ITC Holdings Corp. Reports First Quarter 2006 Results

May 03, 2006

ITC Holdings Corp. Reports First Quarter 2006 Results

NOVI, Mich., May 3, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- ITC Holdings Corp. (NYSE: ITC) today announced net income for the first quarter ended March 31, 2006 of $2.7 million or $0.08 per share on a diluted basis, compared with net income of $7.9 million, or $0.25 per share on a diluted basis for the first quarter of 2005.

"ITC Holdings Corp. is off to a great start for 2006," said Joseph L. Welch, president and CEO of ITC Holdings Corp. "The company has had positive developments in key areas, such as ITCTransmission's continued use of Attachment O and delivering on our commitment to reliability through continued capital investments. Also, first quarter financial results are in line with our expectations. As discussed during our March 16, 2006 earnings call, point-to-point revenues in 2006 are expected to be $8 to 12 million less than last year primarily we believe because of improved efficiency in the power markets first introduced by MISO in 2005. As a result of ITCTransmission's formula rate mechanism, this revenue reduction will be adjusted for in following years' rates."

Based on a detailed review of the issue by outside counsel, ITC announced it has determined that ITCTransmission's Attachment O ratemaking methodology has no set expiration date, and remains in effect unless and until a different methodology is approved by the Federal Energy Regulatory Commission (FERC). This determination is consistent with the company's recent conversations on the issue with senior staff at the FERC and the Midwest Independent Transmission System Operator (MISO). Previously the company had disclosed that Attachment O was approved only through January 31, 2008, subject to further extension that must be approved by the FERC.

During the first quarter of 2006, ITCTransmission invested $34.8 million in infrastructure improvements and upgrades to its transmission system. ITCTransmission expects to invest at least $135 million in capital additions in 2006, an increase of $10 million over the previous estimate.

Other significant events in the first quarter of 2006 include:

  • Moody's Investor Services upgraded ITCTransmission's first mortgage bonds to A3 from Baa1 on March 22, 2006; and

  • ITCTransmission issued $100 million of 6.125% First Mortgage Bonds, Series C, due March 31, 2036.

Operating revenues of $39.1 million for the first quarter 2006 decreased by $3.4 million over the same period in 2005, mainly due to lower point-to- point revenues. This anticipated drop in point-to-point revenues is related to the elimination of transitional rate schedules from the MISO tariff and, we believe, to improved efficiency in the power markets first introduced by MISO in 2005. Under Attachment O, lower point-to-point revenues this year are expected to result in a smaller deduction from ITCTransmission's revenue requirement used to set future transmission rates.

General and administrative (G&A) expenses of $7.5 million were $2.2 million higher than the same period in 2005. G&A expenses increased due to higher compensation and benefits expense of $1.3 million primarily resulting from personnel additions for corporate and other functions needed to support our increased level of capital and maintenance activities. Those costs associated with ITCTransmission's delivery of services to customers are recoverable through transmission rates derived using the Company's 2006 data.

ITCTransmission is a public utility regulated by the FERC and operates under an approved annual rate setting mechanism known as "Attachment O." Attachment O enables the Company to generate predictable revenues. Variability in such items as weather or operating costs can change earnings in any period compared to the prior year, but these variations are not expected to materially impact ITCTransmission over the longer term because Attachment O adjusts for these effects in subsequent rate setting periods.

ITCTransmission is focused on best in class operations, maintenance, improving reliability and reducing congestion to lower the overall cost of delivered energy to end-use consumers.

ITC Holdings Corp. will conduct a conference call to discuss first quarter earnings results at 11:00 a.m. EDT Thursday, May 4. Joseph L. Welch, president and CEO, will provide a business overview for the year and Edward M. Rahill, senior vice president and CFO, will provide a financial update of the first quarter of 2006. Individuals wishing to participate in the conference call may dial toll-free 800-289-0473 (domestic) or 913-981-5527 (international); there is no passcode. The conference call replay, available through May 12, can be accessed by dialing toll-free 888-203-1112 (domestic) or 719-457-0820 (international), passcode 5425368. Investors, the news media and the public may listen to a live Internet broadcast of the meeting at http://investor.itc-holdings.com. The webcast also will be archived on the ITC website at http://investor.itc-holdings.com.

More detail about the 2006 first quarter results may be found in ITC Holdings Corp.'s Form 10-Q filing. Once filed with the SEC, an electronic copy of the 10-Q can be found at ITC Holdings Corp.'s website, http://investor.itc-holdings.com. Written copies can also be made available by contacting us either through our website or the phone listings below.

About ITC Holdings Corp.

ITC Holdings Corp.'s wholly owned operating subsidiary, ITCTransmission, is the first independently owned and operated electricity transmission company in the United States. ITCTransmission owns, operates and maintains a fully- regulated, high-voltage system that transmits electricity to local electric distribution facilities from generating stations in Michigan, other Midwestern states and Ontario, Canada. The local distribution facilities connected to the ITCTransmission system serve an area comprised of 13 southeastern Michigan counties, including the Detroit metropolitan area. For more information on ITCTransmission, please visit http://www.itctransco.com. For more information on ITC Holdings Corp., please visit http://www.itc-holdings.com.

Safe Harbor Statement

This press release contains certain statements that describe our management's beliefs concerning future business conditions and prospects, growth opportunities and the outlook for our business and the electricity transmission industry based upon information currently available. Such statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Wherever possible, we have identified these forward-looking statements by words such as "anticipates," "believes," "intends," "estimates," "expects," "projects" and similar phrases. These forward-looking statements are based upon assumptions our management believes are reasonable. Such forward-looking statements are subject to risks and uncertainties which could cause our actual results, performance and achievements to differ materially from those expressed in, or implied by, these statements, including, among other things the risks and uncertainties disclosed in our annual report on Form 10-K and our quarterly reports on Form 10-Q filed with the Securities and Exchange Commission from time to time.

Because our forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different and any or all of our forward- looking statements may turn out to be wrong. They speak only as of the date made and can be affected by assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this release and in our annual and quarterly reports will be important in determining future results. Consequently, we cannot assure you that our expectations or forecasts expressed in such forward-looking statements will be achieved. Actual future results may vary materially. Except as required by law, we undertake no obligation to publicly update any of our forward-looking or other statements, whether as a result of new information, future events, or otherwise, unless required by law.

SOURCE ITC Holdings Corp.

Investor\Analysts: Pat Wenzel, +1-248-374-7200,
pwenzel@itctransco.com, or Media:
Lisa Aragon, +1-248-835-9300, laragon@itctransco.com, both of ITC Holdings Corp.

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