It is a good time to be in transmission.

Favorable regulatory decisions are compounding the impacts of higher returns from rising electricity rates in some parts of the country to boost revenues and profit at ITC Holdings, a major US electricity transmission firm.

The company reported profits of almost $43 million for the second quarter of 2011 at the end of July, up from $36.3 million in the same period last year, while results in the first half of 2011 at nearly $85 million in profit were strikingly higher than the $70.5 million profits booked in the first six months of 2010.

ITC invested $271.6 million in capital projects in the first six months of 2011, and increased its capital investment spending guidance to a range of $600-645 million for the year, leaving it more than $300 million to spend in the second half of 2011. The company had previously said it would invest between $560 and $640 million in 2011.

Fabulous FERC

Long-awaited regulatory clarity on a number of key transmission investment and electricity sector issues in recent months have burnished the company’s glow.

“While we have been sustaining our track record of delivering on our near-term commitments, critical transmission policy reforms we have been advocating in the areas of planning and cost allocation have materialized with the issuance of FERC Order 1000,” ITC Chairman and CEO Joseph Welch said in announcing the company’s second quarter results.

The Federal Energy Regulatory Commission rule, approved July 21, sets out basic approaches to paying for regional transmission projects that reduces much of the complexity and uncertainty surrounding the investment in the sector. For more on that rule, and on the transmission sector’s response, see: Paying For The New Grid.

Revenues in the second quarter were also driven in part by regulatory shifts, with the Midwest Independent Transmission System Operator (MISO) marking additional capital projects as eligible for regional cost sharing. The controversial allocation of transmission costs has been the subject of regional and federal debate, as has the role of independent system operators in cost allocation.