Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 01, 2018 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Entity Registrant Name | ITC HOLDINGS CORP. | |
Entity Common Stock, Shares Outstanding | 224,203,112 | |
Entity Central Index Key | 1,317,630 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 18 | $ 66 |
Accounts receivable | 128 | 119 |
Inventory | 31 | 29 |
Regulatory assets | 14 | 18 |
Income tax receivable | 2 | 15 |
Prepaid and other current assets | 14 | 13 |
Total current assets | 207 | 260 |
Property, plant and equipment (net of accumulated depreciation and amortization of $1,764 and $1,675, respectively) | 7,760 | 7,309 |
Other assets | ||
Goodwill | 950 | 950 |
Intangible assets (net of accumulated amortization of $38 and $35, respectively) | 38 | 41 |
Regulatory assets | 198 | 197 |
Other | 71 | 66 |
Total other assets | 1,257 | 1,254 |
TOTAL ASSETS | 9,224 | 8,823 |
Current liabilities | ||
Accounts payable | 119 | 97 |
Accrued compensation | 26 | 28 |
Accrued interest | 55 | 60 |
Accrued taxes | 38 | 57 |
Regulatory liabilities | 182 | 183 |
Refundable deposits and advances for construction | 50 | 25 |
Debt maturing within one year | 0 | 100 |
Other | 11 | 12 |
Total current liabilities | 481 | 562 |
Accrued pension and postretirement liabilities | 71 | 74 |
Deferred income taxes | 697 | 601 |
Regulatory liabilities | 674 | 619 |
Refundable deposits | 11 | 29 |
Other | 23 | 17 |
Long-term debt | 5,246 | 5,001 |
Commitments and contingent liabilities (Notes 5 and 14) | ||
STOCKHOLDER’S EQUITY | ||
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at September 30, 2018 and December 31, 2017 | 892 | 892 |
Retained earnings | 1,125 | 1,026 |
Accumulated other comprehensive income | 4 | 2 |
Total stockholder’s equity | 2,021 | 1,920 |
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | $ 9,224 | $ 8,823 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) (Parentheticals) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Property, plant and equipment, accumulated depreciation and amortization | $ 1,764 | $ 1,675 |
Intangible assets, accumulated amortization | $ 38 | $ 35 |
Common stock, without par value | $ 0 | $ 0 |
Common stock, shares authorized | 235,000,000 | 235,000,000 |
Common stock, shares issued | 224,203,112 | 224,203,112 |
Common stock, shares outstanding | 224,203,112 | 224,203,112 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
OPERATING REVENUES | ||||
Transmission and other services | $ 350 | $ 362 | $ 932 | $ 947 |
Formula rate true-up | (55) | (63) | (68) | (47) |
Total operating revenues | 295 | 299 | 864 | 900 |
OPERATING EXPENSES | ||||
Operation and maintenance | 29 | 24 | 80 | 82 |
General and administrative | 32 | 31 | 91 | 91 |
Depreciation and amortization | 45 | 42 | 133 | 125 |
Taxes other than income taxes | 27 | 28 | 82 | 79 |
Other operating (income) and expenses, net | (1) | (1) | (2) | (2) |
Total operating expenses | 132 | 124 | 384 | 375 |
OPERATING INCOME | 163 | 175 | 480 | 525 |
OTHER EXPENSES (INCOME) | ||||
Interest expense, net | 56 | 56 | 167 | 164 |
Allowance for equity funds used during construction | (8) | (9) | (26) | (25) |
Other (income) and expenses, net | 0 | 0 | 2 | 2 |
Total other expenses (income) | 48 | 47 | 143 | 141 |
INCOME BEFORE INCOME TAXES | 115 | 128 | 337 | 384 |
INCOME TAX PROVISION | 26 | 46 | 87 | 141 |
NET INCOME | $ 89 | $ 82 | $ 250 | $ 243 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
NET INCOME | $ 89 | $ 82 | $ 250 | $ 243 |
OTHER COMPREHENSIVE INCOME | ||||
Derivative instruments, net of tax (Note 11) | 0 | 3 | 2 | 1 |
TOTAL COMPREHENSIVE INCOME | $ 89 | $ 85 | $ 252 | $ 244 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
NET INCOME | $ 250 | $ 243 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 133 | 125 |
Recognition, refund and collection of revenue accruals and deferrals — including accrued interest | 54 | 60 |
Deferred income tax expense | 86 | 140 |
Allowance for equity funds used during construction | (26) | (25) |
Other | 6 | 6 |
Changes in assets and liabilities, exclusive of changes shown separately: | ||
Accounts receivable | (10) | (54) |
Income tax receivable | 13 | 3 |
Accounts payable | 4 | (3) |
Accrued interest | (6) | 8 |
Accrued taxes | (19) | (16) |
Net estimated refund related to return on equity complaints | 4 | (115) |
Other current and non-current assets and liabilities, net | 5 | 31 |
Net cash provided by operating activities | 494 | 403 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Expenditures for property, plant and equipment | (556) | (554) |
Contributions in aid of construction | 23 | 20 |
Other | 0 | (10) |
Net cash used in investing activities | (533) | (544) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of long-term debt | 225 | 200 |
Borrowings under revolving credit agreements | 588 | 807 |
Borrowings under term loan credit agreements | 0 | 250 |
Net issuance of commercial paper, net of discount | 0 | 82 |
Retirement of long-term debt | (100) | (50) |
Repayments of revolving credit agreements | (518) | (984) |
Repayment of term loan credit agreement | (50) | 0 |
Dividends to ITC Investment Holdings Inc. | (150) | (168) |
Other | (2) | 3 |
Net cash (used in) provided by financing activities | (7) | 140 |
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (46) | (1) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period | 68 | 11 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period | $ 22 | $ 10 |
GENERAL
GENERAL | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL | GENERAL ITC Holdings and its subsidiaries are engaged in the transmission of electricity in the United States. Through our Regulated Operating Subsidiaries, we own and operate high-voltage 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 systems. ITC Holdings is a wholly-owned subsidiary of Investment Holdings. 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, 2017 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 ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Pronouncements Revenue from Contracts with Customers In May 2014, the FASB issued authoritative guidance requiring entities to apply a new model for recognizing revenue from contracts with customers. Subsequent updates have been issued primarily to provide implementation guidance related to the initial guidance issued in May 2014. The guidance requires entities to evaluate their revenue recognition arrangements using a five-step model to determine when a customer obtains control of a transferred good or service. The guidance may be adopted using either (a) a full retrospective method, whereby comparative periods would be restated to present the impact of the new standard, with the cumulative effect of applying the standard recognized as of the earliest period presented, or (b) a modified retrospective method, under which comparative periods would not be restated and the cumulative effect of applying the standard would be recognized at the date of initial adoption. We adopted the guidance effective January 1, 2018 using the modified retrospective approach; however, we did not identify or record any adjustments to the opening balance of retained earnings upon adoption. Substantially all of our revenue from contracts with customers is generated from providing transmission services to customers based on tariff rates, as approved by the FERC, and is in the scope of the new guidance. The true-up mechanisms under our Formula Rates are considered alternative revenue programs of rate-regulated utilities and are outside the scope of the new guidance, as they are not considered to be contracts with customers. The implementation of the new standard did not have a material impact on the amount and timing of revenue recognition. However, the following summarizes the impacts of the adoption of this new accounting guidance on our financial statements: • Our condensed consolidated statements of operations have been modified to present operating revenues arising from alternative revenue programs (Formula rate true-up) separately from revenues in the scope of the new guidance (Transmission and other services). In connection with this presentation change, we adopted an accounting policy whereby only the initial origination of our alternative revenue program revenue is reported in the Formula rate true-up line on our condensed consolidated statements of operations. When those amounts are subsequently included in the price of utility service and billed or refunded to customers, we account for that event as the recovery or settlement of the associated regulatory asset or regulatory liability, respectively. • Note 3 has been added to address the requirement to provide more information regarding the nature, amount, timing, and uncertainty of revenue and cash flows. • Note 4 has been added to provide more information about changes in accounts receivable from customers. Recognition and Measurement of Financial Instruments In January 2016, the FASB issued authoritative guidance amending the classification and measurement of financial instruments. The guidance requires entities to carry most investments in equity securities at fair value and recognize changes in fair value in net income, unless the investment results in consolidation or equity method accounting. Additionally, the new guidance amends certain disclosure requirements associated with the fair value of financial instruments. The guidance is required to be adopted using a modified retrospective approach, with limited exceptions. The guidance impacts the accounting for certain of our investments previously accounted for as available-for-sale with changes in fair value recorded in other comprehensive income; upon adoption of the guidance on January 1, 2018, we began accounting for such investments with changes in fair value reported in net income. We recorded an immaterial adjustment to retained earnings in accordance with the modified retrospective adoption requirement. Presentation of Restricted Cash in the Statement of Cash Flows In November 2016, the FASB issued authoritative guidance on the presentation of restricted cash and restricted cash equivalents within the statement of cash flows. The new guidance specifies that restricted cash and restricted cash equivalents shall be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance does not, however, provide a definition of restricted cash or restricted cash equivalents. We adopted the guidance effective for interim and annual periods beginning on January 1, 2018, using a retrospective approach as required. Restricted cash includes cash and cash equivalents that are legally or contractually restricted for use or withdrawal or are formally set aside for a specific purpose. See reconciliation of cash, cash equivalents and restricted cash in Note 15 . The following summarizes the impact of this adoption on our previously reported amounts: Nine months ended (in millions) September 30, 2017 Restricted cash - Beginning balance $ 3 Restricted cash - Ending balance 2 Change - Other current and non-current assets and liabilities, net within condensed consolidated statements of cash flow $ (1 ) Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 2017, the FASB issued authoritative guidance that requires entities to disaggregate the current service cost component of net benefit cost (i.e., net periodic pension cost and net periodic postretirement benefit cost) and present it in the same statement of operations line item as other current compensation costs for employees (i.e., within General and administrative for us). Entities are required to present the other components of net benefit cost (“non-service costs”) elsewhere in the statement of operations and outside operating income. The line or lines containing such other components must be appropriately described on the face of the statement of operations; otherwise, disclosure of the location of such other costs in the statement of operations is required. We elected to present the non-service costs within the line “ Other (income) and expenses, net ” in the condensed consolidated statements of operations and include disclosure within Note 9 . In addition, the new guidance allows capitalization of only the service cost component of net benefit cost. We adopted the guidance effective January 1, 2018. The changes regarding cost capitalization were applied prospectively while the changes to the presentation of net benefit cost in the condensed consolidated statements of operations were adopted retrospectively. We applied the practical expedient that permits entities to use amounts previously disclosed in the pension and postretirement welfare footnotes as the estimation basis for the retrospective adjustments to the condensed consolidated statements of operations. The following summarizes the impact of this adoption on our previously reported amounts: Three months ended Nine months ended (in millions) September 30, 2017 September 30, 2017 General and administrative Reported $ 31 $ 92 Adjustment — (1 ) Adjusted $ 31 $ 91 Other (income) and expenses, net Reported $ — $ 1 Adjustment — 1 Adjusted $ — $ 2 Reclassification of Certain Tax Effects from AOCI In February 2018, the FASB issued authoritative guidance that permits entities to reclassify the stranded tax effects resulting from the TCJA from AOCI to retained earnings. The stranded tax effects were the result of the revaluation of deferred taxes through net income as a result of the tax rate change, with no adjustment to the tax effects recorded in AOCI. The guidance is effective for fiscal years beginning January 1, 2019; however, we have elected to early adopt the guidance as of January 1, 2018. We elected to apply the guidance in the period of adoption, accounted for as a change in accounting principle resulting from the adoption of new accounting guidance. We recorded a $1 million adjustment to AOCI and retained earnings upon adoption. We apply an investment by investment approach to releasing income tax effects from AOCI. Recently Issued Pronouncements We have considered all new accounting pronouncements issued by the FASB and concluded the following accounting guidance, which has not yet been adopted by us, may have a material impact on our consolidated financial statements. Accounting for Leases In February 2016, the FASB issued authoritative guidance on accounting for leases, which primarily impacts accounting by lessees. In January 2018, additional guidance was issued that provides an optional transition practical expedient to not evaluate under the new guidance existing or expired easements that were not previously accounted for as leases under current guidance. The new guidance creates a dual approach for lessee accounting, with lease classification determined in accordance with principles in existing lease guidance. Statement of operations presentation differs depending on the lease classification; however, both types of leases result in lessees recognizing a right-of-use asset and a lease liability, with limited exceptions. Under existing accounting guidance, operating leases are not recorded on the balance sheet of lessees. The new guidance is effective on January 1, 2019. Early adoption is permitted; however, we will not early adopt. In July 2018, transition relief guidance was issued whereby entities may elect to apply the new guidance on a modified retrospective basis at the adoption date (i.e., January 1, 2019) as opposed to at the beginning of the earliest period presented in the financial statements (i.e., January 1, 2017). We expect to elect this transition relief and begin applying the new guidance as of January 1, 2019, with prior period comparative financial statements and disclosures presented under current lease accounting guidance. In connection with our adoption of the new guidance, we expect to elect various practical expedients and make certain accounting policy elections, including: • a “package of three” practical expedients that must be taken together and will allow us to not reassess: ◦ whether any expired or existing contracts are or contain leases, ◦ the lease classification of any expired or existing leases, and ◦ the initial direct costs for any existing leases; • a practical expedient that permits entities to not evaluate existing land easements at adoption that were not previously accounted for as leases; and • an accounting policy election to not apply the recognition requirements to short-term leases (i.e., leases with terms of 12 months or less). However, our conclusions on practical expedients and accounting policy elections may continue to evolve during our final stages of implementation as we work through our adoption plan. We are continuing to assess the impact that this guidance will have on our consolidated financial statements, including our disclosures. Targeted Improvements to Accounting for Hedging Activities In August 2017, the FASB issued authoritative guidance to make targeted improvements to hedge accounting to better align with an entity’s risk management objectives and to reduce the complexity of hedge accounting. Among other changes, the new guidance simplifies hedge accounting by (a) allowing more time for entities to complete initial quantitative hedge effectiveness assessments, (b) enabling entities to elect to perform subsequent effectiveness assessments qualitatively, (c) eliminating the concept of recognizing periodic hedge ineffectiveness for cash flow hedges, (d) requiring the change in fair value of a derivative to be recorded in the same statement of operations line item as the earnings effect of the hedged item, and (e) permitting additional hedge strategies to qualify for hedge accounting. In addition, the guidance modifies existing disclosure requirements and adds new disclosure requirements, including tabular disclosures about both (a) the total amounts reported in the statement of operations for each income and expense line item that is affected by hedging and (b) the effects of hedging on those line items. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We do not plan to early adopt. The guidance is required to be adopted on a modified retrospective basis to existing hedging relationships and on a prospective basis for the presentation and disclosure requirements. We do not expect a significant impact upon adoption, but we will add the required disclosures, as applicable. Fair Value Measurement Disclosures In August 2018, the FASB issued authoritative guidance modifying the disclosure requirements for fair value measurements. The new guidance adds disclosure requirements for Level 3 fair value measurements and modifies disclosure requirements for public entities regarding certain fair value measurements. In addition, the guidance eliminates (a) the disclosure of the amount of, and reasons for, transfers between Level 1 and Level 2 assets and liabilities, (b) the policy for timing of transfers between levels of the fair value hierarchy, and (c) other disclosure requirements related to Level 3 fair value measurements. The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted. The guidance is required to be adopted primarily on a retrospective basis, with certain new and modified disclosures requiring prospective application. We are still evaluating the new guidance, but do not expect our disclosures to be significantly impacted upon adoption, particularly given we do not currently have any Level 3 fair value measurements. Pension and Other Postretirement Plan Disclosures In August 2018, the FASB issued authoritative guidance modifying the disclosure requirements for defined benefit pension and other postretirement plans. The new guidance requires disclosures including (a) the weighted average interest credit rates used for cash balance pension plans, (b) a narrative description of the reasons for significant gains and losses affecting the benefit obligation for the period, and (c) an explanation of other significant changes in the benefit obligation or plan assets. In addition, the guidance removes currently required disclosures including, among others, the requirement for public entities to disclose the effects of a one-percentage-point change on the assumed health care costs and the effect of the change in rates on service cost, interest cost, and the benefit obligation for postretirement health care benefits. The new guidance, which is effective for fiscal years ending after December 15, 2020 with early adoption permitted, is required to be adopted on a retrospective basis. We are still evaluating the impact of the new guidance on our disclosures. Accounting for Cloud Computing Arrangements In August 2018, the FASB issued authoritative guidance to address the accounting for implementation costs incurred in a cloud computing agreement that is a service contract. The new standard aligns the accounting for implementation costs incurred in a cloud computing arrangement accounted for as a service contract with existing guidance on capitalizing costs associated with developing or obtaining internal-use software. In addition, the new guidance requires entities to expense capitalized implementation costs of a cloud computing arrangement that is a service contract over the term of the agreement and to present the expense in the same income statement line item as the hosting fees. The guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We are still evaluating the impact of the new standard on our financial statements, including disclosures. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Our total revenues are comprised of revenues which arise from three classifications including transmission services, other services revenue, 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 operations. 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 operating data and financial performance, including the amount of network load on their transmissions 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 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 fluctuations of actual load, the unbilled revenue amount generally increases during the spring and summer and decreases during the fall and winter. See Note 4 for information on changes in unbilled accounts receivable. Other Services Revenue 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 was less than $1 million for the three months ended September 30, 2018 and $1 million for the three months ended September 30, 2017 . Total other services revenue for the nine months ended September 30, 2018 and 2017 were $3 million and $5 million , respectively. 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 5 for more information on our Formula Rates. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE The following table presents the components of accounts receivable on the balance sheet: September 30, December 31, (in millions) 2018 2017 Trade accounts receivable $ 2 $ 2 Unbilled accounts receivable 117 108 Other 9 9 Total accounts receivable $ 128 $ 119 |
REGULATORY MATTERS
REGULATORY MATTERS | 9 Months Ended |
Sep. 30, 2018 | |
Regulated Operations [Abstract] | |
REGULATORY MATTERS | 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 Note 14 for detail on ROE matters for our MISO Regulated Operating Subsidiaries and “Challenge to Independence Incentive Adders for Transmission Rates” discussed in Note 5 herein. Our rates 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 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. 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 months ended September 30, 2018 : (in millions) Total Net regulatory liability as of December 31, 2017 $ (35 ) Net refund of 2016 revenue deferrals and accruals, including accrued interest 15 Net revenue deferral for the nine months ended September 30, 2018 (68 ) Net accrued interest payable for the nine months ended September 30, 2018 (1 ) Net regulatory liability as of September 30, 2018 $ (89 ) 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 at September 30, 2018 and December 31, 2017 as follows: September 30, December 31, (in millions) 2018 2017 Current regulatory assets $ 13 $ 18 Non-current regulatory assets 9 11 Current regulatory liabilities (29 ) (38 ) Non-current regulatory liabilities (82 ) (26 ) Net regulatory liability $ (89 ) $ (35 ) Reposting of Rates for Regulated Operating Subsidiaries As a result of the reduction in the federal tax rate arising from the enactment of the TCJA, the 2018 projected Formula Rates for our MISO Regulated Operating Subsidiaries have been reposted. On March 15, 2018, the FERC granted a waiver which allows us the ability to adjust the rates effective back to January 1, 2018 for our MISO Regulated Operating Subsidiaries and allows MISO to return to customers excess amounts previously collected in 2018. Our rates included in MISO invoices for services provided starting in March 2018 and going forward reflected the lower corporate tax rate. Resettlement of invoices for services provided in January and February 2018 occurred in April 2018 when the services were billed. We recorded a reduction of revenue of $16 million in the first quarter of 2018, which was offset through a lower income tax provision for our MISO Regulated Operating Subsidiaries and as such did not impact net income. In addition, the 2018 projected Formula Rates for ITC Great Plains, which are settled by SPP, have been reposted. On May 25, 2018, the FERC granted a waiver which allows us the ability to adjust the rate effective back to January 1, 2018 and allows SPP to return to customers excess amounts previously collected in 2018. Our rates included in SPP invoices for services provided starting in June and going forward reflected the lower corporate tax rate. During the second quarter of 2018, we recorded a reduction of revenue of $4 million related to the resettlement of invoices for services provided in January through May 2018. This reduction of revenue was offset through a lower income tax provision for ITC Great Plains and as such did not impact net income. At September 30, 2018, this amount was primarily recorded as a current regulatory liability related to the resettlement of invoices at ITC Great Plains. MISO Funding Policy for Generator Interconnections On June 18, 2015, the FERC issued an order initiating a proceeding, pursuant to Section 206 of the FPA, to examine MISO’s funding policy for generator interconnections, which allowed a TO to unilaterally elect to fund network upgrades and recover such costs from the interconnection customer. In this order, the FERC found that the MISO funding policy may be unduly discriminatory, and suggested the MISO funding policy be revised to require mutual agreement between the interconnection customer and TO for the TO funded network upgrades. In the absence of such mutual agreement, the facilities would be funded solely by the interconnection customer. On January 8, 2016, MISO made a compliance filing to revise its funding policy to adopt the FERC suggestion to require mutual agreement between the customer and TO, with an effective date of June 24, 2015. Our MISO Regulated Operating Subsidiaries, along with another MISO TO, appealed the FERC’s orders on this issue and on January 26, 2018, the D.C. Circuit Court vacated the orders and remanded this case to FERC. On March 24, 2018, our MISO Regulated Operating Subsidiaries and the other MISO TO that participated in the appeal at the D.C. Circuit Court filed a motion at FERC that asks FERC to implement the D.C. Circuit Court’s decision and order MISO to amend its tariff to reinstate the self-fund option effective June 24, 2015 and to permit MISO TOs that were unable to elect self-funding in GIAs that were executed since June 24, 2015 to amend those GIAs to include the self-fund option. On August 31, 2018, FERC issued an order on remand that directed MISO to restore the right of a TO to unilaterally elect to fund the capital cost of network upgrades, effective prospectively from the date of the FERC order. A request for rehearing of the August 31, 2018 FERC order was filed on October 2, 2018. FERC also requested additional briefing regarding the treatment of contracts entered into between June 24, 2015 and the date of the FERC order, and initial briefs have been filed. We do not expect the resolution of this proceeding to have a material impact on our consolidated results of operations, cash flows or financial condition. Rate of Return on Equity Complaints See “Rate of Return on Equity Complaints” in Note 14 for a discussion of the ROE complaints. Challenge to Independence Incentive Adders for Transmission Rates On April 20, 2018, Consumers Energy, IP&L, Midwest Municipal Transmission Group, Missouri River Energy Services, Southern Minnesota Municipal Power Agency and WPPI Energy filed a complaint with the FERC under section 206 of the FPA, challenging the independence incentive adders that are included in transmission rates charged by ITC’s operating subsidiaries in the MISO region. The adders allowed up to 50 basis points or 100 basis points to be added to the MISO Regulated Operating Subsidiaries’ authorized ROE, subject to any ROE cap established by FERC. On October 18, 2018, FERC issued an order granting the complaint in part, setting revised adders for each of the MISO Regulated Operating Subsidiaries at 25 basis points, and requiring the MISO Regulated Operating Subsidiaries to include the revised adders, effective April 20, 2018, in their Formula Rates. In addition, the order directs the MISO Regulated Operating Subsidiaries to provide refunds, with interest, for the period from April 20, 2018 through the date of the order. A compliance filing to revise the MISO Regulated Operating Subsidiaries’ Formula Rates will be submitted to FERC and refunds will be made to reflect the revised rates in compliance with the FERC order. On October 22, 2018, MISO filed a motion requesting an extension until January 17, 2019 to issue the refunds. We do not expect the resolution of this proceeding to have a material adverse impact on our consolidated results of operations, cash flows or financial condition. Calculation of Accumulated Deferred Income Tax Balances in Projected Formula Rates On June 21, 2018, FERC issued an order initiating a proceeding and paper hearings, pursuant to Section 206 of the FPA, to examine the methodology used by a group of TOs, including ITCTransmission and ITC Midwest, for calculating balances of accumulated deferred income taxes (“ADIT”) in forward-looking Formula Rates. The order is based on a previous FERC decision for another group of TOs in which FERC concluded that the two-step averaging methodology for ADIT is no longer necessary to comply with IRS normalization rules in light of IRS guidance issued in 2017. On August 27, 2018, ITCTransmission and ITC Midwest, along with other MISO TOs, filed an initial brief in the paper hearing proceeding. In addition, on August 27, 2018, our MISO Regulated Operating Subsidiaries submitted a filing with the FERC under Section 205 of the FPA to eliminate the use of the two-step averaging methodology in the calculation of ADIT balances for the projected test year and also to modify the manner by which they calculate average ADIT balances in their annual transmission formula rate true-up calculation, subject to receiving guidance from the IRS to respond to the FERC order. The Regulated Operating Subsidiaries only utilize the two-step averaging methodology for their projected Formula Rate and not for purposes of the true-up. We do not expect the resolution of this proceeding to have a material adverse impact on our consolidated results of operations, cash flows or financial condition. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill At September 30, 2018 and December 31, 2017 , we had goodwill balances recorded at ITCTransmission, METC and ITC Midwest of $173 million , $454 million and $323 million , respectively, which resulted from the ITCTransmission and METC acquisitions and ITC Midwest’s acquisition of the IP&L transmission assets, respectively. Intangible Assets We have recorded intangible assets as a result of the METC acquisition in 2006. The carrying value of these assets was $23 million and $26 million (net of accumulated amortization of $36 million and $33 million ) as of September 30, 2018 and December 31, 2017 , respectively. We have also recorded intangible assets for payments made by and obligations of ITC Great Plains to certain TOs to acquire rights, which are required under the SPP tariff to designate ITC Great Plains to build, own and operate projects within the SPP region, including regional cost sharing projects in Kansas. The carrying amount of these intangible assets was $14 million (net of accumulated amortization of $2 million ) at both September 30, 2018 and December 31, 2017 . We have recorded $1 million of other intangible assets at both September 30, 2018 and December 31, 2017 . We recognized $1 million of amortization expense of our intangible assets during each of the three month periods ended September 30, 2018 and 2017 , and recorded $3 million during each of the nine month periods ended September 30, 2018 and 2017 . For each of the next five years, we expect the annual amortization of our intangible assets that have been recorded as of September 30, 2018 to be $3 million per year. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT ITC Holdings Senior Unsecured Notes On November 14, 2017, ITC Holdings completed the private offering of $500 million aggregate principal amount of unsecured 2.70% Senior Notes, due November 15, 2022, and $500 million aggregate principal amount of unsecured 3.35% Senior Notes, due November 15, 2027, (collectively, the “2017 Senior Notes”). In connection with the offering of the 2017 Senior Notes, ITC Holdings also entered into a registration rights agreement with the representatives of the initial purchasers named therein. Pursuant to this registration rights agreement, ITC Holdings agreed to use its commercially reasonable efforts to file with the SEC and cause to become effective a registration statement with respect to registered exchange offers to exchange each series of 2017 Senior Notes issued in the offering for an issue of notes having terms substantially identical to the applicable series of 2017 Senior Notes (except for provisions relating to the transfer restrictions, registration rights and payment of additional interest) (the “Exchange Offers”). On June 19, 2018, ITC Holdings completed the Exchange Offers, pursuant to an effective registration statement on Form S-4, under which all of the 2017 Senior Notes issued in the offering were exchanged for an issue of notes having terms substantially identical to the applicable series of 2017 Senior Notes (except for provisions in the 2017 Senior Notes relating to transfer restrictions, registration rights and payment of additional interest). 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. As of September 30, 2018 and December 31, 2017, ITC Holdings did not have any commercial paper issued or outstanding. ITCTransmission First Mortgage Bonds On March 29, 2018, ITCTransmission issued $225 million aggregate principal amount of 4.00% First Mortgage Bonds due March 30, 2053. The proceeds were used to refinance $100 million of 5.75% First Mortgage Bonds due April 1, 2018 and repay the existing indebtedness under the revolving credit agreement in March 2018. Proceeds were also used to repay the $50 million of borrowings under the term loan credit agreement due March 23, 2019. Remaining proceeds will be used to partially fund capital expenditures and for general corporate purposes. ITCTransmission’s First Mortgage bonds were issued under its First Mortgage and Deed of Trust and secured by a first mortgage lien on substantially all of its real property and tangible personal property. ITC Midwest First Mortgage Bonds On November 1, 2018, ITC Midwest issued $162 million of 4.32% First Mortgage Bonds due November 1, 2051. ITC Midwest expects to issue an additional $13 million of these First Mortgage Bonds in early November 2018. The proceeds will be used to partially repay existing indebtedness under ITC Midwest’s revolving credit agreement, partially fund capital expenditures and for general corporate purposes. ITC Midwest’s First Mortgage Bonds were issued under its 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 may 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. At September 30, 2018 , ITC Holdings did not have any interest rate swaps outstanding. Revolving Credit Agreements At September 30, 2018 , ITC Holdings and certain of its Regulated Operating Subsidiaries had the following unsecured revolving credit facilities available: (in millions) Total Capacity Outstanding Balance (a) Unused Capacity Weighted Average Interest Rate on Outstanding Balance (b) Commitment Fee Rate (c) ITC Holdings $ 400 $ — $ 400 (d) —% 0.175 % ITCTransmission 100 13 87 3.2% 0.10 % METC 100 62 38 3.3% 0.10 % ITC Midwest 225 175 50 3.2% 0.10 % ITC Great Plains 75 40 35 3.2% 0.10 % Total $ 900 $ 290 $ 610 ____________________________ (a) Included within long-term debt. (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. 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, 2018 , we were not in violation of any debt covenant. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES In December 2017, the President of the United States signed into law the TCJA, which enacted significant changes to the Internal Revenue Code including a reduction in the U.S. federal corporate income tax rate from 35% to 21% effective for tax years beginning after 2017. During the second quarter of 2018, Iowa enacted a reduction in corporate statutory income tax rates from 12.0% to 9.8% , effective January 1, 2021. Based upon the future change in rate, we have revalued the Iowa NOL at ITC Holdings. As a result, we recorded additional income tax expense of $2 million and $8 million during the three and nine months ended September 30, 2018 , respectively. For the three months ended September 30, 2018 and 2017 , our effective tax rates were 23% and 36% , respectively, and for the nine months ended September 30, 2018 and 2017 , our effective tax rates were 26% and 37% , respectively. We continue to evaluate the bonus depreciation exemption for regulated utilities. We have recorded an estimated provision for bonus depreciation for our fixed assets placed in service after September 27, 2017, which impacts our deferred tax assets and liabilities. We anticipate further clarification on this item from the IRS and the provisional amounts we have recorded under SAB 118 represent our best estimates as a result of the TCJA. |
RETIREMENT BENEFITS AND ASSETS
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST | 9 Months Ended |
Sep. 30, 2018 | |
Retirement Benefits [Abstract] | |
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST | RETIREMENT BENEFITS AND ASSETS HELD IN TRUST Pension Plan Benefits We have a qualified defined benefit pension plan (“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 to contribute amounts necessary to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974, plus additional amounts as we determine appropriate. During the second quarter of 2018, we contributed $4 million to the retirement plan. We do not expect to make any additional contributions to this plan in 2018 . 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. We contributed $3 million to the supplemental benefit plans during the second quarter of 2018. We do not expect to make any additional contributions to these plans in 2018 . Net periodic benefit cost for the pension plans, by component, was as follows for the three and nine months ended September 30, 2018 and 2017 : Three months ended Nine months ended September 30, September 30, (in millions) 2018 2017 2018 2017 Service cost $ 1 $ 2 $ 5 $ 5 Interest cost 1 1 3 3 Expected return on plan assets (1 ) (1 ) (3 ) (3 ) Amortization of unrecognized loss 1 — 1 1 Net pension cost $ 2 $ 2 $ 6 $ 6 The components of net pension cost other than the service cost component are included in the line item “ Other (income) and expenses, net ” in the condensed consolidated statements of operations. Other Postretirement Benefits We provide certain postretirement health care, dental and life insurance benefits for eligible employees. During the nine months ended September 30, 2018 we contributed $7 million to the postretirement benefit plan. We expect to make additional contributions of $2 million to the postretirement benefit plan during the fourth quarter of 2018 . Net postretirement benefit plan cost, by component, was as follows for the three and nine months ended September 30, 2018 and 2017 : Three months ended Nine months ended September 30, September 30, (in millions) 2018 2017 2018 2017 Service cost $ 3 $ 2 $ 8 $ 6 Interest cost — 1 2 2 Expected return on plan assets (1 ) (1 ) (3 ) (2 ) Net postretirement cost $ 2 $ 2 $ 7 $ 6 The components of net postretirement cost other than the service cost component are included in the line item “ Other (income) and expenses, net ” in the condensed consolidated statements of operations. 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 million for each of the three month periods ended September 30, 2018 and 2017 and $4 million and $3 million for the nine months ended September 30, 2018 and 2017 , respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 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 months ended September 30, 2018 and the year ended December 31, 2017 , there were no transfers between levels. Our assets measured at fair value subject to the three-tier hierarchy at September 30, 2018 , 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) (Level 1) (Level 2) (Level 3) Financial assets measured on a recurring basis: Mutual funds — fixed income securities $ 53 $ — $ — Mutual funds — equity securities 2 — — Total $ 55 $ — $ — Our assets measured at fair value subject to the three-tier hierarchy at December 31, 2017 , 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) (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 1 — — Total $ 54 $ — $ — As of September 30, 2018 and December 31, 2017 , 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 9 . 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. Beginning on January 1, 2018, gains and losses for all mutual fund investments are recorded in earnings. Previously, gains and losses on available-for-sale investments were recorded in AOCI. 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 nine months ended September 30, 2018 and 2017 . For additional information on our goodwill and intangible assets, please refer to Note 6 . 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 and term loan credit agreements and commercial paper, was $4,967 million and $5,192 million at September 30, 2018 and December 31, 2017 , 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 and term loan credit agreements and commercial paper, was $4,956 million and $4,830 million at September 30, 2018 and December 31, 2017 , respectively. Revolving and Term Loan Credit Agreements At September 30, 2018 and December 31, 2017 , we had a consolidated total of $290 million and $271 million , respectively, outstanding under our revolving and term loan credit agreements, which are variable rate loans. The fair value of these loans 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. |
STOCKHOLDER'S EQUITY
STOCKHOLDER'S EQUITY | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
STOCKHOLDER'S EQUITY | STOCKHOLDER'S EQUITY Accumulated Other Comprehensive Income The following table provides the components of changes in AOCI for the three and nine months ended September 30, 2018 and 2017 : Three months ended Nine months ended September 30, September 30, (in millions) 2018 2017 2018 2017 Balance at the beginning of period $ 4 $ — $ 2 $ 2 Derivative instruments Reclassification of net loss relating to interest rate cash flow hedges from AOCI to earnings (net of tax, of less than $1 million for the three months ended September 30, 2017 and nine months ended September 30, 2018 and 2017) (a) — 1 1 1 Reclassification of deferred tax effects on interest rate cash flow hedges stranded in AOCI, subject to the TCJA, into retained earnings — — 1 — Gain on interest rate swaps relating to interest rate cash flow hedges (net of tax of $1 for the three months ended September 30, 2017) — 2 — — Total other comprehensive income (loss), net of tax — 3 2 1 Balance at the end of period $ 4 $ 3 $ 4 $ 3 ____________________________ (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, 2019 is expected to be approximately $1 million (net of tax of less than $1 million ). The reclassification is reported in interest expense on a pre-tax basis. |
SHARE-BASED COMPENSATION AND EM
SHARE-BASED COMPENSATION AND EMPLOYEE SHARE PURCHASE PLAN | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION AND EMPLOYEE SHARE PURCHASE PLAN | SHARE-BASED COMPENSATION AND EMPLOYEE SHARE PURCHASE PLAN 2017 Omnibus Plan On March 7, 2018, pursuant to the 2017 Omnibus Plan, we granted 296,559 PBUs and 230,645 SBUs. Each PBU and SBU granted will be 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. The awards 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 consistent with the target award and settled in cash at the end of the vesting period. The granted awards and related dividend equivalents have no shareholder rights. The aggregate fair value of all tranches of PBUs and SBUs as of September 30, 2018 was $15 million and $16 million , respectively. At September 30, 2018 , the total unrecognized compensation cost related to the PBUs and SBUs was $11 million and $9 million , respectively. Employee Share Purchase Plan We have an ESPP plan which enables ITC employees to purchase shares of Fortis common stock. Our cost of the plan is based on the value of our contribution, as additional compensation to a participating employee, equal to 10% of an employee’s contribution up to a maximum annual contribution of 1% of an employee’s base pay and an amount equal to 10% of all dividends paid on the Fortis shares allocated to an employee’s ESPP account. ITC Holdings implemented the ESPP during the second quarter of 2017. The cost of ITC Holdings’ contribution for each of the three and nine months ended September 30, 2018 and 2017 was less than $1 million . |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 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 less than $1 million at September 30, 2018 and December 31, 2017 and intercompany payables to Fortis and such subsidiaries of less than $1 million at September 30, 2018 and December 31, 2017 . Related party charges for corporate expenses from Fortis and such subsidiaries are recorded in general and administrative expense. Such expense for each of the three months ended September 30, 2018 and 2017 for ITC Holdings was $2 million . For each of the nine months ended September 30, 2018 and 2017 , such expense for ITC Holdings was $6 million . Related party billings 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 and nine months ended September 30, 2018 and 2017 . Dividends During the nine months ended September 30, 2018 , we paid dividends of $150 million to Investment Holdings. ITC Holdings also paid dividends of $50 million to Investment Holdings in October 2018. |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENT LIABILITIES | 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, establish standards for the management, treatment, storage, transportation and disposal of solid and hazardous wastes and hazardous materials, 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 results of operations, financial position or liquidity. Our assets and operations also involve the use of materials classified as hazardous, toxic or otherwise dangerous. Many 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 aboveground 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. Our facilities and equipment are often situated on or near property owned by others so that, if they are the source of contamination, others’ property may be affected. For example, aboveground 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 such as wetlands. 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. Rate of Return on Equity Complaints 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 under Section 206 of the FPA requesting that the FERC find the then current 12.38% MISO regional base ROE rate (the “base ROE”) for all MISO TOs, including ITCTransmission, METC and ITC Midwest, to no longer be just and reasonable. The complainants sought a FERC order reducing 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 FERC set the refund effective date for the Initial Complaint as November 12, 2013. On June 19, 2014, in a separate Section 206 complaint against the regional base ROE rate for ISO New England TOs, the FERC adopted a methodology for establishing base ROE rates for electric transmission utilities. The methodology was based on a two-step DCF analysis that uses both short-term and long-term growth projections in calculating ROE rates for a proxy group of electric utilities. The FERC also reiterated that it can apply discretion in determining how ROE rates are established within a zone of reasonableness and reiterated its policy for limiting the overall ROE rate for any company, including the base and all applicable adders, at the high end of the zone of reasonableness set by the two-step DCF methodology. The new method ultimately adopted in the ISO New England ROE case, discussed below, is expected to be used in resolving the MISO ROE cases. On December 22, 2015, the presiding administrative law judge issued an initial decision on the Initial Complaint, consistent with the two-step DCF methodology adopted in the ISO New England decision in June 2014. On September 28, 2016, the FERC issued the September 2016 Order affirming the presiding administrative law judge’s initial decision and setting 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 (the “Initial Refund Period”). Additionally, the base ROE established by the September 2016 Order will be used prospectively from the date of that order until a new approved base ROE is established by the FERC. The September 2016 Order resulted in an ROE used by ITCTransmission, METC and ITC Midwest of 11.35% , 11.35% and 11.32% , respectively, effective for the period between September 28, 2016 and April 19, 2018. Beginning April 20, 2018, the ROE used by all MISO Regulated Operating Subsidiaries was 11.07% . See Note 5 for additional information regarding the challenge to independence incentive adders for transmission rates. The September 2016 Order required all MISO TOs, including our MISO Regulated Operating Subsidiaries, to provide refunds for the Initial Refund Period. The total refund for the Initial Complaint resulting from this FERC order, including interest, was $118 million for our MISO Regulated Operating Subsidiaries and refunds were completed during the first six months of 2017. 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 used by FERC to determine the cost of equity of public utilities. The complainants also filed a request for rehearing, citing that FERC erred in several material respects in the September 2016 Order. The FERC issued a tolling order on November 28, 2016 to allow for additional time to address the rehearing requests. On February 12, 2015, the Second Complaint was filed with the FERC under Section 206 of the FPA 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. The FERC set the Second Complaint for hearing and settlement procedures and set the refund effective date for the Second Complaint as February 12, 2015. On June 30, 2016, the presiding administrative law judge issued an initial decision on the Second Complaint, which recommended a base ROE of 9.70% for February 12, 2015 through May 11, 2016 (the “Second Refund Period”), with a maximum ROE of 10.68% . The initial decision is a non-binding recommendation to the FERC on the Second Complaint, and all parties have filed briefs contesting various parts of the proposed findings and recommendations. FERC has not yet issued an order on the initial decision on the Second Complaint. On April 14, 2017, in Emera Maine v. FERC , the D.C. Circuit Court vacated the precedent-setting FERC orders that revised the regional base ROE rate for the ISO New England TOs and established and applied the two-step DCF methodology for the determination of ROE. The court remanded the orders to the FERC for further justification of its establishment of the new base ROE for the ISO New England TOs. On October 16, 2018, FERC issued an order on remand which proposes a new methodology for 1) determining when an existing ROE is no longer just and reasonable; and 2) setting a new just and reasonable ROE if an existing ROE has been found not to be just and reasonable. FERC requested written responses through a paper hearing on how the proposed new methodology should apply to the ISO New England TOs ROE complaint proceedings. If finalized, FERC’s proposed policy for determining whether an existing ROE remains just and reasonable, and if not, what the new just and reasonable ROE is, would be applied in ROE proceedings currently pending before the FERC, including the MISO ROE Initial Complaint, and all subsequent periods including, but not limited to, the Second Complaint. On September 29, 2017, certain MISO transmission owners, including our MISO Regulated Operating Subsidiaries, filed a motion for the FERC to dismiss the Second Complaint, on the grounds that the Second Complaint fails as a matter of law to make the showings required by the D.C. Circuit Court’s decision in Emera Maine v. FERC to demonstrate that the currently effective base ROE of 10.32% is unjust and unreasonable. Pending a determination by FERC on the merits of the motion, the estimated current regulatory liability that has been recorded in the condensed consolidated statements of financial position for the Second Complaint has not been modified. If the Second Complaint is not dismissed, we expect the FERC to establish a new base ROE and zone of reasonableness that will be used, along with any ROE adders, to calculate the refund liability for the Second Refund Period and future ROEs for our MISO Regulated Operating Subsidiaries. As of September 30, 2018 , the estimated refund for the related refund period was $149 million on a pre-tax basis. Our MISO Regulated Operating Subsidiaries had an estimated current regulatory liability for the Second Complaint of $149 million and $145 million as of September 30, 2018 and December 31, 2017, respectively. The recognition of the obligations associated with the complaints resulted in a reduction of net income and additional revenue and interest expense as set forth in the table below for the periods indicated. Three months ended Nine months ended September 30, September 30, (in millions) 2018 2017 2018 2017 Revenue increase $ — $ — $ (1 ) $ — Interest expense increase 2 1 5 4 Estimated net income reduction 1 — 3 2 Further uncertainty regarding the outcome of the Initial Complaint and the Second Complaint and the timing of completion of these matters has been introduced due to the Emera Maine v. FERC decision and FERC’s October 16, 2018 order on remand. It is possible that the outcome of these matters could differ from the amounts previously refunded and estimated losses and could, therefore, materially affect our consolidated results of operations. This is due to the uncertainty of the calculation of an authorized base ROE along with the zone of reasonableness, which is subject to significant discretion by the FERC. As of September 30, 2018 , our MISO Regulated Operating Subsidiaries had a total of approximately $4 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 $4 million . In a separate but related matter, in November 2014, METC, ITC Midwest and other MISO TOs filed a request with the FERC, under FPA Section 205, for authority to include a 50 basis point incentive adder for RTO participation in each of the TOs’ Formula Rates. On January 5, 2015, the FERC approved the use of this incentive adder, effective January 6, 2015. Additionally, ITC Midwest filed a request with the FERC, under FPA Section 205, in January 2015 for authority to include a 100 basis point incentive adder for independent transmission ownership. On March 31, 2015, the FERC approved the use of a 50 basis point incentive adder for independence, effective April 1, 2015. On April 30, 2015, ITC Midwest and an intervenor, RPGI, filed separate requests with the FERC for rehearing on the approved incentive adder for independence, and both requests were subsequently denied by the FERC on January 6, 2016. RPGI has filed an appeal of the FERC’s decisions, which remains pending. Beginning September 28, 2016, these incentive adders have been applied to METC’s and ITC Midwest’s base ROEs in establishing their total authorized ROE rates, subject to the maximum ROE limitation in the September 2016 Order of 11.35% . Effective April 20, 2018, an incentive adder of 25 basis points has been applied to the ROE of the MISO Regulated Operating Subsidiaries as a result of the FERC order on the complaint regarding the MISO Regulated Operating Subsidiaries’ independence incentive adders. See Note 5 for additional information regarding the challenge to independence incentive adders for transmission rates. Maximum ROEs may be subject to revision based on the methodology finally established in the ROE complaint proceedings for the ISO New England TOs. Development Projects We are pursuing strategic development projects that may result in payments to developers that are contingent on the projects reaching certain milestones indicating that the projects are financially viable. We believe it is reasonably possible that we will be required to make these contingent development payments up to a maximum amount of $125 million for the period from 2018 through 2022. In the event it becomes probable that we will make these payments, we would recognize the liability and the corresponding intangible asset or expense as appropriate. |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | 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, (in millions) 2018 2017 2017 2016 Cash and cash equivalents $ 18 $ 8 $ 66 $ 8 Restricted cash included in: Other non-current assets 4 2 2 3 Total cash, cash equivalents and restricted cash $ 22 $ 10 $ 68 $ 11 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. Supplementary Cash Flows Information Nine months ended September 30, (in millions) 2018 2017 Supplementary cash flows information: Interest paid (net of interest capitalized) (a) $ 164 $ 157 Income tax refunds received 13 1 Supplementary non-cash investing and financing activities: Additions to property, plant and equipment and other long-lived assets (b) 102 103 Allowance for equity funds used during construction 26 25 ____________________________ (a) Amount for the nine months ended September 30, 2017 includes $9 million of interest paid associated with the Initial Complaint. See Note 14 for information on the Initial Complaint. (b) 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, 2018 or 2017 , respectively, but will be or have been included as a cash outflow from investing activities when paid. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 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 OPERATING REVENUES: September 30, September 30, (in millions) 2018 2017 2018 2017 Regulated Operating Subsidiaries $ 302 $ 306 $ 886 $ 921 ITC Holdings and other — 1 — 1 Intercompany eliminations (7 ) (8 ) (22 ) (22 ) Total Operating Revenues $ 295 $ 299 $ 864 $ 900 Three months ended Nine months ended INCOME (LOSS) BEFORE INCOME TAXES: September 30, September 30, (in millions) 2018 2017 2018 2017 Regulated Operating Subsidiaries $ 151 $ 166 $ 441 $ 492 ITC Holdings and other (36 ) (38 ) (104 ) (108 ) Total Income Before Income Taxes $ 115 $ 128 $ 337 $ 384 Three months ended Nine months ended NET INCOME: September 30, September 30, (in millions) 2018 2017 2018 2017 Regulated Operating Subsidiaries $ 112 $ 104 $ 327 $ 304 ITC Holdings and other 89 82 250 243 Intercompany eliminations (112 ) (104 ) (327 ) (304 ) Total Net Income $ 89 $ 82 $ 250 $ 243 TOTAL ASSETS: September 30, December 31, (in millions) 2018 2017 Regulated Operating Subsidiaries $ 9,101 $ 8,688 ITC Holdings and other 4,899 4,799 Reconciliations / Intercompany eliminations (a) (4,776 ) (4,664 ) Total Assets $ 9,224 $ 8,823 ____________________________ (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. |
GENERAL (Policies)
GENERAL (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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, 2017 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 ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Lessee, Leases | Accounting for Leases In February 2016, the FASB issued authoritative guidance on accounting for leases, which primarily impacts accounting by lessees. In January 2018, additional guidance was issued that provides an optional transition practical expedient to not evaluate under the new guidance existing or expired easements that were not previously accounted for as leases under current guidance. The new guidance creates a dual approach for lessee accounting, with lease classification determined in accordance with principles in existing lease guidance. Statement of operations presentation differs depending on the lease classification; however, both types of leases result in lessees recognizing a right-of-use asset and a lease liability, with limited exceptions. Under existing accounting guidance, operating leases are not recorded on the balance sheet of lessees. The new guidance is effective on January 1, 2019. Early adoption is permitted; however, we will not early adopt. In July 2018, transition relief guidance was issued whereby entities may elect to apply the new guidance on a modified retrospective basis at the adoption date (i.e., January 1, 2019) as opposed to at the beginning of the earliest period presented in the financial statements (i.e., January 1, 2017). We expect to elect this transition relief and begin applying the new guidance as of January 1, 2019, with prior period comparative financial statements and disclosures presented under current lease accounting guidance. In connection with our adoption of the new guidance, we expect to elect various practical expedients and make certain accounting policy elections, including: • a “package of three” practical expedients that must be taken together and will allow us to not reassess: ◦ whether any expired or existing contracts are or contain leases, ◦ the lease classification of any expired or existing leases, and ◦ the initial direct costs for any existing leases; • a practical expedient that permits entities to not evaluate existing land easements at adoption that were not previously accounted for as leases; and • an accounting policy election to not apply the recognition requirements to short-term leases (i.e., leases with terms of 12 months or less). However, our conclusions on practical expedients and accounting policy elections may continue to evolve during our final stages of implementation as we work through our adoption plan. We are continuing to assess the impact that this guidance will have on our consolidated financial statements, including our disclosures. |
REVENUE (Policies)
REVENUE (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition, Policy | 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 operating data and financial performance, including the amount of network load on their transmissions 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 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 fluctuations of actual load, the unbilled revenue amount generally increases during the spring and summer and decreases during the fall and winter. See Note 4 for information on changes in unbilled accounts receivable. Other Services Revenue 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 was less than $1 million for the three months ended September 30, 2018 and $1 million for the three months ended September 30, 2017 . Total other services revenue for the nine months ended September 30, 2018 and 2017 were $3 million and $5 million , respectively. 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 5 for more information on our Formula Rates. |
RECENT ACCOUNTING PRONOUNCEME_3
RECENT ACCOUNTING PRONOUNCEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Standards Update 2016-18 | |
New Accounting Pronouncements or Change in Accounting Principle | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following summarizes the impact of this adoption on our previously reported amounts: Nine months ended (in millions) September 30, 2017 Restricted cash - Beginning balance $ 3 Restricted cash - Ending balance 2 Change - Other current and non-current assets and liabilities, net within condensed consolidated statements of cash flow $ (1 ) |
Accounting Standards Update 2017-07 | |
New Accounting Pronouncements or Change in Accounting Principle | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following summarizes the impact of this adoption on our previously reported amounts: Three months ended Nine months ended (in millions) September 30, 2017 September 30, 2017 General and administrative Reported $ 31 $ 92 Adjustment — (1 ) Adjusted $ 31 $ 91 Other (income) and expenses, net Reported $ — $ 1 Adjustment — 1 Adjusted $ — $ 2 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Components of accounts receivable | The following table presents the components of accounts receivable on the balance sheet: September 30, December 31, (in millions) 2018 2017 Trade accounts receivable $ 2 $ 2 Unbilled accounts receivable 117 108 Other 9 9 Total accounts receivable $ 128 $ 119 |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Regulated Operations [Abstract] | |
Net Changes in Regulatory Assets and Liabilities | 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 months ended September 30, 2018 : (in millions) Total Net regulatory liability as of December 31, 2017 $ (35 ) Net refund of 2016 revenue deferrals and accruals, including accrued interest 15 Net revenue deferral for the nine months ended September 30, 2018 (68 ) Net accrued interest payable for the nine months ended September 30, 2018 (1 ) Net regulatory liability as of September 30, 2018 $ (89 ) |
Schedule of Regulatory Assets and Liabilities | 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 at September 30, 2018 and December 31, 2017 as follows: September 30, December 31, (in millions) 2018 2017 Current regulatory assets $ 13 $ 18 Non-current regulatory assets 9 11 Current regulatory liabilities (29 ) (38 ) Non-current regulatory liabilities (82 ) (26 ) Net regulatory liability $ (89 ) $ (35 ) |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Revolving Credit Agreements | At September 30, 2018 , ITC Holdings and certain of its Regulated Operating Subsidiaries had the following unsecured revolving credit facilities available: (in millions) Total Capacity Outstanding Balance (a) Unused Capacity Weighted Average Interest Rate on Outstanding Balance (b) Commitment Fee Rate (c) ITC Holdings $ 400 $ — $ 400 (d) —% 0.175 % ITCTransmission 100 13 87 3.2% 0.10 % METC 100 62 38 3.3% 0.10 % ITC Midwest 225 175 50 3.2% 0.10 % ITC Great Plains 75 40 35 3.2% 0.10 % Total $ 900 $ 290 $ 610 ____________________________ (a) Included within long-term debt. (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. |
RETIREMENT BENEFITS AND ASSET_2
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Pension plans | |
Defined Benefit Plan Disclosure [Line Items] | |
Net Defined Benefit Cost Components | Net periodic benefit cost for the pension plans, by component, was as follows for the three and nine months ended September 30, 2018 and 2017 : Three months ended Nine months ended September 30, September 30, (in millions) 2018 2017 2018 2017 Service cost $ 1 $ 2 $ 5 $ 5 Interest cost 1 1 3 3 Expected return on plan assets (1 ) (1 ) (3 ) (3 ) Amortization of unrecognized loss 1 — 1 1 Net pension cost $ 2 $ 2 $ 6 $ 6 |
Other Postretirement Benefits Plan | |
Defined Benefit Plan Disclosure [Line Items] | |
Net Defined Benefit Cost Components | Net postretirement benefit plan cost, by component, was as follows for the three and nine months ended September 30, 2018 and 2017 : Three months ended Nine months ended September 30, September 30, (in millions) 2018 2017 2018 2017 Service cost $ 3 $ 2 $ 8 $ 6 Interest cost — 1 2 2 Expected return on plan assets (1 ) (1 ) (3 ) (2 ) Net postretirement cost $ 2 $ 2 $ 7 $ 6 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities at Fair Value Subject to Three-Tier Hierarchy | Our assets measured at fair value subject to the three-tier hierarchy at September 30, 2018 , 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) (Level 1) (Level 2) (Level 3) Financial assets measured on a recurring basis: Mutual funds — fixed income securities $ 53 $ — $ — Mutual funds — equity securities 2 — — Total $ 55 $ — $ — Our assets measured at fair value subject to the three-tier hierarchy at December 31, 2017 , 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) (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 1 — — Total $ 54 $ — $ — |
STOCKHOLDER'S EQUITY (Tables)
STOCKHOLDER'S EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Income | The following table provides the components of changes in AOCI for the three and nine months ended September 30, 2018 and 2017 : Three months ended Nine months ended September 30, September 30, (in millions) 2018 2017 2018 2017 Balance at the beginning of period $ 4 $ — $ 2 $ 2 Derivative instruments Reclassification of net loss relating to interest rate cash flow hedges from AOCI to earnings (net of tax, of less than $1 million for the three months ended September 30, 2017 and nine months ended September 30, 2018 and 2017) (a) — 1 1 1 Reclassification of deferred tax effects on interest rate cash flow hedges stranded in AOCI, subject to the TCJA, into retained earnings — — 1 — Gain on interest rate swaps relating to interest rate cash flow hedges (net of tax of $1 for the three months ended September 30, 2017) — 2 — — Total other comprehensive income (loss), net of tax — 3 2 1 Balance at the end of period $ 4 $ 3 $ 4 $ 3 ____________________________ (a) The reclassification of the net loss relating to interest rate cash flow hedges is reported in interest expense on a pre-tax basis. |
COMMITMENTS AND CONTINGENT LI_2
COMMITMENTS AND CONTINGENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Impacts from the Initial and Second ROE Complaints | The recognition of the obligations associated with the complaints resulted in a reduction of net income and additional revenue and interest expense as set forth in the table below for the periods indicated. Three months ended Nine months ended September 30, September 30, (in millions) 2018 2017 2018 2017 Revenue increase $ — $ — $ (1 ) $ — Interest expense increase 2 1 5 4 Estimated net income reduction 1 — 3 2 |
SUPPLEMENTAL FINANCIAL INFORM_2
SUPPLEMENTAL FINANCIAL INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Restrictions on Cash and Cash Equivalents | 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, (in millions) 2018 2017 2017 2016 Cash and cash equivalents $ 18 $ 8 $ 66 $ 8 Restricted cash included in: Other non-current assets 4 2 2 3 Total cash, cash equivalents and restricted cash $ 22 $ 10 $ 68 $ 11 |
Supplementary Cash Flow Information | Nine months ended September 30, (in millions) 2018 2017 Supplementary cash flows information: Interest paid (net of interest capitalized) (a) $ 164 $ 157 Income tax refunds received 13 1 Supplementary non-cash investing and financing activities: Additions to property, plant and equipment and other long-lived assets (b) 102 103 Allowance for equity funds used during construction 26 25 ____________________________ (a) Amount for the nine months ended September 30, 2017 includes $9 million of interest paid associated with the Initial Complaint. See Note 14 for information on the Initial Complaint. (b) 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, 2018 or 2017 , respectively, but will be or have been included as a cash outflow from investing activities when paid. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Financial Information by Reportable Segment | The following tables show our financial information by reportable segment: Three months ended Nine months ended OPERATING REVENUES: September 30, September 30, (in millions) 2018 2017 2018 2017 Regulated Operating Subsidiaries $ 302 $ 306 $ 886 $ 921 ITC Holdings and other — 1 — 1 Intercompany eliminations (7 ) (8 ) (22 ) (22 ) Total Operating Revenues $ 295 $ 299 $ 864 $ 900 Three months ended Nine months ended INCOME (LOSS) BEFORE INCOME TAXES: September 30, September 30, (in millions) 2018 2017 2018 2017 Regulated Operating Subsidiaries $ 151 $ 166 $ 441 $ 492 ITC Holdings and other (36 ) (38 ) (104 ) (108 ) Total Income Before Income Taxes $ 115 $ 128 $ 337 $ 384 Three months ended Nine months ended NET INCOME: September 30, September 30, (in millions) 2018 2017 2018 2017 Regulated Operating Subsidiaries $ 112 $ 104 $ 327 $ 304 ITC Holdings and other 89 82 250 243 Intercompany eliminations (112 ) (104 ) (327 ) (304 ) Total Net Income $ 89 $ 82 $ 250 $ 243 TOTAL ASSETS: September 30, December 31, (in millions) 2018 2017 Regulated Operating Subsidiaries $ 9,101 $ 8,688 ITC Holdings and other 4,899 4,799 Reconciliations / Intercompany eliminations (a) (4,776 ) (4,664 ) Total Assets $ 9,224 $ 8,823 ____________________________ (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. |
RECENT ACCOUNTING PRONOUNCEME_4
RECENT ACCOUNTING PRONOUNCEMENTS Restricted Cash (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle | ||
Restricted cash - Beginning balance | $ 2 | $ 3 |
Restricted cash - Ending balance | 4 | 2 |
Change - Other current and non-current assets and liabilities, net within condensed consolidated statements of cash flow | $ 5 | 31 |
Accounting Standards Update 2016-18 | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Change - Other current and non-current assets and liabilities, net within condensed consolidated statements of cash flow | $ (1) |
RECENT ACCOUNTING PRONOUNCEME_5
RECENT ACCOUNTING PRONOUNCEMENT Service Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle | ||||
General and administrative | $ 32 | $ 31 | $ 91 | $ 91 |
Other (income) and expenses, net | $ 0 | 0 | $ 2 | 2 |
Reported | Accounting Standards Update 2017-07 | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
General and administrative | 31 | 92 | ||
Other (income) and expenses, net | 0 | 1 | ||
Adjustment | Accounting Standards Update 2017-07 | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
General and administrative | 0 | (1) | ||
Other (income) and expenses, net | $ 0 | $ 1 |
RECENT ACCOUNTING PRONOUNCEME_6
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle | ||||
Reclassification of deferred tax effects on interest rate cash flow hedges stranded in AOCI, subject to the TCJA, into retained earnings | $ 0 | $ 0 | $ 0 | |
Accounting Standards Update 2018-02 | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Reclassification of deferred tax effects on interest rate cash flow hedges stranded in AOCI, subject to the TCJA, into retained earnings | $ 1 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Transmission and other services | $ 350 | $ 362 | $ 932 | $ 947 |
Other services | ||||
Disaggregation of Revenue [Line Items] | ||||
Transmission and other services | $ 1 | $ 1 | $ 3 | $ 5 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 128 | $ 119 |
Unbilled accounts receivable | 117 | 108 |
Other | 9 | 9 |
Trade accounts receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 2 | $ 2 |
REGULATORY MATTERS Net Changes
REGULATORY MATTERS Net Changes in Regulatory Assets and Liabilities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Revenue Accruals and Deferrals | |
Net regulatory liability as of December 31, 2017 | $ (35) |
Net refund of 2016 revenue deferrals and accruals, including accrued interest | 15 |
Net revenue deferral for the nine months ended September 30, 2018 | (68) |
Net accrued interest payable for the nine months ended September 30, 2018 | (1) |
Net regulatory liability | $ (89) |
REGULATORY MATTERS Schedule of
REGULATORY MATTERS Schedule of Regulatory Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Schedule of Regulatory Assets and Liabilities [Line Items] | ||
Current regulatory assets | $ 14 | $ 18 |
Non-current regulatory assets | 198 | 197 |
Current regulatory liabilities | (182) | (183) |
Non-current regulatory liabilities | (674) | (619) |
Net regulatory liability | (89) | (35) |
Revenue Deferrals, Including Accrued Interest | ||
Schedule of Regulatory Assets and Liabilities [Line Items] | ||
Current regulatory liabilities | (29) | (38) |
Non-current regulatory liabilities | (82) | (26) |
Revenue Accruals, Including Accrued Interest | ||
Schedule of Regulatory Assets and Liabilities [Line Items] | ||
Current regulatory assets | 13 | 18 |
Non-current regulatory assets | $ 9 | $ 11 |
REGULATORY MATTERS (Details)
REGULATORY MATTERS (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Oct. 18, 2018 | Dec. 31, 2017USD ($) | |
Regulatory Liabilities [Line Items] | ||||||||
Transmission rate, applicable period | 1 year | |||||||
Revenue true-up amount reflected in customer bill, period of recognition | 2 years | |||||||
Revenue (increase) decrease | $ (295) | $ (299) | $ (864) | $ (900) | ||||
Current regulatory liability | 182 | 182 | $ 183 | |||||
ITC Great Plains | TCJA Resettlement of Rates | ||||||||
Regulatory Liabilities [Line Items] | ||||||||
Current regulatory liability | $ 4 | $ 4 | ||||||
Minimum | MISO Operating Subsidiaries | ||||||||
Regulatory Liabilities [Line Items] | ||||||||
Incentive Adder for Independent Transmission Ownership | 50 | 50 | ||||||
Maximum | MISO Operating Subsidiaries | ||||||||
Regulatory Liabilities [Line Items] | ||||||||
Incentive Adder for Independent Transmission Ownership | 100 | 100 | ||||||
Impact from Recognition of Liability | MISO Operating Subsidiaries | ||||||||
Regulatory Liabilities [Line Items] | ||||||||
Revenue (increase) decrease | $ 16 | |||||||
Impact from Recognition of Liability | ITC Great Plains | ||||||||
Regulatory Liabilities [Line Items] | ||||||||
Revenue (increase) decrease | $ 4 | |||||||
Subsequent Event | MISO Operating Subsidiaries | ||||||||
Regulatory Liabilities [Line Items] | ||||||||
Incentive Adder for Independent Transmission Ownership | 25 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Goodwill and Intangible Assets [Line Items] | |||||
Goodwill | $ 950 | $ 950 | $ 950 | ||
Accumulated amortization | 38 | 38 | 35 | ||
Other intangible assets | 1 | 1 | 1 | ||
Amortization expense | 1 | $ 1 | 3 | $ 3 | |
Expected amortization expense, year one | 3 | 3 | |||
Expected amortization expense, year two | 3 | 3 | |||
Expected amortization expense, year three | 3 | 3 | |||
Expected amortization expense, year four | 3 | 3 | |||
Expected amortization expense, year five | 3 | 3 | |||
ITCTransmission | |||||
Goodwill and Intangible Assets [Line Items] | |||||
Goodwill | 173 | 173 | 173 | ||
METC | |||||
Goodwill and Intangible Assets [Line Items] | |||||
Goodwill | 454 | 454 | 454 | ||
Intangible assets | 23 | 23 | 26 | ||
Accumulated amortization | 36 | 36 | 33 | ||
ITC Midwest | |||||
Goodwill and Intangible Assets [Line Items] | |||||
Goodwill | 323 | 323 | 323 | ||
ITC Great Plains | |||||
Goodwill and Intangible Assets [Line Items] | |||||
Intangible assets | 14 | 14 | 14 | ||
Accumulated amortization | $ 2 | $ 2 | $ 2 |
DEBT Schedule of Revolving Cred
DEBT Schedule of Revolving Credit Agreements (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2018USD ($) | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 900 | |
Outstanding Balance | 290 | [1] |
Unused Capacity | $ 610 | |
Interest rate description | Interest charged on borrowings depends on the variable rate structure we elected at the time of each borrowing. | |
ITC Holdings Corp. | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 400 | |
Outstanding Balance | 0 | [1] |
Unused Capacity | $ 400 | [2] |
Weighted Average Interest Rate on Outstanding Balance | 0.00% | [3] |
Commitment Fee Rate | 0.175% | [4] |
ITCTransmission | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 100 | |
Outstanding Balance | 13 | [1] |
Unused Capacity | $ 87 | |
Weighted Average Interest Rate on Outstanding Balance | 3.20% | [3] |
Commitment Fee Rate | 0.10% | [4] |
METC | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 100 | |
Outstanding Balance | 62 | [1] |
Unused Capacity | $ 38 | |
Weighted Average Interest Rate on Outstanding Balance | 3.30% | [3] |
Commitment Fee Rate | 0.10% | [4] |
ITC Midwest | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 225 | |
Outstanding Balance | 175 | [1] |
Unused Capacity | $ 50 | |
Weighted Average Interest Rate on Outstanding Balance | 3.20% | [3] |
Commitment Fee Rate | 0.10% | [4] |
ITC Great Plains | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 75 | |
Outstanding Balance | 40 | [1] |
Unused Capacity | $ 35 | |
Weighted Average Interest Rate on Outstanding Balance | 3.20% | [3] |
Commitment Fee Rate | 0.10% | [4] |
[1] | Included within long-term debt. | |
[2] | 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. | |
[3] | Interest charged on borrowings depends on the variable rate structure we elected at the time of each borrowing. | |
[4] | Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating. |
DEBT (Details)
DEBT (Details) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | ||||
Nov. 30, 2018 | Sep. 30, 2018 | Nov. 01, 2018 | Mar. 29, 2018 | Dec. 31, 2017 | Nov. 14, 2017 | |
Debt Instrument [Line Items] | ||||||
Commercial Paper Program, Maximum Authorized Amount Outstanding | $ 400 | |||||
Commercial Paper | $ 0 | $ 0 | ||||
ITC Holdings Corp. | Unsecured Debt | Senior Notes, Due November 15, 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 500 | |||||
Interest Rate | 2.70% | |||||
ITC Holdings Corp. | Unsecured Debt | Senior Notes, Due November 15, 2027 | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 500 | |||||
Interest Rate | 3.35% | |||||
ITCTransmission | Secured Debt | First Mortgage Bonds, Series G, due March 30, 2053 | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 225 | |||||
Interest Rate | 4.00% | |||||
ITCTransmission | Secured Debt | First Mortgage Bonds, Series D, due April 1, 2018 | ||||||
Debt Instrument [Line Items] | ||||||
Interest Rate | 5.75% | |||||
Extinguishment of Debt, Amount | $ 100 | |||||
ITCTransmission | Line of Credit | Term Loan Credit Agreement, Due March 23, 2019 | ||||||
Debt Instrument [Line Items] | ||||||
Extinguishment of Debt, Amount | $ 50 | |||||
Subsequent Event | ITC Midwest | Secured Debt | First Mortgage Bonds, Series I, due November 1, 2051 | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 162 | |||||
Interest Rate | 4.32% | |||||
Debt Instrument, Amount to be Issued | $ 13 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 11 Months Ended | ||||
Dec. 31, 2017 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Nov. 30, 2017 | |
Operating Loss Carryforwards [Line Items] | ||||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | ||||||
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent | 9.80% | 12.00% | ||||||
Effective tax rate | 23.00% | 36.00% | 26.00% | 37.00% | ||||
State and Local Jurisdiction | State of Iowa | ||||||||
Operating Loss Carryforwards [Line Items] | ||||||||
Change in Tax Rate Income Tax Expense (Benefit) | $ 2 |
RETIREMENT BENEFITS AND ASSET_3
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST Schedule of Net Defined Benefit Cost Components (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Pension plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 1 | $ 2 | $ 5 | $ 5 |
Interest cost | 1 | 1 | 3 | 3 |
Expected return on plan assets | (1) | (1) | (3) | (3) |
Amortization of unrecognized loss | 1 | 0 | 1 | 1 |
Net cost | 2 | 2 | 6 | 6 |
Other Postretirement Benefits Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 3 | 2 | 8 | 6 |
Interest cost | 0 | 1 | 2 | 2 |
Expected return on plan assets | (1) | (1) | (3) | (2) |
Net cost | $ 2 | $ 2 | $ 7 | $ 6 |
RETIREMENT BENEFITS AND ASSET_4
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined Contribution Plan, Cost | $ 1 | $ 1 | $ 4 | $ 3 | |
Pension plans - retirement plan | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Contributions by Employer | $ 4 | ||||
Expected Future Employer Contributions, Remainder of Fiscal Year | 0 | 0 | |||
Pension plans - supplemental benefit plans | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Contributions by Employer | $ 3 | ||||
Expected Future Employer Contributions, Remainder of Fiscal Year | 0 | 0 | |||
Other Postretirement Benefits Plan | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Contributions by Employer | 7 | ||||
Expected Future Employer Contributions, Remainder of Fiscal Year | $ 2 | $ 2 |
FAIR VALUE MEASUREMENTS Assets
FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value Subject to Three-Tier Hierarchy (Details) - Fair Value, Inputs, Level 1 - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Cash equivalents | $ 1 | |
Total - assets | $ 55 | 54 |
Mutual fund - fixed income securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Mutual funds | 53 | 52 |
Mutual fund - equity securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Mutual funds | $ 2 | $ 1 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | $ 0 | $ 0 |
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0 | 0 |
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount | 0 | 0 |
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount | 0 | 0 |
Fair value of long-term debt and debt maturing within one year, excluding revolving and term loan credit agreements and commercial paper | 4,967 | 5,192 |
Book value of long-term debt and debt maturing within one year, net of discount and deferred financing fees and excluding revolving and term loan credit agreements and commercial paper | 4,956 | 4,830 |
Book value of revolving credit and term loan credit agreements | $ 290 | $ 271 |
STOCKHOLDER'S EQUITY (Details)
STOCKHOLDER'S EQUITY (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2019 | |||||
Balance at the beginning of period | $ 4 | $ 0 | $ 2 | $ 2 | $ 4 | ||||
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to earnings (net of tax, of less than $1 million for the three months ended September 30, 2017 and nine months ended September 30, 2018 and 2017) (a) | 0 | 1 | [1] | 1 | [1] | 1 | [1] | ||
Reclassification Aof net loss relating to interest rate cash flow hedges from AOCI to earnings, Tax of less than $1 million | 1 | 1 | 1 | ||||||
Reclassification of deferred tax effects on interest rate cash flow hedges stranded in AOCI, subject to the TCJA, into retained earnings | 0 | 0 | 0 | ||||||
Gain on interest rate swaps relating to interest rate cash flow hedges (net of tax of $1 for the three months ended September 30, 2017) | 0 | 2 | 0 | 0 | |||||
Gain on interest rate swaps relating to interest rate cash flow hedges, tax of less than $1 million | 1 | ||||||||
Total other comprehensive income (loss), net of tax | 0 | 3 | 2 | 1 | |||||
Balance at the end of period | $ 4 | $ 3 | 4 | $ 3 | |||||
Expectation | |||||||||
Other Comprehensive Loss, reclassification adjustment from AOCI to earnings, pretax | [1] | 1 | |||||||
Other Comprehensive Loss, reclassification adjustment from AOCI to earnings, Tax of less than $1 million | $ 1 | ||||||||
Accounting Standards Update 2018-02 | |||||||||
Reclassification of deferred tax effects on interest rate cash flow hedges stranded in AOCI, subject to the TCJA, into retained earnings | $ 1 | ||||||||
[1] | The reclassification of the net loss relating to interest rate cash flow hedges is reported in interest expense on a pre-tax basis. |
SHARE-BASED COMPENSATION AND _2
SHARE-BASED COMPENSATION AND EMPLOYEE SHARE PURCHASE PLAN (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Employer Match Contribution | 10.00% | |||
Maximum Annual Contribution Percentage of Pay | 1.00% | |||
Percent of Dividends Payable | 10.00% | |||
2017 Omnibus Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted Award Vesting Rights | The granted awards and related dividend equivalents have no shareholder rights. | |||
2017 Omnibus Plan | Performance Share Units (PSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted | 296,559 | |||
Aggregate fair value of PBUs or SBUs | $ 15 | $ 15 | ||
Total unrecognized compensation cost | 11 | $ 11 | ||
2017 Omnibus Plan | Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted | 230,645 | |||
Aggregate fair value of PBUs or SBUs | 16 | $ 16 | ||
Total unrecognized compensation cost | 9 | 9 | ||
Employee Share Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation Expense (less than $1 million) | $ 1 | $ 1 | $ 1 | $ 1 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Intercompany receivables (less than $1 million) | $ 1 | $ 1 | $ 1 | |||
Intercompany payables (less than $1 million) | 1 | 1 | $ 1 | |||
Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party | 2 | $ 2 | 6 | $ 6 | ||
Related Party Transaction, Other Revenues from Transactions with Related Party (less than $1 million) | $ 1 | $ 1 | 1 | 1 | ||
Payments of Dividends | $ 150 | $ 168 | ||||
Subsequent Event | ||||||
Payments of Dividends | $ 50 |
COMMITMENTS AND CONTINGENT LI_3
COMMITMENTS AND CONTINGENT LIABILITIES (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | 51 Months Ended | |||||||||||||
Sep. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2022USD ($) | Oct. 18, 2018 | Apr. 20, 2018 | Dec. 31, 2017USD ($) | Sep. 28, 2016 | Jun. 30, 2016 | Mar. 31, 2015 | Feb. 12, 2015 | Jan. 31, 2015 | Jan. 05, 2015 | Nov. 12, 2013 | |
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Current regulatory liability | $ 182 | $ 182 | $ 183 | ||||||||||||||
Revenue (increase) decrease | (295) | $ (299) | (864) | $ (900) | |||||||||||||
Interest expense increase | 56 | 56 | 167 | 164 | |||||||||||||
Estimated net income reduction | (89) | (82) | (250) | (243) | |||||||||||||
Basis Point Incentive Adder for RTO Participation | 50 | ||||||||||||||||
Estimated Potential Refund Related to Return on Equity Complaints | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Current regulatory liability | 149 | 149 | $ 145 | ||||||||||||||
Rate of Return on Equity and Capital Structure Initial Complaint | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Required customer refund paid | $ 118 | ||||||||||||||||
Rate of Return on Equity and Capital Structure Initial Complaint | FERC Order | Minimum | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Revised rate of return on equity | 10.32% | ||||||||||||||||
Rate of Return on Equity and Capital Structure Initial Complaint | FERC Order | Maximum | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Revised rate of return on equity | 11.35% | ||||||||||||||||
Rate of Return on Equity and Capital Structure Second Complaint | Presiding Administrative Law Judge Initial Decision | Minimum | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Recommended rate of return on equity | 9.70% | ||||||||||||||||
Rate of Return on Equity and Capital Structure Second Complaint | Presiding Administrative Law Judge Initial Decision | Maximum | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Recommended rate of return on equity | 10.68% | ||||||||||||||||
Rate of Return on Equity and Capital Structure Complaints | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Estimated potential refund | 149 | 149 | |||||||||||||||
Rate of Return on Equity and Capital Structure Complaints | Impact from Recognition of Liability | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Revenue (increase) decrease | 0 | 0 | (1) | 0 | |||||||||||||
Interest expense increase | 2 | 1 | 5 | 4 | |||||||||||||
Estimated net income reduction | 1 | $ 0 | 3 | $ 2 | |||||||||||||
ITCTransmission | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Rate of return on equity | 12.38% | ||||||||||||||||
Revised rate of return on equity | 11.07% | 11.35% | |||||||||||||||
ITCTransmission | Rate of Return on Equity and Capital Structure Initial Complaint | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Reduced rate of return on equity | 9.15% | ||||||||||||||||
ITCTransmission | Rate of Return on Equity and Capital Structure Second Complaint | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Reduced rate of return on equity | 8.67% | ||||||||||||||||
METC | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Rate of return on equity | 12.38% | ||||||||||||||||
Revised rate of return on equity | 11.07% | 11.35% | |||||||||||||||
METC | Maximum | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Revised rate of return on equity | 11.35% | ||||||||||||||||
METC | Rate of Return on Equity and Capital Structure Initial Complaint | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Reduced rate of return on equity | 9.15% | ||||||||||||||||
METC | Rate of Return on Equity and Capital Structure Second Complaint | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Reduced rate of return on equity | 8.67% | ||||||||||||||||
ITC Midwest | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Rate of return on equity | 12.38% | ||||||||||||||||
Revised rate of return on equity | 11.07% | 11.32% | |||||||||||||||
Incentive Adder for Independent Transmission Ownership | 50 | 100 | |||||||||||||||
ITC Midwest | Rate of Return on Equity and Capital Structure Initial Complaint | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Reduced rate of return on equity | 9.15% | ||||||||||||||||
ITC Midwest | Rate of Return on Equity and Capital Structure Second Complaint | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Reduced rate of return on equity | 8.67% | ||||||||||||||||
MISO Operating Subsidiaries | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Equity in capital structure for ratemaking purposes | 4,000 | 4,000 | |||||||||||||||
Effect on net income from 10 basis point reduction in the authorized base return on equity | $ 4 | $ 4 | |||||||||||||||
MISO Operating Subsidiaries | Impact from Recognition of Liability | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Revenue (increase) decrease | $ 16 | ||||||||||||||||
MISO Operating Subsidiaries | Minimum | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Incentive Adder for Independent Transmission Ownership | 50 | 50 | |||||||||||||||
MISO Operating Subsidiaries | Maximum | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Incentive Adder for Independent Transmission Ownership | 100 | 100 | |||||||||||||||
Expectation | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Future Development Payments, Reasonably Possible Estimate | $ 125 | ||||||||||||||||
Subsequent Event | MISO Operating Subsidiaries | |||||||||||||||||
Commitments and Contingent Liabilities [Line Items] | |||||||||||||||||
Incentive Adder for Independent Transmission Ownership | 25 |
SUPPLEMENTAL FINANCIAL INFORM_3
SUPPLEMENTAL FINANCIAL INFORMATION Restricted cash reconciliation (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 18 | $ 66 | $ 8 | $ 8 |
Restricted Cash, included in other non-current assets | 4 | 2 | 2 | 3 |
Cash, Cash Equivalents and Restricted Cash | $ 22 | $ 68 | $ 10 | $ 11 |
SUPPLEMENTAL FINANCIAL INFORM_4
SUPPLEMENTAL FINANCIAL INFORMATION Supplemental Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |||
Supplemental Cash Flow Elements [Abstract] | ||||||
Interest paid (net of interest capitalized) | $ 164 | $ 157 | [1] | |||
Income tax refunds received | 13 | 1 | ||||
Additions to property, plant and equipment and other long-lived assets | [2] | 102 | 103 | |||
Allowance for equity funds used during construction | $ 8 | $ 9 | $ 26 | 25 | ||
Interest paid associated with the ROE complaints | $ 9 | |||||
[1] | Amount for the nine months ended September 30, 2017 includes $9 million of interest paid associated with the Initial Complaint. See Note 14 for information on the Initial Complaint. | |||||
[2] | Amounts consist of current and accrued liabilities for construction, labor, materials and other costs that have not been included in investing activities. These amounts have not been paid for as of September 30, 2018 or 2017, respectively, but will be or have been included as a cash outflow from investing activities when paid. |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | ||
OPERATING REVENUES: | ||||||
Operating revenues | $ 295 | $ 299 | $ 864 | $ 900 | ||
INCOME (LOSS) BEFORE INCOME TAXES: | ||||||
Income before income taxes | 115 | 128 | 337 | 384 | ||
NET INCOME: | ||||||
NET INCOME | 89 | 82 | 250 | 243 | ||
TOTAL ASSETS: | ||||||
Assets | 9,224 | 9,224 | $ 8,823 | |||
Regulated Operating Subsidiaries | ||||||
OPERATING REVENUES: | ||||||
Operating revenues | 302 | 306 | 886 | 921 | ||
INCOME (LOSS) BEFORE INCOME TAXES: | ||||||
Income before income taxes | 151 | 166 | 441 | 492 | ||
NET INCOME: | ||||||
NET INCOME | 112 | 104 | 327 | 304 | ||
TOTAL ASSETS: | ||||||
Assets | 9,101 | 9,101 | 8,688 | |||
ITC Holdings and other | ||||||
OPERATING REVENUES: | ||||||
Operating revenues | 0 | 1 | 0 | 1 | ||
INCOME (LOSS) BEFORE INCOME TAXES: | ||||||
Income before income taxes | (36) | (38) | (104) | (108) | ||
NET INCOME: | ||||||
NET INCOME | 89 | 82 | 250 | 243 | ||
TOTAL ASSETS: | ||||||
Assets | 4,899 | 4,899 | 4,799 | |||
Intercompany eliminations | ||||||
OPERATING REVENUES: | ||||||
Operating revenues | (7) | (8) | (22) | (22) | ||
NET INCOME: | ||||||
NET INCOME | (112) | $ (104) | (327) | $ (304) | ||
TOTAL ASSETS: | ||||||
Assets | [1] | $ (4,776) | $ (4,776) | $ (4,664) | ||
[1] | 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 |