FALL PARTNERS IN BUSINESS Ypsilanti, Michigan September 10, 2009.

FALL PARTNERS IN BUSINESSYpsilanti, Michigan

September 10, 2009

FALL PARTNERS IN BUSINESSYpsilanti, Michigan

September 10, 2009

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WelcomeWelcome

Restroom Locations:

Cell Phones: Please set to Vibrate

Golf: Sign in Sheet

Eagle Crest pushed back start time to 4:00

Price Discount to $25.00 / 9 holes with cart

Free Range Balls before tee time

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AGENDAAGENDA

Introduction / David Nagy

Wind Zone Transmission Study Update / Carlo Capra

Regulatory Update / Purvi Patel

Load Forecast / Mike Taylor

ITC Transmission & METC Capital Project Review / John Andree

Guest Speakers:

Automotive Power Policy, Technology & Myths/ Brett Smith, CARS

Stakeholder Relations Survey Review / Karen Hilton, Scott Madden

Closing Remarks / Jeff Dorr, ITC, Manager Stakeholder Relations

Carlo CapraManager, Regional Planning

Michigan Wind Zones Transmission Study Update

Carlo CapraManager, Regional Planning

Michigan Wind Zones Transmission Study Update

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BackgroundBackground

PA 295 of 2008 created Wind Energy Resource Zone Board

Board is an 11 member panel charged with issuing a report: Identifies regions in the state with the highest level of wind energy harvest potential; A description of the estimated maximum and minimum wind generating capacity in MW that can be installed in each identified region of

the state; An estimate of the annual maximum and minimum energy production potential for each identified region of the state; and An estimate of the maximum wind generation capacity already in service in each identified region of the state.

Board’s preliminary report was issued on June 2nd and identified 4 potential zones.

Board has held two public hearings to discuss their findings; one on August 24th and one on August 31st.

Final Board report is to be issued no later than October 15th.

Following issuance of the Board’s Final Report, transmission entities within or adjacent to regions of the state identified in the Board’s report shall identify existing or new transmission infrastructure necessary to deliver the maximum and minimum wind energy production potential for each of the regions identified and shall submit this information to the Board for its review. No action by the Board is called for in the statute.

Based on the Board’s findings, the Commission through a Final Order shall designate the area of the state likely to be the most productive of wind energy as the primary wind energy resource zone; Commission may designate additional wind energy resource zones.

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Preliminary Wind Zones OverviewPreliminary Wind Zones Overview

Wind Zones Board preliminary report identified 4 possible primary zones Zone 1

— Parts or all of Allegan county — minimum capability – 249 MW — maximum capability – 445 MW

Zone 2 — Parts or all of Antrim and Charlevoix

counties — minimum capability – 163 MW — maximum capability – 292 MW

Zone 3 — Parts or all of Benzie, Leelanau and

Manistee counties — minimum capability – 652 MW — maximum capability – 1,167 MW

Zone 4 — Parts or all of Huron, Bay, Saginaw,

Sanilac, and Tuscola counties — minimum capability – 2,367 MW — maximum capability – 4,236 MW

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4

Purvi Patel Regulatory Affairs Analyst

Regulatory Update

Purvi Patel Regulatory Affairs Analyst

Regulatory Update

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The Midwest ISO Transmission Owners, with the exception of ITC and ATC, filed jointly with MISO to modify the cost allocation methodology for network upgrades on generator interconnections established in Attachment FF (ER09-1431). — The ITC filed comments against the filing.

MISO made a filing to revise Section 22.3 of the MISO Tariff to eliminate the practice of market participants redirecting firm transmission service from other interfaces to PJM sinks to reduce their transmission charges (ER09-1543). — MISO amended its filing seeking to charge the higher of the original rate for the

firm service or the redirected rate.

Regulatory UpdateRegulatory Update

9


ITCTransmission filed for a depreciation rate changes resulting from a recent depreciation study (Docket No ER09-1530).

MISO filed a new Schedule 34 establishing notice and cost recovery provisions for reliability penalties assessed to MISO by the Commission, the North American Electric Reliability Corporation (“NERC”), or a NERC-approved Regional Entity (ER09-1435).— The MISO TOs protested the filing.

MISO submitted a compliance filing regarding the Order 890 planning process (Docket No. OA08-53).— The MISO TO filed in support of MISO’s filing.

The Court of Appeals for the Seventh Circuit issued an opinion affirming in part and remanding in part the Commission’s orders regarding the regional cost allocation methodology for transmission facilities within PJM that operate at or above 500 kilovolts (“kV”).

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MISO and the MISO TOs filed revisions to Attachment GG of the MISO Tariff (Docket No. _______). — The TOs ask for an effective date of January 1, 2010.

Three new transmission owners joined MISO on September 1, 2009.— MidAmerican Energy Company,— Muscatine Power and Water — Municipal Electric Utility of the City of Cedar Falls, Iowa

First Energy filed an application with FERC to consolidate its transmission assets and operations into PJM (Docket No. ER09-1589).

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The 2010 projected Attachment O rates for all MISO ITC Companies were posted on OASIS on September 1, 2009. SPP posted the 2010 revenue requirement for ITC Great Plains on their website.

Customer meetings have been scheduled to discuss the inputs to the template. — ITCTransmission and METC- October 6, 2009 in Novi, MI. — ITC Midwest - September 23-24, 2009 in Marion, IA and Northwood, IA.— ITC Great Plains – September 30, 2009 in Kansas City, MO.

ITC Long Term Planning Forecast Mike Taylor – ITC Holdings

September 10, 2009

ITC Long Term Planning Forecast Mike Taylor – ITC Holdings

September 10, 2009

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Long Term Planning ForecastLong Term Planning Forecast

ITC employs a top-down approach to forecast system peaks. Long-range demographic and usage pattern forecasts influences these anticipated loads heavily.

In recent years, this process has become more volatile. — Peak growth of 1.5-2% annually was common. This is no

longer the case. Major retrenching of state’s primary industry. Pace of out-migration has accelerated. Unemployment that is unmatched in recent years. Greater propensity to save instead of consume. Consumer credit and home equity suffering.

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Features of 2009 Long Term ForecastFeatures of 2009 Long Term Forecast

Large decrease in loads, many years of growth lost— De-industrialization— Out-migration/Foreclosures— Business Bankruptcies

Return to growth will be slow arriving— It is assumed that Michigan will lag the remainder of the

country out of recession.

Growth rate will be slower than in the past— Energy efficiency programs— Electric rate increases— Average Growth Rate of 0.41% for ITCTransmission,

0.95% for METC over 15-year forecast horizon.

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Sensitivity AnalysisSensitivity Analysis

ITC models different scenarios of peak forecast drivers:— Economics/Demographics: Each scenario is taken from

a range of possible outcomes. — Weather: A 15-year sample of Heating Degree days and

Cooling Degree Days provides the basis for a range of different yearly weather scenarios.

— Usage/Efficiency: The system load factor is modeled over a range of outcomes that represent different demand patterns.

Many combinations of these scenarios are fed through the forecast model to produce a range of outcomes.

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METC ForecastMETC Forecast

Year\% 10 20 30 40 50 60 70 80 90

2011 6,864 7,319 7,725 8,204 8,630 9,009 9,392 9,819 10,375

2012 6,973 7,478 7,887 8,325 8,722 9,085 9,457 9,870 10,422

2013 7,081 7,638 8,049 8,446 8,813 9,161 9,521 9,921 10,468

2014 7,190 7,798 8,211 8,567 8,905 9,238 9,586 9,972 10,515

2015 7,241 7,862 8,290 8,654 9,000 9,341 9,700 10,112 10,691

2016 7,291 7,927 8,369 8,740 9,095 9,445 9,814 10,253 10,866

2017 7,342 7,991 8,448 8,827 9,190 9,548 9,928 10,393 11,042

2018 7,393 8,056 8,527 8,914 9,285 9,651 10,042 10,533 11,218

2019 7,443 8,120 8,606 9,000 9,380 9,755 10,156 10,673 11,393

2020 7,494 8,185 8,685 9,087 9,475 9,858 10,270 10,813 11,569

2021 7,545 8,249 8,764 9,173 9,570 9,962 10,384 10,953 11,745

2022 7,595 8,314 8,843 9,260 9,665 10,065 10,499 11,093 11,920

2023 7,646 8,379 8,922 9,346 9,760 10,168 10,613 11,234 12,096

2024 7,697 8,443 9,001 9,433 9,855 10,272 10,727 11,374 12,271

2025 7,747 8,508 9,080 9,519 9,950 10,375 10,841 11,514 12,447

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ITCTransmission ForecastITCTransmission Forecast

Year\% 10 20 30 40 50 60 70 80 90

2011 9,496 9,956 10,220 10,416 10,579 10,728 10,874 11,033 11,237

2012 9,492 9,948 10,227 10,440 10,617 10,775 10,930 11,097 11,308

2013 9,489 9,940 10,235 10,464 10,654 10,823 10,986 11,160 11,379

2014 9,486 9,933 10,243 10,488 10,691 10,870 11,041 11,224 11,451

2015 9,497 9,977 10,294 10,540 10,742 10,921 11,092 11,274 11,501

2016 9,509 10,021 10,346 10,592 10,793 10,972 11,143 11,325 11,550

2017 9,520 10,065 10,397 10,644 10,844 11,023 11,194 11,375 11,600

2018 9,531 10,108 10,449 10,695 10,896 11,074 11,245 11,425 11,650

2019 9,542 10,152 10,500 10,747 10,947 11,125 11,296 11,476 11,700

2020 9,553 10,196 10,552 10,799 10,998 11,176 11,347 11,526 11,749

2021 9,564 10,240 10,603 10,851 11,049 11,227 11,398 11,576 11,799

2022 9,576 10,284 10,655 10,903 11,101 11,278 11,448 11,627 11,849

2023 9,587 10,328 10,706 10,954 11,152 11,329 11,499 11,677 11,898

2024 9,598 10,372 10,758 11,006 11,203 11,380 11,550 11,727 11,948

2025 9,609 10,416 10,809 11,058 11,254 11,432 11,601 11,778 11,998

Planning UpdateJohn Andree

Manager, ITCT/METC Planning

Planning UpdateJohn Andree

Manager, ITCT/METC Planning

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AgendaAgenda

2009 ITC Assessment Work

MISO MTEP10

ITCTransmission Projects

METC Projects

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2009 ITC Assessment Work2009 ITC Assessment Work Mid Term: 2014 Study Year

Long Term: 2019 Study Year

Peak & 85% Peak

Sensitivities Ludington Generating and Pumping Various Import Levels in and out of Canada 70/30 & 50/50 Load Forecasts Used

Thermal and Voltage Analysis

Identify System Constraints – based on the ITC Planning Criteria which has its basis in ‘Good Utility Practice’ but now is based on mandatory NERC Planning Standards.

Most severe constraints identified for inclusion in 2010 MTEP

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MISO MTEP10MISO MTEP10

Cases MISO will be using to analyze the systems

2 Year Out Model

Peak and Shoulder Peak

5 year Out Model

Peak and Shoulder Peak

10 Year Out Model

Light Load Model

MISO will also be setting up and studying sensitivity cases as appropriate for different study areas to evaluate projects for MTEP10

Set Schedule for project review in SPM and Technical Task Force meetings for Michigan

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Where ITC is atWhere ITC is at

Planning – Has identified potential issues on the grid using the current forecasts and identified potential proposals to solve the issues.

Engineering – Has identified infrastructure issues with the system and programs to resolve these issues.

Proposed projects within the appropriate time horizon will be submitted to MISO for consideration to be moved to Appendix A in MTEP10.

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ITCTransmissionITCTransmission

Distribution Connections Holland - 120/13.2kV Substation in Troy

Phoenix - 120/13.2kV Substation in Ann Arbor

Upper Rouge – 120/13.2kV Substation in Dearborn Heights

Distribution Interconnection Blanket for smaller scale interconnection projects yet to be identified

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Capacity/System Reinforcement Cut Belle River – Greenwood – Pontiac 345kV into Jewell

Adams-Spokane / Burns-Jewell 120kV Rebuild

St. Antoine – Essex 120kV Underground Cable

Superior – Wayne 120kV Rebuild

Bismarck – Troy 345kV Cable Project: To be withdrawn from MTEP database

Goodison 345/120kV project: Plan to withdraw project pending successful MTEP Appendix A approval of the Adams-Spokane / Burns-Jewell 120kV Rebuild & Cut Belle River – Greenwood – Pontiac 345kV into Jewell projects

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Infrastructure Improvement Breaker Replacement Program

Capacitor Bank Replacement Program

NERC Relay Loadability Compliance

Potential Device Replacement Program

Relay Betterment Program

Wood Pole Replacement Program

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METCMETC

Distribution Connections Alma – Relay changes for 138kV Circuit Switcher at Alma

Faussett – Tap Pole and switches for 138/24.9kV Substation in Deerfield

Pearline - Tap Pole and switch for 138/12.47kV Substation in Allendale

Ryno - Tap Pole and switch for 138/24.9kV Substation in Big Creek

Chums Corner - Tap Pole and switch for 138/12.47kV Substation in Blair

Egan - Relay changes for 138/12.47kV Substation in Caledonia

Distribution Interconnection Blanket for smaller scale interconnection projects yet to be identified

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METCMETC

Transmission Interconnections Clinton: 138kV Tap Pole and Switch for a Wolverine Power

138/69kV Interconnection Station

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METCMETC

Capacity/System Reinforcement

David Jct. – Bingham 138kV Sag Limit Remediation

Livingston – Riggsville 138kV Rebuild

138kV Sag Clearance Program

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METCMETC

Infrastructure Improvement

Battery Replacement Program

Breaker Replacement Program

NERC Relay Loadability Compliance

Potential Device Replacement Program

Power Plant Controls Relocation Program

Relay Betterment Program

Wood Pole Replacement Program

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Next Steps Next Steps

MTEP 2010 Schedule posted by the Midwest ISO for rest of 2009

The list of projects and project justification documentation will be submitted to the Midwest ISO by tomorrow (Sept 11)

Preliminary plans to be posted by the Midwest ISO by Sept 15

Initial comments by stakeholders due Nov 1

1st SPM Meeting no later than Dec 30

ITC Assessments will be completed by Oct 31

Focused Area Studies ongoing for Northern Michigan and Troy Area

Lunch BreakLunch Break

The Center For Automotive Research

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Automotive Power Policy, Technology & Myths

September 10, 2009

By

Brett Smith

Director, Automotive Analysis Group

The Center for Automotive Research


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POWERTRAIN POLICYSection I

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34

A Lower SpikeA Lower SpikeGasoline Prices (Nominal)Gasoline Prices (Nominal)

2003-2009 (June)2003-2009 (June)

Source: Energy Information Administration, USDOE, 6/8/09

Pri

ce P

er G

allo

nP

rice

Per

Gal

lon

*Regular Conventional GasolineAll Price Nominal

Summer spike is much lower and at2005 levels – should fall in the fall.


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The Product Development Cycle

• 6-12 month business case development• A number of factors must be considered including return on investment (ROI); market surveys; forecasts of market size, sales, fuel costs, and future consumer preferences; along with technology availability.

• Capacity on existing lines, powertrain availability

• 24 month product development engineering cycle

• Many market factors can change in this period—gas prices, etc.

• It is remarkable when a company launches a new vehicle that consumers want—at the exact time they want it.


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Site Selection(Can happen anytime during this time period)

Concept Definition & Business Case Development

Assembly Site Preparation / Marketing Plan Development

Product Engineering

Manufacturing Engineering

30 monthsand beyond … 24 18 12

Launch

06

Product / feature changes

Strategy Development Phase

Program Execution Phase

Site Selection(Can happen anytime during this time period)

Concept Definition & Business Case Development

Assembly Site Preparation / Marketing Plan Development

Product Engineering

Manufacturing Engineering


Launch


Launch

06

Product / feature changes

Strategy Development Phase

Program Execution Phase

Automotive Product Development Cycle


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New Technologies Risks

New Technologies = Huge Risk

Ironically, there are too many technology options Multitude of technology options, each with unknown future costs and

technology synergies

Market is very competitive – customers discount FE Manufacturer at a competitive disadvantage if the selected

technology ultimately proves to be more expensive

Even worse – widespread adoption of a technology that does not meet customer expectations for performance and reliability Hurts manufacturers’ reputation Sets back acceptance of new technology for everyone (e.g. early

1980s diesel)

Source: J. German, icct


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Pathway #1: An Act of CongressPathway #1: An Act of Congress

The House of Representatives and The Senate agree on a combined

congressional bill

The President signs the bill into law

The House of Representatives approves a bill to increase CAFE

The Senate approves a bill to increase CAFE

The President vetoes the bill

EPA calculates CAFE value for each manufacturer

NHTSA compares EPA values against the new standard and

enforces compliance


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Pathway #2: By Directive of the PresidentPathway #2: By Directive of the President

The President directs NHTSA to increase CAFE

Under The Energy Policy and Conservation Act, NHTSA has the authority

to increase CAFE for cars based on a one size fits all paradigm. NHTSA also has the authority to changeCAFE for individual categories of light trucks based on

vehicle footprints.

EPA calculates CAFE value for each manufacturer

NHTSA compares EPA values against the new standard and

enforces compliance

Note: Congress can negate NHTSA changes by passing a bill to over-ride NHTSA changes


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Pathway 3: EPA Creates GHG StandardsPathway 3: EPA Creates GHG Standards

EPA deems public endangerment from green house gases—thus they create tailpipe

emissions limits for GHG

NHTSA is responsible for ensuring that manufacturersmeet new emissions standards set by the EPA

In order to meet new emissions standards, manufacturers are forced to increase fuel

economy. Therefore, although the EPA doesnot have direct authority to regulate CAFE, new

emissions standards have the effect of increasing fuel economy


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Fuel Economy—Washington DC StyleFuel Economy—Washington DC Style

The House of Representatives The Senate

EPA NHTSA

The President

CAFE Increase

Combined Congressional Bill


42

National Harmony

May 2009: Presidential Directive to “Harmonize” national CO2 and fuel economy standards (and California GHG regulation). EPA and NHTSA issue Notice of Proposed Rule Making (NPRM). The major stakeholders agree to the plan.– Backed by

• Congress

• Automakers

• UAW

• State of California


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Harmonized Corporate Average Fuel Economy

Currently (or before harmonization)

• Corporate Average Fuel Economy (CAFE)—Re-defined by EISA of 2007, NHTSA sets the standard, EPA calculates each manufacturers’ averages

• National CO2 Regulation via the Clean Air Act—CO2 is now a harmful emission—measures have not yet been set.

• California greenhouse gas; a.k.a. the Pavley Rule• California granted permission to regulate emissions, agrees to defer to federal rules

through 2016, but can set its own rules after 2016 if a future president should back off the national standards


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NHTSA CAFE and EPA CO2

The Same but Different

The goal of the Presidential Directive is to provide regulatory compatibility that allows automakers the ability to build a single, national fleet that would comply with both EPA GHG standard and NHTSA CAFE – The two standards will not be identical—but are intended to be

compatible. Both include:• Attribute based

– Generally using the attribute curves as defined for the 2011 model year measures

• Individual fleet averages (for CO2 and CAFE) – Each automaker would have its own targets based on a sales weighted average

of emissions /fuel economy from each model in its fleet—calculated at the end of the year. And, include a passenger car and light truck fleet.

• Each Automaker has a CO2 and CAFE requirement unique to its fleet.

– Automakers with fleets comprised of larger vehicles would have a less stringent standard than automakers with a fleet of smaller vehicles.


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Harmonized and Understood (?)The Plan

Harmonized EPA CO2 Regulation and NHTSA CAFE

EPA CO2 regulation

Considering proposing a national CO2 standard of 250 grams/mile of CO2 in the model year 2016. It would be Implemented beginning in 2012, with a linear phase-in to the 2016 standard.

NHTSA CAFE regulation (proposed)2011 combined standard: 27.3 m.p.g.

Passenger Cars: 30.2 m.p.g.

Light Trucks: 24.1 m.p.g.

2016 Combined Standard: 35.5 m.p.g.Passenger Cars: 42.0 m.p.g.

Light Trucks: 27.0 m.p.g.

(5 percent year over year increase based on 2011 standard)

* Current Standard: Passenger Car, 27.5, Light Trucks 24.0 m.pg.


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20

25

30

35

40

45

Tar

get

MP

G

Footprint (sq. ft.)

2015 2011 Current

CAFE Footprint for Passenger Cars

35 40 45 50 55

Source: NHTSA PRIA 2008; Truck Final 2007; CAR Research

Current Small cars

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DOE Recovery Act Awards for Electric Drive Vehicle Battery, Component Manufacturing, and Transportation Electrification Initiatives (Millions USD)

Source: U.S. Department of Energy http://www.energy.gov/news2009/7749.htm

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DOE Recovery Act Award Locations

(Electric Drive Vehicle Battery, Component Manufacturing, and Transportation Electrification

Initiatives)

Source: U.S. Department of Energy http://www.energy.gov/news2009/7749.htm


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Section I Summary

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1. Gasoline Prices drive the market2. The vehicle product development cycle is long

—and costly3. Introducing new technology inherently risky4. U.S. policy has historically been stable—but

unpredictable5. There is a presidential directive to harmonize

fuel economy and GHG regulation6. Advanced energy storage: The answer? Or

the next Bubble?


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POWERTRAIN FORECASTSection II

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Introductory Notes

• This survey of the report presents results of a targeted survey of powertrain experts from vehicle manufacturers, powertrain suppliers, powertrain engineering services firm and Non-Government Organizations (NGO). The survey was conducted during the second quarter of 2009.

• Seventeen individuals participated in the survey. The majority of interviewees had engineering backgrounds, and currently held the position of director or above. They were selected based on their wide range of expertise in both technical and market issues.

• This topic is highly complex in nature. As such, CAR believes there is only a very small group of individuals that are capable of responding to the specific questions asked

• The data is presented as the mean of all responses. Statistical analysis of such a small sample is not helpful. All respondents had the opportunity to compare their estimates to the survey mean and make additional comments. There was generally minimal disagreement from the respondents upon review.


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2007(Baseline)

2011 2015

$2.50/

Gallon

$6.00/

Gallon

$2.50/

Gallon

$6.00/

Gallon

Dedicated Gasoline

95.2% 91.5% 83.8% 89.0% 69.0%

Hybrid Electric Vehicle

2.4% 5.0% 10.0% 6.0% 20.0%

All Gasoline*

97.6% 96.5% 93.8% 95.0% 89.0%

Diesel 2.4% 3.0% 5.0% 4.0% 7.5%

Battery Electric Vehicle

0.0% 0.1% 1.0% 0.5% 2.5%

Powertrain Technology As a percent of total light duty vehicles sold

•*Gasoline and hybrid electric vehicles (with gasoline engine)•Percentages are based on total light vehicle sales • This table is a summary of several questions, thus inter-quartile ranges are not possible


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2011 2015

$2.50/

Gallon

$6.00/

Gallon

$2.50/

Gallon

$6.00/

Gallon

Percent Significantly improved vis-à-vis current engine technology

10.0% 32.5% 10.0% 55.0%

Fuel Economy ImprovementsBetter Spark Ignited Gasoline Engines


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Gasoline Engine TechnologiesAs percent of total gasoline engine powered vehicles sold

2007(Baseline)

2011 2015

$2.50/

Gallon

$6.00/

Gallon

$2.50/

Gallon

$6.00/

Gallon

Turbo-Charged PFI 2.2% 3.5% 7.0% 4.5% 10.0%

Super-Charged PFI 0.3% 0.3% 0.3% 0.3% 0.3%

Gasoline Direct Injection

Normally Aspirated

0.3 5.0% 10.8% 6.0% 15.0%

Turbo-Charged GDI as percent of GDi

N/A 5.0% 17.5% 9.0% 33.3%


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Hybrid Electric Vehicle Technologies As a percent of Total U.S. Light Vehicle HEV Sales

2008(Baseline)

2011 2015

$2.50/

Gallon

$6.00/

Gallon

$2.50/

Gallon

$6.00/

Gallon

HEV (Non plug-in)

Power-split (Parallel, including dual mode)

87.7% 80.0% 70.0% 68.0% 34.0%

Integrated Motor Assist

9.8% 12.0% 15.0% 12.0% 18.0%

Belt-alternator starter

2.2% 5.5% 8.0% 6.0% 9.0%

Plug-in Capable

Parallel Plug-in 0.0% 1.0% 1.0% 1.0% 3.0%Series (extended-range) Plug-in

0.0% 0.7% 1.1% 1.1% 3.0%

Hybrid Electric Vehicle

2.4% 5.0% 10.0% 6.0% 20.0%


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Plug in Electric VehiclesSales Forecast: 2011, 2015

$2.50/ gallon $6.00/ gallon

2011 2015 2011 2015

U.S. vehicle sales

12, 000,000 14,000,000 12, 000,000 14,000,000

PHEV/EREV sales 10,200 29,400 14,400 168,000

BEV sales12,000 140,000 60,000 350,000

Total PEV sales 22,200 169,400 74,400 518,000


57

PEV Manufacturing Models

• 1) The traditional vehicle manufacturers

• 2) The new automotive manufacturers,

• 3) The U.S.-based venture capital start-ups

• 4) the international independent start-ups.


58

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The New Hybrids… (or the been there, done that)

BYD F3DM PHEV 2010 Toyota Prius

2010 Honda

Insight

2010 Lexus HS 250H

2009 Saturn Vue

2010 Ford Fusion

http://www.thetorquereport.com/saturn_vue_main.jpg


59

59

The New Poster Children…

Toyota FT-EV concept Dodge Circuit Concept

Cadillac Convej Concept

Mini E

2011 Chevrolet Volt

http://www.thecarconnection.com/image/100167184_2011-chevrolet-volt

http://www.dancewithshadows.com/motor/wp-content/uploads/2008/11/bmw-2009-min-e-photo.jpg


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Deja-Vu All Over: Or the are 1980s A’coming again?

The manufacturers response to the last CAFE driven fuel economy increases


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Section II Summary

61

1. Gasoline will continue to dominate2. The gasoline engine will evolve rapidly in the

coming years3. Gasoline direct injection is the next big thing,

and may be combined with turbochargers4. HEVs are here…but don’t necessarily present

a quick payback5. PEVs are a’coming, but the technical and cost

issues are BIG.


62

Automotive Powertrain Forecast:What is Coming, and What are the Implications

Thank you!

Copyright © 2009 by ScottMadden. All rights reserved.

2009 Stakeholder Relations Customer Survey Results

ITC Partners in Business Meeting

September 10, 2009

64Copyright © 2008 by ScottMadden. All rights reserved.

ScottMadden Introduction

About ScottMadden

ScottMadden is a general management consulting firm that specializes in the energy industry and has served more than 150 energy companies across the country and around the world. ScottMadden’s clients include integrated utilities, competitive energy suppliers, retail energy suppliers, energy delivery specialists, trading and marketing firms, RTOs/ISOs/ITCs, gas pipelines, LCDs, global IPPs, regulators, and government agencies. Apart from its energy industry focus, ScottMadden has practices focused on Sustainability, Shared Services, and the Federal Government.

For more than 25 years, clients have trusted ScottMadden to provide guidance as they face the challenges associated with growing, consolidating, acquiring or just aspiring to do what they do better. They trust ScottMadden’s people, methods, and solutions; and to see them through, start to finish.

Karen Hilton Bio

Karen is a Director at ScottMadden and has twelve years of consulting experience with the firm. She has focused on customer satisfaction surveys, process improvement, organizational design and restructuring, and cost reduction analysis in both shared services and energy. Karen manages ScottMadden’s survey business focused on internal customer satisfaction and engagement of employees in the service delivery process. Karen has an undergraduate business degree from Wake Forest and an M.B.A. from the University of North Carolina at Chapel Hill.


Contents

Introduction Summary Findings Survey Results Conclusions

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Introduction

Survey Objectives Understand stakeholder satisfaction with ITC

Stakeholder Relations and ITC overall Establish a baseline of performance to enable

measurement of performance over time Learn about communication preferences and

desired frequency of interaction Solicit ideas for how ITC can add value for its

customers

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Introduction (Cont’d)

About the Survey The survey was administered using Inquisite, a

web-based survey tool used by ScottMadden The survey was launched on Monday, May 18th and

was closed on Friday, June 19th

Survey invitations were sent to 182 stakeholder contacts in various organizations

Reminder messages, phone calls, and a gift card drawing were used to encourage participation

At the end of the survey period, a total of 80 responses were collected, representing a 44% response rate

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Summary Findings

Overall, survey respondents show high levels of satisfaction with 78% providing favorable ratings on overall satisfaction with ITC— All questions have mean scores on the positive end of

the rating scale (means greater than 3.0, where 5.0 is best)

The questions with the three highest mean scores are:— ‘ITC Stakeholder Relations department is pleasant,

accommodating, and treats me with respect’— ‘When dealing with ITC, I am treated with

consideration and respect’— ‘ITC provides reliable power to its customers’

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Summary Findings

The questions with the three lowest mean scores are:— ‘ITC has efficient processes’— ‘ITC Stakeholder Relations has my best interests in

mind’— ‘I understand the interconnection process well’

The majority of respondents have met their Stakeholder Relations Account Manager and would like to meet between one and four times a year

Respondents are fairly satisfied with communication efforts and the majority prefer email as the method of communication

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Summary Findings

The Partners in Business meetings are considered valuable by the majority of respondents; most respondents would attend one or two a year

Respondents gave favorable ratings for Stakeholder Relations’ role in the outage scheduling and interconnection processes

Respondents gave high ratings to ITC on quality of service but are slightly less satisfied with the value of ITC services

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Summary Findings (Cont’d)

When asked about significant actions ITC could take to provide value to customers, respondents included comments in the following categories:— Communication and meetings, including power quality

event communication— Costs and value— Project planning and coordination— Outage scheduling and communication

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“Power quality event communication, Power quality meetings and new load (economic development) meetings are an ongoing value.”

“Coordinate joint projects through one point of contact. ITC is such a relatively large organization that project inputs from a variety of ITC departments have been contrary to other ITC department inputs.”


Summary Findings (Cont’d)

Additional comments include a variety of topics including:— Positive comments about satisfaction, relationship

with ITC, and ITC staff— A few concerns on responsiveness and follow-through

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“It seems to be somewhat evolving; however, it is headed in the right direction…”

“Simply follow-through more reliably on communications and commitments in working to address interconnected customer issues…”


Survey Demographics

The following charts show the demographics of the survey respondents:

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17. What type of entity is your organization? 18. Are you affected or impacted by:

31%

36%

12%

4%

16%

0% 10% 20% 30% 40% 50%

Generator

Municipality or Cooperative

Customer of Consumers Energy or DTE

Agency, Regulator, or Industry Association

Other

14%

31%

55%

0% 20% 40% 60%

METC

ITC Transmission

Both


Overall, respondents report a high level of satisfaction with ITC with 78% of respondents providing a favorable rating and only 7% of respondents providing a negative rating

1%6% 14% 51% 27%

0% 20% 40% 60% 80% 100%

Overall, I am

satisfied with ITC

Strongly Disagree Disagree Neutral Agree Strongly Agree

Overall Satisfaction

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N Mean

3.96 78


Highest Scores by Percent Favorable

Respondents rated these questions highest based on the percent of favorable responses (% Strongly Agree + % Agree)

75

93%

91%

90%

90%

83%

0% 50% 100%

14a. ITC provides reliable power to its customers

2d. When dealing with ITC, I am treated with consideration and respect

14b. Voltage on the system is managed appropriately

5d. ITC Stakeholder Relations department is pleasant, accommodating, and treats

me with respect

13c. I know who to call with issues or concerns about the interconnection

process

Five Highest Questions (% Favorable)


Lowest Scores by Percent Favorable

Respondents rated these questions lowest based on the percent of favorable responses (% Strongly Agree + % Agree)

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Five Lowest Questions (% Favorable)

52%

57%

63%

65%

65%

0% 20% 40% 60% 80% 100%

5a. ITC Stakeholder Relations has my best interests in mind

1d. ITC has efficient processes

13b. I understand the interconnection process well

1h. ITC takes initiative and is proactive in working with me

1f. ITC provides valuable solutions and ideas


Question 1: Overall Questions about ITC

In evaluating the overall relationship with ITC, respondents gave the highest scores for:— Viewing ITC as a valued business partner— ITC’s teaming with stakeholder staff— Knowing where to go for support

Respondents gave the lowest scores to process efficiency and flexibility

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“ITC's system operation group does a great job and are easy to work with.”


Question 2: Satisfaction with Interactions with or Support from ITC

78

Respondents are very satisfied with the way they are treated by ITC and management’s availability to address problems

While still generally positive, respondents gave lower ratings for ITC’s timeliness


Questions 3-4: Meeting with Stakeholder Relations

85% of respondents have met their Stakeholder Relations Account Manager

The majority would like to meet with Stakeholder Relations between one and four times a year

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4. How often would you like to meet with Stakeholder Relations?

3%

19%

33%29%

18%

0%5%

10%15%20%25%30%35%

Monthly Quarterly Twice a year Once a year Other


Question 5: Satisfaction with Stakeholder Relations

80

Mean

4.31

4.12

3.93

3.87

3.77

3.51

Please rate your level of agreement with the following statements about the Stakeholder Relations organization:

Questions are sorted in order of descending mean scores

1%

3%

1%

8%

7%

6%

10%

22%

22%

17%

25%

39%

49%

44%

58%

48%

52%

42%

41%

34%

18%

25%

16%

10%

0% 20% 40% 60% 80% 100%


d. ITC Stakeholder Relations department is pleasant, accommodating, and treats me with respect

c. My ITC Stakeholder Relations Account Manager listens, understands, and is prepared to discuss my needs

b. ITC Stakeholder Relations staff are available when I need them

f. I am satisfied with the overall performance of ITC Stakeholder Relations

e. I have a clear understanding of the benefits we receive from ITC Stakeholder Relations

a. ITC Stakeholder Relations has by best interests in mind


Respondents are generally satisfied with their communication with Stakeholder Relations and prefer email as the primary communication method

Questions 6-7: Communication

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6. Please rate your level of agreement with the following statements:

3.89

4.07

3.83

Mean

1%

1%

1%

3%

3%

6%

22%

16%

22%

54%

48%

48%

20%

32%

22%

0% 20% 40% 60% 80% 100%


a. ITC Stakeholder Relations stays in touch to keep me apprised of issues that may affect my organization

b. I have open and easy communication with ITC Stakeholder Relations

c. I am satisfied with ITC’s communication efforts


Questions 8-10: Partners in Business Meetings

70% of respondents agree that the Partners in Business Meetings are informative and helpful; only 5% disagree

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9. Indicate on an annual basis the frequency of Partners in Business

meetings you would attend:

10. What topics would you like to see addressed at the Partners in Business

meetings?

Many topics were suggested including some common themes on:

•ITC transmission plans and options•Business, industry, and economic outlooks and trends•Project updates and project planning•Legislative/NERC updates

40%45%

4%10%

0%

10%

20%

30%

40%

50%

1 2 3 4

“Most recent PIB meeting was the best by far. A lot of informative details.”


Question 11: Outage Scheduling

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11. Please rate your level of agreement with the following statements about outage scheduling:

Respondents provided mostly favorable ratings on outage scheduling

Mean

3.97

3.86

3.76

Noted as a significant action ITC could take: “Faster response times to our unexpected outages, more efficient switching operations for our planned outages.”

3%

5%

2%

18%

20%

31%

57%

58%

58%

22%

17%

10%

0% 20% 40% 60% 80% 100%


a. Stakeholder Relations is proactive in informing me of scheduled outages

b. Stakeholder Relations coordinates the various parties involved in scheduling an outage and I am kept fully informed of developmentsc. The process allows me adequate time to prepare for a scheduled outage


Fewer than half of the respondents have had a recent need to interconnect to ITC’s system — Those who have are generally favorable about

Stakeholder Relations role in the process and knowing who to call for support.

— Ratings were slightly lower for customer understanding of the interconnection process.

Questions 12-13: Interconnects

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13. Please rate your level of agreement with the following statements about interconnects: Mean

4.03

3.63

4.07

3%

11%

3%

21%

26%

14%

45%

52%

55%

31%

11%

28%

0% 20% 40% 60% 80% 100%


a. Stakeholder Relations is helpful in the interconnection process

b. I understand the interconnection process well

c. I know who to call with issues or concerns about the interconnection process


Question 14: Quality of Service and Value

ITC receives high ratings from customers on providing reliable power and managing voltage on the system. While generally positive, respondents gave somewhat lower ratings for being satisfied with the value of ITC services.

85

14. Please rate your level of agreement with the following statements:

4.28

4.15

3.88

Mean

a. ITC provides reliable power to its customers

b. Voltage on the system is managed appropriately

c. I am satisfied with the value of ITC services

1%

1%

1%

8%

5%

8%

13%

57%

62%

56%

36%

28%

21%

0% 20% 40% 60% 80% 100%



Conclusions

ITC demonstrates good customer service and has effective working relationships with its customers

ITC is viewed as providing reliable power and effectively manages voltage for its customers

There are opportunities to improve in several areas:— Customer perceptions of ITC Stakeholder Relations

intentions— Process efficiency— Timeliness and responsiveness— Being flexible and accommodating in conducting business

Stakeholder Relations staff are highly regarded by customers and communication efforts are viewed positively

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87

Karen HiltonDirector

ScottMadden, Inc.2626 Glenwood Ave

Suite 480Raleigh, NC 27608

Phone: 919-781-4191Mobile: 919-423-8399

[email protected]

mailto:[email protected]

ITC Response to Survey ResultsJeff Dorr

Manager, Stakeholder Relations

ITC Response to Survey ResultsJeff Dorr


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Lowest Scores by Percent FavorableLowest Scores by Percent Favorable

Respondents rated these questions lowest based on the percent of favorable responses (% Strongly Agree + % Agree)

89

Five Lowest Questions (% Favorable)52%

57%

63%

65%

65%

0% 20% 40% 60% 80% 100%

5a. ITC Stakeholder Relations has my best interests in mind

1d. ITC has efficient processes

13b. I understand the interconnection process well

1h. ITC takes initiative and is proactive in working with me

1f. ITC provides valuable solutions and ideas

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Survey Action PlanSurvey Action Plan

Perception of ITC Stakeholder Relations Intentions— Ensure we listen before we speak to gain understanding of needs— Focus on why we are taking an action instead of just “what is being done”— Follow through on our commitments in a timely manner— Do what we say and say what we do

Being Flexible and accommodating in conducting business— Always consider stakeholder perspective when taking actions— Never say no without providing alternative options— Meet with stakeholders at their convenience to discuss your needs

Timeliness and Responsiveness— 24 hour commitment to return all phone calls and e-mails — 30 day commitment to resolving request

Process Efficiency— Implementing a contact data base to track activities and action items— Implemented a planned outage template to share information with stakeholders— Stakeholder Relations is your one point of contact to serve all of your needs— Make Improvements to the “Partners in Business” portion of the www.itctransco.com website

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Survey Action PlanSurvey Action Plan

Interconnection Process— Further develop flowcharts and explanations of how to interconnect to the transmission system— Post the interconnection process on the www.itctransco.com website

Stakeholder Relations proactive approach in providing solutions — Continue the Implementation of the ITC Power Quality Initiative

Program to investigate if ITC can improve service to interconnected stakeholders through identifying opportunities with a team of subject matter experts.

» GM, Filer City, Mac Steel— Identification of improvements through

Customer meetings System wide events

» Root cause analysis

Communications— Shared the results of the survey with ITC Holdings executive management— Shared the results of the survey with internal and external stakeholders— Continue to look for opportunities to improve

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AnnouncementsAnnouncements

Attachment O meetings to review 2010 network billing rates for ITCTransmission and METC

—October 6,2009 at ITC Holdings HQ in Novi, MI—Webcast—Must RSVP to gain access to the building and webcast—Invitations will be sent via e-mail next week

Congratulations to Wayne Frey, Plant Manager of Kinder Morgan Power Plant - the winner of the stakeholder survey drawing prize!

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THANK YOU !!!!!!!!! THANK YOU !!!!!!!!!

For electronic copies of ITC presentations please visit the Partners in Business tab found on our web-site at:

www.itctransco.com

Drive home safely

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Jeff Dorr

ITC Holdings


248.946.3482 Office

248.660.7109 Cell

[email protected]

Dave Nagy

ITC Holdings

Account Manager

248.946.3480 Office

248.881.9208 Cell

[email protected]

Contact informationContact information

95

GOLF GOLF

FALL PARTNERS IN BUSINESS Ypsilanti, Michigan September 10, 2009.

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