Welcome 2017 Partners in Business Meeting September 26, 2017 The Power of Connection 2017 Partners in Business Meeting September 26, 2017 Simon S. Whitelocke Vice President, ITC Holdings Corp., and President, ITC Michigan Connecting to Our Heritage INCEPTION Two Operating Companies TODAY • ITCTransmission - 2003 • Michigan Electric Transmission Company - 2006 Statistics • Transmission Lines: 8,700 circuit miles • Transmission Towers and Poles: 55,600 • Substations: 283 • Voltage Levels: 120kV to 345kV • Capital Investment: ~$3.5B to date • Headquarters: Novi, Michigan Improving System Reliability Modernizing and Maintaining the Transmission Grid Interconnecting Generation 2,147 MW of Connected Generation in Michigan Since 2003 Coal/Nuclear 10% Renewables Natural Gas Gas 32% Renewables Coal/Nuclear 61% ITC Today $6.5B Invested In Infrastructure Since 2003 • 4 Subsidiaries in 8 states • 15,800 Circuit miles • 90,000 Square mile service territory • 600+ Employees • Member of 4 RTOs: – MISO, SPP, PJM, NYISO • Geographically flexible business model • A Fortis company A Fortis Company • Fortis Inc. acquired ITC in 2016 • Leader in the North American regulated electric and gas utility industry • Operations in five Canadian provinces, nine U.S. states and three Caribbean countries • Established 1885 in St. John’s, Newfoundland and Labrador with formation of the St. John’s Electric Company Our Commitment Since Inception Deliver customer benefits: • Improve and maintain system reliability • Reduce system congestion • Expand access to competitive energy markets • Facilitate interconnection of new generation • Lower overall cost of delivered energy Michigan Economy Michigan Economy Michigan Real GDP Forecast 450 430 RGDP 50th Percentile 410 Forecast 390 Stronger Near-Term Rebound 370 Slower Near-term Recovery 350 Moderate Recession 330 310 Stagflation 290 Real GDP (Bil. Chained 2009 $, SAAR) $, 2009 Chained (Bil. GDP Real 2016 2006 2007 2008 2010 2011 2012 2013 2015 2017 2018 2020 2021 2022 2005 Source: BEA; BLS; Moody's Analytics ITC Strategy Build the transmission grid of the future in North America Significant need for transmission infrastructure • Interregional (tie regions together) and within regions • Robust “regulated” grid with appropriate “contracted” lines • Accommodates increase of renewable generation Canada • Most efficiently matches generation sources to load United States • Increases security, reliability, and resiliency of electric grid • Enhances affordability of electricity to consumers Mexico • Assessment of storage solutions to support transmission infrastructure Flexible, Accessible Grid Needed New Demands and Uses: Modern, interconnected grid needed to support 21st Century technology and policy developments: • Distributed generation • Demand response • Efficiency programs • Electric vehicles • Renewable energy mandates Consumer Awareness Consumers are growing more conscious of energy issues and are gaining influence over the source, cost and use of energy in their daily lives. Customer Trends Desire for higher reliability Increasing need for high-quality, uninterrupted power in homes and businesses Increasing environmental awareness Public concern for the environmental impacts of energy generation is rising * Polling results from survey conducted online by Research Now, an independent opinion research company, with a nationally representative audience of 800 U.S. adults age 18+. The precision of online polls is calculated using a credibility interval, with a poll of 800 accurate to roughly +/- 4 percentage points. *Quotation from blinded interviews with senior-level officials engaged in energy- related decisions at their organizations conducted by an independent interviewer. Underinvestment American Society Civil Engineers 2017 Infrastructure Report Card Economic Impacts of Failing to Invest in the Grid 2016-2025 2026-2040 Business Sales $1.4 trillion $2 trillion GDP $816 billion $1.1 trillion Jobs 102K fewer by 2025 242K fewer by 2040 2016-2025 2016-2040 Investment Gap $177 billion $565 billion Among all infrastructure, electricity has the second largest total funding need and the largest funding shortfall. - American Society of Civil Engineers All totals in constant 2015 value, other than jobs. Modern Grid Investment Source: EEI - Transmission Projects At a Glance, Dec. 2016 Value of Transmission • Generation production cost savings • Reliability and resource adequacy benefits • Generation capacity cost savings • Market benefits • Environmental benefits • Public policy benefits • Employment and economic development -- Brattle Group/WIRES study, 2013 INSIDE AN ELECTRIC BILL ITC Outlook Vision of the Future Grid • Changes on supply and demand sides; grid may look same, but used differently • Have older equipment, mixed with new technologies • Will incorporate newer forms of generation, more intermittent and varied; more storage • Can provide greater access to markets, price efficiencies • Should have appropriate mix of AC infrastructure, with DC where it makes sense • Should have more energy storage for capability • Should be reliable, resilient, flexible, efficient and secure Needs Drivers • Connecting consumers to renewables (unlocking renewables) • Connecting consumers to energy markets • Reducing congestion • Reliability, resiliency and security improvements Our Partners in Business ITC’s focus on transmission and grid development drives operational excellence and delivers superior value for customers, communities and other stakeholders. Next Up: • American Center for Mobility • ITC Business Updates • Networking • But first…a video! Laurel Champion Chief Operating Officer American Center for Mobility Break Grid Resiliency 2017 Partners in Business Meeting September 26, 2017 Pedro Melendez Director, Asset Protection and Performance Agenda • Risk landscape • Planning and preparedness • Responding to a risk / emergency • Industry organization and participation • Drill and assess Event Risk Categories NATURAL MAN-MADE (with intent) An event that is caused by An event caused directly and nature or natural processes of principally by one or more the earth (e.g. flooding, tornado, ice storm) identifiable deliberate human actions (e.g. bomb-threat, cyber attack, active shooter, riots) OPERATIONAL REPUTATION An event that may affect An event that could negatively business continuity and/or impact perspectives of operations including employees, stakeholders, facility/physical/technology general public, or media (e.g. infrastructure functions, supply insider trading, executive chain, logistics and workforce inappropriate activity, regulatory (e.g. electric system blackout, violations) computer failure, pandemic) National Guidelines • Allows for adoption of new approaches that will enable continuous refinement • Improves integration and connectivity among jurisdictions and disciplines • Fosters cohesion among various response organizations • A guide on how the nation conducts all-hazards response • Builds upon the National Incident Management System (NIMS) coordinating structures to align key roles and responsibilities • Links all levels of government, non-governmental organizations, and the private sector Incident Command System (ICS) • Standardized, on-scene, all-hazards incident management concept • Enables a coordinated response among various jurisdictions and agencies • Establishes common processes for planning and management of resources • Allows for integration with a common organizational structure • Can be used to manage natural, operational, human-caused or unplanned events. Public – Private Sector Coordination • ITC has implemented the use of NIMS and ICS to manage all incidents • Use of NIMS and ICS allows ITC to better coordinate with government, non-governmental organizations, and private organizations during large-scale events Emergency Plans and Facilities Emergency Action Plans • Business Continuity / Disaster Recovery • Cyber and Physical Security • Emergency Operations • Pandemic Incident Facilities • Emergency Operations Center • Security Command Center • Cyber Security Operations Center • Joint Information Center ‘Typical’ System Problems Storm Damage • Thunder and lightning • Wind • Flooding • Heavy snow and ice Physical Damage • Vehicle accidents • Tractors • Airplanes Miscellaneous • Animal interference • Flying debris ‘Typical’ System Restoration Basic system restoration steps • System reconfiguration (Reroute power through unaffected circuits) • Assess damage • Build work packages • Get parts and equipment • Isolate and repair • Return to normal service ‘New Normal’ Problems Everything ‘Typical’ plus: Cyber intrusions Remote control vehicles Terrorist attacks ??? Physical Attack (‘New Normal’ Event) Pacific Gas & Electric - Metcalf Substation • Six underground fiber optic lines cut • 17 Transformers, 6 circuit breakers, 44 radiators damaged • 52,000 gallons of oil spilled • Estimated $30M in damage • Less than one hour in the middle of the night • Attackers had knowledge of layout and locations of equipment Cyber and Physical Security Asset theft and public safety are no longer the primary issues. Now, we must prepare for forced entry, explosives, ballistic attacks, control system hacking, sabotage… The ‘new normal’ issues must be addressed through enhanced cyber and physical security: • Additional monitoring • Physical obstacles to substation access • Improved cyber security and monitoring • Exercises to test systems and responses Industry and government partnerships are critical to managing