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ITC Holdings: Riding the Wires

Fortnightly Magazine - September 2010

billion from now until 2015. Yet your earnings are rate-regulated and you’ve grown your dividend payout every year. Do you expect ITC to remain a growth stock, or will you achieve a critical mass and then become more like a typical utility?

Welch: A lot of investors have asked us why we even pay a dividend. We always say it’s because we’re in the utility space, and utilities typically pay dividends. From day one we’ve said we would target 4 to 5 percent annual growth in our dividend payout, and we’ve maintained our commitment to doing that. But we also have a high growth rate and we’re putting capital to use.

Being a development company is a big part of our culture. A second part is generator interconnections, primarily for renewable energy facilities. We’ve brought forth non-discriminatory interconnection standards, and we’ve been blessed with a lot of projects in the queue. Third is acquisition of transmission systems, and getting them into the condition they need to be in. Each system brings its own circumstances, but transmission in the U.S. has aged and hasn’t been particularly well maintained.

At the end of our five-year plan, we will continue to be a growth company. Whatever forecast you look at says that many billions of dollars need to be spent on transmission. If we get just a small percentage of that market, it will be a tremendous business for us. My biggest regret is that I’m not a 35 year-old executive, and I won’t get to participate in most of that growth. – MTB