UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended	~~September 30, 2021~~March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-32576

ITC HOLDINGS CORP.

(Exact Name of Registrant as Specified in Its Charter)


Michigan						32-0058047
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

27175 Energy Way

Novi, MI 48377

(Address Ofof Principal Executive Offices, Including Zip Code)

(248) 946-3000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☑ * ~~(Note: the~~The Registrant is a voluntary filer and has not been subject to the filing requirements under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the preceding 12 months.)

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☐

☑

☐

If an emerging growth company, ~~indicated~~indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the ~~Registrant~~registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

All shares of outstanding common stock of ITC Holdings Corp. are held by its parent company, ITC Investment Holdings Inc., which is an indirect majority owned subsidiary of Fortis Inc. There were 224,203,112 shares of common stock, no par value, outstanding as of ~~October 28, 2021.~~May 3, 2022.

Table of Contents

ITC Holdings Corp.

Form 10-Q for the Quarterly Period Ended ~~September 30, 2021~~March 31, 2022

INDEX

Table of Contents

DEFINITIONS

Unless otherwise noted or the context requires, all references in this report to:

ITC Holdings Corp. and its subsidiaries

•“ITC Great Plains” are references to ITC Great Plains, LLC, a wholly-owned subsidiary of ITC Holdings;

•“ITC Holdings” are references to ITC Holdings Corp. and not any of its subsidiaries;

•“ITC Interconnection” are references to ITC Interconnection LLC, a wholly-owned subsidiary of ITC Holdings;

•“ITC Midwest” are references to ITC Midwest LLC, a wholly-owned subsidiary of ITC Holdings;

•“ITCTransmission” are references to International Transmission Company, a wholly-owned subsidiary of ITC Holdings;

•“METC” are references to Michigan Electric Transmission Company, LLC, a wholly-owned subsidiary of MTH;

•“MISO Regulated Operating Subsidiaries” are references to ITCTransmission, METC and ITC Midwest together;

•“MTH” are references to Michigan Transco Holdings, LLC, the sole member of METC and a wholly-owned subsidiary of ITC Holdings;

•“Regulated Operating Subsidiaries” are references to ITCTransmission, METC, ITC Midwest, ITC Great Plains and ITC Interconnection together; and

•“Company,” “we,” “our” and “us” are references to ITC Holdings together with all of its subsidiaries.

Other definitions

•“AFUDC” are references to an allowance for funds used during construction;

•“ALJ” are references to an administrative law judge;

•“AOCI” are references to accumulated other comprehensive income or (loss);

•“Consumers Energy” are references to Consumers Energy Company, a wholly-owned subsidiary of CMS Energy Corporation;

•“COVID-19” are references to the Coronavirus disease that the World Health Organization declared a pandemic in March 2020;

•“D.C. Circuit Court” are references to the U.S. Court of Appeals for the District of Columbia Circuit;

•“DCF” are references to discounted cash flow;

•“DTE Electric” are references to DTE Electric Company, a wholly-owned subsidiary of DTE Energy Company;

•“Exchange Act” are references to the Securities Exchange Act of 1934, as amended;

•“FASB” are references to the Financial Accounting Standards Board;

•“FERC” are references to the Federal Energy Regulatory Commission;

•“Formula Rate” are references to a FERC-approved formula template used to calculate an annual revenue requirement;

•“Fortis” are references to Fortis Inc.;

•“FortisUS” are references to FortisUS Inc., an indirect subsidiary of Fortis;

•“FPA” are references to the Federal Power Act;

•“GAAP” are references to accounting principles generally accepted in the United States of America;

Table of Contents

•“GIC” are references to GIC Private Limited;

•“Initial Complaint” are references to a November 2013 complaint to the FERC under Section 206 of the FPA regarding the base ROE;

•“IP&L” are references to Interstate Power and Light Company, an Alliant Energy Corporation subsidiary;

~~Table of Contents~~

•“ITC Investment Holdings” are references to ITC Investment Holdings Inc., a majority owned indirect subsidiary of Fortis in which GIC has an indirect, passive, non-voting minority ownership interest;

•“KCC” are references to the Kansas Corporation Commission;

•“kW” are references to kilowatts (one kilowatt equaling 1,000 watts);

•“LIBOR” are references to the London Interbank Offered Rate;

•“May 2020 Order” are references to an order issued by the FERC on May 21, 2020 regarding MISO ROE Complaints;

•“MISO” are references to the Midcontinent Independent System Operator, Inc., a FERC-approved RTO which oversees the operation of the bulk power transmission system for a substantial portion of the Midwestern United States and Manitoba, Canada, and of which ITCTransmission, METC and ITC Midwest are members;

•“MISO ROE Complaints” are references to the Initial Complaint and the Second Complaint;

•“NERC” are references to the North American Electric Reliability Corporation;

•“NOPR” are references to a Notice of Proposed Rulemaking issued by the FERC;

•“November 2019 Order” are references to an order issued by the FERC on November 21, 2019 regarding MISO ROE Complaints;

•“PBU” are references to a performance-based unit;

•“PCBs” are references to polychlorinated biphenyls;

•“ROE” are references to return on equity;

•“RTO” are references to Regional Transmission Organizations;

•“SBU” are references to a service-based unit;

•“SEC” are references to the Securities and Exchange Commission;

•“Second Complaint” are references to an additional complaint filed on February 12, 2015 with the FERC under Section 206 of the FPA regarding the base ROE;

•“September 2016 Order” are references to an order issued by the FERC on September 28, 2016 regarding the Initial Complaint;

•“SOFR” are references to the Secured Overnight Financing Rate;

•“SPP” are references to Southwest Power Pool, Inc., a FERC-approved RTO which oversees the operation of the bulk power transmission system for a substantial portion of the South Central United States, and of which ITC Great Plains is a member;

•“S&P” are references to S&P Global Ratings;

•“TO” are references to transmission owner; and

•“USD” are references to the United States dollar.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ITC HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)


		September 30,		December 31,			March 31,		December 31,
(In millions of USD, except share data)	(In millions of USD, except share data)	2021		2020		(In millions of USD, except share data)	2022		2021
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	3	$	4	Cash and cash equivalents	$	3	$	5
Accounts receivable	Accounts receivable	141		114		Accounts receivable	125		128
Inventory	Inventory	44		42		Inventory	45		45
Regulatory assets	Regulatory assets	27		52		Regulatory assets	17		21

Prepaid and other current assets	Prepaid and other current assets	19		12		Prepaid and other current assets	40		18
Total current assets	Total current assets	234		224		Total current assets	230		217
Property, plant and equipment (net of accumulated depreciation and amortization of $2,160 and $2,055, respectively)		9,765		9,327
Property, plant and equipment (net of accumulated depreciation and amortization of $2,248 and $2,199, respectively)						Property, plant and equipment (net of accumulated depreciation and amortization of $2,248 and $2,199, respectively)	10,148		9,961
Other assets	Other assets					Other assets
Goodwill	Goodwill	950		950		Goodwill	950		950
Intangible assets (net of accumulated amortization of $48 and $46, respectively)		27		29
Intangible assets (net of accumulated amortization of $50 and $49, respectively)						Intangible assets (net of accumulated amortization of $50 and $49, respectively)	25		26
Regulatory assets	Regulatory assets	205		212		Regulatory assets	218		190

Other assets	Other assets	84		83		Other assets	95		101
Total other assets	Total other assets	1,266		1,274		Total other assets	1,288		1,267
TOTAL ASSETS	TOTAL ASSETS	$	11,265	$	10,825	TOTAL ASSETS	$	11,666	$	11,445
LIABILITIES AND STOCKHOLDER’S EQUITY	LIABILITIES AND STOCKHOLDER’S EQUITY					LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	123	$	130	Accounts payable	$	126	$	127
Accrued compensation	Accrued compensation	59		55		Accrued compensation	43		72
Accrued interest	Accrued interest	69		55		Accrued interest	70		56
Accrued taxes	Accrued taxes	35		61		Accrued taxes	55		64
Regulatory liabilities	Regulatory liabilities	11		14		Regulatory liabilities	15		14
Refundable deposits and advances for construction	Refundable deposits and advances for construction	43		37		Refundable deposits and advances for construction	64		44
Debt maturing within one year	Debt maturing within one year	180		67		Debt maturing within one year	736		654
Other current liabilities	Other current liabilities	16		18		Other current liabilities	11		16
Total current liabilities	Total current liabilities	536		437		Total current liabilities	1,120		1,047
Accrued pension and postretirement liabilities	Accrued pension and postretirement liabilities	57		59		Accrued pension and postretirement liabilities	51		52
Deferred income taxes	Deferred income taxes	1,122		1,013		Deferred income taxes	1,205		1,161
Regulatory liabilities	Regulatory liabilities	632		612		Regulatory liabilities	612		619
Refundable deposits	Refundable deposits	25		65		Refundable deposits	8		28
Other liabilities	Other liabilities	48		50		Other liabilities	39		55
Long-term debt	Long-term debt	6,414		6,295		Long-term debt	6,099		6,009
Commitments and contingent liabilities (Notes 4 and 11)	Commitments and contingent liabilities (Notes 4 and 11)	0		0		Commitments and contingent liabilities (Notes 4 and 11)
TOTAL LIABILITIES	TOTAL LIABILITIES	8,834		8,531		TOTAL LIABILITIES	9,134		8,971
STOCKHOLDER’S EQUITY	STOCKHOLDER’S EQUITY					STOCKHOLDER’S EQUITY
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at September 30, 2021 and December 31, 2020		892		892
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at March 31, 2022 and December 31, 2021						Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at March 31, 2022 and December 31, 2021	892		892
Retained earnings	Retained earnings	1,543		1,410		Retained earnings	1,626		1,584
Accumulated other comprehensive loss		(4)		(8)
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	14		(2)
Total stockholder’s equity	Total stockholder’s equity	2,431		2,294		Total stockholder’s equity	2,532		2,474
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	11,265	$	10,825	TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	11,666	$	11,445

See notes to condensed consolidated interim financial statements (unaudited).

Table of Contents

ITC HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


		Three months ended				Nine months ended					Three months ended
		September 30,				September 30,					March 31,
(In millions of USD)	(In millions of USD)	2021		2020		2021		2020		(In millions of USD)		2022		2021
OPERATING REVENUES	OPERATING REVENUES									OPERATING REVENUES
Transmission and other services	Transmission and other services	$	397	$	378	$	1,042	$	1,008	Transmission and other services		$	327	$	299
Formula Rate true-up	Formula Rate true-up	(57)		(66)		(24)		(32)		Formula Rate true-up		38		37
Total operating revenues	Total operating revenues	340		312		1,018		976		Total operating revenues		365		336
OPERATING EXPENSES	OPERATING EXPENSES									OPERATING EXPENSES
Operation and maintenance	Operation and maintenance	30		19		82		66		Operation and maintenance		27		22
General and administrative	General and administrative	30		30		94		89		General and administrative		33		35
Depreciation and amortization	Depreciation and amortization	58		55		172		163		Depreciation and amortization		72		57
Taxes other than income taxes	Taxes other than income taxes	30		31		100		93		Taxes other than income taxes		36		35
Other operating (income) and expenses, net		(1)		(1)		—		(1)

Total operating expenses	Total operating expenses	147		134		448		410		Total operating expenses		168		149
OPERATING INCOME	OPERATING INCOME	193		178		570		566		OPERATING INCOME		197		187
OTHER EXPENSES (INCOME)	OTHER EXPENSES (INCOME)									OTHER EXPENSES (INCOME)
Interest expense, net	Interest expense, net	62		62		187		178		Interest expense, net		64		62
Allowance for equity funds used during construction	Allowance for equity funds used during construction	(8)		(7)		(22)		(19)		Allowance for equity funds used during construction		(9)		(7)
Other (income) and expenses, net		(1)		(1)		(4)		(2)
Other expenses (income), net										Other expenses (income), net		2		(1)
Total other expenses (income)	Total other expenses (income)	53		54		161		157		Total other expenses (income)		57		54
INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES	140		124		409		409		INCOME BEFORE INCOME TAXES		140		133
INCOME TAX PROVISION	INCOME TAX PROVISION	35		32		102		104		INCOME TAX PROVISION		34		33
NET INCOME	NET INCOME	105		92		307		305		NET INCOME		106		100
OTHER COMPREHENSIVE INCOME (LOSS)
OTHER COMPREHENSIVE INCOME										OTHER COMPREHENSIVE INCOME
Derivative instruments, net of tax (Note 8)	Derivative instruments, net of tax (Note 8)	2		1		4		(16)		Derivative instruments, net of tax (Note 8)		16		1
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX		2		1		4		(16)
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX										TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX		16		1
TOTAL COMPREHENSIVE INCOME	TOTAL COMPREHENSIVE INCOME	$	107	$	93	$	311	$	289	TOTAL COMPREHENSIVE INCOME		$	122	$	101

See notes to condensed consolidated interim financial statements (unaudited).

Table of Contents

ITC HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY (UNAUDITED)


						Accumulated									Accumulated
						Other		Total							Other		Total
				Retained		Comprehensive		Stockholder’s					Retained		Comprehensive		Stockholder’s
(In millions of USD)	(In millions of USD)	Common Stock		Earnings		Income (Loss)		Equity		(In millions of USD)	Common Stock		Earnings		(Loss) Income		Equity
BALANCE, DECEMBER 31, 2019		$	892	$	1,333	$	7	$	2,232
Net income		—		92		—		92
Dividends to ITC Investment Holdings Inc.		—		(82)		—		(82)
Other comprehensive loss, net of tax (Note 8)		—		—		(16)		(16)
BALANCE, MARCH 31, 2020		892		1,343		(9)		2,226
Net income		—		121		—		121
Dividends to ITC Investment Holdings Inc.		—		(83)		—		(83)
Other comprehensive loss, net of tax (Note 8)		—		—		(1)		(1)
BALANCE, JUNE 30, 2020		892		1,381		(10)		2,263
BALANCE, DECEMBER 31, 2020										BALANCE, DECEMBER 31, 2020	$	892	$	1,410	$	(8)	$	2,294
Net income	Net income	—		92		—		92		Net income	—		100		—		100
Dividends to ITC Investment Holdings Inc.	Dividends to ITC Investment Holdings Inc.	—		(82)		—		(82)		Dividends to ITC Investment Holdings Inc.	—		(58)		—		(58)
Other comprehensive income, net of tax (Note 8)	Other comprehensive income, net of tax (Note 8)	—		—		1		1		Other comprehensive income, net of tax (Note 8)	—		—		1		1
BALANCE, SEPTEMBER 30, 2020		$	892	$	1,391	$	(9)	$	2,274
BALANCE, MARCH 31, 2021										BALANCE, MARCH 31, 2021	$	892	$	1,452	$	(7)	$	2,337

BALANCE, DECEMBER 31, 2020		$	892	$	1,410	$	(8)	$	2,294

BALANCE, DECEMBER 31, 2021										BALANCE, DECEMBER 31, 2021	$	892	$	1,584	$	(2)	$	2,474

Net income	Net income	—		100		—		100		Net income	—		106		—		106
Dividends to ITC Investment Holdings Inc.	Dividends to ITC Investment Holdings Inc.	—		(58)		—		(58)		Dividends to ITC Investment Holdings Inc.	—		(64)		—		(64)

Other comprehensive income, net of tax (Note 8)	Other comprehensive income, net of tax (Note 8)	—		—		1		1		Other comprehensive income, net of tax (Note 8)	—		—		16		16
BALANCE, MARCH 31, 2021		892		1,452		(7)		2,337
Net income		—		102		—		102
Dividends to ITC Investment Holdings Inc.		—		(57)		—		(57)
Other comprehensive income, net of tax (Note 8)		—		—		1		1
BALANCE, JUNE 30, 2021		892		1,497		(6)		2,383
Net income		—		105		—		105
Dividends to ITC Investment Holdings Inc.		—		(59)		—		(59)
Other comprehensive income, net of tax (Note 8)		—		—		2		2
BALANCE, SEPTEMBER 30, 2021		$	892	$	1,543	$	(4)	$	2,431
BALANCE, MARCH 31, 2022										BALANCE, MARCH 31, 2022	$	892	$	1,626	$	14	$	2,532

See notes to condensed consolidated interim financial statements (unaudited).

Table of Contents

ITC HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		Nine months ended					Three months ended
		September 30,					March 31,
(In millions of USD)	(In millions of USD)	2021		2020		(In millions of USD)	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Net income	Net income	$	307	$	305	Net income	$	106	$	100
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	Depreciation and amortization expense	172		163		Depreciation and amortization expense	72		57
Recognition, refund and collection of revenue accruals and deferrals — including accrued interest	Recognition, refund and collection of revenue accruals and deferrals — including accrued interest	56		3		Recognition, refund and collection of revenue accruals and deferrals — including accrued interest	(37)		(26)
Deferred income tax expense	Deferred income tax expense	102		106		Deferred income tax expense	33		33
Allowance for equity funds used during construction	Allowance for equity funds used during construction	(22)		(19)		Allowance for equity funds used during construction	(9)		(7)
Share-based compensation	Share-based compensation	21		20		Share-based compensation	6		7
Other	Other	3		3		Other	5		1
Changes in assets and liabilities, exclusive of changes shown separately:	Changes in assets and liabilities, exclusive of changes shown separately:					Changes in assets and liabilities, exclusive of changes shown separately:
Accounts receivable	Accounts receivable	(24)		(11)		Accounts receivable	7		(6)

Accounts payable	Accounts payable	19		1		Accounts payable	5		(4)
Accrued compensation	Accrued compensation	(7)		(15)		Accrued compensation	(22)		(8)
Accrued interest	Accrued interest	13		18		Accrued interest	14		13
Accrued taxes	Accrued taxes	(26)		(30)		Accrued taxes	(9)		(9)
Net refund settlements and adjustments related to return on equity complaints	Net refund settlements and adjustments related to return on equity complaints	(6)		(65)		Net refund settlements and adjustments related to return on equity complaints	—		8
Other current and non-current assets and liabilities, net	Other current and non-current assets and liabilities, net	(16)		(12)		Other current and non-current assets and liabilities, net	(17)		(17)
Net cash provided by operating activities	Net cash provided by operating activities	592		467		Net cash provided by operating activities	154		142
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	Expenditures for property, plant and equipment	(626)		(569)		Expenditures for property, plant and equipment	(265)		(239)
Contributions in aid of construction		4		2

Other						Other	1		2
Net cash used in investing activities	Net cash used in investing activities	(622)		(567)		Net cash used in investing activities	(264)		(237)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt	Issuance of long-term debt	75		880		Issuance of long-term debt	150		—
Borrowings under revolving credit agreements	Borrowings under revolving credit agreements	852		1,145		Borrowings under revolving credit agreements	239		263
Borrowings under term loan credit agreements		—		275
Net issuance (repayment) of commercial paper		113		(200)

Net issuance of commercial paper						Net issuance of commercial paper	82		113

Repayments of revolving credit agreements	Repayments of revolving credit agreements	(811)		(1,347)		Repayments of revolving credit agreements	(298)		(229)
Repayment of term loan credit agreement		—		(400)

Dividends to ITC Investment Holdings Inc.	Dividends to ITC Investment Holdings Inc.	(174)		(247)		Dividends to ITC Investment Holdings Inc.	(64)		(58)
Refundable deposits from generators for transmission network upgrades		14		53
Repayment of refundable deposits from generators for transmission network upgrades		(38)		(6)
Settlement of interest rate swaps		—		(23)

Other	Other	(1)		(10)		Other	(1)		5
Net cash provided by financing activities	Net cash provided by financing activities	30		120		Net cash provided by financing activities	108		94
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		—		20
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH						NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(2)		(1)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period	CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period	6		6		CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period	7		6
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	$	6	$	26	CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	$	5	$	5

See notes to condensed consolidated interim financial statements (unaudited).

Table of Contents

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

1. GENERAL

ITC Holdings and its subsidiaries are engaged in the transmission of electricity in the United States. ITC Holdings is a wholly-owned subsidiary of ITC Investment Holdings. Fortis owns a majority indirect equity interest in ITC Investment Holdings, with GIC holding an indirect, passive, non-voting equity interest of 19.9%. Through our Regulated Operating Subsidiaries, we own, operate, maintain and invest in high-voltage electric transmission systems in Michigan’s Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma that transmit electricity from generating stations to local distribution facilities connected to our transmission systems.

Basis of Presentation

These condensed consolidated interim financial statements should be read in conjunction with the notes to the consolidated financial statements as of and for the year ended December 31, ~~2020~~2021 included in ITC Holdings’ annual report on Form 10-K for such period.

The accompanying condensed consolidated interim financial statements have been prepared using GAAP and with the instructions to Form 10-Q and Rule 10-01 of SEC Regulation S-X as they apply to interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These accounting principles require us to use estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from our estimates.

The condensed consolidated interim financial statements are unaudited but, in our opinion, include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim period. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.

~~Recent Developments Regarding the COVID-19 Pandemic~~

In March 2020, the World Health Organization declared COVID-19 a pandemic. Efforts to control the outbreak of COVID-19 have resulted in impacts to businesses and facilities in various industries around the world, such as operating restrictions and closures, and disruptions to the global economy and supply chains. The COVID-19 pandemic has and will continue to impact our customers throughout our operating footprint. To date, COVID-19 has not had a material impact on our net income. However, for 2020, beginning in April, we utilized various temporary cost saving measures related to operating expenses, including operation and maintenance expenses and general and administrative expenses, in an attempt to reduce costs for our customers that were collected through our Formula Rates.

The duration and cumulative impact on our operations from COVID-19 is unknown at this time and will ultimately depend on the duration and severity of the pandemic, the length of time that the various business restrictions are in effect, the impact of resurgences of COVID-19 cases and deaths in the United States, and the efficacy and distribution of COVID-19 vaccines. We are continuing to monitor developments involving our workforce, customers and suppliers and cannot predict whether COVID-19 will have a material impact on our consolidated results of operations, cash flows or financial condition. We are also monitoring the evolving situation and guidance from federal, state and local public health authorities. We continue to take steps to mitigate the potential risks to us and our employees posed by COVID-19, including enabling remote work arrangements for employees when appropriate, and are following government requirements to reduce the transmission of COVID-19.

2. REVENUE

Our total revenues are comprised of revenues which arise from three classifications including transmission services, other services, and Formula Rate true-up. As other services revenue is immaterial, it is presented in combination with transmission services on the condensed consolidated statements of comprehensive income.

Transmission Services

Through our Regulated Operating Subsidiaries, we generate nearly all our revenue from providing electric transmission services over our transmission systems. As independent transmission companies, our transmission services are provided and revenues are received based on our tariffs, as approved by the FERC. The transmission revenue requirements at our Regulated Operating Subsidiaries are set annually using Formula Rates and remain in effect for a one-year period. By updating the inputs to the formula and resulting rates on an annual basis, the revenues at our Regulated Operating Subsidiaries reflect changing operational data and financial performance, including the amount of network load on their

~~Table of Contents~~

transmission systems (for our MISO Regulated Operating Subsidiaries), operating expenses and additions to property, plant and equipment when placed in service, among other items.

We recognize revenue for transmission services over time as transmission services are provided to customers (generally using an output measure of progress based on transmission load delivered). Customers simultaneously receive and consume the benefits provided by the Regulated Operating Subsidiaries’ services. We recognize revenue in the amount to which we have the right to invoice because we have a right to consideration in an amount that corresponds directly with the value to the customer of performance completed to date. As billing agents, MISO and SPP independently bill our customers on a monthly basis and ~~collects~~collect fees for the use of our transmission systems. No component of the transaction price is allocated to unsatisfied performance obligations.

Transmission service revenue includes an estimate for unbilled revenues from service that has been provided but not billed by the end of an accounting period. Unbilled revenues are dependent upon a number of factors that require management’s judgment including estimates of transmission network load (for the MISO Regulated Operating Subsidiaries) and preliminary information provided by billing agents. Due to the seasonal

Table of Contents

fluctuations of actual load, the unbilled revenue amount generally increases during the spring and summer and decreases during the fall and winter. See Note 3 for information on changes in unbilled accounts receivable.

Other Services

Other services revenue consists of rental revenues, easement revenues, and amounts from providing ancillary services. A portion of other services revenue is treated as a revenue credit and reduces gross revenue requirement when calculating net revenue requirement under our Formula Rates. Total other services revenue for ~~each of~~ the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$2 million and~~ $1 ~~million respectively. Total other services revenue for each of the nine months ended September 30, 2021 and 2020 were $5 million and $4 million respectively.~~million.

Formula Rate True-Up

The true-up mechanism under our Formula Rates is considered an alternative revenue program of a rate-regulated utility given it permits our Regulated Operating Subsidiaries to adjust future rates in response to past activities or completed events in order to collect our actual revenue requirements under our Formula Rates. In accordance with our accounting policy, only the current year origination of the true-up is reported as a Formula Rate true-up. See “Cost-Based Formula Rates with True-Up Mechanism” in Note 4 for more information on our Formula Rates.

3. ACCOUNTS RECEIVABLE

The following table presents the components of accounts receivable on the condensed consolidated statements of financial position:


		September 30,		December 31,			March 31,		December 31,
(In millions of USD)	(In millions of USD)	2021		2020		(In millions of USD)	2022		2021
Trade accounts receivable	Trade accounts receivable	$	3	$	2	Trade accounts receivable	$	2	$	3
Unbilled accounts receivable	Unbilled accounts receivable	123		102		Unbilled accounts receivable	111		116

Other	Other	15		10		Other	12		9
Total accounts receivable	Total accounts receivable	$	141	$	114	Total accounts receivable	$	125	$	128

4. REGULATORY MATTERS

Cost-Based Formula Rates with True-Up Mechanism

The transmission revenue requirements at our Regulated Operating Subsidiaries are set annually using Formula Rates and remain in effect for a one-year period. By updating the inputs to the formula and resulting rates on an annual basis, the revenues at our Regulated Operating Subsidiaries reflect changing operational data and financial performance, including the amount of network load on their transmission systems (for our MISO Regulated Operating Subsidiaries), operating expenses and additions to property, plant and equipment when placed in service, among other items. The formula used to derive the rates does not require further action or FERC filings each year, although the formula inputs remain subject to legal challenge at the FERC. Our Regulated Operating Subsidiaries will continue to use the formula to calculate their respective annual revenue requirements unless the FERC determines the resulting rates to be unjust and unreasonable and another mechanism is determined by the FERC to be just and reasonable. See “Rate of Return on Equity Complaints” in

~~Table of Contents~~

Note 11 for detail on ROE matters for our MISO Regulated Operating Subsidiaries and “Incentive Adders for Transmission Rates” discussed herein.

The cost-based Formula Rates at our Regulated Operating Subsidiaries include a true-up mechanism that compares the actual revenue requirements of our Regulated Operating Subsidiaries to their billed revenues for each year to determine any over- or under-collection of revenue requirements. Revenue is recognized for services provided during each reporting period based on actual revenue requirements calculated using the formula. Our Regulated Operating Subsidiaries accrue or defer revenues to the extent that the actual revenue requirement for the reporting period is higher or lower, respectively, than the amounts billed relating to that reporting period. The amount of accrued or deferred revenues is reflected in future revenue requirements and thus flows through to customer bills within two years under the provisions of our Formula Rates.

Table of Contents

The net changes in regulatory assets and liabilities associated with our Regulated Operating Subsidiaries’ Formula Rate revenue accruals and deferrals, including accrued interest, were as follows during the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:


(In millions of USD)	Total
Net regulatory ~~assets~~liabilities as of December 31, ~~2020~~2021	$	50 (2)
Net collection of ~~2019~~2020 revenue deferrals and accruals, including accrued interest	~~(32)~~(2)
Net revenue ~~deferral for the nine months ended September 30, 2021~~accrual, including accrued interest	~~(24)~~39

Net regulatory ~~liabilities~~assets as of ~~September 30, 2021~~March 31, 2022	$	~~(6)~~35

Regulatory assets and liabilities associated with our Regulated Operating Subsidiaries’ Formula Rate revenue accruals and deferrals, including accrued interest, are recorded in the condensed consolidated statements of financial position as follows:


		September 30,		December 31,			March 31,		December 31,
(In millions of USD)	(In millions of USD)	2021		2020		(In millions of USD)	2022		2021
Current regulatory assets	Current regulatory assets	$	26	$	44	Current regulatory assets	$	17	$	20
Non-current regulatory assets	Non-current regulatory assets	12		19		Non-current regulatory assets	47		10
Current regulatory liabilities	Current regulatory liabilities	(10)		(1)		Current regulatory liabilities	(14)		(13)
Non-current regulatory liabilities	Non-current regulatory liabilities	(34)		(12)		Non-current regulatory liabilities	(15)		(19)
Net regulatory (liabilities) assets		$	(6)	$	50
Net regulatory assets (liabilities)						Net regulatory assets (liabilities)	$	35	$	(2)

ROE and Incentive Adders for Transmission Rates

The FERC has authorized the use of ROE incentives, or adders, that can be applied to the rates of TOs when certain conditions are met. Our MISO Regulated Operating Subsidiaries and ITC Great Plains utilize ROE adders related to independent transmission ownership and RTO participation. The FERC issued a NOPR on March 20, 2020, and issued a supplemental NOPR on April 15, 2021, proposing to update its transmission incentives policy. As of March 31, 2022, no final determination had been made on these NOPRs and we cannot predict whether this will have a material impact on us.

MISO Regulated Operating Subsidiaries

~~On April 20, 2018, Consumers Energy, IP&L, Midwest Municipal Transmission Group, Missouri River Energy Services, Southern Minnesota Municipal Power Agency~~For the three months ended March 31, 2022 and ~~WPPI Energy filed a complaint with~~2021, the ~~FERC under section 206 of the FPA, challenging the adders for independent transmission ownership that are included in transmission rates charged~~authorized ROE used by the MISO Regulated Operating ~~Subsidiaries. The adders for independent transmission ownership allowed up to 50 basis points or 100 basis points to be added to the MISO Regulated Operating Subsidiaries’ authorized~~Subsidiaries was 10.77% and is composed of a base ROE ~~subject to any ROE cap established by the FERC. On October 18, 2018, the FERC issued an order granting the complaint in part, setting revised adders for independent transmission ownership for each~~ of the MISO Regulated Operating Subsidiaries to 25 basis points, and requiring the MISO Regulated Operating Subsidiaries to include the revised adders, effective April 20, 2018, in their Formula Rates. On September 11, 2019, the MISO Regulated Operating Subsidiaries filed an appeal of the FERC’s order in the D.C. Circuit Court and on February 19, 2021, the appeal was denied. As a result, the FERC’s October 18, 2018 order was upheld without further impact on our financial condition, consolidated results of operations or cash flows.

~~For the three and nine months ended September 30, 2021 and 2020, the authorized incentive adders for the MISO Regulated Operating Subsidiaries included~~10.02% with a 25 basis point adder for independent transmission ownership and a 50 basis point adder for RTO participation. See “Rate of Return on Equity Complaints” in Note 11 for ~~information regarding~~a discussion of the MISO ROE ~~Complaints and the associated impact to the base ROE of our MISO Regulated Operating Subsidiaries.~~

~~Table of Contents~~

Complaints.

ITC Great Plains

~~On June 11, 2019, KCC filed a complaint with~~For the FERC under section 206 of the FPA, challenging the adder for independent transmission ownership that is included in the transmission rate charged by ITC Great Plains. The adder for independent transmission ownership allowed up to 100 basis points to be added to the ITC Great Plains authorized ROE, subject to any ROE cap established by the FERC. On July 16, 2020, the FERC issued an order granting the complaint, setting the revised adder for independent transmission ownership for ITC Great Plains to 25 basis points,three months ended March 31, 2022 and requiring ITC Great Plains to include the revised adder, effective June 11, 2019, in their Formula Rate. In addition, the order directed ITC Great Plains to provide refunds, with interest, for the period from June 11, 2019 through July 16, 2020. During the fourth quarter of 2020, refunds of $4 million were made to settle the refund liability. ITC Great Plains filed appeals in the D.C. Circuit Court for the various FERC orders in the proceedings for ITC Great Plains. On March 4, 2021, these appeals were dismissed following a motion for voluntary dismissal by ITC Great Plains in response to the denial of the appeal of the FERC’s order to reduce the adder for independent transmission ownership for each of the MISO Regulated Operating Subsidiaries. The dismissal of the appeals did not result in additional impacts to our consolidated results of operations, cash flows or financial condition.

~~Prior to the issuance of the FERC order on July 16, 2020,~~ the authorized ROE used by ITC Great Plains was 12.16% and was composed of a base ROE of 10.66% with a 100 basis point adder for independent transmission ownership and a 50 basis point adder for RTO participation. Based on the July 16, 2020 order, the authorized ROE used by ITC Great Plains was revised to 11.41% and is composed of a base ROE of 10.66% with a 25 basis point adder for independent transmission ownership and a 50 basis point adder for RTO participation.

Depreciation Rate ~~of Return~~Filings

~~See “Rate of Return on Equity Complaints”~~January 1, 2022, which will result in ~~Note 11 for a discussion of~~higher revenue as the ~~MISO ROE Complaints.~~increase in depreciation expense flows through to customer bills.

5. DEBT

ITC Holdings

Commercial Paper Program

ITC Holdings has an ongoing commercial paper program for the issuance and sale of unsecured commercial paper in an aggregate amount not to exceed $400 million outstanding at any one time. Borrowings under ITC Holdings’ $400 million revolving credit facility may be used to repay the notes under the commercial paper

Table of Contents

program, if necessary. As of ~~September 30, 2021,~~March 31, 2022, ITC Holdings had ~~$180~~$237 million of commercial paper issued and outstanding under the program, with a weighted-average interest rate of ~~0.2%~~1.1% and weighted-average remaining days to maturity of 3943 days. The amount outstanding as of ~~September 30, 2021~~March 31, 2022 was classified as debt maturing within one year in the condensed consolidated statements of financial position. As of December 31, ~~2020~~2021 ITC Holdings had ~~$67~~$155 million of commercial paper issued and outstanding.

~~METC~~ITCTransmission

~~Senior Secured Notes~~First Mortgage Bonds

On ~~August 3, 2021, METC~~January 14, 2022, ITCTransmission issued ~~$75~~$130 million of ~~2.90%~~aggregate principal amount of 2.93% First Mortgage Bonds, Series ~~A Senior Secured Notes,~~J, due ~~August 3, 2051.~~January 14, 2052. The proceeds ~~from~~were used to repay existing indebtedness under the revolving credit agreement and intercompany loan agreement and will also be used to partially fund capital expenditures and for general corporate purposes. ITCTransmission also issued an additional $20 million of aggregate principal amount of 2.93% First Mortgage Bonds, Series ~~A Senior Secured Notes~~I, due January 14, 2052, the proceeds of which are expected to fund or refinance a portfolio of eligible renewable energy projects based on the green bond framework established by ITC Holdings. METC has an additional $75 million delayed draw of 3.05% Series B Senior Secured Notes in May 2022 with a due date 30 years from the date of issuance. The proceeds from the Series B Senior Secured Notes are expected to be used to repay borrowings under the METC revolving credit agreement, to partially fund capital expenditures and for general corporate purposes. All of ~~METC’s Senior Secured Notes~~ITCTransmission’s First Mortgage Bonds are issued under its ~~first mortgage indenture~~First Mortgage and Deed of Trust and secured by a first mortgage lien on substantially all of its real property and tangible personal property.

Derivative Instruments and Hedging Activities

We have entered into an interest rate ~~swap~~swaps to manage interest rate risk associated with the forecasted future issuance of fixed-rate debt at ITC Holdings, the proceeds of which will be used for the expected repayment of the ITC Holdings 2.70% Senior Notes, due November 15, 2022. At ~~September 30, 2021,~~March 31, 2022, ITC Holdings had the following interest rate ~~swap:~~swaps:

~~Table of Contents~~

Interest Rate Swaps
(in millions of USD, except percentages)

Notional Amount

Weighted Average Fixed Rate

Original Term

Effective Date

Interest Rate Swaps
(in millions of USD, except percentages)

Notional Amount

Weighted Average Fixed Rate

Benchmark Rate

Interest Received

Interest Paid

July 2021 swap

1.113%

5 years

November 2022

July 2021 swap

1.113%

LIBOR

Quarterly

Semi-annually

November 2021 swap

1.581%

LIBOR

Quarterly

Semi-annually

November 2021 swap

1.492%

LIBOR

Quarterly

Semi-annually

November 2021 swap

1.497%

LIBOR

Quarterly

Semi-annually

November 2021 swap

1.544%

LIBOR

Quarterly

Semi-annually

December 2021 swap

1.560%

LIBOR

Quarterly

Semi-annually

December 2021 swap

1.489%

LIBOR

Quarterly

Semi-annually

December 2021 swap

1.475%

LIBOR

Quarterly

Semi-annually

March 2022 swap

1.546%

SOFR

Semi-annually

Annually

March 2022 swap

1.533%

SOFR

Semi-annually

Annually

Total

450

1.483%

The ~~5-year term~~ interest rate ~~swap calls~~swaps call for ITC Holdings to receive interest, either quarterly or semi-annually, at a variable rate equal to LIBOR or SOFR and to pay interest, either semi-annually or annually, at avarious fixed ~~rate~~rates effective for the 5-year period beginning November 15, 2022. The ~~agreement includes a~~transactions include mandatory early termination ~~provision~~provisions and will be terminated no later than the effective date of the interest rate ~~swap~~swaps of November 15, 2022. The interest rate ~~swap has~~swaps have been determined to be highly effective at offsetting changes in the fair value of the forecasted interest cash flows associated with the debt issuance, resulting from changes in benchmark interest rates from the trade date of the interest rate swaps to the issuance date of the debt obligation.

The interest rate ~~swap qualifies~~swaps qualify for cash flow hedge accounting treatment, whereby any gain or loss recognized from the trade date to the effective date is recorded net of tax in AOCI. This amount will be accumulated and amortized as a component of interest expense over the life of the forecasted debt. As of ~~September 30, 2021,~~March 31, 2022, the fair value of the derivative instruments of $23 million was ~~an asset~~recorded in prepaid and other current assets in the condensed consolidated statements of ~~$1 million.~~financial position. The interest rate ~~swap does~~swaps do not contain credit-risk-related contingent features. Refer to Note 7 for additional fair value information. ITC Holdings had interest rate swaps outstanding with a total notional amount of $375 million at December 31, 2021.

Table of Contents

Revolving Credit Agreements

On May 17, 2021, ITC Holdings, ITCTransmission, METC, ITC Midwest and ITC Great Plains amended their respective revolving credit agreements each dated October 23, 2017, as previously amended and restated on January 10, 2020. The amendments extend the maturity date of the revolving credit agreements from October 2023 to October 2024. The determination of the applicable interest rates and commitment fee rates in the new agreements is consistent with the previous agreements and remains subject to adjustment based on the borrower’s credit rating. At ~~September 30, 2021,~~March 31, 2022, ITC Holdings and certain of its Regulated Operating Subsidiaries had the following unsecured revolving credit facilities available:


(In millions of USD, except percentages)	(In millions of USD, except percentages)	Total Available Capacity		Outstanding Balance (a)		Unused Capacity			Weighted Average Interest Rate on Outstanding Balance (b)	Commitment Fee Rate (c)		(In millions of USD, except percentages)	Total Available Capacity		Outstanding Balance (a)		Unused Capacity			Weighted Average Interest Rate on Outstanding Balance (b)	Commitment Fee Rate (c)
ITC Holdings	ITC Holdings	$	400	$	—	$	400	(d)	—%	0.175	%	ITC Holdings	$	400	$	—	$	400	(d)	—%	0.175	%
ITC Transmission	ITC Transmission	100		80		20			1.1%	0.10	%	ITC Transmission	100		17		83			1.5%	0.10	%
METC	METC	100		6		94			1.1%	0.10	%	METC	100		60		40			1.5%	0.10	%
ITC Midwest	ITC Midwest	225		120		105			1.1%	0.10	%	ITC Midwest	225		164		61			1.5%	0.10	%
ITC Great Plains	ITC Great Plains	75		33		42			1.1%	0.10	%	ITC Great Plains	75		29		46			1.5%	0.10	%
Total	Total	$	900	$	239	$	661					Total	$	900	$	270	$	630

____________________________

(a)Included within long-term debt in the condensed consolidated statements of financial position.

(b)Interest charged on borrowings depends on the variable rate structure we elected at the time of each borrowing.

(c)Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating.

(d)ITC Holdings’ revolving credit agreement may be used for general corporate purposes, including to repay commercial paper issued pursuant to the commercial paper program described above, if necessary. While outstanding commercial paper does not reduce available capacity under ITC Holdings’ revolving credit agreement, the unused capacity under this agreement adjusted for the commercial paper outstanding was ~~$220~~$163 million as of ~~September 30, 2021.~~March 31, 2022.

6. RETIREMENT BENEFITS AND ASSETS HELD IN TRUST

Pension Plan Benefits

We have a qualified defined benefit pension plan (the “retirement plan”) for eligible employees, comprised of a traditional final average pay plan and a cash balance plan. The traditional final average pay plan is noncontributory, covers select employees, and provides retirement benefits based on years of benefit service, average final compensation and age at retirement. The cash balance plan is also noncontributory, covers substantially all employees and provides retirement benefits based on eligible compensation and interest credits. Our funding practice for the retirement plan is generally to fund the annual net pension cost, though we may contribute additional amounts as necessary to meet the minimum funding

~~Table of Contents~~

requirements of the Employee Retirement Income Security Act of 1974 or as we deem appropriate. ~~During the nine months ended September 30, 2021, we contributed $4~~We expect to contribute $3 million to the retirement ~~plan. We do not expect to make any additional contributions to this~~ plan in ~~2021.~~2022.

We also have two supplemental nonqualified, noncontributory, defined benefit pension plans for selected management employees (the “supplemental benefit plans” and, collectively with the retirement plan, the “pension plans”). The supplemental benefit plans provide for benefits that supplement those provided by the retirement plan. ~~During the nine months ended September 30, 2021, we contributed $3 million to the supplemental benefit plans.~~ We do not expect to ~~make any additional contributions~~contribute to ~~these~~the supplemental benefit plans in ~~2021.~~2022.

Net periodic benefit cost for the pension plans, by component, was as follows:


		Three months ended				Nine months ended					Three months ended
		September 30,				September 30,					March 31,
(In millions of USD)	(In millions of USD)	2021		2020		2021		2020		(In millions of USD)	2022		2021
Service cost	Service cost	$	2	$	1	$	7	$	5	Service cost	$	2	$	2
Interest cost	Interest cost	1		1		2		3		Interest cost	1		1
Expected return on plan assets	Expected return on plan assets	(1)		(2)		(4)		(4)		Expected return on plan assets	(1)		(1)

Amortization of unrecognized loss		—		1		1		1

Net pension cost	Net pension cost	$	2	$	1	$	6	$	5	Net pension cost	$	2	$	2

The components of net pension cost other than the service cost component are included in Other expenses (income) ~~and expenses,~~, net in the condensed consolidated statements of comprehensive income.

Table of Contents

Other Postretirement Benefits

We provide certain postretirement health care, dental and life insurance benefits for eligible employees. ~~During the nine months ended September 30, 2021, we contributed $6 million to the postretirement benefit plan.~~ We expect to ~~make additional contributions of $2~~contribute $7 million to the postretirement benefit plan ~~during the fourth quarter of 2021.~~in 2022.

Net postretirement benefit plan cost, by component, was as follows:


		Three months ended				Nine months ended					Three months ended
		September 30,				September 30,					March 31,
(In millions of USD)	(In millions of USD)	2021		2020		2021		2020		(In millions of USD)	2022		2021
Service cost	Service cost	$	3	$	3	$	8	$	8	Service cost	$	3	$	2
Interest cost	Interest cost	—		1		2		3		Interest cost	1		1
Expected return on plan assets	Expected return on plan assets	(1)		(1)		(4)		(3)		Expected return on plan assets	(2)		(1)

Net postretirement cost	Net postretirement cost	$	2	$	3	$	6	$	8	Net postretirement cost	$	2	$	2

The components of net postretirement cost other than the service cost component are included in Other expenses (income) ~~and expenses,~~, net in the condensed consolidated statements of comprehensive income.

Defined Contribution Plan

We also sponsor a defined contribution retirement savings plan. Participation in this plan is available to substantially all employees. We match employee contributions up to certain predefined limits based upon eligible compensation and the employee’s contribution rate. The cost of this plan was $1$3 million for each of the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020, and $5 million for each of the nine months ended September 30, 2021 and 2020.~~2021.

7. FAIR VALUE MEASUREMENTS

The measurement of fair value is based on a three-tier hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. For the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and the year ended December 31, ~~2020,~~2021, there were no transfers between levels.

~~Table of Contents~~

Our assets are measured at fair value subject to the three-tier hierarchy at ~~September 30, 2021,~~March 31, 2022, were as follows:


		Fair Value Measurements at Reporting Date Using							Fair Value Measurements at Reporting Date Using
		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In millions of USD)	(In millions of USD)	(Level 1)		(Level 2)		(Level 3)		(In millions of USD)	(Level 1)		(Level 2)		(Level 3)
Financial assets measured on a recurring basis:	Financial assets measured on a recurring basis:							Financial assets measured on a recurring basis:

Mutual funds — fixed income securities	Mutual funds — fixed income securities	$	52	$	—	$	—	Mutual funds — fixed income securities	$	48	$	—	$	—
Mutual funds — equity securities	Mutual funds — equity securities	12		—		—		Mutual funds — equity securities	12		—		—
Interest rate swap derivatives	Interest rate swap derivatives	—		1		—		Interest rate swap derivatives	—		23		—

Total	Total	$	64	$	1	$	—	Total	$	60	$	23	$	—

Table of Contents

Our assets measured at fair value subject to the three-tier hierarchy at December 31, ~~2020,~~2021, were as follows:


	~~Fair Value Measurements at Reporting Date Using~~
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
~~(In millions of USD)~~	~~(Level 1)~~		~~(Level 2)~~		~~(Level 3)~~
~~Financial assets measured on a recurring basis:~~
~~Cash equivalents~~	$	1	$	—	$	—
~~Mutual funds — fixed income securities~~	52		—		—
~~Mutual funds — equity securities~~	10		—		—



~~Total~~	$	63	$	—	$	—


	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In millions of USD)	(Level 1)		(Level 2)		(Level 3)
Financial assets measured on a recurring basis:

Mutual funds — fixed income securities	$	51	$	—	$	—
Mutual funds — equity securities	12		—		—
Interest rate swap derivatives	—		2		—


Total	$	63	$	2	$	—

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we held certain assets that are required to be measured at fair value on a recurring basis. The assets included in the table consist of investments recorded within ~~cash and cash equivalents and~~ other long-term assets, including investments held in a trust associated with our supplemental benefit plans described in Note 6. The mutual funds we own are publicly traded and are recorded at fair value based on observable trades for identical securities in an active market. Changes in the observed trading prices and liquidity of money market funds are monitored as additional support for determining fair value. Gains and losses for all mutual fund investments are recorded in ~~earnings.~~other operating income and expense.

~~The~~As of March 31, 2022, the assets related to derivatives consist of an interest rate ~~swap~~swaps as discussed in Note 5. The fair value of our interest rate swap derivatives is determined based on a DCF method using benchmark interest rates of LIBOR or SOFR swap rates, which are observable at commonly quoted intervals.

We also held non-financial assets that are required to be measured at fair value on a non-recurring basis. These consist of goodwill and intangible assets. We did not record any impairment charges on long-lived assets and no other significant events occurred requiring non-financial assets and liabilities to be measured at fair value (subsequent to initial recognition) during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Fair Value of Financial Assets and Liabilities

Fixed Rate Debt

Based on the borrowing rates obtained from third party lending institutions currently available for bank loans with similar terms and average maturities from active markets, the fair value of our consolidated long-term debt and debt maturing within one year, excluding revolving credit agreements and commercial paper, was ~~$7,063~~$6,482 million and ~~$7,119~~$6,995 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. These fair values represent Level 2 under the three-tier hierarchy described above. The total book value of our consolidated long-term debt and debt maturing within one year, net of discount and deferred financing fees and excluding revolving credit agreements and commercial paper, was ~~$6,175~~$6,328 million and ~~$6,097~~$6,179 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Revolving Credit Agreements

At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had a consolidated total of ~~$239~~$270 million and ~~$198~~$329 million, respectively, outstanding under our revolving credit agreements, which are variable rate loans. The fair value of these loans

~~Table of Contents~~

approximates book value based on the borrowing rates currently available for variable rate loans obtained from third party lending institutions. These fair values represent Level 2 under the three-tier hierarchy described above.

Other Financial Instruments

The carrying value of other financial instruments included in current assets and current liabilities, including cash and cash equivalents, special deposits and commercial paper, approximates their fair value due to the short-term nature of these instruments.

Table of Contents

8. STOCKHOLDER'S EQUITY

Accumulated Other Comprehensive Income (Loss)

The following table provides the components of changes in AOCI:


		Three months ended				Nine months ended					Three months ended
		September 30,				September 30,					March 31,
(In millions of USD)	(In millions of USD)	2021		2020		2021		2020		(In millions of USD)		2022		2021
Balance at the beginning of period	Balance at the beginning of period	$	(6)	$	(10)	$	(8)	$	7	Balance at the beginning of period		$	(2)	$	(8)
Derivative instruments	Derivative instruments									Derivative instruments
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to earnings (net of tax of less than $1 for the three months ended September 30, 2021 and 2020, respectively, and $1 for the nine months ended September 30, 2021 and 2020, respectively) (a)		1		1		3		2
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to earnings (net of tax of less than $1 for the three months ended March 31, 2022 and 2021) (a)										Reclassification of net loss relating to interest rate cash flow hedges from AOCI to earnings (net of tax of less than $1 for the three months ended March 31, 2022 and 2021) (a)		1		1

Gain/(loss) on interest rate swaps relating to interest rate cash flow hedges (net of tax of less than $1 for the three months ended September 30, 2021 and less than $1 and $8 for the nine months ended September 30, 2021 and 2020, respectively)		1		—		1		(18)
Gain on interest rate swaps relating to interest rate cash flow hedges (net of tax of $6 for the three months ended March 31, 2022)										Gain on interest rate swaps relating to interest rate cash flow hedges (net of tax of $6 for the three months ended March 31, 2022)		15		—

Total other comprehensive income (loss), net of tax		2		1		4		(16)
Total other comprehensive income, net of tax										Total other comprehensive income, net of tax		16		1
Balance at the end of period	Balance at the end of period	$	(4)	$	(9)	$	(4)	$	(9)	Balance at the end of period		$	14	$	(7)

____________________________

(a)The reclassification of the net loss relating to interest rate cash flow hedges is reported in interest expense on a pre-tax basis.

The amount of net loss relating to interest rate cash flow hedges to be reclassified from AOCI to earnings for the 12-month period ending ~~September 30, 2022~~March 31, 2023 is expected to be approximately $4$3 million (net of tax of $2$1 million). The reclassification is reported in Interest expense, net in the condensed consolidated statements of comprehensive income on a pre-tax basis.

9. SHARE-BASED COMPENSATION

Long-Term Incentive Plans

In the first quarter of ~~2021, 281,516~~2022, 253,476 PBUs and ~~221,433~~197,926 SBUs were granted pursuant to our long-term incentive plans. Generally, each PBU and SBU granted is valued based on one share of Fortis common stock traded on the Toronto Stock Exchange, converted to U.S. dollars and settled only in cash. However, SBUs granted to the executives may settle in cash, 100% Fortis common stock, or 50% cash and 50% Fortis common stock depending on executives’ settlement elections and whether certain share ownership requirements are met. The awards are classified as liability awards and vest on the date specified in a particular grant agreement, provided the service and performance criteria, as applicable, are satisfied. The PBUs and SBUs earn dividend equivalents which are also re-measured and settled consistent with the target award at the end of the vesting period. The granted awards and related dividend equivalents have no shareholder rights.

The aggregate fair value of all outstanding PBUs and SBUs as of ~~September 30, 2021~~March 31, 2022 was ~~$64~~$56 million and ~~$29~~$30 million, respectively. At ~~September 30, 2021,~~March 31, 2022, the total unrecognized compensation cost related to the PBUs and SBUs was ~~$22~~$26 million and ~~$11~~$16 million, respectively.

~~Table of Contents~~

10. RELATED PARTY TRANSACTIONS

Intercompany Receivables and Payables

ITC Holdings may incur charges from Fortis and other subsidiaries of Fortis that are not subsidiaries of ITC Holdings for general corporate expenses incurred. In addition, ITC Holdings may perform additional services for, or receive additional services from, Fortis and such subsidiaries. These transactions are in the normal course of business and payments for these services are settled through accounts receivable and accounts payable, as necessary. We had intercompany receivables from Fortis and such subsidiaries of ~~$1 million and less than $1~~$2 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020, respectively.~~2021. At ~~September 30, 2021 we did not have any intercompany payables to Fortis~~March 31, 2022 and ~~such subsidiaries. At~~ December 31, ~~2020~~2021 we had intercompany payables to Fortis and such subsidiaries of less than $1 million.

Related party charges for corporate expenses from Fortis and such subsidiaries are recorded in general and administrative expenses in the condensed consolidated statements of comprehensive income. Such expense

Table of Contents

for each of the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ for ITC Holdings was $4 million and $3 million, ~~and for each of the nine months ended September 30, 2021 and 2020 was $8 million.~~respectively. Related party ~~billings~~charges for services to Fortis and other subsidiaries, recorded as an offset to general and administrative expenses for ITC Holdings, were ~~less than~~ $1 million for each of the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020, and $2 million and $1 million for the nine months ended September 30, 2021 and 2020, respectively.~~2021.

Dividends

During the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we paid dividends of ~~$174~~$64 million and ~~$247~~$58 million, respectively, to ITC Investment Holdings. We also paid dividends of ~~$58~~$64 million to ITC Investment Holdings in ~~October 2021.~~

~~Transfer of Membership Interests~~

In February 2021, we transferred our membership interests in certain wholly-owned development entities to our parent company, ITC Investment Holdings. The transfer was accounted for at book value as a non-reciprocal transfer of value. There was no gain or loss recognized on the transfer. The transfer did not have a material impact on our consolidated results of operations, cash flows or financial condition.

~~Intercompany Tax Sharing Agreement~~

We are organized as a corporation for tax purposes and subject to a tax sharing agreement as a wholly-owned subsidiary of ITC Investment Holdings. Additionally, we record income taxes based on our separate company tax position and make or receive tax-related payments with ITC Investment Holdings. During the nine months ended September 30, 2021 we did not make or receive any tax-related payments with ITC Investment Holdings. During the nine months ended September 30, 2020 we paid $2 million to ITC Investment Holdings for matters related to the State of Michigan income taxes.

~~During the nine months ended September 30, 2020 we received $2 million from FortisUS for a tax refund that originated prior to establishing a tax sharing agreement.~~April 2022.

11. COMMITMENTS AND CONTINGENT LIABILITIES

Environmental Matters

We are subject to federal, state and local environmental laws and regulations, which impose limitations on the discharge of pollutants into the environment, require reporting of emissions from certain equipment, establish standards for the management, treatment, storage, transportation and disposal of hazardous materials and of solid and hazardous wastes, and impose obligations to investigate and remediate contamination in certain circumstances. Liabilities relating to investigation and remediation of contamination, as well as other liabilities concerning hazardous materials or contamination, such as claims for personal injury or property damage, may arise at many locations, including formerly owned or operated properties and sites where wastes have been treated or disposed of, as well as properties currently owned or operated by us. Such liabilities may arise even where the contamination does not result from noncompliance with applicable environmental laws. Under some environmental laws, such liabilities may also be joint and several, meaning that a party can be held responsible for more than its share of the liability involved, or even the entire share. Although environmental requirements generally have become more stringent and compliance with those requirements more expensive, we are not aware of any specific developments that would increase our costs for such compliance in a manner that would be expected to have a material adverse effect on our financial condition, results of operations ~~financial condition~~ or liquidity.

~~Table of Contents~~

Our assets and operations also involve the use of materials classified as hazardous, toxic or otherwise dangerous. Some of the properties that we own or operate have been used for many years and include older facilities and equipment that may be more likely than newer ones to contain or be made from such materials. Some of these properties include above ground or underground storage tanks and associated piping. Some of them also include large electrical equipment filled with mineral oil, which may contain or previously have contained PCBs. Some of our facilities and electrical equipment may also contain asbestos containing materials. Our facilities and equipment are often situated close to or on property owned by others so that, if they are the source of contamination, the property of others may be affected. For example, above ground and underground transmission lines sometimes traverse properties that we do not own and transmission assets that we own or operate are sometimes commingled at our transmission stations with distribution assets owned or operated by our transmission customers.

Some properties in which we have an ownership interest or at which we operate are, or are suspected of being, affected by environmental contamination. We are not aware of any pending or threatened claims against us with respect to environmental contamination relating to these properties, or of any investigation or remediation of contamination at these properties, that entail costs likely to materially affect us. Some facilities and properties are located near environmentally sensitive areas, including wetlands and habitat for threatened and endangered species.

Litigation

We are involved in certain legal proceedings before various courts, governmental agencies and mediation panels concerning matters arising in the ordinary course of business. These proceedings include certain contract disputes, eminent domain and vegetation management activities, regulatory matters and pending judicial matters. We cannot predict the final disposition of such proceedings. We regularly review legal matters and record provisions for claims that are considered probable of loss.

Table of Contents

Rate of Return on Equity Complaints

Two complaints were filed with the FERC by combinations of consumer advocates, consumer groups, municipal parties and other parties challenging the base ROE in MISO. The complaints were filed with the FERC under Section 206 of the FPA requesting that the FERC find the MISO regional base ROE rate (the “base ROE”) for all MISO TO’s, including our MISO Regulated Operating Subsidiaries, to no longer be just and reasonable.

Initial Complaint

On November 12, 2013, the Association of Businesses Advocating Tariff Equity, Coalition of MISO Transmission Customers, Illinois Industrial Energy Consumers, Indiana Industrial Energy Consumers, Inc., Minnesota Large Industrial Group and Wisconsin Industrial Energy Group (collectively, the “complainants”) filed the Initial Complaint with the FERC. The complainants sought a FERC order to reduce the base ROE used in the formula transmission rates for our MISO Regulated Operating Subsidiaries to 9.15%, reducing the equity component of our capital structure and terminating the ROE adders approved for certain Regulated Operating Subsidiaries. The FERC set the base ROE for hearing and settlement procedures, while denying all other aspects of the Initial Complaint. The ROE collected through the MISO Regulated Operating Subsidiaries’ rates during the period November 12, 2013 through September 27, 2016 consisted of a base ROE of 12.38% plus applicable incentive adders.

On September 28, 2016, the FERC issued the September 2016 Order that set the base ROE at 10.32%, with a maximum ROE of 11.35%, effective for the period from November 12, 2013 through February 11, 2015 based on a two-step DCF methodology adopted in previous complaint matters for other utilities. The September 2016 Order required our MISO Regulated Operating Subsidiaries to provide refunds, including interest, which were completed in 2017. Additionally, the base ROE established by the September 2016 Order was to be used prospectively from the date of that order until a new approved base ROE was established by the FERC. On October 28, 2016, the MISO TOs, including our MISO Regulated Operating Subsidiaries, filed a request with the FERC for rehearing of the September 2016 Order regarding the short-term growth projections in the two-step DCF analysis. Additional impacts to the base ROE for the period of the Initial Complaint and the related accrued refund liabilities resulted from the November 2019 Order and May 2020 Order issued by the FERC, as discussed below.

Second Complaint

On February 12, 2015, the Second Complaint was filed with the FERC by Arkansas Electric Cooperative Corporation, Mississippi Delta Energy Agency, Clarksdale Public Utilities Commission, Public Service Commission of Yazoo City and Hoosier Energy Rural Electric Cooperative, Inc., seeking a FERC order to reduce the base ROE used in the formula transmission rates of our MISO Regulated Operating Subsidiaries to 8.67%, with an effective date of February 12, 2015.

~~Table of Contents~~

On June 30, 2016, the presiding ALJ issued an initial decision that recommended a base ROE of 9.70% for the refund period from February 12, 2015 through May 11, 2016, with a maximum ROE of 10.68%, which also would be applicable going forward from the date of a final FERC order. The Second Complaint was dismissed as a result of the November 2019 Order and the dismissal of the complaint was reaffirmed in the May 2020 Order, as discussed below.

November 2019 Order

On November 21, 2019, the FERC issued an order in the MISO ROE Complaints which applied a methodology to the Initial Complaint period that used two financial models to determine the base ROE. The FERC determined that the base ROE for the Initial Complaint should be 9.88% and the top of the range of reasonableness for that period should be 12.24% and that this base ROE should apply during the first refund period of November 12, 2013 to February 11, 2015 and from the date of the September 2016 Order prospectively. In the November 2019 Order, the FERC also dismissed the Second Complaint. Therefore, based on the November 2019 Order, for the Second Complaint refund period from February 12, 2015 to May 11, 2016, no refund is due. As a result, in 2019, we reversed the aggregate estimated current liability we had previously recorded for the Second Complaint. In addition, for the period from May 12, 2016 to September 27, 2016, no refund is due because no complaint had been filed for that period. The FERC ordered refunds to be made in accordance with the November 2019 Order. The MISO TOs, including our MISO Regulated Operating

Table of Contents

Subsidiaries, and several other parties filed requests for rehearing of the November 2019 Order. The MISO TOs asserted that the methodology applied by the FERC in the November 2019 Order does not allow the MISO TOs to earn a reasonable rate of return on their investment, as required by precedent. On January 21, 2020, the FERC issued an order granting rehearing of the November 2019 Order for further consideration.

May 2020 Order

On May 21, 2020, the FERC issued an order on rehearing of the November 2019 Order. In this order, the FERC revised its November 2019 Order methodology, finding that three financial models should be used to determine the base ROE, among other revisions. By applying the new methodology, the FERC determined that the base ROE for the Initial Complaint should be 10.02% and the top of the range of reasonableness for that period should be 12.62%. The FERC determined that this base ROE should apply during the first refund period of November 12, 2013 to February 11, 2015 and from the date of the September 2016 Order prospectively. The FERC ordered refunds to be made in accordance with the May 2020 ~~Order by December 23, 2020. On October 8, 2020,~~Order. Refund settlements were finalized during the ~~FERC granted an extension to September 23, 2021 and on August 2, 2021 the FERC granted a second extension to February 28,~~three months ended March 31, 2022. In the May 2020 Order, the FERC also reaffirmed its decision to dismiss the Second Complaint and its finding that no refunds would be ordered on the Second Complaint. Our MISO Regulated Operating Subsidiaries are parties to multiple appeals of the September 2016 Order, November 2019 Order and May 2020 Order at the D.C. Circuit Court.

Financial Statement Impacts

~~The following amounts were~~As of December 31, 2021, we had recorded an aggregate current regulatory asset and liability of $1 million and less than $1 million, respectively, in the ~~condensed~~ consolidated statements of financial ~~position related to the MISO ROE complaints:~~

September 30, December 31,
(In millions of USD) 2021 2020
Current regulatory assets $ 1 $ 8
Current regulatory liabilities — 13
Accounts receivable 1 —
Accounts payable 13 —

position. These impacts reflect amounts owed from or due to customers under the terms outlined in the May 2020 Order and the November 2019 Order on the Initial Complaint and the periods subsequent to the September 2016 Order. During the ~~nine~~three months ended ~~September 30,~~March 31, 2022, we settled the remaining regulatory assets and liabilities and, as of March 31, 2022, there are no remaining regulatory assets or liabilities recorded related to this matter. During the three months ended March 31, 2021, we received net settlement payments of $6$8 million owed from customers related to this ROE matter and during the nine months ended September 30, 2020, we refunded net settlement payments of $31 million due to customers related to this ROE matter. In October 2021, we refunded net settlement payments of $12 million due to customers related to this ROE matter.

Although the November 2019 Order and May 2020 Order dismissed the Second Complaint with no refunds required, it is possible upon resolution of the pending ~~appeal~~appeals that our MISO Regulated Operating Subsidiaries could be required to

~~Table of Contents~~

provide material refunds related to the Second Complaint. ~~As of December 31, 2018, we had recorded an estimated regulatory liability of $151 million for the Second Complaint which was reversed following the November 2019 Order.~~

Our MISO Regulated Operating Subsidiaries currently record revenues at the base ROE of 10.02% established in the May 2020 Order plus applicable ROE incentive adders. See Note 4 for a summary of incentive adders for transmission rates.

~~The recognition of the obligations associated with the MISO ROE Complaints resulted in the following impacts to the condensed consolidated statements of comprehensive income:~~

Three months ended Nine months ended
September 30, September 30,
(In millions of USD) 2021 2020 2021 2020
Revenue increase $ — $ — $ — $ 32
Interest expense decrease — — — (3)
Estimated net income (decrease) increase — (1) — 24

As of ~~September 30, 2021,~~March 31, 2022, our MISO Regulated Operating Subsidiaries had a total of approximately $5 billion of equity in their collective capital structures for ratemaking purposes. Based on this level of aggregate equity, we estimate that each 10 basis point change in the authorized ROE would impact annual consolidated net income by approximately $5 million.

12. SUPPLEMENTAL FINANCIAL INFORMATION

Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the condensed consolidated statements of financial position that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:


		September 30,				December 31,					March 31,				December 31,
(In millions of USD)	(In millions of USD)	2021		2020		2020		2019		(In millions of USD)	2022		2021		2021		2020
Cash and cash equivalents	Cash and cash equivalents	$	3	$	22	$	4	$	4	Cash and cash equivalents	$	3	$	3	$	5	$	4
Restricted cash included in:	Restricted cash included in:									Restricted cash included in:
Other non-current assets	Other non-current assets	3		4		2		2		Other non-current assets	2		2		2		2
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	6	$	26	$	6	$	6	Total cash, cash equivalents and restricted cash	$	5	$	5	$	7	$	6

Restricted cash included in other non-current assets primarily represents cash on deposit to pay for vegetation management, land easements and land purchases for the purpose of transmission line construction as well as amounts liquidated to make benefit payments related to our supplemental benefit plans.

2019

Table of Contents

Supplementary Cash Flows Information


		Nine months ended					Three months ended
		September 30,					March 31,
(In millions of USD)	(In millions of USD)	2021		2020		(In millions of USD)	2022		2021
Supplementary cash flows information:	Supplementary cash flows information:					Supplementary cash flows information:

Interest paid (net of interest capitalized)	Interest paid (net of interest capitalized)	$	165	$	164	Interest paid (net of interest capitalized)	$	47	$	44
Income taxes paid		—		2
Income tax refunds received		—		2

Supplementary non-cash investing and financing activities:	Supplementary non-cash investing and financing activities:					Supplementary non-cash investing and financing activities:
Additions to property, plant and equipment and other long-lived assets (a)	Additions to property, plant and equipment and other long-lived assets (a)	108		127		Additions to property, plant and equipment and other long-lived assets (a)	118		111

Allowance for equity funds used during construction	Allowance for equity funds used during construction	22		19		Allowance for equity funds used during construction	9		7

____________________________

(a)Amounts consist of current and accrued liabilities for construction, labor, materials and other costs that have not been included in investing activities. These amounts have not been paid for as of ~~September 30,~~March 31, 2022 or 2021, ~~or 2020,~~ respectively, but will be or have been included as a cash outflow from investing activities for expenditures for property, plant and equipment or repayments of contributions in aid of construction when paid.

13. SEGMENT INFORMATION

We identify reportable segments based on the criteria set forth by the FASB regarding disclosures about segments of an enterprise, including the regulatory environment of our subsidiaries and the business activities performed to earn revenues and incur expenses. The following tables show our financial information by reportable segment:


		Three months ended				Nine months ended					Three months ended
OPERATING REVENUES:	OPERATING REVENUES:	September 30,				September 30,				OPERATING REVENUES:	March 31,
(In millions of USD)	(In millions of USD)	2021		2020		2021		2020		(In millions of USD)		2022		2021
Regulated Operating Subsidiaries	Regulated Operating Subsidiaries	$	349	$	321	$	1,045	$	1,002	Regulated Operating Subsidiaries		$	374	$	346

Intercompany eliminations	Intercompany eliminations	(9)		(9)		(27)		(26)		Intercompany eliminations		(9)		(10)
Total Operating Revenues	Total Operating Revenues	$	340	$	312	$	1,018	$	976	Total Operating Revenues		$	365	$	336


		Three months ended				Nine months ended					Three months ended
INCOME (LOSS) BEFORE INCOME TAXES:	INCOME (LOSS) BEFORE INCOME TAXES:	September 30,				September 30,				INCOME (LOSS) BEFORE INCOME TAXES:	March 31,
(In millions of USD)	(In millions of USD)	2021		2020		2021		2020		(In millions of USD)		2022		2021
Regulated Operating Subsidiaries	Regulated Operating Subsidiaries	$	178	$	163	$	522	$	514	Regulated Operating Subsidiaries		$	180	$	171
ITC Holdings and other	ITC Holdings and other	(38)		(39)		(113)		(105)		ITC Holdings and other		(40)		(38)
Total Income Before Income Taxes	Total Income Before Income Taxes	$	140	$	124	$	409	$	409	Total Income Before Income Taxes		$	140	$	133


		Three months ended				Nine months ended					Three months ended
NET INCOME:	NET INCOME:	September 30,				September 30,				NET INCOME:	March 31,
(In millions of USD)	(In millions of USD)	2021		2020		2021		2020		(In millions of USD)		2022		2021
Regulated Operating Subsidiaries	Regulated Operating Subsidiaries	$	131	$	121	$	385	$	379	Regulated Operating Subsidiaries		$	135	$	126
ITC Holdings and other	ITC Holdings and other	105		92		307		305		ITC Holdings and other		106		100
Intercompany eliminations	Intercompany eliminations	(131)		(121)		(385)		(379)		Intercompany eliminations		(135)		(126)
Total Net Income	Total Net Income	$	105	$	92	$	307	$	305	Total Net Income		$	106	$	100

2120

Table of Contents


TOTAL ASSETS:	TOTAL ASSETS:	September 30,		December 31,		TOTAL ASSETS:	March 31,		December 31,
(In millions of USD)	(In millions of USD)	2021		2020		(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	Regulated Operating Subsidiaries	$	11,150	$	10,710	Regulated Operating Subsidiaries	$	11,526	$	11,317
ITC Holdings and other	ITC Holdings and other	6,054		5,830		ITC Holdings and other	6,199		6,134
Reconciliations / Intercompany eliminations (a)	Reconciliations / Intercompany eliminations (a)	(5,939)		(5,715)		Reconciliations / Intercompany eliminations (a)	(6,059)		(6,006)
Total Assets	Total Assets	$	11,265	$	10,825	Total Assets	$	11,666	$	11,445

____________________________

(a)Reconciliation of total assets results primarily from differences in the netting of deferred tax assets and liabilities in our segments as compared to the classification in our condensed consolidated statements of financial position.

2221

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Our reports, filings and other public announcements contain certain statements that describe our management’s beliefs concerning future business conditions, plans and prospects, growth opportunities, the outlook for our business and the electric transmission industry, and expectations with respect to various legal and regulatory proceedings based upon information currently available. Such statements are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Wherever possible, we have identified these forward-looking statements by words such as “will,” “may,” “anticipates,” “believes,” “intends,” “estimates,” “expects,” “forecasted,” “projects,” “likely” and similar phrases. These forward-looking statements are based upon assumptions our management believes are reasonable. Such forward-looking statements are based on estimates and assumptions and are subject to significant risks and uncertainties which could cause our actual results, performance and achievements to differ materially from those expressed in, or implied by, these statements, including, among others, the following risks and uncertainties listed in “Item 1A Risk Factors” of our Form 10-K for the year ended December 31, ~~2020,~~2021, as modified herein:

•Certain elements of our Regulated Operating Subsidiaries’ Formula Rates have been and can be challenged, which could result in lowered rates and/or refunds of amounts previously collected and thus may have an adverse effect on our business, financial condition, results of operations and cash flows.

•Our actual capital investment may be lower than planned, which would cause a lower than anticipated rate base and would therefore result in lower revenues, earnings and associated cash flows compared to our current expectations. In addition, we may incur expenses related to the pursuit of strategic investment opportunities, which may be higher than forecasted.

•The regulations to which we are subject may limit our ability to raise capital and/or pursue acquisitions, development opportunities or other transactions or may subject us to liabilities.

•Changes in energy laws, regulations or policies could impact our business, financial condition, results of operations and cash flows.

•The widespread outbreak of an illness or other communicable disease, including the COVID-19 pandemic, or any other public health crisis, could have a material adverse impact on our business, financial condition, results of operations, ~~financial condition,~~ cash flows and credit metrics.

•Each of our MISO Regulated Operating Subsidiaries depends on its primary customer for a substantial portion of its revenues, and any material failure by those primary customers to make payments for transmission services could have a material adverse effect on our business, financial condition, results of operations and cash flows.

•A significant amount of the land on which our assets are located is subject to easements, mineral rights and other similar encumbrances. As a result, we must comply with the provisions of various easements, mineral rights and other similar encumbrances, which may adversely impact our ability to complete construction projects in a timely manner.

•We contract with third parties to provide services for certain aspects of our business. If any of these agreements are terminated, we may face a shortage of labor or replacement contractors to provide the services formerly provided by these third parties.

•Hazards associated with high-voltage electricity transmission may result in suspension of our operations, costly litigation or the imposition of civil or criminal penalties.

•We are subject to environmental regulations and to laws that can give rise to substantial liabilities from environmental contamination.

•If amounts billed for transmission service for our Regulated Operating Subsidiaries’ transmission systems are lower than expected, or our actual revenue requirements are higher than expected, the timing of actual collection of our total revenues would be delayed.

•We are subject to various regulatory requirements, including reliability standards; contract filing requirements; reporting, recordkeeping and accounting requirements; and transaction approval

Table of Contents

requirements. Violations of these requirements, whether intentional or unintentional, may result in penalties that, under some circumstances, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~Table of Contents~~

•Acts of war, terrorist attacks ~~natural disasters, severe weather~~ and other catastrophic events may have a material adverse effect on our business, financial condition, results of operations and cash flows.

•A cyber-attack or incident could have a material adverse effect on our business, financial condition, results of operations and cash flows.

•Effects of climate change, including natural disasters, severe weather and other related phenomena, and the regulatory and legislative developments related to climate change, may have a material adverse effect on our business, financial condition, results of operations and cash flows.

•Changes in tax laws or regulations may negatively affect our financial condition, results of operations, net income, ~~financial condition,~~ cash flows and credit metrics.

•Advances in technology may negatively impact our business, financial condition, results of operations and cash flows.

•ITC Holdings is a holding company with no operations, and unless we receive dividends or other payments from our subsidiaries, we may be unable to fulfill our cash obligations.

•We have a considerable amount of debt and our reliance on debt financing may limit our ability to fulfill our debt obligations and/or to obtain additional financing.

•Adverse changes in our credit ratings may negatively affect us.

•Certain provisions in our debt instruments limit our financial and operating flexibility.

Forward-looking statements speak only as of the date made and can be affected by assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this report will be important in determining future results. Consequently, we cannot assure you that our expectations or forecasts expressed in such forward-looking statements will be achieved. Except as required by law, we undertake no obligation to publicly update any of our forward-looking or other statements, whether as a result of new information, future events or otherwise.

OVERVIEW

ITC Holdings provides safe and ~~its subsidiaries are engaged in the~~reliable electric transmission ~~of electricity in the United States.~~service to connect consumers to more sustainable and cost-effective energy resources. ITC Holdings iscontinues to make investments in a ~~wholly-owned subsidiary~~modernized grid to maintain reliability and accommodate future demands as our economy and lifestyles become increasingly dependent on electricity.

Our business consists primarily of ~~ITC Investment Holdings.~~the electric transmission operations of our Regulated Operating Subsidiaries. Through our Regulated Operating Subsidiaries, we own and operate high-voltage electric transmission systems in Michigan’s Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma that transmit electricity from generating stations to local distribution facilities connected to our transmission systems.

~~ITC Holdings provides safe~~Our Regulated Operating Subsidiaries’ primary operating responsibilities include maintaining, improving and ~~reliable electric~~expanding their transmission ~~service~~systems to ~~connect consumers~~meet their customers’ ongoing needs, scheduling outages on system elements to ~~cleaner~~allow for maintenance and ~~more cost-effective energy resources. ITC Holdings is making investments in a modernized grid~~construction, maintaining appropriate system voltages and monitoring flows over transmission lines and other facilities to ~~maintain reliability and accommodate future demands as our economy and lifestyles become increasingly dependent on electricity. We~~ensure physical limits are ~~actively involved in planning an integrated energy network to serve our customers, communities and the greater grid.~~

Our business strategy is focused on owning, operating, maintaining and investing in transmission infrastructure and grid solutions in order to enhance system integrity and reliability, protect critical infrastructure, reduce transmission constraints, interconnect new renewable generation resources, expand access to electricity markets and lower the overall cost of delivered energy.not exceeded.

Our Regulated Operating Subsidiaries earn revenues for the use of their electric transmission systems by their customers, which include investor-owned utilities, municipalities, cooperatives, power marketers and alternative energy suppliers. As independent transmission companies, our Regulated Operating Subsidiaries are subject to rate regulation only by the FERC, and our cost-based rates are discussed below under “ — Cost-Based Formula Rates with True-Up Mechanism” as well as in Note 4 to the condensed consolidated interim financial statements.

Our Regulated Operating Subsidiaries’ primary operating responsibilities include maintaining, improving and expanding their transmission systems to meet their customers’ ongoing needs, scheduling outages on system elements to allow for maintenance and construction, maintaining appropriate system voltages and monitoring flows over transmission lines and other facilities to ensure physical limits are not exceeded.

Table of Contents

Significant recent matters that influenced our financial condition, results of operations and cash flows for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 or that may affect future results include:

•Our capital expenditures of ~~$626~~$265 million at our Regulated Operating Subsidiaries during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022, as described below under “ — Capital Investment and Operating Results ~~Trends,~~Trends;” ~~resulting primarily from our focus on improving system reliability, increasing system capacity and upgrading the transmission network to support new generating resources;~~

~~Table of Contents~~

•Debt issuances, borrowings and repayments, and interest rate swaps, as described in Note 5 to the condensed consolidated interim financial ~~statements to fund capital investment at our Regulated Operating Subsidiaries as well as for general corporate purposes;~~statements;

•The FERC orders related to the MISO ROE Complaints, as described in Note 11 to the condensed consolidated interim financial statements, that are currently under appeal at the D.C. Circuit Court; and

•Issuance of a NOPR by the FERC on March 20, 2020 and issuance of a supplemental NOPR on April 15, 2021, that ~~includes~~include a proposal to update the transmission incentives policy, as described below under “ — Recent ~~Developments”.~~Developments.”

These items are discussed in more detail throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Recent Developments

~~COVID-19 Pandemic~~

~~Rate of Return on Equity Complaints~~

Two complaints were filed with the FERC by combinations of consumer advocates, consumer groups, municipal parties and other parties challenging the base ROEs in MISO. The FERC has issued multiple orders in these proceedings, and there are appeals of these orders pending in the D.C. Circuit Court. See Note 11 to the condensed consolidated interim financial statements for a summary of the MISO ROE Complaints.

Incentive Adders for Transmission Rates

The FERC issued a NOPR on March 20, 2020, and issued a supplemental NOPR on April 15, 2021, proposing to update its transmission incentives policy. Among other things, the rulemaking proposals would:

•grant incentives to transmission projects based upon benefits to customers ensuring reliability and reducing the cost of delivered power by reducing transmission congestion, and

•eliminate the ROE adders for independent transmission ownership and for RTO participation.

The outcome of this proposal may impact the incentive adders that our Regulated Operating Subsidiaries are authorized to apply to their base ROEs on a prospective basis. As of ~~September 30, 2021,~~March 31, 2022, our MISO Regulated Operating Subsidiaries had a total of approximately $5 billion of equity in their collective capital structures for ratemaking purposes. Based on this level of aggregate equity, we estimate that each 10 basis point change in the authorized ROE would impact annual consolidated net income by approximately $5 million. For ITC Great Plains, each 10 basis point change in authorized ROE would impact annual consolidated net income by less than $1 million.

~~Complaints were previously filed with~~FERC NOPR on Transmission Planning

FERC issued a NOPR on April 21, 2022 addressing regional transmission planning and cost allocation. The proposal requires transmission planning regions to conduct long-term, scenario-based transmission planning and adopt enhanced transparency measures; provide a formal role for states in developing the ~~FERC~~cost allocation for projects; and reinstate federal rights of first refusal under ~~section 206~~certain circumstances. We are currently assessing the impacts of the ~~FPA challenging~~NOPR to our business. Initial comments on the ~~adders for independent transmission ownership that~~NOPR are in transmission rates charged by our MISO Regulated Operating Subsidiaries and ITC Great Plains. FERC issued orders in these proceedings, setting revised adders for independent transmission ownership for

~~Table~~due 75 days from the date of ~~Contents~~

~~each of the MISO Regulated Operating Subsidiaries and ITC Great Plains to 25 basis points, and the FERC orders were subsequently appealed~~publication in the D.C. Circuit Court. On February 19, 2021, the appeal of the FERC order in the proceedings for the MISO Regulated Operating Subsidiaries was denied. On March 4, 2021, the appeals of the FERC orders in the proceedings for ITC Great Plains were dismissed following a motion for voluntary dismissal by ITC Great Plains. See Note 4 to the condensed consolidated interim financial statements for a summary of incentive adders for transmission rates and these matters.Federal Register.

Cost-Based Formula Rates with True-Up Mechanism

Our Regulated Operating Subsidiaries calculate their revenue requirements using cost-based Formula Rates that are effective without the need to file rate cases with the FERC, although the rates are subject to legal challenge at the FERC. Under their cost-based formula, each of our Regulated Operating Subsidiaries separately calculates a revenue requirement based on financial information specific to each company. The calculation of projected revenue requirement for a future period is used to establish the transmission rate used for billing purposes. The calculation of actual revenue requirements for a historic period is used to calculate the amount of revenues recognized in that period and determine the over-or under-collection for that period.

Under these Formula Rates, our Regulated Operating Subsidiaries recover expenses and earn an authorized return on and recover investments in property, plant and equipment on a current basis. The Formula Rates for a given year reflect forecasted expenses, property, plant and equipment, point-to-point revenues, network load at our MISO Regulated Operating Subsidiaries and other items for the upcoming calendar year to establish projected revenue requirements for each of our Regulated Operating Subsidiaries that are used as the basis for billing for service on their systems from January 1 to December 31 of that year. Our Formula Rates

Table of Contents

include a true-up mechanism, whereby our Regulated Operating Subsidiaries compare their actual revenue requirements to their billed revenues for each year to determine any over- or under-collection of revenue. The over- or under-collection typically results from differences between the projected revenue requirement used as the basis for billing and actual revenue requirement at each of our Regulated Operating Subsidiaries, or from differences between actual and projected monthly network peak loads at our MISO Regulated Operating Subsidiaries. In the event billed revenues in a given year are more or less than actual revenue requirements, which are calculated primarily using information from that year’s FERC Form No. 1, our Regulated Operating Subsidiaries will refund or collect additional revenues, with interest, within a two-year period such that customers pay only the amounts that correspond to actual revenue requirements for that given period. This annual true-up ensures that our Regulated Operating Subsidiaries recover their allowed costs and earn their authorized returns.

See “Cost-Based Formula Rates with True-Up Mechanism” in Note 4 to the condensed consolidated interim financial statements for further discussion of our Formula Rates and see “Rate of Return on Equity Complaints” in Note 11 to the condensed consolidated interim financial statements for detail on ROE matters.

Revenue Accruals and Deferrals — Effects of Monthly Network Peak Loads

For our MISO Regulated Operating Subsidiaries, monthly network peak loads are used for billing network revenues, which currently is the largest component of our operating revenues. One of the primary factors that impacts the revenue accruals and deferrals at our MISO Regulated Operating Subsidiaries is actual monthly network peak loads experienced as compared to those forecasted in establishing the annual network transmission rate. Under their cost-based Formula Rates that contain a true-up mechanism, our MISO Regulated Operating Subsidiaries accrue or defer revenues to the extent that their actual revenue requirement for the reporting period is higher or lower, respectively, than the amounts billed relating to that reporting period. Although monthly network peak loads do not impact operating revenues recognized, network load affects the timing of our cash flows from transmission service. The monthly network peak load of our MISO Regulated Operating Subsidiaries is generally impacted by weather, ~~and~~ economic conditions and other significant factors, including the effects of COVID-19, and is seasonally shaped with higher load in the summer months when cooling demand is higher. We are unable to predict the possible future impacts of weather, economic conditions, including COVID-19, ~~weather~~ and other factors on monthly network peak loads at our MISO Regulated Operating Subsidiaries.

ITC Great Plains does not receive revenue based on a peak load or a dollar amount per kW each month. Therefore, peak load does not have a seasonal effect on operating cash flows. The SPP tariff applicable to ITC Great Plains is billed ratably each month based on its annual projected revenue requirement posted annually by SPP.

Capital Investment and Operating Results Trends

We expect a long-term upward trend in rate base resulting from our anticipated capital investment, in excess of depreciation and any acquisition premiums, from our Regulated Operating Subsidiaries’ long-term capital investment

~~Table of Contents~~

programs to improve reliability, increase system capacity and upgrade the transmission network to support new generating resources. Investments in property, plant and equipment, when placed in-service upon completion of a capital project, are added to the rate base of our Regulated Operating Subsidiaries. ~~While we~~We expect increases in rate base to result in a corresponding long-term upward trend in revenues and ~~earnings, our~~earnings. Our revenues and earnings ~~are also~~may be impacted by ~~changes in~~future increases or decreases to our ~~ROE or required refunds resulting from the resolution of the~~rates for incentive adders ~~complaints~~ and ~~MISO ROE Complaints, as described in~~base ROE. See Note 4 and Note 11 to the condensed consolidated interim financial statements ~~or other~~for additional information related to matters that may impact future ~~increases or decreases to our~~ rates for incentive adders and base ROE.

During 2021, our MISO Regulated Operating Subsidiaries filed revised depreciation rates for their assets which were approved by the FERC in December 2021. The overall depreciation expense at our MISO Regulated Operating Subsidiaries increased beginning on January 1, 2022. This increase is expected to result in higher revenue from customers in the near term due to an overall increase in the rates at which we record depreciation expense. For the three months ended March 31, 2022, there was an increase in depreciation expense of approximately $8 million resulting from our MISO Regulated Operating Subsidiaries’ new depreciation rates.

Our Regulated Operating Subsidiaries strive for high reliability of their systems and improvement in system accessibility for all generation resources. The FERC requires compliance with certain reliability standards and

Table of Contents

may take enforcement actions against violators, including the imposition of substantial fines. NERC is responsible for developing and enforcing these mandatory reliability standards. We continually assess our transmission systems against standards established by NERC, as well as the standards of applicable regional entities under NERC that have been delegated certain authority for the purpose of proposing and enforcing reliability standards. We believe that we meet the applicable standards in all material respects, although further investment in our transmission systems and an increase in maintenance activities will likely be needed to maintain compliance, improve reliability and address any new standards that may be promulgated.

We also assess our transmission systems against our own planning criteria that are filed annually with the FERC. Based on our planning studies, we see needs to make capital investments to: (1) maintain and replace our current transmission infrastructure ~~including enhancing~~to enhance system ~~integrity and~~ reliability and ~~accommodating~~accommodate load growth; (2) interconnect new renewable generation resources; (3) upgrade physical and technological grid ~~security; (3) promote the transformation of the generation fleet~~security to ~~cleaner and more sustainable resources through required interconnections and transmission build-out;~~protect critical infrastructure; and (4) ~~develop and build regional transmission infrastructure. We do~~expand access to electricity markets to reduce the overall cost of delivered energy to customers. To date, COVID-19 has not ~~currently expect any~~had a material ~~decrease in planned capital expenditures due to COVID-19; however, we continue to evaluate potential impacts of COVID-19~~impact on our forecasted capital expenditures. ~~Depending on~~However, we continue to evaluate and monitor the ~~length and severity of future~~potential impacts of COVID-19, ~~certain planned~~including potential supply chain disruptions, on our forecasted capital ~~expenditures may be shifted to later years of the forecast.~~expenditures. The following table shows our actual and expected capital expenditures at our Regulated Operating Subsidiaries:

Actual Capital

Forecasted

Actual Capital

Forecasted

Expenditures for the

Capital

Expenditures for the

Capital

Nine Months Ended

Expenditures

Three Months Ended

Expenditures

(In millions of USD)

September 30, 2021

2022 — 2026

(In millions of USD)

March 31, 2022

2022 — 2026

Expenditures for property, plant and equipment (a)

626

4,004

Expenditures for property, plant and equipment (a)

265

4,004

____________________________

(a)Amounts represent the cash payments to acquire or construct property, plant and equipment, as presented in the condensed consolidated statements of cash flows. These amounts exclude non-cash additions to property, plant and equipment for the AFUDC equity as well as accrued liabilities for construction, labor and materials that have not yet been paid.

Our long-term growth plan includes ongoing investments in our current regulated transmission systems and the identification of incremental strategic projects primarily located in and around our service territories. Refer to “Item 1 Business — Development of Business” in our Form 10-K for the year ended December 31, ~~2020~~2021 for additional information.

During the three months ended March 31, 2022, MISO advanced its long-range transmission plan, announcing the first tranche of projects across the MISO Midwest subregion comprised of 18 transmission projects with total associated transmission costs estimated at approximately $10 billion. These projects require MISO board approval, which is currently anticipated in July 2022. Six of these projects run through our MISO Regulated Operating Subsidiaries’ service territories, including Michigan and Iowa, where right of first refusal provisions exist for incumbent transmission owners. Other projects within this portfolio may be subject to competitive bidding, depending on their location. Based on this preliminary information, we currently estimate transmission investments of approximately $1 billion to $1.5 billion through 2030 associated with these projects. Given our preliminary analysis around the transmission investment, its timing and uncertainties regarding the awarding of projects, we cannot state with certainty the impact of our estimated capital expenditure in connection with the long-range transmission plan on our forecasted capital expenditures through 2026 or beyond.

Investments in property, plant and equipment could be lower than expected due to a variety of factors, as discussed in “Item 1A Risk ~~Factors”.~~Factors.” In addition, investments in transmission network upgrades for generator interconnection projects could change from prior estimates significantly due to changes in the MISO queue for generation projects and other factors beyond our control.

2726

Table of Contents

RESULTS OF OPERATIONS

Results of Operations and Variances


		Three months ended						Percentage		Nine months ended						Percentage			Three months ended					Percentage
		September 30,				Increase		increase		September 30,				Increase		increase			March 31,			Increase		increase
(In millions of USD)	(In millions of USD)	2021		2020		(decrease)		(decrease)		2021		2020		(decrease)		(decrease)		(In millions of USD)		2022		2021		(decrease)		(decrease)
OPERATING REVENUES	OPERATING REVENUES																	OPERATING REVENUES
Transmission and other services	Transmission and other services	$	397	$	378	$	19	5	%	$	1,042	$	1,008	$	34	3	%	Transmission and other services		$	327	$	299	$	28	9	%
Formula Rate true-up	Formula Rate true-up	(57)		(66)		9		(14)	%	(24)		(32)		8		(25)	%	Formula Rate true-up		38		37		1		3	%
Total operating revenues	Total operating revenues	340		312		28		9	%	1,018		976		42		4	%	Total operating revenues		365		336		29		9	%
OPERATING EXPENSES	OPERATING EXPENSES																	OPERATING EXPENSES
Operation and maintenance	Operation and maintenance	30		19		11		58	%	82		66		16		24	%	Operation and maintenance		27		22		5		23	%
General and administrative	General and administrative	30		30		—		—	%	94		89		5		6	%	General and administrative		33		35		(2)		(6)	%
Depreciation and amortization	Depreciation and amortization	58		55		3		6	%	172		163		9		6	%	Depreciation and amortization		72		57		15		26	%
Taxes other than income taxes	Taxes other than income taxes	30		31		(1)		(3)	%	100		93		7		8	%	Taxes other than income taxes		36		35		1		3	%
Other operating (income) and expenses, net		(1)		(1)		—		—	%	—		(1)		1		(100)	%

Total operating expenses	Total operating expenses	147		134		13		10	%	448		410		38		9	%	Total operating expenses		168		149		19		13	%
OPERATING INCOME	OPERATING INCOME	193		178		15		8	%	570		566		4		1	%	OPERATING INCOME		197		187		10		5	%
OTHER EXPENSES (INCOME)	OTHER EXPENSES (INCOME)																	OTHER EXPENSES (INCOME)
Interest expense, net	Interest expense, net	62		62		—		—	%	187		178		9		5	%	Interest expense, net		64		62		2		3	%
Allowance for equity funds used during construction	Allowance for equity funds used during construction	(8)		(7)		(1)		14	%	(22)		(19)		(3)		16	%	Allowance for equity funds used during construction		(9)		(7)		(2)		29	%
Other (income) and expenses, net		(1)		(1)		—		—	%	(4)		(2)		(2)		100	%
Other expenses (income), net																		Other expenses (income), net		2		(1)		3		(300)	%
Total other expenses (income)	Total other expenses (income)	53		54		(1)		(2)	%	161		157		4		3	%	Total other expenses (income)		57		54		3		6	%
INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES	140		124		16		13	%	409		409		—		—	%	INCOME BEFORE INCOME TAXES		140		133		7		5	%
INCOME TAX PROVISION	INCOME TAX PROVISION	35		32		3		9	%	102		104		(2)		(2)	%	INCOME TAX PROVISION		34		33		1		3	%
NET INCOME	NET INCOME	$	105	$	92	$	13	14	%	$	307	$	305	$	2	1	%	NET INCOME		$	106	$	100	$	6	6	%

Operating Revenues

The following table sets forth the components of and changes in operating revenues for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ which included revenue accruals and deferrals, as described in Note 4 to the condensed consolidated interim financial statements:


												Percentage													Percentage
		2021				2020				Increase		increase			2022				2021				Increase		increase
(In millions of USD)	(In millions of USD)	Amount		Percentage		Amount		Percentage		(decrease)		(decrease)		(In millions of USD)	Amount		Percentage		Amount		Percentage		(decrease)		(decrease)
Network revenues (a)	Network revenues (a)	$	236	69	%	$	211	68	%	$	25	12	%	Network revenues (a)	$	255	71	%	$	231	68	%	$	24	10	%
Regional cost sharing revenues (a)	Regional cost sharing revenues (a)	90		27	%	89		29	%	1		1	%	Regional cost sharing revenues (a)	95		26	%	91		27	%	4		4	%
Point-to-point	Point-to-point	4		1	%	4		1	%	—		—	%	Point-to-point	5		1	%	5		2	%	—		—	%
Scheduling, control and dispatch (a)	Scheduling, control and dispatch (a)	4		1	%	4		1	%	—		—	%	Scheduling, control and dispatch (a)	5		1	%	5		2	%	—		—	%
Other	Other	6		2	%	4		1	%	2		50	%	Other	5		1	%	4		1	%	1		25	%

Total	Total	$	340	100	%	$	312	100	%	$	28	9	%	Total	$	365	100	%	$	336	100	%	$	29	9	%

____________________________

(a)Includes a portion of the Formula Rate true-up of ~~$(57)~~$38 million and ~~$(66)~~$37 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

~~Table of Contents~~

Operating revenues for the three months ended ~~September 30, 2021~~March 31, 2022 increased, compared to the same period in ~~2020,~~2021, primarily due to higher recoverable depreciation expense due to revised depreciation rates, which became effective January 1, 2022, as well as a higher rate base associated with higher balances of property, plant and equipment ~~in-service~~in service and ~~increased recoverable operating expenses due to the temporary cost saving measures utilized in 2020.~~resulting return.

~~The following table sets forth the components~~

Table of and changes in operating revenues for the nine months ended September 30, 2021 and 2020 which included revenue accruals and deferrals as described in Note 4 to the condensed consolidated interim financial statements:

Percentage
2021 2020 Increase increase
(In millions of USD) Amount Percentage Amount Percentage (decrease) (decrease)
Network revenues (a) $ 699 69 % $ 632 65 % $ 67 11 %
Regional cost sharing revenues (a) 271 27 % 272 27 % (1) — %
Point-to-point 13 1 % 10 1 % 3 30 %
Scheduling, control and dispatch (a) 15 1 % 15 2 % — — %
Other 20 2 % 15 2 % 5 33 %
Remeasurement of liabilities for ROE Complaints — — % 32 3 % (32) (100) %
Total $ 1,018 100 % $ 976 100 % $ 42 4 %

~~____________________________~~

~~(a)Includes a portion of the Formula Rate true-up of $(24) million and $(32) million for the nine months ended September 30, 2021 and 2020, respectively.~~Contents

Operating revenues for the nine months ended September 30, 2021 increased, compared to the same period in 2020, primarily due to a higher rate base associated with higher balances of property, plant and equipment in-service and increased recoverable operating expenses due to the temporary cost saving measures utilized in 2020, which was partially offset by a favorable base ROE adjustment in 2020 related to prior periods as a result of the May 2020 Order.

Operating Expenses

Operation and maintenance expenses

Operation and maintenance expense increased during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in ~~2020~~2021 primarily due to higher expenses associated with substation and overhead line maintenance activities, as well as higher vegetation management ~~requirements, primarily~~requirements.

Depreciation and amortization expense

Depreciation and amortization expenses increased due to a combination of updated depreciation rates at our MISO Regulated Operating Subsidiaries, which became effective January 1, 2022, and a higher depreciable base resulting from property, plant and equipment in-service additions during the ~~temporary cost saving measures that were utilized~~three months ended March 31, 2022 compared to the same period in ~~2020 as a result of the COVID-19 pandemic.~~2021.

LIQUIDITY AND CAPITAL RESOURCES

We expect to maintain our approach of funding our future capital requirements with cash from operations at our Regulated Operating Subsidiaries, our existing cash and cash equivalents, future issuances under our commercial paper program and amounts available under our revolving credit agreements (the terms of which are described in Note 5 to the condensed consolidated interim financial statements). In addition, we may from time to time secure debt funding in the capital markets (including debt to finance or refinance portfolios of eligible projects based on the green bond framework established by ITC Holdings), although we can provide no assurance that we will be able to obtain financing on favorable terms or at all. As market conditions warrant, we may also from time to time repurchase debt securities issued by us in the open market, in privately negotiated transactions, by tender offer or otherwise. We expect that our capital requirements will arise principally from our need to:

•Fund capital expenditures at our Regulated Operating Subsidiaries. Our plans with regard to property, plant and equipment investments are described in detail above under “ — Capital Investment and Operating Results Trends.”

•Fund our debt service requirements, including principal repayments and periodic interest payments.

•Fund working capital requirements.

In addition to the expected capital requirements above, any adverse determinations or settlements relating to the regulatory matters or contingencies described in Notes 4 and 11 to the condensed consolidated interim financial statements would result in additional capital requirements. Our contractual obligations are described in our Form 10-K for the year

~~Table of Contents~~

ended December 31, ~~2020.~~2021. There have been no material changes to that information since December 31, ~~2020,~~2021, other than the items described in Note 5 to the condensed consolidated interim financial statements.

We believe that we have sufficient capital resources to meet our currently anticipated short-term (within twelve months) needs. However, we rely on both internal and external sources of liquidity to provide working capital and fund capital investments. The COVID-19 pandemic has impacted the global economy and capital markets in various ways, including negative impacts which have varied in duration and magnitude. An extended period of economic disruption could impact our ability to access the capital markets requiring us to seek alternative forms of financing which could negatively impact our liquidity and capital resources. ITC Holdings’ sources of cash are dividends and other payments received by us from our Regulated Operating Subsidiaries and any of our other subsidiaries as well as the proceeds raised from the sale of our debt securities. Each of our Regulated Operating Subsidiaries, while wholly-owned by ITC Holdings, is legally distinct from ITC Holdings and has no obligation, contingent or otherwise, to make funds available to us.

We expect to continue to utilize our commercial paper program and revolving credit agreements as well as our cash and cash equivalents as needed to meet our short-term (within twelve months) cash requirements. As of ~~September 30, 2021,~~March 31, 2022, we had consolidated indebtedness under our revolving credit agreements of ~~$239~~$270 million, with unused capacity under our revolving credit agreements of ~~$661~~$630 million. Additionally, ITC Holdings had ~~$180~~$237 million of commercial paper issued and outstanding, net of discount, as of ~~September 30, 2021,~~March 31, 2022, with the ability to issue an additional ~~$220~~$163 million under the commercial paper program. See Note 5 to the condensed consolidated interim financial statements for a detailed discussion of the commercial paper program and our revolving credit agreements.

Table of Contents

To address our long-term capital requirements, we expect that we will need to obtain additional debt financing. Certain of our capital projects could be delayed if we experience difficulties in accessing capital pursuant to complications from COVID-19, or otherwise. We expect to be able to obtain such additional financing as needed, in amounts and upon terms that will be acceptable to us due to our strong credit ratings and our historical ability to obtain financing.

We have ~~material~~ exposure to LIBOR through the revolving credit agreements of ITC Holdings and certain of our Regulated Operating Subsidiaries. ~~It is expected that~~Certain tenors of LIBOR ~~will be~~began being phased out beginning in late 2021, ~~and will be fully discontinued by~~with full discontinuation planned for mid-2023. We believe the rate selected as the preferred alternative to LIBOR will be an acceptable replacement rate when LIBOR is fully discontinued. However, we plan to continue using the available LIBOR tenors until 2023 and as such cannot reasonably estimate the expected impact of the planned discontinuation of LIBOR at this time.

Credit Ratings

Credit ratings by nationally recognized statistical rating agencies are an important component of our liquidity profile. Credit ratings relate to our ability to issue debt securities and the cost to borrow money, and should not be viewed as a recommendation to buy, sell or hold securities. Ratings are subject to revision or withdrawal at any time and each rating should be evaluated independently of any other rating. An explanation of these ratings may be obtained from the respective rating agency. ~~On April 1, 2021, S&P reaffirmed the ratings of ITC Holdings and certain of our Regulated Operating Subsidiaries and revised all outlooks from negative to stable.~~ Additional information related to our credit ratings and outlook reported by rating agencies is included in “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operation — Credit Rating” of our Form 10-K for the year ended December 31, ~~2020.~~2021.

Covenants

Our debt instruments contain numerous financial and operating covenants that place significant restrictions on certain transactions, such as incurring additional indebtedness, engaging in sale and lease-back transactions, creating liens or other encumbrances, entering into mergers, consolidations, liquidations or dissolutions, creating or acquiring subsidiaries and selling or otherwise disposing of all or substantially all of our assets. In addition, the covenants require us to meet certain financial ratios, such as maintaining certain debt to capitalization ratios and certain funds from operations to debt levels. As of ~~September 30, 2021,~~March 31, 2022, we were not in violation of any debt covenant. In the event of a downgrade in our credit ratings, none of the covenants would be directly impacted, although the borrowing costs under our revolving credit agreements may increase.

Cash Flows From Operating Activities

Net cash provided by operating activities was ~~$592~~$154 million and ~~$467~~$142 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The increase in cash provided by operating activities was primarily due to an increase in cash received from operating revenues of ~~$111~~$27 million compared to the same period in ~~2020 and~~2021. This increase was partially offset by lower net receipts related to the MISO ROE Complaints of $6$8 million, including interest, received from customers during the ~~nine~~three months ended ~~September 30,~~March 31, 2021 ~~compared~~and an increase in payments pursuant to ~~net payments~~our long-term incentive plans of ~~$31~~$10 million ~~refunded to customers~~ during the ~~same period in 2020. This~~

~~Table of Contents~~

~~increase was partially offset by higher payments for operation and maintenance expenses, general and administrative expenses and property taxes during the nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to the same period in ~~2020.~~2021.

Cash Flows From Investing Activities

Net cash used in investing activities was ~~$622~~$264 million and ~~$567~~$237 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively, with the increase primarily due to an increase in capital expenditures.

Cash Flows From Financing Activities

Net cash provided by financing activities was ~~$30~~$108 million and ~~$120~~$94 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The ~~decrease~~increase in cash provided by financing activities was primarily due to ~~a decrease~~an increase in issuances of long term debt of ~~$805 million and an~~$150 million. This increase in net repayments of refundable deposits from generators for transmission network upgrades of $71 million during the nine months ended September 30, 2021 compared to the same period in 2020. This decrease was partially offset by ~~an increase in net issuances of commercial paper of $313 million, an increase~~a decrease in net borrowings under our revolving credit agreements of ~~$243~~$93 million, a decrease in net ~~repayments under our term loan credit agreements~~issuances of ~~$125~~commercial paper of $31 million ~~a decrease~~and an increase in dividend payments of ~~$73 million and a decrease in settlement of interest rate swaps of $23~~$6 million during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to the same period in ~~2020. See Note 5 to the condensed consolidated interim financial statements for a description of our revolving credit agreements and our commercial paper program.~~2021.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our condensed consolidated interim financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated interim financial statements requires the application of appropriate

Table of Contents

technical accounting rules and guidance, as well as the use of estimates. The application of these policies requires judgment regarding future events.

These estimates and judgments, in and of themselves, could materially impact the condensed consolidated interim financial statements and disclosures based on varying assumptions, as future events rarely develop exactly as forecasted, and even the best estimates routinely require adjustment.

The accounting policies discussed in “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” of our Form 10-K for the year ended December 31, ~~2020~~2021 are considered by management to be the most important to an understanding of the condensed consolidated interim financial statements because of their significance to the portrayal of our financial condition and results of operations or because their application places the most significant demands on management’s judgment and estimates about the effect of matters that are inherently uncertain. There have been no material changes to that information during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

RECENT ACCOUNTING PRONOUNCEMENTS

We have considered all new accounting pronouncements issued by the FASB and determined that it is not likely that any of the recently issued ~~but not yet adopted~~ accounting guidance ~~may~~will have a material impact on our condensed consolidated interim financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Fixed Rate Debt

Based on the borrowing rates currently available for bank loans with similar terms and average maturities, the fair value of our consolidated long-term debt and debt maturing within one year, excluding revolving credit agreements and commercial paper was ~~$7,063~~$6,482 million and $6,995 million at ~~September 30, 2021.~~March 31, 2022 and December 31, 2021, respectively. The total book value of our consolidated long-term debt and debt maturing within one year, net of discount and deferred financing fees and excluding revolving credit agreements and commercial paper, was ~~$6,175~~$6,328 million and $6,179 million at ~~September 30, 2021. We performed an analysis calculating the impact of changes in interest rates on the fair value of long-term debt~~March 31, 2022 and ~~debt maturing within one year, excluding revolving credit agreements and commercial paper at September 30, 2021. An~~December 31, 2021, respectively. A increase in interest rates of 10% (from 5.0% to 5.5%, for example) at ~~September 30,~~March 31, 2022 and December 31, 2021 would decrease the fair value of debt by ~~$216~~$245 million and $217 million, respectively, and a decrease in interest rates of 10% at ~~September 30,~~March 31, 2022 and December 31, 2021 would increase the fair value of debt by ~~$230~~$264 million ~~at that date.~~

~~Table of Contents~~

and $231 million, respectively.

Revolving Credit Agreements

At ~~September 30,~~March 31, 2022 and December 31, 2021, we had a consolidated total of ~~$239~~$270 million and $329 million, respectively, outstanding under our revolving credit agreements, which are variable rate loans and fair value approximates book value. A 10% increase or decrease in borrowing rates under the revolving credit agreements compared to the weighted average rates in effect at ~~September 30,~~March 31, 2022 and December 31, 2021 would increase or decrease interest expense by less than $1 ~~million for an annual period with a constant borrowing level of $239~~ million.

Commercial Paper

At ~~September 30,~~March 31, 2022 and December 31, 2021, ITC Holdings had ~~$180~~$237 million and $155 million, respectively, of commercial paper issued and outstanding, net of discount, under the commercial paper program. Due to the short-term nature of these financial instruments, the carrying value approximates fair value. A 10% increase or decrease in interest rates for commercial paper would increase or decrease interest expense by less than $1 ~~million for an annual period with a continuous level of commercial paper outstanding of $180~~ million.

Derivative Instruments and Hedging Activities

We use derivative financial instruments, including interest rate swap contracts, to manage our exposure to fluctuations in interest rates. The use of these financial instruments mitigates exposure to these risks and the variability of our operating results. We are not a party to leveraged derivatives and do not enter into derivative financial instruments for trading or speculative purposes.

As of ~~September 30, 2021,~~March 31, 2022, we held a 5-year interest rate swap ~~contract~~contracts with a notional amount of ~~$45~~$450 million, which manages interest rate risk associated with the forecasted future issuance of fixed-rate debt at ITC Holdings, the proceeds of which will be used for the expected repayment of the ITC Holdings 2.70% Senior

Table of Contents

Notes, due November 15, 2022. See Note 5 to the condensed consolidated interim financial statements for further discussion on the interest rate ~~swap.~~swaps. ITC Holdings had interest rate swaps outstanding with a total notional amount of $375 million at December 31, 2021.

Other

As described in our Form 10-K for the year ended December 31, ~~2020,~~2021, we are subject to commodity price risk from market price fluctuations, and to credit risk primarily with DTE Electric, Consumers Energy and IP&L, our primary customers. There have been no material changes in these risks during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that material information required to be disclosed in our reports that we file or submit under the ~~Securities~~ Exchange Act, ~~of 1934, as amended (the “Exchange Act”),~~ is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, with a company have been detected.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective, at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended ~~September 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

~~Table of Contents~~

ITEM 1. LEGAL PROCEEDINGS

See Note 11 to the condensed consolidated interim financial statements for a description of recent developments in the ROE complaints filed against all MISO TOs, including our MISO Regulated Operating Subsidiaries.

ITEM 1A. RISK FACTORS

~~In light of the federal COVID-19 vaccine mandates, we are amending and restating the below~~For information regarding risk factor entitled “The widespread outbreak of an illness or other communicable disease, including the COVID-19 pandemic, or any other public health crisis, could have a material adverse impact on our business, results of operations, financial condition, cash flows and credit metrics.” within the “Risks Related to our Business” as previously disclosed infactors affecting us, see “Item 1A Risk Factors” of our Form 10-K for the year ended December 31, ~~2020. Other than as set forth below, there~~2021. There have been no material changes to the risk factors set forth ~~in “Item 1A Risk Factors” of our Form 10-K for the year ended December 31, 2020.~~

The widespread outbreak of an illness or other communicable disease, including the COVID-19 pandemic, or any other public health crisis, could have a material adverse impact on our business, results of operations, financial condition, cash flows and credit metrics.

We could be negatively impacted by the widespread outbreak of an illness or any other communicable diseases, or any other public health crisis that results in economic and trade disruptions, including the disruption of global supply chains. COVID-19 is currently impacting the global economy, supply chains and markets. As a result of efforts to limit the spread of COVID-19, such as through various “stay in place” orders issued by states served by our transmission systems, many of the businesses that use our transmission systems, including those with large manufacturing operations, have and may continue to experience operating restrictions or temporarily shut down operations. The impact of efforts to limit the spread of COVID-19 on our business, results of operations and financial condition is uncertain and will ultimately depend on the duration and severity of the pandemic, the length that the various business restrictions are in effect, the impact of recent resurgences of COVID-19 cases and deaths in the United States, and the efficacy and distribution of COVID-19 vaccines.

We intend to comply with federal vaccine mandates, seeking to require broad categories of employees and subcontractors to be fully vaccinated against COVID-19. Our compliance poses the risk of workforce disruptions, including the possibility of resignations by our unwilling employees and employees of our subcontractors as well as difficulty securing future labor needs. Significant workforce disruptions or availability could have a material impact on our business, results of operations, financial conditions and cash flows.

We cannot predict whether, and the extent to which, COVID-19 will have a material impact on our liquidity, financial condition, and results of operations. We require access to the capital markets to fund capital investments. To the extent that our access to the capital markets is adversely affected by COVID-19, we may need to consider alternative sources of funding for our operations and for working capital, any of which may not be available and may increase our cost of capital. The extent to which COVID-19 may impact our liquidity, financial condition, and results of operations will depend on future developments, which are highly uncertain and cannot be predicted; an extended period of global supply chain and economic disruption could materially impact our business, results of operations, financial condition, cash flows and credit metrics.therein.

3331

Table of Contents

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report (unless otherwise noted to be previously filed, and therefore incorporated herein by reference). Our SEC file number is 001-32576.


Exhibit No.						Description of Document










~~4.55~~4.56						~~Eleventh~~Ninth Supplemental Indenture, dated as of ~~July 19,~~November 5, 2021, between ~~Michigan Electric~~International Transmission Company ~~LLC~~ and The Bank of New York Mellon Trust Company, N.A. (as successor to ~~JPMorgan Chase Bank)~~BNY Midwest Trust Company), as trustee ~~(Filed~~(including Form of 2.93% First Mortgage Bonds, Series I, due 2052 and Form of 2.93% First Mortgage Bonds, Series J, due 2052) (filed with Registrant’s Form 8-K on ~~August 3, 2021)~~January 14, 2022)

31.1						Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document

101.SCH						Inline XBRL Taxonomy Extension Schema

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF						Inline XBRL Taxonomy Extension Definition Database

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase

104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2021,~~March 31, 2022, formatted in Inline XBRL

3432

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: ~~October 28, 2021~~May 3, 2022



ITC HOLDINGS CORP.


By:			/s/ Linda H. Apsey
			Linda H. Apsey
			President and Chief Executive Officer (duly authorized officer)


By:			/s/ Gretchen L. Holloway
			Gretchen L. Holloway
			Senior Vice President and Chief Financial Officer (principal financial and accounting officer)

3533


			Page
Part I. Financial Information			5
Item 1. Financial Statements			5
Condensed Consolidated Statements of Financial Position (Unaudited)			5
Condensed Consolidated Statements of Comprehensive Income (Unaudited)			6
Condensed Consolidated Statements of Changes in Stockholder’s Equity (Unaudited)			7
Condensed Consolidated Statements of Cash Flows (Unaudited)			8
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2322
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3130
Item 4. Controls and Procedures			3231
Part II. Other Information			3231
Item 1. Legal Proceedings			3331
Item 1A. Risk Factors			3331
Item 6. Exhibits			3432
Signatures			3533