(Reuters) - ITC Holdings Corp ITC.N expects to spend about $4.5 billion from 2014 to 2018 to upgrade and expand its power transmission system in the U.S. Midwest, Chief Financial Officer Rejji Hayes told Reuters.
“Our investments will drive a variety of customer benefits in the form of reduced congestion, improved reliability and ultimately lower costs and lead to very attractive growth in earnings for our shareholders,” Hayes said.
He said ITC, based in Michigan, categorizes investments into three “buckets”: base capital, regional and development projects.
ITC will spend the most on base capital, about $2.2 billion, to fix and upgrade systems it acquired in Michigan, Iowa, Minnesota, Illinois and Missouri between 2003 and 2007, Hayes said.
The company also plans to spend about $1.2 billion on regional transmission upgrade projects, like the Michigan Thumb Loop that entered service on Wednesday, and $1.1 billion on greenfield development projects.
ITC invested about $510 million on the Michigan Thumb project which will serve as the backbone of a system designed to connect the region’s 5,000 megawatt wind energy potential.
There are only about 1,000 MW of wind power in Michigan at this time, but the state may need more to meet the proposed 20 percent renewable energy goal by 2020 and potential future policy objectives, Hayes said.
On the development side, ITC is evaluating the development of a 1000-MW bidirectional transmission line running about 60 miles (97 km) under Lake Erie between Ontario and the PJM power grid.
PJM operates the biggest U.S. power grid covering parts of 13 states from New Jersey to Illinois and the District of Columbia.
“We think there is going to be a good appetite for this line from shippers on both sides of Lake Erie,” Hayes said, noting the company should have visibility by the back half of 2015 on whether the project makes economic sense.
The Lake Erie line could enter service by mid 2019 if the company decides to build it.
Hayes said he could not discuss the cost of the project. In media reports, however, it was estimated to cost about $1 billion.
To take advantage of the U.S. Federal Energy Regulatory Commission’s Order 1000, which opens opportunities for transmission companies to invest outside their service territory, Hayes said ITC bid on several projects in PJM.
“We expect to know if we were successful on our bids in PJM by the back half of 2015,” Hayes said.
Reporting by Scott DiSavino; Editing by Bernard Orr