatory and consistent with local and regional planning processes.

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Transmission Principles Principle #3 - Transmission Open Access

— Transmission service for renewable resources should be provided in a manner consistent with federal open access transmission policies, which require open access for all generation sources.

— Network transmission facilities built for renewable resources and other generation should be developed consistent with such open access policies.

Principle #4 - Reliability— Renewable resources, like other bulk power system generation, must comply

with applicable NERC reliability standards. — Variable resources, such as wind and solar generation, require system

support capabilities, such as operating reserves, regulation and load following to maintain grid reliability.

— The costs of these support capabilities must be accounted for in order to determine the total cost of integrating variable resources into a system or region.

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Transmission Principles Principle #5 - Transmission Incentives

— Federal regulatory policy should promote construction of new or upgraded transmission facilities that integrate renewable resources by providing transmission investment incentives.

— These incentives should be based on the case-specifics of the transmission project.

Principle #6 – Cost Allocation— Transmission cost allocation and recovery mechanisms for renewable

resources should provide regulatory certainty and allow for full cost recovery and a reasonable return.

— FERC should allow transmission cost allocation and recovery approaches which support the building of transmission to help achieve renewable resource goals.

Building the Energy SuperHighway

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Kansas V-Plan

Project Overview ― Commences in Spearville, runs south to Comanche County, where it will then run northeast and terminate

in Sedgwick County. This 180-mile transmission line will ensure Kansas has the robust energy infrastructure it needs to deliver reliable, low-cost energy to families and businesses. The line will be constructed at the voltage level determined by Southwest Power Pool either 345kV or 765kV.

― Partnership with MidKansas Electric and Sunflower Electric Power Cooperative― The route has not been finalized – in the coming months we will be working with you, the Commissioners,

and the residents of all the impacted counties to ensure the route respects the rights of landowners and the community.

Regulatory & Approval Timeline― June 5, 2007: Received utility status from the Kansas Corporation Commission― July 16, 2007: ITC Great Plains advises Southwest Power Pool (SPP) of its commitment to construct, own,

operate, and maintain the northern portion of SPP’s “X-Plan,” thus named the “V-Plan.”― October 31, 2007: SPP places the V-Plan in their Transmission Expansion Plan (STEP)― April 11, 2008: ITC Great Plains files motion with the KCC to amend its “service territory” certificate― May 8, 2008: ITC Great Plains files response to Westar’s motion to dismiss ITC’s case― May 19, 2008: Prairie Wind Transmission announced a similar, but less efficient and more expensive

project― October 2, 2008: KCC expected to issue findings on pending motions regarding the V-Plan― October 17, 2008: Parties to case must respond to KCC findings

 

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Kansas V-Plan

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Kansas V-Plan

Project Overview ― The V-Plan begins in Spearville, runs south to Comanche County, where it will then run northeast and

terminate in Sedgwick County. This 180-mile transmission line will ensure Kansas has the robust energy infrastructure it needs to deliver reliable, low-cost energy to families and businesses. The line will be constructed at the voltage level determined by Southwest Power Pool.

― The route has not been finalized – in the coming months we will be working with you, the Commissioners, and the residents of all the impacted counties to ensure the route respects the rights of landowners and the community.

Regulatory & Approval Timeline― June 5, 2007: Received utility status from the Kansas Corporation Commission― August, 2007: ITC Great Plains advises Southwest Power Pool (SPP) and the KETA Board of its

commitment to construct, own, operate, and maintain the transmission line known as the KETA project― October 31, 2007: SPP places the KETA project in their Transmission Expansion Plan (STEP)― December 2007: ITC Great Plains files motion with the KCC to amend its “service territory” certificate― March 2008: KCC issues order granting expanding ITC’s certificate to ― Summer & Fall 2008: Developing routing studies and working with SPP on cost allocation/ cost recovery

methodologies

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KETA Project

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Moving Forward ITC Great Plains is committed to:

— Working closely with communities and local governments to ensure the siting and construction process is open, transparent, and citizens feel they’re participants in the process – not merely observers.

— Improving Kansas’ electricity transmission infrastructure to further improve reliability

— Creating the most efficient and cost-effective transmission system for the Kansas consumer

— Ensuring low cost energy is available to the Kansas economy to support economic development and attract business to the State

— Helping Kansas be a net exporter of energy

— Constructing a more robust transmission system across the state as soon as prudently possible

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Questions?

Carl Huslig

President, ITC Great Plains

1100 SW Wanamaker Rd.

Topeka, KS 66604

785-783-2227

chuslig@itctransco.com