Electricity transmission is the flow of electricity at high voltages from electricity generation resources to local distribution systems. In the United States, electricity transmission assets are predominantly owned, operated and maintained by utilities that also own electricity generation and distribution assets, known as vertically integrated utilities.

On the basis of recent data collected by the U.S. Department of Energy, or DOE, the U.S. electricity transmission system consists of nearly 160,000 miles of high-voltage transmission lines and has an estimated $60 billion of net installed assets. The electricity transmission sector has historically experienced significant underinvestment. According to the Edison Electric Institute, transmission investment made by investor-owned utilities declined from $42.3 billion in the 10-year period from 1975 to 1984 to $29.5 million in the 10-year period from 1992 to 2001 (both in 2003 dollars), or a reduction of $12.8 billion. According to the DOE, annual electricity consumption more than doubled in the same period, increasing from 1,747 TWh in 1975 to 3,544 TWh in 2001. The DOE expects electricity to remain the fastest growing segment of delivered energy and projects total electricity consumption to increase by approximately 50.0% from 2003 through 2025.

According to the Electric Power Research Institute, U.S. businesses lose $45.7 billion annually in foregone production due to power outages and another $6.7 billion annually due to power quality issues. The cost of power outages includes losses of production materials and employee productivity due to interrupted manufacturing processes. For example, cost estimates attributed to the 2003 blackout range from $4 billion to $10 billion in the United States alone. Transmission system investments over and above maintenance-related investments can increase system reliability and reduce the frequency of power outages. Such investments can reduce transmission constraints and improve access to lower cost generation resources, resulting in a lower overall cost of delivered electricity for end-use consumers.

the Michigan Electric Power Coordination Center, or MEPCC, located near Ann Arbor, Michigan.

As a transmission-only the Company functions as a conduit, moving power from generators to local distribution systems either entirely through its own system or in conjunction with other neighboring transmission systems. Detroit Edison and other third parties then transmit power through these local distribution systems, to end-use consumers. The transmission of electricity by the Company is a central function to the provision of electricity to residential, commercial and industrial end-use consumers. The operations performed by thy Company fall into 4 categories, which are asset planning; engineering, design and construction; maintenance; and real time operations.

The Company is focused on identifying opportunities to reduce transmission system constraints, increase flows across its system and increase system reliability through prudent capital investment.

The Company’s engineering, design and construction division is responsible for design, creating equipment specifications, developing maintenance plans and project management for capital, operation and maintenance work.

The Company's maintenance division develops and tracks the preventative maintenance plan to help ensure a safe and reliable system.

The Company’s real time operations are joint control area operator and field operations. As part of day to day operations in the Company's operations control room located in Novi, Michigan, transmission system coordinators analyze system conditions at all times, allowing them to react quickly to changing conditions.

Total operating expenses increased by $3.5 million, or 3.7%, from $95.8 million in the 2003 Pro Forma Period to $99.3 million for the year ended December 31, 2004.

Operation and maintenance expenses decreased by $4.0 million, or 14.0%, from $28.6 million in the 2003 Pro Forma Period to $24.6 million for the year ended December 31, 2004.

Interest expense increased by $4.0 million, or 18.5%, from $21.6 million in the 2003 Pro Forma Period to $25.6 million for the year ended December 31, 2004.

Net income after taxes increased by $7.2 million from a net loss of $4.6 million in the 2003 Pro Forma Period to net income of $2.6 million for the year ended December 31, 2004.