fall 2015 project planning and formula ... - itc-holdings.com

Fall 2015Project Planning and Formula RatePartners in Business Meeting

Welcome

Keith EylerStakeholder Relations

Safe Harbor Language and Legal Disclosure

2

ITC MidwestFacility and Meeting Accommodations

• Registration for meeting: Sign in…

• Refreshments – Relax, enjoy and ask questions

• Rest Room/Emergency/Safety/Facility Locations

• Lunch

• Partners in Business: Web site located atwww.itctransco.com

• Introductions

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ITC Midwest Meeting AgendaMorning:

• Kick-off – Mike Dabney-Keith Eyler

• Welcome/ITC Update – Krista Tanner, ITC Midwest President

• Reliability Update- Janice Yen, Operations

• Maintenance Performance Update- Amy Murray, VegetationManagement; John Stallman, Asset Management

• Federal Regulatory Update- Nathan Benedict, Regulatory

• State Regulatory Updates- Tim Tessier, Regulatory

Lunch:

Afternoon:

• 2016 Formula Rate-Dave Grover, RTO Affairs

• Project Planning Overview- Dan Barr/Robert Walter/Jeff Eddy,Planning

• Map Review and Planner Discussions


Welcome and ITCUpdate

Krista TannerPresident, ITC Midwest


SystemPerformance

Janice Yen,Senior Engineer

7

OutlineSystem Performance• SGS

— Study Changes— Results

• System Impact• 34.5 kV Performance

Trends• System Maintenance• Summary

8

ITC participated in the 2015 SGS Transmission Reliability Benchmarking Study

2015 is the twenty-first year for the SGS Study

14 systems participated, comprising over one-third of US/Canada bulk power circuitmiles (>200kV)

― Same number of participants as 2014 study but different set of utilities

― General comparability between study-years but changes in the participant pool will resultin some changes to boundary values

― Year-to-year comparison of system rank should be avoided

Common rules are applied to all systems to ensure the highest level of integrity ofanalysis and comparisons

ITC Midwest submits all raw circuit outage data occurring on circuits at the 69kVand above voltage level, ITC Transmission and METC submit 100kV and above

Reliability

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SGS ResultsSustained Outage Performance

Source: 2015 SGS Study Table 3.5.1

• Study results shouldbe viewed as asnapshot in time

• ITCM’s 69kV systemis the primary driverof overall systemperformance

• ITCM’s performanceshould be viewedagainst comparablesystems and / orvoltage classes

Lower isbetter

10


Comparing the ITCMsystem to ITCT, or METCor other transmissionprimary systems providesan inaccurate assessmentof performance

• The 69kV systemmakes up nearly 65% ofthe total ITCMtransmission system

• The characteristic ofITCM is long lines inrural area

• Many multiple tappedlines


Lower isbetter

11


When examiningthe ITC Midwestsystem by voltageclass for 100kVand above, thesystem performswell

Second Quartile


Lower isbetter

12

Historical Outage Performance

Including all voltage classesand outage types, momentaryand sustained, the systemcontinues to improve

There has been a substantialdecline in average number ofcircuit outages experiencedsince inception

Approximately a 45%decrease in averageoutage events from 2008to 2014

The best method of assessing system performance is over time

Systematic Approach to Outage Reduction

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External outages - Outages outside the control of thetransmission system. Examples include foreign utilities,customer equipment, generation, instability or under-frequency, distribution through-faults, etc.

Identify and document cause of eachsustained outage• On average, < 5% of sustained outages are

recorded as “unknown” cause for all ITC systemscombined

Committee of operations, engineering, planningand stakeholder relations reviews each outage• Identification of system

planning/maintenance/operating improvements orlarger scale projects

• Initiate additional inspections, special maintenanceor study projects

Track performance trends• Circuits with repeat outages are identified and

given extra attention

Separate committee performs an after actionreview for all human performance events

Outage cause analysis provides feedback for both the maintenance plan and capital improvements

Systematic Approach to Outage Reduction69 KV and Above

15 circuits were identified as“Poor Performers”

From 2011-2014 thesecircuits accounted for over25% of all system outages

The circuits were assessedto determine the best solutionto improve performance

Implementation of thecorrective actions beganearly 2015

― Results through August showsnearly a quarter of events ascompared to year end 2014

Identify problem areas and develop the appropriate corrective actions

The data on 2015 is just YTD (8 months)

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Weather and System Performance69 KV and Above

Yearly Outage TrendsSummary of outage trends:• Weather has been a

strong influence onsystem performance

• Despite weather patternsat or above averagelevels, outageperformance is showingimprovement

— Capital andmaintenanceactivities

Weather and System Performance: SAIFI

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Yearly Outage TrendsSummary of outagetrends:

• Improved systemperformance trenddeveloping in 2010despite weatherconditions

• 2014 precipitation levelsabove average butSAIFI performance wasthe best in recent history

• Beginning to seeconsistent performancetrends

— 2009-2011— 2012-2014

*http://www.ncdc.noaa.gov/sotc/drought/2012/13

Weather and System Performance: SAIDI

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Yearly OutageTrends

Summary of outagetrends:• Consistent improved

performance trendsdeveloping— 2009-2011— 2012-2014

• Coordination with IPL touse nearest crew asfirst responder

• Allowing Rural ElectricCoops to operate ITCpole top switches

Weather and System Performance: Historical

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Yearly Outage TrendsSummary of outage trends:

— Improved outageperformance for threeconsecutive years

— 2012 and 2014 showthat weather volatility notas impactful on systemperformance

— 57% increase inprecipitation

— 8% decrease inaverage circuitoutages

— Overall downward trendin average circuit outages

Summary

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Our Cause process and Operations Committee provide a systematicapproach to outage identification and reduction

• Investigate and identify cause for every sustained and momentary outage onthe 100 kV+ system

• Investigate and identify cause for every sustained or repeated momentary onthe 69 kV system

• Track poor performing circuits including momentary and sustained events atall voltage levels

Outage tracking feeds our maintenance and capital projects, resulting in:

• Downward trend in non-weather related outages on the 69 kV+ systems

• Consistently strong year-to-year system performance on the 34.5 kV systemdespite weather trends

Questions?

Thank you!

…Our Vision Forward


PreventativeMaintenance forSafety, Reliabilityand Value

Preventative Maintenance for Safety,Reliability and Value

Managing Vegetation

Amy MurrayMaintenance Specialist

ITC Transmission Systems and Projects

ITC Midwest = about6,600 circuit miles

ITC Holdings = roughly15,000 miles

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Vegetation Management:Conversion to Transmission Compatible Plants

Operational andValue Goals:

• System Preparedness= Reliability

• Proper Prioritization

• Work Levelization

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System Preparedness andReliability Improvements

Trends:

• Safety

• Vegetation –Caused Outages

• Work volume

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Prioritizing Work

Inspections:

• Foundation of theprocess

• Biannual aerialinspections

Annual Schedule:

• “Flexible Cycle”

• Minimize hotspotting

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Value to System and Consumers

• Reliable energy

• Reliable productivity

• Cost controls

Principles of Excellence:

• Long-term contracts

• Agency partnerships

• Budget consistency

• Long-term corridor management strategy

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ITC Vegetation Management –Taking it to the Next Level

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Communities

StewardshipCollaborations

Conclusion

Preventative maintenancefor safety and reliability

provides value forcustomers and communities

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Questions?

Thank you!

Preventative Maintenancefor Safety, Reliability and

Value

ITC Midwest Preventative

Line Maintenance

John Stallman,Manager, Maintenance and Equipment

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ITC Midwest Preventative LineMaintenance Process

• ITC Midwest operatesand maintainsapproximately 7,455 milesof lines in Iowa,Minnesota and Illinois.

• This mileage includes theCIPCO integrated system.

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Preventative Line Maintenance Process

• ITC Midwest performs detailed span-by-span patrol on 20% ofthe system per year. This route is called OH Regulatory Patrol

• Criteria used to generate annual line patrol schedule:

• Date of the last regulatory patrol

• Line reliability and performance

• Line age and condition

• Factors which may increase reliability requirements, system rebuilds,voltage conversions etc.

• Input from regional field employees; “boots-on-the-ground folks”

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• Lines not included in span-by-span patrol are patrolledannually. This route is calledAnnual Visual Patrol.

• Less-detailed patrolperformed by several methodsincluding aerial, driving/ATV,and foot depending on linelocation and conditions.

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• ITC Midwest has two dedicated linepatrollers

• Line patrollers use handheld device tocapture the line deficiencies electronically

• Handheld has preset buttons to representcommon line deficiencies

• Patroller has ability to add text to theproblem description of each deficiency

• Handheld captures GPS coordinates foreach line deficiency

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• When entire line has been patrolled, data for eachdeficiency uploaded into Asset Sentry maintenancedata base

• Each deficiency creates an “exception” in AssetSentry

• Each exception has problem detail, accounting,location

• Asset Sentry users can query system to generatework packets and maps from exceptions

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• Three assets related to lines which exceptions can becreated for:

• A line or circuit

• Pole top switches

• Capacitor banks

• Exceptions created against line or circuit forlockouts/momentary operations

• Patrols, called routes, may be queried in data base

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YEARLine Exceptions

GeneratedLine Exceptions

Completed% Complete

2009 4180 4179 99.9%

2010 5853 5844 99%

2011 6096 6069 99%

2012 6522 5826 89%

2013 4450 4050 91%

2014 3448 2618 75%

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Capital Line Maintenance

• Poles: 4,177

• Cross Arms: 2,402

• Guy Strain Insulators: 4,940

• Insulators: 27,319

• Pole Top Switches (69kV): 59

• Arresters (34.5kv – 69Kv): 2,103

Assets replaced through the MaintenanceProcess since 2010

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Poor Performing Circuits

ITCMW tracks its 10 worst performing circuits

• Every circuit is patrolled and evaluated for outage causes

• A detailed plan is put together to lower the number of outages,potentially including:

• wildlife protection,

• static bonding,

• round rod additions,

• insulator replacements,

• pole replacements,

• switch replacements, etc.

Preventative Maintenancefor Safety, Reliability and

Value

ITC Midwest Preventative

Substation Maintenance

John Stallman,Manager, Maintenance and Equipment

ITC Midwest Preventative SubstationMaintenance Process

ITCMW operates and maintains:

• 1,206 circuit breakers

• 54 circuit switchers

• 201 power transformers

• 227 batteries and battery chargers

• 85 capacitor banks

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Preventative Substation Maintenance Process

General substation preventative maintenance

• Every substation with ITC assets is inspected everyother month by a substation operator

• All results recorded digitally in Asset Sentry and areavailable for review

• Every device in the substation is given an annualinfrared scan

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Circuit breaker and circuit switcher maintenance

• Major maintenance performed every five years for oildevices and every 10 years for SF6 devices

• To meet requirements of PRC-005-2, trip coil testingnow will be performed on a five-year cycle

• Annual maintenance also performed

• ITC Midwest has replaced around 209 devices

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Transformer Maintenance

• Dissolved gas analysis (DGA) taken from each oilcompartment once a year

• Within next year or two, ITC Midwest will add atransformer major maintenance activity, conductedonce every 10 years

• ITC Midwest has added or replaced about 20 units


Battery and battery charger maintenance

• Annual maintenance conducted to meet therequirements of PRC-005-2

• ITC Midwest has replaced almost 60 battery sets andchargers

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Relay Maintenance

Relay Testing

• Relay calibration testing every five years

• Complete periodic scheme-based testing every 10years

• New testing requirements for PRC-005 (Lockout relaytesting, Transformer Sudden Pressure relay testing)

• ITC Midwest has replaced approximately 600 relayschemes

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ITC Midwest Capital Maintenance Process

Capital replacement projects determined byAsset Management at ITC Midwest

• To increase system performance, ITC Midwestreplaces assets that cause reliability issues

• Assets at the end of their useful life are replaced

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0

10

20

30

40

50

60

70

80

90

100

0-5 Yrs 5-10 Yrs 10-15 Yrs >15 Yrs

Battery Age 2008-2015

2008 2015

0

100

200

300

400

500

600

0-10 Yrs 10-20 Yrs 20-30 Yrs 30-40 Yrs > 40 Yrs

Circuit Breaker Totals 2008-2015

2008 2015

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0

10

20

30

40

50

60

70

0-10 Yrs 10-20 Yrs 20-30 Yrs 30-40 Yrs >40 Yrs

Transformers 2008-2015

2008 2015

ITC Midwest Preventative Maintenance ProcessRelated to Large Industrial Customers

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• IPL provides ITC with a large industrialcustomer shutdown schedule on monthlybasis

• ITC uses schedule to plan maintenance andproject work related to transmission assetsthat feed these customers

ITC Midwest Preventative Maintenance ProcessRelated to Large Industrial Customers

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ITC follows an internal process (called N-1) if >50 MW of load or aknown critical load is to be placed on a radial feed due to an ITCproject

• Critical ITC assets are identified by Operations Engineering

• A review of open exceptions for critical assets is performed

• Additional patrols or inspections of critical assets may begenerated

• ITC project will be delayed if critical assets can’t be repaired orare not deemed reliable

Questions?

Thank you!



Federal RegulatoryUpdate

Nathan BenedictRegulatory Analyst

Self-Funding of Network Upgrades

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FERC denied Otter Tail Power’s request to revisetwo pro forma Facility Construction Agreements toself-fund network upgrades:

• FERC also instituted a Section 206 proceeding to determinewhether MISO’s pro forma Generator InterconnectionAgreement, which allows self-funding, is just and reasonable

• Several MISO TOs (including ITC) filed a rehearing request

Self-Funding of Network Upgrades

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MISO made an informational filing on Aug. 17agreeing to adopt proposed FERC language thatwould allow transmission owners to elect the self-fund option only when the interconnectioncustomer agrees:

• Several MISO TOs (including ITC) filed comments on Sept. 1arguing that FERC should terminate the Section 206proceeding and, at a minimum, retain the self-fund option

Generator Interconnection

57

American Wind Energy Association (AWEA)proposed reforms to the pro forma GeneratorInterconnection Agreement and Procedures

• The June filing alleges the current process is unjust andunreasonable (delays, costs, rates, terms and conditions)

• Responses were filed on Sept. 8

• ITC commented that AWEA failed to establish that the currentprocedures need revision and that a rulemaking is needed, andthat AWEA’s proposed modifications would degrade fairnessand efficiency

MISO Base ROE Case

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First Complaint:

• Hearings were held during the week of Aug.17

• Initial post-hearing briefs were filed Sept. 21

• Initial decision is due from the ALJ Nov. 30

MISO Base ROE Case

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Second Complaint

• On July 20, the MISO TOs requested rehearing of FERC’sOrder accepting the second ROE complaint and establishinghearing procedures

• Initial testimony is due this fall

– Sept. 2: Complainants

– Oct. 20: Respondents

– Nov. 23: FERC Staff

• These dates lead to an initial decision by the ALJ in June 2016

Order 1000 Update

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MISO now fully compliant with the regionalrequirements of Order 1000. MISO and its neighbors(PJM, SERTP, SPP) made filings to comply with theinterregional requirements of Order 1000:

• MISO-PJM: second filing made July 31

• MISO-SERTP: second filing made June 22

• MISO-SPP: second filing made Aug. 18

Activity on the Seams

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ITC filed responses in:

• Each interregional compliance filing on the MISO seams

• The NIPSCO complaint against the MISO-PJMinterregional planning process

The filings address the regions’:

• “Triple hurdle” of interregional and regional approvalcriteria

• Arbitrary cost and voltage thresholds

• Limited consideration of benefits

Petition for Declaratory Order

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On July 28, ITC Grid Development requestedguidance on cost recovery for competitively bidprojects pursuant to Order 1000. Asks FERC toconfirm:

• Whether the revenue requirement provided in a selectedbid will be deemed just and reasonable

• Whether binding, full revenue requirement bids areprotected from further rate challenges unless review isrequired in the public interest

2014 Formula Rates True-Up

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On June 1, 2015, the ITC Companiesposted 2014 true-up adjustments on theirrespective OASIS sites:

• 2014 true-up adjustments are reflected in 2016rates

Projected rates for 2016 were posted onSept. 1

Questions?

Thank you!


State RegulatoryUpdate

Tim TessierManager, Regulatory Strategy andState Regulatory Affairs – Iowa

State Regulatory Activities

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• Major capital projects

• Distributed generation

• Cyber security

• Clean Power Plan


2016 Attachment O -Projected FormulaRate

David GroverDirector, RTO Affairs (MISO)

Agenda• Timeline and mechanics of the

MISO Attachment O FormulaRates process

• 2016 projected Formula Ratesposting

• 2016 projected ratescalculations and key drivers

• Next steps

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2016 RATE1/1/16 – 12/31/16

Projected 2016 RR+/- 2014 True-Up with

Interest

2015 RATE

1/1/15 – 12/31/15


Interest

2014 RATE

1/1/14 – 12/31/14


Interest

Forward Looking Attachment O Timeline

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1/1/13 1/1/14 1/1/15 1/1/16 1/1/17

9/1/2015Post

ProjectedRates for

2016

6/1/2016Post

Actual2015

True-Up

FormulaRatePostingDates*

AnnualCustomerRate

9/1/2013Post

ProjectedRates for

2014

6/1/2014Post

Actual2013

True-Up

9/1/2014Post

ProjectedRates for

2015

6/1/2015Post

Actual2014

True-Up

9/1/2016Post

ProjectedRates for

2017

* Preliminary True-Ups and Projected Rates are posted or before 06/01 and 09/01 respectively;(or the following business day when dates fall on a weekend or a holiday

ITC Midwest2016 Projected Formula Rates – Documents Posted

On August 31, 2015, the 2016 projected rates and supporting documentswere posted to misoenergy.org and MISO’s OASIS website.

Documents posted Include:

• Attachment O Formula Rate Template

• Attachment GG, and Attachment MM

• Schedule 1 Projected Expense Recovery

• Relevant Workpapers (supporting Attachment O, GG and MM)

• Accounting Narrative

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ITC MidwestSteps to Derive 2016 Projected Formula Rate

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Step 2

Step 12016 Projected Rate Base Weighted Average Cost of Capital =

Allowed Return* Operating Expenses + Income Taxes =

2016 Projected Gross Revenue Requirement*(Before Revenue Credits/Offsets)

Revenue Credits/Offsets

=

Step 3

2016 Projected Revenue Requirement(After Revenue Credits/Offsets)

2014 True-Up Adj. + DiscountUnder/(Over) Recovery

2016 Projected Net Revenue Requirement*(Includes 2014 True-Up adj. & Customer Discount)

2016 Projected Network Load

∑12 CP Load (kW-Mo)

Step 4

Step 5=

$ 2,023,184,581 9.14%

$ 184,990,036 $ 234,676,718

$ 419,666,755 $ 64,870,574

$ 354,796,181 $ (8,547,201)

$ 346,248,980

2016 Projected Network Rate**

35,340,000

=

Step 6$9.798/kW-Mo

* Totals may not reconcile due to rounding** Represents only the ITC Midwest portion of the ITC Midwest joint zone network rate. Schedules 1, 26, & 26A are billed separately by MISO.

ITC MidwestSummary of Key Drivers of 2016 Projected Formula Rate

72* Totals may not reconcile due to rounding

Descriptions2016

Projected2015

ProjectedIncrease/

(Decrease)

Return on Rate Base $ 184,990,036 $ 165,823,459 $ 19,166,578

Operating Expenses 234,676,718 217,429,752 17,246,966

Credits/Offsets (Sch. 26, 26A, PTP, rents) (64,870,574) (46,810,464) (18,060,110)

True-Ups (4,422,201) (10,110,355) 5,688,154

Customer Discount (4,125,000) (4,125,000) -

Projected Net Revenue Requirement $ 346,248,980 $ 322,207,392 $ 24,041,588

2016 Projected Network Load (based on 12 CP) 35,340,000 34,776,000 564,000

Projected Rate ($/kW-Mo) $ 9.798 $ 9.265 $ 0.532

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ITC MidwestWaterfall – 2016 vs 2015 Projected Formula Rate

Represents increases from 2015 to 2016 Projected ratesRepresents decreases from 2015 to 2016 Projected rates

* Total may not reconcile to 2016 projected rate change due to rounding

2016Proj.Rate

2015Proj.Rate

ITC Midwest’s 2016 Projected Networkrate is $9.798/kW-Mo, and it is

effective January 1 through December31, 2016.

All values are shown in $/kW-Mo

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OperatingExpenses +Income Taxes

True-Up Impact

RevenueCredits andOffsets

Return on RateBase

ITC MidwestKey Drivers of 2016 Projected Formula Rate

2016 projected operating expenses are higher than 2015 projections by ~ $ 17.2 million, primarily due to:

Higher Operations & maintenance expenses Higher depreciation expense due to an increase in gross plant in-service Higher property taxes due to capital additions Higher income taxes as a result of larger rate base, partially offset by Lower administrative and general expenses

The change in the True-Up Adjustment (over-collection) accounts for ~ $5.7 million higher revenue requirement in2016 relative to that of 2015

2016 projected revenue credits and offsets were higher than 2015 by (~ $ 18.1 million), primarily driven by:

Higher overall Multi-Value and regionally-Shared project (Schedule 26 and 26-A) revenue requirements

Higher revenues associated with Facilities Services Agreements for Network Upgrades

Higher credits from Point-to-Point revenues and

Higher rental revenues

Overall 2016 Projected return on rate base is higher than 2015 projection by ~ $ 19.2 million, primarily driven by:

Higher projected plant in-service, partially offset by a corresponding increase in accumulated depreciation,deferred taxes and lower materials and supplies

ITC Midwest’s 2016 Projected Rate increased by ~53 cents/kW-Mo. Key drivers for the increase are described below.

ITC MidwestNext Steps

Information Exchange Process:

• Requests for information must be submitted in writing [email protected]

• Requests must be received no later than December 1,2015

• Good faith effort to respond within 15 business days

• All questions and answers will be distributed via emailto the requesting party and posted on the MISO andOASIS websites

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Questions?

Thank you !

ITC Midwest

APPENDIX

* Totals may not reconcile due to rounding78

ITC MidwestCalculation of 2016 Projected Rate Base

Rate Base Components 2016 Projected Amount 2015 Projected AmountIncrease/

(Decrease)

Gross Plant in Service $ 2,637,489,042 $ 2,338,522,000 $ 298,967,042

- Accumulated Depreciation 432,639,086 400,069,000 32,570,086

Net Plant in Service* $ 2,204,849,956 $ 1,938,453,000 $ 266,396,956

+ Deferred Income Taxes (222,634,131) (190,225,000) (32,409,131)

+ Materials & Supplies 30,128,044 32,649,346 (2,521,302)

+ Prepayments 2,270,974 2,049,000 221,974

+ Working Capital 8,569,739 8,596,884 (27,144)

= Total Rate Base* $ 2,023,184,581 $ 1,791,523,230 $ 231,661,352

ITC Midwest2016 Planned Capital Additions: Process Overview

• The development of the annual Rate Base begins with aforecast of planned capital additions.

• The ITC Midwest Planned Capital Addition slides identifyexpected line, substation, and other construction projects asthey are currently known

• The projects identified represent our best estimates for projectsto be initiated and completed

• Note that many factors such as regulatory approvals,construction resources, availability of materials, weather andother unforeseen events, could alter projections and schedules

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ITC Midwest - Step 12016 Planned Transfers to Plant in Service

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* Totals may not reconcile due to rounding

MISO ID Project NameProjected

Amount

Reliability - Infrastructure Improvements

3053 Keokuk Hydro-Mess-Carbide 69kV Rbld 13,985,814$

3627 Chariton-Corydon 69kV Line Rebuild 8,179,618

3628 Nettle Switchstation 3,268,561

3639 Rebuild Chariton Substation 7,329,841

3642 Chariton Melrose 69KV Rebuild 33,506

4103 N Burlington to N Burlington Tap 6,081,671

4122 Miscellaneous - Reliability ITCMW 8,030,816

4123 Breaker Replacements 7,969,588

4126 ITCMW Pole Top Switch Replacement 2,479,116

4127 ITCMW Relay Betterment Project 1,644,469

4128 Communication Addition Program 2,247,212

4128 BES Communication Addition Program 1,665,695

4129 Wood Pole Replacement Program 3,066,542

8042 Burlington South Sub Bus and Line 389,070

8048 Control Relocations 1,710,627

8049 NERC Compliance Mitigation Upgrades 698,677

8051 ERUC-Reactionary Capital Work 1,776,463

8053 Poor Performing Circuit Replacement 4,543,960

8057 ITCMW SCADA Program 720,844

8058 ITCMW Tower/Pole Signage 340,727

8093 Prairie Creek Industrial - Install 3,313,910

8157 Marshalltown Substation 161kV Expan 10,898,402

34.5kV to 69kV Conversion Phase 1 45,437,070

ITCMW Road Move Projects 562,929

ITCMW Right of Way Acquisition 2,021,949

Albany Substation 161kV Breakers 1,456,082

Cerro Gordo Wind Farm 161kV Switch 282,690

Total for Reliability - Infrastructure Improvements 140,135,849$

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ITC Midwest - Step 1 (Cont.)2016 Planned Transfers to Plant in Service - Continues


Grand Total for ITCMW's Planned Transfers to Plant in Service $293,285,043

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ITC Midwest - Steps 1 & 2Calculation of 2016 Projected Formula Rate of Return & Allowed Return


Cost of Capital Weight Projected Cost2016 Projected

WACC2015 Projected

WACCIncrease/

(Decrease)

Equity 60% 12.38% 7.427% 7.427% 0.000%

Debt 40% 4.29% 1.716% 1.828% -0.112%

Rate of Return 9.144% 9.256% -0.112%

Allowed Return 2016 Projected Amount 2015 Projected Amount Increase/ (Decrease)

Rate Base $2,023,184,581 $1,791,523,230

x Rate of Return (above) 9.144% 9.256%

= Allowed Return* $ 184,990,036 $ 165,823,459 $ 19,166,578

ITC Midwest - Steps 2 & 32016 Projected Operating Expenses & Total Gross Revenue Requirement


Operating Expense2016 Projected

Amount2015 Projected Amount

Increase/(decrease)

Operation & Maintenance Expenses $ 33,893,615 $ 32,430,000 $ 1,463,615

Administrative & General Expenses 34,664,298 36,345,069 (1,680,771)

Depreciation Expense 47,671,459 42,893,000 4,778,459

Taxes Other Than Income Taxes 12,196,861 11,609,000 587,861

Income Taxes 106,250,486 94,152,684 12,097,802

Total Operating Expenses $234,676,718 $ 217,429,752 $ 17,246,966

Actual Gross Revenue Requirement 2016 Actual Amount

2016 Actual Allowed Return (from previous slide) $ 184,990,036+ Actual Operating 234,676,718

2016 Actual Gross Revenue Requirement before Revenue Credits & Offsets $ 419,666,755

ITC Midwest - Step 42016 Projected Revenue Requirement after Credits & Offsets


Revenue Requirement & Revenue Credits/Offsets2016 Projected

Amount2015 Projected

AmountVariance

Revenue Requirement before Revenue Credits & Offsets $ 419,666,755 $ 383,253,211 $ 36,413,544

Less: Attachment GG Revenue Requirement (Sch. 26) 27,199,120 27,139,943 59,177Less: Attachment MM Revenue Requirement (Sch. 26A) 22,012,922 10,944,521 11,068,401Less: Rental Revenues 2,412,973 1,729,000 683,973Less: Point-to-Point 5,425,346 5,246,000 179,346Less: Self Funded GIP Revenue Credits 5,862,360 1,189,000 4,673,360Less: Other Transmission Service Revenues 1,957,853 562,000 1,395,853Subtotal Credits/Offsets 64,870,574 46,810,464 18,060,110

Revenue Requirement after Revenue Credits/Offsets $ 354,796,181 $ 336,442,747 $ 18,353,434

ITC Midwest - Step 52016 Net Revenue Requirement – after 2014 True-up


Net Revenue Requirement

Projected 2016 Gross Revenue Requirement after Revenue Credits & Offsets $ 354,796,181

+ 2014 True-up Adjustment under/(Over) Recovery (4,422,201)

Customer Discount (4,125,000)

Projected 2016 Net Revenue Requirement (including 2014 True-up) $ 346,248,980

Load Divisor 35,340,000Network & P-to-P Rate ($/kW/Mo) $9.798


MVP Update

Daniel Barr, PEPrincipal Engineer, Planning

87

Multi-Value Projects (MVP)

• Portfolio of projects studied and designated“Multi-Value Projects” (MVPs) by MISO(Midcontinent Independent SystemOperator)

• 17 projects, warranting cost-sharing acrossentire MISO territory of 11 states

• MISO identified multiple project benefits:― Improved reliability

― Improved system efficiency

― Support state and federal energy policy mandates

― Job creation and investment

• ITC Midwest is building 4 of the 17 MVPs― MVPs 3, 4, 5, and 7

Note: ITC Midwest is designated to build segments ofprojects in blue.


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MVP #3

• Lakefield to Huntley to MN/IA Border– Certificate of Need and Route Permit issued in

November 2014

– Easement acquisition in progress.

– Begin construction by November 2015.

– Expected In-Service Date is June 2017

• MN/IA Border to Ledyard to KossuthCounty

– Continue Iowa regulatory process

– Filed petition with IUB in July 2015

– Over 95% easement acquisition

– Franchise decision expected around June 2016

– Expected In-Service Date is September 2017Note: ITC Midwest designated to build segments ofprojects in blue.


89

MVP #4

• Ledyard to Colby– Continue Iowa regulatory process

– Filed petition with IUB March 2014

– 96% easement acquisition

– Franchise decision expected

around June 2016

– Expected in-service date

November 2018

• Colby to Killdeer

– Construction complete

Note: ITC Midwest designated to build segments of projects inblue


90

MVP #4 (Continued)

• Killdeer to Hampton Tap

– Iowa regulatory processcomplete

– Franchise received June 2015

– Begin construction by April 2016

– Expected in-service dateNovember 2016

• Blackhawk to Hazleton

– Construction complete

Note: ITC Midwest designated to build segments of projects in blue


91

MVP #5

• Hickory Creek to Cardinal

– ITC, ATC and DPC jointly developedproject

– Currently working with multiple stateand federal agencies, including stateDNR and USF&W, to obtainnecessary approvals

– Begun public outreach in Wisconsin

– Expected in-service date December2020

Note: Final line routes will be determined throughrouting studies and regulatory processes


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MVP #7

• Ottumwa to Zachary

– ITC will own portion from Ottumwasubstation south to a change ofownership point with MEC

– MEC will own portion from changeof ownership to the Iowa/Missouriborder

– ITC and MEC currently performinga route study

– ITC and MEC will participate jointlyin the Iowa regulatory process

Note: Final line routes will be determined throughrouting studies and regulatory processes

Questions?

Thank you!



GeneratorInterconnectionsUpdate

Daniel Barr, PEPrincipal Engineer, Planning

Generation Connected

95

ITC Midwest has connected24 projects representingapproximately 2,650 MW ofwind generation since 2008

Wind accounts forapproximately 45% of thegenerating capacityconnected to ITC Midwest

Restudy of Existing ITCM Projects

Restudies completed late 2014 for most of ITCMprojects connected between 2009 and 2013

- Iterative studies required due to projects dropping fromqueue and changes to initial study assumptions

- Amendment of 11 interconnection agreements requiredfor ITCM projects

- Two new GIAs also issued

- MISO Queue reforms to reduce restudies are in progress

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Network Upgrades for In-Service Projects

Project H021 NetworkUpgrade• 128 MW wind project connected to

Wellsburg 161kV• Replacement of 69 kV breaker

#5760 and terminal equipmentrequired

• Network upgrade will becoordinated with Traer 161 kV ringbus upgrade


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Project H009 Network Upgrade

• 150 MW wind project connected toAbbott 161kV

• Rebuild of approximately 4 mileJasper to Aurora Heights 69 kVrequired

• Upgrade also needed for Project J233at Marshalltown

• Expected in service by end of 2016


99

Project G870 Network Upgrade• 201 MW wind project connected to

Freeborn 161kV• Rebuild of ~38 miles of

Winnebago to Freeborn 161 kVrequired

• Line will become Huntley toFreeborn to 161 kV in conjunctionwith MVP work

• Completes much-needed upgradeof 60 year-old Winnebago toHayward 161 kV corridor

J233 – 635 MW Combined CycleGas Plant at Marshalltown

• Provides much-needed capacity to the system

• Upgrades required for J233 based on an assumed future year2023 system topology including:

― MVPs

― 34.5 to 69 kV conversions

― Marshalltown-Toledo-Belle Plaine-Stoney Point 115 kV to 161 kV conversion

• Coordination of construction of Network Upgrades andplanned, approved projects challenging

100

J233 Network Upgrades

Network Upgrades:

• Expand Marshalltown substation

• Three 150 MVA, 161/69 kV transformer replacements

― Fernald, Jasper and Newton substations

• Line Uprates

― Marshalltown to Blairstown Jct 115 kV from 80 MVA to 90 MVA

― Jasper to Laurel 161 kV – conductor replacement

― Jasper to Newton 161 kV – sag mitigation

• Newton to Prairie City 69 kV rebuild

• Network upgrades expected to be in service by J233’s requestedcommercial operating date

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J233 Network Upgrades

102

Questions?

Thank you!



34.5 kV to 69 kVSystem UpdateRobert Walter, PESenior Engineer, Planning

105

• Rebuild outdated 34.5 kV lines to 69 kV standards

― 34.5 kV lines are in poor physical condition and do not provide lightning protection

― Most 34.5 kV lines have small conductor which limits system voltage and loading capabilities during system contingencies

• Rebuilt lines have larger wire and lightning protection

― Larger wire provides additional capacity for loading and reduces voltage drop

― Rebuilt lines have a shield wire which provides lightning protection

• In addition to these benefits, ITC made a commitment made to Iowa UtilitiesBoard for rebuilding the 34.5 kV system

― 12-year time frame for rebuilding 34.5 kV lines that will be converted to 69 kV in 18 years

Benefits of 34.5 to 69 kV Rebuild

106

Benefits of 34.5 to 69 kV Rebuild

• Convert 34.5 kV lines to networked 69 kV operation

― Converting to 69 kV increases capacity on a line which helps provide for future load growth

― Networked 69 kV operation allows updated relaying which provides faster restoration after an outage event

― Conversion allows retirement of lines not rebuilt and without a shield wire when converting to 69 kV operation reduces exposure to all lines in agiven area

• In addition to these benefits, ITC made a commitment to the IowaUtilities Board for converting the 34.5 kV system to 69 kV operation

― 18-year time frame for converting the system to 69 kV operation

34.5 kV Rebuild/Conversion Plan

• Rebuild Progress

― Since 2008, 369 miles will be rebuilt by the end of 2015 with 254 miles converted to 69kV (conversionmiles include both ITC and CIPCO 34.5 kV linemiles)

• Miles of 34.5 kV Rebuilds Planned

― 41 rebuild miles in 2015

― 53 rebuild miles in 2016

― Rebuild 235 miles in 2017 and beyond

107

34.5 kV ReliabilityITC continues to prioritize system reliability in theplanning process

• Consider stakeholder impacts, both financial and operational,when scheduling rebuild and conversion projects

• Ongoing discussions between Planning and Maintenance todetermine level of maintenance required on assets planned to berebuilt or retired in future

• Overall 34.5 kV breaker operations have been trendingdownward

― Breaker operations includes both momentary and sustained outages

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34.5 kV Reliability

1000

1100

1200

1300

1400

1500

1600

1700

1800

1900

2000

2100

2200

2011,3rd

2011,4th

2012,1st

2012,2nd

2012,3rd

2012,4th

2013,1st

2013,2nd

2013,3rd

2013,4th

2014,1st

2014,2nd

2014,3rd

2014,4th

2015,1st

2015,2nd

Total Operations (All Circuits Combined)

Total Operations (All Circuits Combined)

110110

34.5 kV Study Areas

Study Areas

Vinton-Hazelton Area

2015 Projects• Center Point–Troy Mills–Lafayette Rebuild

• Urbana–Center Point

Future Projects• Palo –Toddville New Line (2016)

• Blair's Ferry Rd 69 kV breaker station (2016)

• Hiawatha – Coggon 69 kV conversion (2016)

• Hiawatha – Vinton 69 kV conversion (2016)

• Conversion of the area planned to be completed by end of 2016

111

Vinton-Hazelton Area Rebuild

2016 ProjectFuture RetirementConstructed to 69 kV

Vinton-Hazelton/Cedar Rapids Area Conversion

2015 Conversion2016 Conversion

Cedar Rapids Area

2015 Projects

• 29th Street–Louisa Rebuild

• Radio 69 kV breaker station

Near-term Future Projects

• Marion–Emerald Isle–Hiawatha conversion(2016)

• Marion–Radio–Hiawatha conversion (2016)

• PCI–Oak Hill (2017 rebuild, 2018 substation and conversion)

• Emerald Isle–Beverly (2017 rebuild, 2018 conversion)

114

Cedar Rapids Area Rebuild

2017 Project2018 Project2019 ProjectFuture RetirementConstructed to 69 kV

115

Eastern Iowa Area

2015 Projects• Radio 69 kV breaker station• Hiawatha – Echo Hill REC 69 kV

conversionNear-term Future Projects• Springville–Amber Creamery Rebuild

(2016)• Radio – Coggon 69 kV conversion (2016)• Traver REC – city of Mt Vernon (2016)• Sale – Cascade – Sand Springs 69 kV

conversion (2016)

116

Eastern Iowa Area Rebuild

2016 ProjectFuture ProjectFuture RetirementConstructed to 69 kV

Eastern Iowa Area Conversion

2016Conversion

118

Toledo-Belle Plaine-Williamsburg

2015 Projects• North English - South English Rebuild• Sigourney – What Cheer 69 kV conversion

Near-term Future Projects• Williamsburg South Jct – Parnell 161/69 kV

double circuit (2016/2017)

• Vining REC Tap – Tama East rebuild (2016/2017)• Marengo Eastern 69 kV substation (supports new IPL distribution

substation, 2016)• Belle Plaine Junction – City of Belle Plaine re-build (2017)

119

Toledo-Belle Plaine-Williamsburg Rebuild

2016/2017 ProjectFuture ProjectFuture RetirementConstructed to 69 kV

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Grand Jct.-Ames-Marshalltown

2015 Projects

• Doud–Clear Lake REC Tap

• Marshalltown–East Nevada StreetRebuild


• Doud–Squaw Valley 69 kV conversion (2016)

• Ames Mine Tap–Ames NADC Rebuild (2016)

• Timber Creek–East Nevada St Rebuild (2016)

• NADC–Ames Mine 69 kV conversion (2016)

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Grand Jct.-Ames-Marshalltown

2016 ProjectFutureProjectFutureRetirementConstructedto 69 kV

Grand Jct.-Ames-Marshalltown Conversion

2016 Conversion

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Anita-Grand Jct.

2015 Projects

• Menlo – Thompson Rebuild

• Perry Willis 161 kV substation (supportsnew IPL 161/24.9 kV substation)

• Anita – Exira REC Rebuild


• Grand Junction–Jefferson WCC Rebuild(2016/2017)

• Redfield – Panora new 69 kV line (2017)

• Guthrie – White Pole Rd – Redfield – Panora 69 kV conversion (2017)

• Anita – Anita Muni – Adair - White Pole Rd Rebuild (2017)

Anita-Grand Jct. Rebuild

2017 ProjectFuture ProjectFuture RetirementConstructed to 69 kV

Anita-Grand Jct. Conversion

2016 Conversion2017 Conversion

Northwest Iowa Area

Future Projects• Rebuild from new Corn Belt

161/69 kV substation to Fenton(2020)

• New line and rebuild to connectBurt 69 kV to Fenton 69 kV(2020)

• Retire 138 miles of ITC 34.5 kVline in Northwest IA area

127

Northwest Iowa Area Rebuild

Future ProjectFuture RetirementConstructed to 69 kV

128

Questions?

Thank you!


Infrastructure andCapacity UpgradesNew in MTEP

Jeff Eddy,Manager, Planning

BGS Substation Upgrades

Benefits• Resolve numerous protection and operational issues due

to outdated design of the substation.• Enable NERC PRC-005 maintenance testing of the BGS

relaying schemes without extensive substation outages• Relocate protection systems from inside plant control

room

Proposed Work:• Add breakers• New control house and relaying

131

BGS Substation Upgrades

132

Wapello County Substation Reliability Rebuild

Benefits• Resolve numerous protection and operational issues due to outdated design

of the substation.• Enable NERC PRC-005 maintenance testing of the substation relaying

schemes without extensive substation outages• Upgrade substation to breaker and ½ which provides added reliability at the

substation near the larger power plant (OGS)

Proposed Work:• Add breakers and replace old oil circuit breakers• New control house and relaying• Upgrade substation from partial ring bus to breaker and 1/2

133

Wapello County Substation Reliability Rebuild

Red = newfacilitiesBlack = existingfacilities

134

Cedar Rapids – North Liberty – Hills Upgrades

Benefits• Resolve numerous planning criteria violations in area, both voltage and thermal

loading• Provide ability to serve added load growth in area• Provide higher voltage backbone system between Hills and Cedar Rapids

Proposed Work:• Build new substations and new 161 and 69 kV lines between Hills, Iowa, area

and Coralville/North Liberty• Rebuild and build new 161 and 69 kV facilities between North Liberty and

Cedar Rapids area (Fairfax substation)• Projects part of joint area plan with Central Iowa Power Cooperative; projects

shared between both companies

135

Cedar Rapids –North Liberty –Hills Upgrades

Original Plan

Green Cloud =facilities changed inrevised plan

Cedar Rapids –North Liberty –Hills Upgrades

Revised Plan

Red Cloud = facilitieschanged in revised plan

Mt. Ayr 69 kV Substation Rebuild

Benefits• Resolve existing issues at the substation including:

• Switch inoperability due to swaying with wood structure• Increased reliability due to reduced risk of equipment failure

• Address planning criteria voltage violations with new and increased capacitorbanks

Proposed Work:• Rebuild wooden box structure with new steel structure• New control house and relaying• Add additional stages of capacitor banks and increase existing

capacitor bank size

138

Mt. Ayr 69 kV Substation Rebuild

139

Appanoose County 161 kV Substation Rebuild

Benefits

• Adding a transformer with LTC helps with existing voltage issues in the area

• Expanding the bus from a straight bus to a ring bus provides additionalreliability to the area

Proposed Work:

• Install 100 MVA transformer with LTC

• Existing transformer to be re-used here

• Upgrade substation from straight bus with 1 breaker to ring bus

140

Appanoose County 161 kV Substation Rebuild

141

Summit – Dovray – Fulda – Heron Lake Rebuild

Benefits

• Address galloping issues with the existing line

• Due to galloping, this line has frequent operations

• This long line is one of the worst performing circuits

• Upgrade to add lightning protection on line section without shield wire

Proposed Work:

• Rebuild existing 69 kV line sections due to age and condition

• Summit to Dovray (Phase 1)

• Dovray to Fulda (Phase 2)

• Fulda to Heron Lake (Phase 3)

142

Summit – Dovray – Fulda – Heron Lake Rebuild

143

Newhall – Williamsburg 161 kV Rebuild andNewhall 161 kV Breaker Station

Benefits

• Provide an additional 161 kV line into the Parnell 161/69 kV substation

• Facilitate 34.5 to 69 kV conversion of area between Parnell and Williamsburg

• Provide additional voltage support to the area

Proposed Work:

• Rebuild Blairstown – Williamsburg 115 kV to 161 kV

• Build new 161 kV between Blairstown and north 161 kV line

• Build a new 161 kV breaker station at Newhall

144

Newhall –Williamsburg

161 kV Rebuildand Newhall

161 kV BreakerStation

Newhall – Williamsburg 161 kV Rebuild andNewhall 161 kV Breaker Station

146

Amber Creamery Capacitor Bank

Benefits

• Address near term voltage issuesin the area until full 69 kVconversion has been completed

• Provide additional VAR support tothe area long term

Proposed Work:

• Add a new 7.2 MVAR 69 kVcapacitor bank at the AmberCreamery substation

147

Columbus Junction Breaker Addition

Benefits• Increased reliability to customers served from substation

due to the existing configuration of only one breaker atColumbus Jct.

Proposed Work:• Add second breaker to substation

148

Columbus Junction Breaker Addition

149

Huntley 69kV Maintenance

Benefits• Project replaces major maintenance identified for Winnebago Substation,

including replacement of control house, breaker, switches, and equipment.

• Project replaces antiquated substation design of Winnebago Sub.

• Replaces need to route 161kV lines from Huntley to Winnebago.

• Project costs roughly equal or less than required maintenance upgrades androuting costs.

Proposed Work:• Relocate 69kV Substation at Winnebago Sub to Huntley Sub

• Relocate transformers, replace equipment.

150

Huntley 69kV Maintenance

151

Traer 161kV Ring Bus

Benefits• Increased reliability.

• Currently, the 161kV bus does not have line breakerprotection and load is dropped for a fault on 161kV line fromeither Abbott or Dysart.

• For fault on 161kV lines, restoration times to customersdelayed until faulted line is sectionalized.

Proposed Work:• Add three position 161kV ring bus at substation

152

Traer 161kV Ring Bus

153

Questions?

Thank you!

We appreciate your time and effort to participate in today’sPartners in Business meeting

For copies of today’s ITC presentations please visit ourweb-site at: www.itctransco.com, click on ITC Midwest,click on Partners in Business, click on Meeting and EventsWe appreciate your feedback on our meetings, so we cancontinue to bring you value

Mike Dabney Keith [email protected] [email protected]

www.itctransco.com

Thank You!

Upcoming Partners inBusiness Meetings:

–2016 Spring Partners inBusiness-OperationsExcellence Meeting TBD

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