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.

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.

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,…

Thanks Joe and good morning everyone. I will begin by providing a brief summery of our results for the second quarter in year-to-date period. In the second quarter of 2010, ITC reported net income of $36.3 million or $0.71 per diluted share. This compares with net income of $30.8 million or $0.61 per diluted share in the second quarter of 2009. Net income for the six months ended June 30, 2010 was $70.5 million for $1.38 per diluted share, compared to $59.5 million or a $1.17 per diluted share, for the same period last year. These increases in net income and earnings per share for the second quarter for year-to-date 2010 compared to the corresponding periods in 2009 can be attributed primarily to higher return on rate days and allowance for fund used during construction at all operating companies and lower non recoverable expenses. These increased for both the quarter and year-to-date period were partially offset by higher interest expense resulting from our recently completed long term financial activities at ITC Holdings. The improvements in net income and earnings per share for about the quarter and year-to-date period, they are also reflective of our continued success in implementing our capital investment plans. For the year-to-date 2010 period, ITC invested $216 million in capital projects at its operating companies, including $29.3 million, $65.5 million, $114.1 million and $7.1 million at ITC transmission, METC, ITC Midwest and ITC Great Plains respectively. As Joe mentioned our operating and physical performance for the first half at 2010 reinforce our confidence in our ability to continue to deliver on the commitments we have outlined in our five year plan including your capital investment objectives. Our capital plans for both 2010 and for the 5 year plan include investments in our base operating company's transmission upgrades…

Thank you ladies and gentlemen (Operator Instructions), our first question comes from Neil Kalton of Wells Fargo Securities.

Hi, everybody. Just a question -- first question on the five-year CapEx forecast. So if I may, can I walk through? It sounds like the pluses to the original guidance would include the Michigan Thumb project and potential higher base CapEx from Michigan due to the economy offset by a slight negative of lower voltage for the KETA and V plans. Are there any other moving pieces in that five-year forecast?

Neil, I think-- this is Cameron. Yes, that's a pretty good summery of the potential upsides, I would say with respect to the Michigan Wind Zone opportunities we highlighted on the last call, we see the potential upside to that being, 225 to 275 million in that range. As it relates to the economic environment, I don't think we're really in positions to say that we'd expect material changes to base capital plans as a result of that. I think what we are trying to express, to a large degree, is that the economic environment is stable, perhaps not quiet as bad as what we had originally anticipated and it certainly reinforced the confidante we have in being able to achieve those base capital plans. As it relates to the downside exposure, I think your right, as we sit here today we have the V plan approved at 354 double circuit. As we discussed, again, on the last call, given some slight increases in expectations for the costs of Hugo and KETA, offset by a reduction in the voltage of V Plan from 765 to 345 we would see about a 100 million less capital potentially associated with the development projects in Great Plains.

Okay. And then, a follow up on the Michigan opportunity, wind. There was a report recently that suggested that that project could qualify for MVP status. I'm wondering how that might work. Might that complicate the MISO approval process and potentially push back a decision? I guess you're hopeful for something in August. Is that soon -- that could be a complicating factor here?

I don't necessarily think it's a complicating factor, if you look at the proposal that MISO put forward to FERC, there proposal suggested that it would apply to any projects that are approved by the MISO board after the filing day, which I believe was July 15. So to the extent that the board the project in August, as we would hope that they would. The MVP statue, to the extent to the extent it is granted to the Michigan Wind Zone Project, would apply assuming that the FERC approves the MISO cost allocation proposal in December. Ultimately, regardless of whether of not it's designated as a MVP project or not, we have an existing cost allocation methodology for the Michigan Wind Zone Project, we are advancing with it regardless of whether or not it ultimately is approved as a MVP project, to the that MISO and the State of Michigan desire to spread the costs more broadly, we certainly are supportive of that, but none the less we're going to continue to move forward regardless.

Okay, thanks.

Our next question comes from Dan Eggers of Credit Suisse.

Hey, good morning. Joe, I know it's still early from the SPP and MISO plans for rate allocation and planning purposes, but can you just share your thoughts as what you think the highlights of the two plans are? And do you see any chance that these plans could get merged into one more comprehensive design, just to make life easier for all the multi-region participants on a long-run basis?

Well I think first of all, just from a high level there is actually a lot of similarities in the plans. It's just that SPP when they put there plan together, they weren't quiet as far along with there cost allocation process early on so they -- when they developed there process, they developed it with kind of an eye for regional transmission development. MISO was more mature at that point and had developed other cost allocation processes, so what MISO did was they added the MVP process to what hey had, which for the most part appears to from the outside to be somewhat confusing, but I think you'll fine that, that's going to duck tail together pretty well. SPP has a more comprehensive regional plan right out of the get-go and so it's going to move forward. It think that over the long haul some of the provisions of the MISO, cost allocation process, especially those stuff that they had for there economic projects, because just to quote some of the MISO officials that process wasn't of much benefit, since nothing ever got built. And so I think that over time, you'll see MISO eliminate some of the cost allocation processes that they have, go strictly with there MVP process for regional transmission and at that point there is not a lot of difference between and the highway/byway process, so they might merge it, but I think FERC is going to be in a position where, they're going to allow those regional difference to take place, just to see which one is the most effective.

And Dan, this Cameron, that was one point I was going to make, as I do think that FERC has a history of being willing to accept regional difference as long as broadly the principles are aligned with what they would like to see. So for an intra-regional project, you can see some difference like -- that exist between MISO's filing and SPP's filing. I think the important thing about the FERC NOPR as well is it also will address inter-regional transmission projects, so there will need to be some clarification as to how not only are those projects playing, but ultimately how the cost allocation for those will work as well. And that's perhaps the point where you will see some convergence or rules for inter-regional activity.

And I guess the inter-regional rule or thought process would come after they finalize the regional plans? Is there another sit-down at that point in time, or will that be kind of worked out on an ad-hoc basis as they go?

I believe that the FERC with there notices of proposed rule making is really going to start to push it. While they'll allow the regional difference for the intra-regional projects for the inter-region projects, they are going to start to look to get some commonality on those cost allocations because as you move from the west to the east there is huge differences, especially when you go east of MISO and I think that FERC is going to start to focus on those eastern RTO's and start to get this to move forward because that's where the big difference. I think they are less concerned about the differences between the SPP and MISO at this point.

Okay. And then, I guess the next question -- picking your brain a little bit today, Joe -- but what is your thinking on kind of independent, unregulated transmission lines out in the market? And are you seeing opportunities where they might make more economic sense, if only to avoid some of the planning headaches that come with even the FERC design?

Well I think that, there will always be a spot out there for some of these unregulated lines, but by-and-large I believe those will have to be DC because once you start to -- you have an AC line, I don't -- I really from a physical operational stand point, I don't know what it means to have a merchant AC line. These things are all synchronous with the system and they are free flowing in -- I'd have a rough time comprehending how one of these lines would integrate into system that wasn't comprehensively planned across the region in the right way. A lot of people get frustrated with the planning process, but let me tell you this, if you want to remember how integrated we are, just remember August 14th of 2003, and I just don't see a roll on the AC system for it.

Okay, thanks. Cameron, on the CapEx for this year, what are going to be the big variabilities within the range? And there's still a 10% band with half a year left.

Quiet frankly with the remainder of the year left it's largely going to be dependent on weather in our ability to continue to make good progress advancing, some of the projects that are currently underway and then in certain situation, we still have permits and other local approval, that are required to advance some of the projects that we have on the calendar for the balance of the year but, in general being this far into the year and hence our willingness today to refine our capital guidance, we feel pretty good about the ranges. They're reasonably narrow given the scope of the activities that we have underway, a $10 million roughly band and 5 million for ITC Great Plains is pretty narrow given the scope of the activity that are still -- that we are still executing against in Michigan, Iowa and down in Kansas and Oklahoma, so we feel good about that range and obviously there is some variability that will exist as we work through the year, but we think that's the kind of the right point at this stage.

I guess one last one, on Michigan spending around wind. What's the thought process on an expedited approval process? And it seems like the guys who are building the wind, or running the wind, are making pretty good progress and advancing on their side. Is there an acceleration opportunity that's getting more clear at this point?

In Michigan to build the Thumb Loop project?

Yeah.

I think the schedule we laid out is fairly expatriated quiet frankly, we are a little bit hamstrung until we get that MISO approval. We are working in parallel to do as much as we can to prepare for filing our siting application as quickly as possible, on the heals of getting MISO approval. There is some, presumably, opportunity for the MPSE to do an expedited, even shorter than the six months statutory period. I wouldn't hold out a great deal a hope for that, but there is that potential that, that could happen. Our goal is to be prepared to move as soon and as quickly as possible upon getting tall the regulatory approvals that we need, so if they can accelerate there approval process, we can accelerate to some degree or our activities but I think they schedule that we outlined that we outlined is fairly realistic, just given the -- all the issues will have to be addressed at both MISO level and the MPSC level.

Okay. Thank you, guys.

Thank you our next question comes from Stefka Gerova of JP Morgan.

Good morning, and congratulations on a good quarter. Based on year-to-date results, your full-year guidance seems to imply that earnings in the second half of the year should decline modestly relative to 2009 levels. Can you elaborate what factors may be causing this?

Sure Stef, it's Camerron. I think to some degree the back half of the year has some development expenses, that are in excess of what we would have spent in the first half of this year. Which as you know puts a dag on the over all earnings for the company. I think the other item I would highlight is -- as we look at the effective tax rate through the first half of the year there is the potential that in the back half of the year that rate could be a little bit higher and we expected to be a little bit higher for the year, which again would be little bit of a drag relative to where we are for the first six months of the year, so again not tribally large impacts on either of those fronts but you know we do expect rate base to continue to grow and return on rate base to grow, but that will be potentially slightly off set by those two factors. I think given the activity we've seen on the policy and regulatory landscape we have some development initiatives in the back half of the year that are like, we require a little more support that what we have put forth than what we have put forth in the first half of the year.

Okay. And are there specific development initiatives or projects that you can highlight at this stage?

No, I don't think I think keeping with our historical approach, when we have projects that are advanced to the points where we have confidence in our ability to deliver on those we will talk about them more specifically. In the interim, I think you should rest assured that we view development and in our development -- develop new projects is a critical aspect of our strategy and it's one that we spend a tremendous amount of time focused on and we're working diligently to development new projects in the markets where we are active and I think we have a great deal of confidence on our ability to do that and as we have more details to share around specific activities, we will.

Great; thank you very much.

Thank you,(Operator Instructions), our next question comes from Jonathan Arnold of Deutsche Bank.

Hi, good morning. My question relates -- Cameron, thank you for the analyst meeting on the -- in September. I just was curious -- you said you would give a business update. Will you anticipate rolling forward the five-year plan by another year, as you've done, or is this more of a general update?

No, I think Jonathan it's fair to assume that our expectation as we roll our new five-year forecast that rolls forward our outlook another year and reflects some of the changes that we talked about with respect to those development that are material, that have changed relative to the plan we put forth last year, but also give a glimpse into our outlook for 2015 as well.

So similar content, basically, to last year and the same kind of format?

I think that's a fair expectation.

Thank you very much.

Your next question comes from Jay Dobson of Wunderlich Securities.

Hey, good morning. A question, Cameron, on G&A expenses. I think in your answer to an earlier question, you were beginning to get at the question I'm about to ask, but as we look at the last three-- certainly three quarters, we've seen G&A declining. What's sort of the run rate of that number. And I think in an earlier question you were responding that development expenses ought to trend a little higher. So should we expect those to go higher? Just give us a little run rate around G&A and what we ought to expect for the balance of the year.

Yeah, during the first half of the year we spend about $3.9 million on development activities I think at this point last year we had spend about 5.2, it's a little bit of apples and oranges, to be honest with you Jay, last year as you will recall we had not yet recognized the regulatory assets for ITC Great Plains and this year some of the development costs we've been incurring go to those regulatory assets that supposed to going to expense. So, it's a little hard to always put forth an apples-to-apples comparison of those numbers, but I think over the last couple of quarters, you've seen G&A come down a little bit largely because a lot of the development activities that we had going on have been focused on projects that have regulatory assets associated with them that have been recognized. I think going forward, as our development activities transition to -- and continue to transition for other two developing new projects, you'll see the expense side of the equation increase slightly as we look to deploy development dollars to advancing new projects that do not have regulatory assets associated with them. So, I think it's fair to assume that over the next few quarters, the run rate around that would be little bit higher than what we've seen in the first half of the year because we wont have the opportunity to put those towards regulatory assets.

Got you no, that's perfect. And if I were to look -- drill down on G&A to non-development-related G&A, would you say we're sort of at -- not minimum level, but certainly the level that's a decent run rate right now? I know, going back to fourth quarter last year, you had some austerity measures that were sort of continuing to cut that. It seems like that's continued, at least in reading your press release. Would you say we're about at a run rate for those non-developmental G&A?

Yeah, I think, the first thing I would highlight is, those are all, for the most part, recoverable costs, and are simply a factor in the Attachment O revenue requirements. So, we're recovering all those costs through our Attachment O mechanism. Yeah, I think we've had a philosophy here of always running a very lean organization, and I think we've done a very good job at running a very lean organization, we're highly efficient. But I think, with any business you can only get so much productivity gain, as we continue to grow in size and in scale. Obviously, there will need to be incremental G&A support to accomplish that. As with everything we try to do, we will add it in the most efficient way possible and the least amount that we think is necessary to support the objectives that we have. But I think in terms of going forward, assuming that we can do that on the backs of productivity gains of our existing workforce is probably, little bit optimistic. I did think the G&A will have to expand somewhat to be able to achieve the growth that we have premised in our plan. That being said, it certainly won't in my mind grow at the level that certainly rate base and revenue will grow, as we continue to execute on our forecast.

That's great.

Does that help?

Yes, tremendously, thanks. And Joe, maybe just sort of taking that, and so you're going to be spending more developmental dollars. And in a sort of answer to an earlier question, you clearly suggested you didn't have anything advanced enough that you wanted to disclose on this call. But maybe if you could, just talk a little bit about the environment for new development and I guess, I'm sort of thinking outside of the Iowa and Michigan area, where you predominately operate franchises, but for Kansas-type, SPP-type development, which it sounds like what you'd be pursuing in that realm, since they'd be development dollars. Just what the environment's like for that?

The environment, clearly, has improved tremendously. When we started in Kansas, we had a long period just working through the process because of the two major issues. One was the planning process, which was very immature, which has changed dramatically, and the second one, which is, you know, put the -- which has allowed us then to move forward with the V plan, was there around cost allocation. With those two items set, now you really have broad based plans starting to come together. And now, it really starts to set the stage for the development work to really, in my mind, have a much broader scope and a lot more opportunities out there and hopefully we can compress some of the times on the front end of this. So if we met, I mean, everyone wants to compress time but that front in process should get shorter for us. So we're very optimistic across the whole footprint both in the Western portions of MISO and in SPP.

Got you and then just last question on the competitive environment and sort of an add-on to that, because certainly there's at least more people saying they're going to chase transmission investments relative to the time period that you were pursuing or a bit developing SPP. Just sort of how you view that landscape, though? Clearly, you all have a competitive advantage here.

Well, I think I view that landscape as I always did. You'll always have competition. When we started this business, there were other people out there that were going to go into the transmission business. So and we have a sustained and grown, I mean, I looked -- in some way I look forward to the competition because it makes -- really gets you going in candidly for me, I guess, It gets my juices flowing. But having said that, you've got a lot of big companies that have announced that they want to form trends goes or ITC like companies. I don't think one, I don't think any of them can give the financial performance that we get and the second thing is that, Cameron said that in a little differently as he was answering the question, we want a pretty lean organization and now the decision making process is here and ITC are pretty quick. And we are pretty nimble company and so while I assure that the other companies can do a lot of good things and they will make us get better but I think we've got the competitive advantages. We've got the skill sets and the demonstration of those skill sets to deliver. So, there's plenty of work out there and there's a plenty of stuff where a lot of people to do, will get our fair share. With that bet, I fell very confident.

Yes, nice to compete with a competitive advantage, definitely. Thanks a lot Joe, I appreciate it.

Thanks Jay.

Thank you. We have a follow-up question from Neil Kalton of Wells Fargo Securities.

If there's an open in the question, but you were recently appointed to a task force in New Mexico. And I wonder if you could maybe share the background on that. And then maybe also provide some thoughts about the longer-term opportunities that you see in the state.

Yes, Neil. I think generally when we look at expanding or development activities, we looked for markets that we think have number one in need for transmission, number two have sort of the need being recognized and three, frankly, that there's support for it. I think in Mexico, it is at least in some degree on the eastern side connected to SPP, they do have good renewable expansion opportunities as it relates to both wind and solar and we think potentially longer term it might make for an interesting market for us to try to participate. That being said, very early in our thinking, as it relates to the Mexico and what activities ultimately might be available to us there, but certainly by being appointed to this task force and having any individual kind of actively monitoring the environment there and participating in the dialog. We'll continue to assess it and make it a determination as to whether a longer term, it's worthy of our further development efforts. This is the pretty inexpensive way to explore in the market and we try to find those opportunities when we can and we make decisions from there as to whether or not it wants a lot of further investment quite frankly in both personal and financial resources.

Got you. That's helpful; thanks.

Thank you, I'm showing no further questions at this time, sir.

This concludes the question and answer portion of our call. Before I end the call I'd like to thank everyone who participated today. Anyone wishing to hear the conference replay available through August 13th 2010 should dial tool free 1800-642-1687 or 706-645-92-91, the pass code is 87-28-18-17. The webcast of this event will also be archived on the ITC website at itc-holdings.com, under our investors section. Have a great day everyone.

Ladies and gentlemen thank you for your participation in today's conference. This concludes the program, you may all now disconnect.