10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

OR

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

Commission File Number: 001-32576

ITC HOLDINGS CORP.

(Exact Name of Registrant as Specified in Its Charter)

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

27175 Energy Way

Novi, MI 48377

(Address of Principal Executive Offices, Including Zip Code)

(248) 946-3000

(Registrant’s Telephone Number, Including Area Code)

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

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

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

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

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

Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company
☐	☐	☑	☐	☐

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

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

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

ITC Holdings Corp.

Form 10-Q for the Quarterly Period Ended March 31, 2022

INDEX

	Page
Part I. Financial Information	5
Item 1. Financial Statements	5
Condensed Consolidated Statements of Financial Position (Unaudited)	5
Condensed Consolidated Statements of Comprehensive Income (Unaudited)	6
Condensed Consolidated Statements of Changes in Stockholder’s Equity (Unaudited)	7
Condensed Consolidated Statements of Cash Flows (Unaudited)	8
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30
Item 4. Controls and Procedures	31
Part II. Other Information	31
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 6. Exhibits	32
Signatures	33

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DEFINITIONS

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

ITC Holdings Corp. and its subsidiaries

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

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

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

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

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

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

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

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

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

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

Other definitions

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

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

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

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

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

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

•“DCF” are references to discounted cash flow;

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

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

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

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

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

•“Fortis” are references to Fortis Inc.;

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

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

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

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•“GIC” are references to GIC Private Limited;

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

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

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

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

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

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

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

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

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

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

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

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

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

•“PCBs” are references to polychlorinated biphenyls;

•“ROE” are references to return on equity;

•“RTO” are references to Regional Transmission Organizations;

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

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

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

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

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

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

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

•“TO” are references to transmission owner; and

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

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ITC HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

	March 31,		December 31,
(In millions of USD, except share data)	2022		2021
ASSETS
Current assets
Cash and cash equivalents	$	3	$	5
Accounts receivable	125		128
Inventory	45		45
Regulatory assets	17		21
Prepaid and other current assets	40		18
Total current assets	230		217
Property, plant and equipment (net of accumulated depreciation and amortization of $2,248 and $2,199, respectively)	10,148		9,961
Other assets
Goodwill	950		950
Intangible assets (net of accumulated amortization of $50 and $49, respectively)	25		26
Regulatory assets	218		190
Other assets	95		101
Total other assets	1,288		1,267
TOTAL ASSETS	$	11,666	$	11,445
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities
Accounts payable	$	126	$	127
Accrued compensation	43		72
Accrued interest	70		56
Accrued taxes	55		64
Regulatory liabilities	15		14
Refundable deposits and advances for construction	64		44
Debt maturing within one year	736		654
Other current liabilities	11		16
Total current liabilities	1,120		1,047
Accrued pension and postretirement liabilities	51		52
Deferred income taxes	1,205		1,161
Regulatory liabilities	612		619
Refundable deposits	8		28
Other liabilities	39		55
Long-term debt	6,099		6,009
Commitments and contingent liabilities (Notes 4 and 11)
TOTAL LIABILITIES	9,134		8,971
STOCKHOLDER’S EQUITY
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at March 31, 2022 and December 31, 2021	892		892
Retained earnings	1,626		1,584
Accumulated other comprehensive income (loss)	14		(2)
Total stockholder’s equity	2,532		2,474
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	11,666	$	11,445

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

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ITC HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three months ended
	March 31,
(In millions of USD)	2022		2021
OPERATING REVENUES
Transmission and other services	$	327	$	299
Formula Rate true-up	38		37
Total operating revenues	365		336
OPERATING EXPENSES
Operation and maintenance	27		22
General and administrative	33		35
Depreciation and amortization	72		57
Taxes other than income taxes	36		35
Total operating expenses	168		149
OPERATING INCOME	197		187
OTHER EXPENSES (INCOME)
Interest expense, net	64		62
Allowance for equity funds used during construction	(9)		(7)
Other expenses (income), net	2		(1)
Total other expenses (income)	57		54
INCOME BEFORE INCOME TAXES	140		133
INCOME TAX PROVISION	34		33
NET INCOME	106		100
OTHER COMPREHENSIVE INCOME
Derivative instruments, net of tax (Note 8)	16		1
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX	16		1
TOTAL COMPREHENSIVE INCOME	$	122	$	101

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

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ITC HOLDINGS CORP. AND SUBSIDIARIES

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

					Accumulated
					Other		Total
			Retained		Comprehensive		Stockholder’s
(In millions of USD)	Common Stock		Earnings		(Loss) Income		Equity
BALANCE, DECEMBER 31, 2020	$	892	$	1,410	$	(8)	$	2,294
Net income	—		100		—		100
Dividends to ITC Investment Holdings Inc.	—		(58)		—		(58)
Other comprehensive income, net of tax (Note 8)	—		—		1		1
BALANCE, MARCH 31, 2021	$	892	$	1,452	$	(7)	$	2,337
BALANCE, DECEMBER 31, 2021	$	892	$	1,584	$	(2)	$	2,474
Net income	—		106		—		106
Dividends to ITC Investment Holdings Inc.	—		(64)		—		(64)
Other comprehensive income, net of tax (Note 8)	—		—		16		16
BALANCE, MARCH 31, 2022	$	892	$	1,626	$	14	$	2,532

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

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ITC HOLDINGS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three months ended
	March 31,
(In millions of USD)	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	106	$	100
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	72		57
Recognition, refund and collection of revenue accruals and deferrals — including accrued interest	(37)		(26)
Deferred income tax expense	33		33
Allowance for equity funds used during construction	(9)		(7)
Share-based compensation	6		7
Other	5		1
Changes in assets and liabilities, exclusive of changes shown separately:
Accounts receivable	7		(6)
Accounts payable	5		(4)
Accrued compensation	(22)		(8)
Accrued interest	14		13
Accrued taxes	(9)		(9)
Net refund settlements and adjustments related to return on equity complaints	—		8
Other current and non-current assets and liabilities, net	(17)		(17)
Net cash provided by operating activities	154		142
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(265)		(239)
Other	1		2
Net cash used in investing activities	(264)		(237)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt	150		—
Borrowings under revolving credit agreements	239		263
Net issuance of commercial paper	82		113
Repayments of revolving credit agreements	(298)		(229)
Dividends to ITC Investment Holdings Inc.	(64)		(58)
Other	(1)		5
Net cash provided by financing activities	108		94
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(2)		(1)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period	7		6
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	$	5	$	5

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

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NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

1.    GENERAL

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

Basis of Presentation

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

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

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

2.    REVENUE

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

Transmission Services

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

We recognize revenue for transmission services over time as transmission services are provided to customers (generally using an output measure of progress based on transmission load delivered). Customers simultaneously receive and consume the benefits provided by the Regulated Operating Subsidiaries’ services. We recognize revenue in the amount to which we have the right to invoice because we have a right to consideration in an amount that corresponds directly with the value to the customer of performance completed to date. As billing agents, MISO and SPP independently bill our customers on a monthly basis and 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

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

Other Services

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

Formula Rate True-Up

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

3.    ACCOUNTS RECEIVABLE

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

	March 31,		December 31,
(In millions of USD)	2022		2021
Trade accounts receivable	$	2	$	3
Unbilled accounts receivable	111		116
Other	12		9
Total accounts receivable	$	125	$	128

4.    REGULATORY MATTERS

Cost-Based Formula Rates with True-Up Mechanism

The transmission revenue requirements at our Regulated Operating Subsidiaries are set annually using Formula Rates and remain in effect for a one-year period. By updating the inputs to the formula and resulting rates on an annual basis, the revenues at our Regulated Operating Subsidiaries reflect changing operational data and financial performance, including the amount of network load on their transmission systems (for our MISO Regulated Operating Subsidiaries), operating expenses and additions to property, plant and equipment when placed in service, among other items. The formula used to derive the rates does not require further action or FERC filings each year, although the formula inputs remain subject to legal challenge at the FERC. Our Regulated Operating Subsidiaries will continue to use the formula to calculate their respective annual revenue requirements unless the FERC determines the resulting rates to be unjust and unreasonable and another mechanism is determined by the FERC to be just and reasonable. See “Rate of Return on Equity Complaints” in Note 11 for detail on ROE matters for our MISO Regulated Operating Subsidiaries and “Incentive Adders for Transmission Rates” discussed herein.

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

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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 three months ended March 31, 2022:

(In millions of USD)	Total
Net regulatory liabilities as of December 31, 2021	$	(2)
Net collection of 2020 revenue deferrals and accruals, including accrued interest	(2)
Net revenue accrual, including accrued interest	39
Net regulatory assets as of March 31, 2022	$	35

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

	March 31,		December 31,
(In millions of USD)	2022		2021
Current regulatory assets	$	17	$	20
Non-current regulatory assets	47		10
Current regulatory liabilities	(14)		(13)
Non-current regulatory liabilities	(15)		(19)
Net regulatory assets (liabilities)	$	35	$	(2)

ROE and Incentive Adders for Transmission Rates

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

MISO Regulated Operating Subsidiaries

For the three months ended March 31, 2022 and 2021, the authorized ROE used by the MISO Regulated Operating Subsidiaries was 10.77% and is composed of a base ROE of 10.02% with a 25 basis point adder for independent transmission ownership and a 50 basis point adder for RTO participation. See “Rate of Return on Equity Complaints” in Note 11 for a discussion of the MISO ROE Complaints.

ITC Great Plains

For the three months ended March 31, 2022 and 2021, the authorized ROE used by ITC Great Plains was 11.41% and is composed of a base ROE of 10.66% with a 25 basis point adder for independent transmission ownership and a 50 basis point adder for RTO participation.

Depreciation Rate Filings

During 2021, our MISO Regulated Operating Subsidiaries filed revised depreciation rates for their assets which were approved by the FERC in December 2021. The overall depreciation expense at our MISO Regulated Operating Subsidiaries increased beginning on January 1, 2022, which will result in higher revenue as the increase in depreciation expense flows through to customer bills.

5.    DEBT

ITC Holdings

Commercial Paper Program

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

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program, if necessary. As of March 31, 2022, ITC Holdings had $237 million of commercial paper issued and outstanding under the program, with a weighted-average interest rate of 1.1% and weighted-average remaining days to maturity of 43 days. The amount outstanding as of March 31, 2022 was classified as debt maturing within one year in the condensed consolidated statements of financial position. As of December 31, 2021 ITC Holdings had $155 million of commercial paper issued and outstanding.

ITCTransmission

First Mortgage Bonds

On January 14, 2022, ITCTransmission issued $130 million of aggregate principal amount of 2.93% First Mortgage Bonds, Series J, due January 14, 2052. The proceeds were used to repay existing indebtedness under the revolving credit agreement and intercompany loan agreement and will also be used to partially fund capital expenditures and for general corporate purposes. ITCTransmission also issued an additional $20 million of aggregate principal amount of 2.93% First Mortgage Bonds, Series I, due January 14, 2052, the proceeds of which are expected to fund or refinance a portfolio of eligible renewable energy projects based on the green bond framework established by ITC Holdings. All of ITCTransmission’s First Mortgage Bonds are 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 have entered into interest rate swaps to manage interest rate risk associated with the forecasted future issuance of fixed-rate debt at ITC Holdings, the proceeds of which will be used for the expected repayment of the ITC Holdings 2.70% Senior Notes, due November 15, 2022. At March 31, 2022, ITC Holdings had the following interest rate swaps:

Interest Rate Swaps (in millions of USD, except percentages)	Notional Amount		Weighted Average Fixed Rate	Benchmark Rate	Interest Received	Interest Paid
July 2021 swap	$	45	1.113%	LIBOR	Quarterly	Semi-annually
November 2021 swap	45		1.581%	LIBOR	Quarterly	Semi-annually
November 2021 swap	45		1.492%	LIBOR	Quarterly	Semi-annually
November 2021 swap	45		1.497%	LIBOR	Quarterly	Semi-annually
November 2021 swap	50		1.544%	LIBOR	Quarterly	Semi-annually
December 2021 swap	50		1.560%	LIBOR	Quarterly	Semi-annually
December 2021 swap	50		1.489%	LIBOR	Quarterly	Semi-annually
December 2021 swap	45		1.475%	LIBOR	Quarterly	Semi-annually
March 2022 swap	40		1.546%	SOFR	Semi-annually	Annually
March 2022 swap	35		1.533%	SOFR	Semi-annually	Annually
Total	$	450	1.483%

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

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

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Revolving Credit Agreements

At March 31, 2022, ITC Holdings and certain of its Regulated Operating Subsidiaries had the following unsecured revolving credit facilities available:

(In millions of USD, except percentages)	Total Available 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	%
ITC Transmission	100		17		83			1.5%	0.10	%
METC	100		60		40			1.5%	0.10	%
ITC Midwest	225		164		61			1.5%	0.10	%
ITC Great Plains	75		29		46			1.5%	0.10	%
Total	$	900	$	270	$	630

____________________________

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

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

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

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

6.    RETIREMENT BENEFITS AND ASSETS HELD IN TRUST

Pension Plan Benefits

We have a qualified defined benefit pension plan (the “retirement plan”) for eligible employees, comprised of a traditional final average pay plan and a cash balance plan. The traditional final average pay plan is noncontributory, covers select employees, and provides retirement benefits based on years of benefit service, average final compensation and age at retirement. The cash balance plan is also noncontributory, covers substantially all employees and provides retirement benefits based on eligible compensation and interest credits. Our funding practice for the retirement plan is generally to fund the annual net pension cost, though we may contribute additional amounts as necessary to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974 or as we deem appropriate. We expect to contribute $3 million to the retirement plan in 2022.

We also have two supplemental nonqualified, noncontributory, defined benefit pension plans for selected management employees (the “supplemental benefit plans” and, collectively with the retirement plan, the “pension plans”). The supplemental benefit plans provide for benefits that supplement those provided by the retirement plan. We do not expect to contribute to the supplemental benefit plans in 2022.

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

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Service cost	$	2	$	2
Interest cost	1		1
Expected return on plan assets	(1)		(1)
Net pension cost	$	2	$	2

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

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Other Postretirement Benefits

We provide certain postretirement health care, dental and life insurance benefits for eligible employees. We expect to contribute $7 million to the postretirement benefit plan in 2022.

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

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Service cost	$	3	$	2
Interest cost	1		1
Expected return on plan assets	(2)		(1)
Net postretirement cost	$	2	$	2

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

Defined Contribution Plan

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

7.    FAIR VALUE MEASUREMENTS

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

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

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In millions of USD)	(Level 1)		(Level 2)		(Level 3)
Financial assets measured on a recurring basis:
Mutual funds — fixed income securities	$	48	$	—	$	—
Mutual funds — equity securities	12		—		—
Interest rate swap derivatives	—		23		—
Total	$	60	$	23	$	—

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

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In millions of USD)	(Level 1)		(Level 2)		(Level 3)
Financial assets measured on a recurring basis:
Mutual funds — fixed income securities	$	51	$	—	$	—
Mutual funds — equity securities	12		—		—
Interest rate swap derivatives	—		2		—
Total	$	63	$	2	$	—

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

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

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

Fair Value of Financial Assets and Liabilities

Fixed Rate Debt

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

Revolving Credit Agreements

At March 31, 2022 and December 31, 2021, we had a consolidated total of $270 million and $329 million, respectively, outstanding under our revolving 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.

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8.    STOCKHOLDER'S EQUITY

Accumulated Other Comprehensive Income (Loss)

The following table provides the components of changes in AOCI:

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Balance at the beginning of period	$	(2)	$	(8)
Derivative instruments
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to earnings (net of tax of less than $1 for the three months ended March 31, 2022 and 2021) (a)	1		1
Gain on interest rate swaps relating to interest rate cash flow hedges (net of tax of $6 for the three months ended March 31, 2022)	15		—
Total other comprehensive income, net of tax	16		1
Balance at the end of period	$	14	$	(7)

____________________________

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

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

9.    SHARE-BASED COMPENSATION

Long-Term Incentive Plans

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

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

10.    RELATED PARTY TRANSACTIONS

Intercompany Receivables and Payables

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

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

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for each of the three months ended March 31, 2022 and 2021 for ITC Holdings was $4 million and $3 million, respectively. Related party charges for services to Fortis and other subsidiaries, recorded as an offset to general and administrative expenses for ITC Holdings, were $1 million for each of the three months ended March 31, 2022 and 2021.

Dividends

During the three months ended March 31, 2022 and 2021, we paid dividends of $64 million and $58 million, respectively, to ITC Investment Holdings. We also paid dividends of $64 million to ITC Investment Holdings in April 2022.

11.    COMMITMENTS AND CONTINGENT LIABILITIES

Environmental Matters

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

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

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

Litigation

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

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Rate of Return on Equity Complaints

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

Initial Complaint

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

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

Second Complaint

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

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

November 2019 Order

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

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

May 2020 Order

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

Financial Statement Impacts

As of December 31, 2021, we had recorded an aggregate current regulatory asset and liability of $1 million and less than $1 million, respectively, in the consolidated statements of financial position. These impacts reflect amounts owed from or due to customers under the terms outlined in the May 2020 Order and the November 2019 Order on the Initial Complaint and the periods subsequent to the September 2016 Order. During the three months ended March 31, 2022, we settled the remaining regulatory assets and liabilities and, as of March 31, 2022, there are no remaining regulatory assets or liabilities recorded related to this matter. During the three months ended March 31, 2021, we received net settlement payments of $8 million owed from customers related to this matter.

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

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

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

12.    SUPPLEMENTAL FINANCIAL INFORMATION

Reconciliation of Cash, Cash Equivalents and Restricted Cash

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

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

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

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Supplementary Cash Flows Information

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Supplementary cash flows information:
Interest paid (net of interest capitalized)	$	47	$	44
Supplementary non-cash investing and financing activities:
Additions to property, plant and equipment and other long-lived assets (a)	118		111
Allowance for equity funds used during construction	9		7

____________________________

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

13.    SEGMENT INFORMATION

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

	Three months ended
OPERATING REVENUES:	March 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	374	$	346
Intercompany eliminations	(9)		(10)
Total Operating Revenues	$	365	$	336

	Three months ended
INCOME (LOSS) BEFORE INCOME TAXES:	March 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	180	$	171
ITC Holdings and other	(40)		(38)
Total Income Before Income Taxes	$	140	$	133

	Three months ended
NET INCOME:	March 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	135	$	126
ITC Holdings and other	106		100
Intercompany eliminations	(135)		(126)
Total Net Income	$	106	$	100

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TOTAL ASSETS:	March 31,		December 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	11,526	$	11,317
ITC Holdings and other	6,199		6,134
Reconciliations / Intercompany eliminations (a)	(6,059)		(6,006)
Total Assets	$	11,666	$	11,445

____________________________

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

OVERVIEW

ITC Holdings provides safe and reliable electric transmission service to connect consumers to more sustainable and cost-effective energy resources. ITC Holdings continues to make investments in a modernized grid to maintain reliability and accommodate future demands as our economy and lifestyles become increasingly dependent on electricity.

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

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

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

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

•Our capital expenditures of $265 million at our Regulated Operating Subsidiaries during the three months ended March 31, 2022, as described below under “ — Capital Investment and Operating Results Trends;”

•Debt issuances, borrowings and repayments, and interest rate swaps, as described in Note 5 to the condensed consolidated interim financial statements;

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

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

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

Recent Developments

Incentive Adders for Transmission Rates

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

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

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

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

FERC NOPR on Transmission Planning

FERC issued a NOPR on April 21, 2022 addressing regional transmission planning and cost allocation. The proposal requires transmission planning regions to conduct long-term, scenario-based transmission planning and adopt enhanced transparency measures; provide a formal role for states in developing the cost allocation for projects; and reinstate federal rights of first refusal under certain circumstances. We are currently assessing the impacts of the NOPR to our business. Initial comments on the NOPR are due 75 days from the date of publication in the Federal Register.

Cost-Based Formula Rates with True-Up Mechanism

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

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

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

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

Revenue Accruals and Deferrals — Effects of Monthly Network Peak Loads

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

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

Capital Investment and Operating Results Trends

We expect a long-term upward trend in rate base resulting from our anticipated capital investment, in excess of depreciation and any acquisition premiums, from our Regulated Operating Subsidiaries’ long-term capital investment programs to improve reliability, increase system capacity and upgrade the transmission network to support new generating resources. Investments in property, plant and equipment, when placed in-service upon completion of a capital project, are added to the rate base of our Regulated Operating Subsidiaries. We expect increases in rate base to result in a corresponding long-term upward trend in revenues and earnings. Our revenues and earnings may be impacted by future increases or decreases to our rates for incentive adders and base ROE. See Note 4 and Note 11 to the condensed consolidated interim financial statements for additional information related to matters that may impact future rates for incentive adders and base ROE.

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

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

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

We also assess our transmission systems against our own planning criteria that are filed annually with the FERC. Based on our planning studies, we see needs to make capital investments to: (1) maintain and replace our current transmission infrastructure to enhance system reliability and accommodate load growth; (2) interconnect new renewable generation resources; (3) upgrade physical and technological grid security to protect critical infrastructure; and (4) expand access to electricity markets to reduce the overall cost of delivered energy to customers. To date, COVID-19 has not had a material impact on our forecasted capital expenditures. However, we continue to evaluate and monitor the potential impacts of COVID-19, including potential supply chain disruptions, on our forecasted capital expenditures. The following table shows our actual and expected capital expenditures at our Regulated Operating Subsidiaries:

	Actual Capital		Forecasted
	Expenditures for the		Capital
	Three Months Ended		Expenditures
(In millions of USD)	March 31, 2022		2022 — 2026
Expenditures for property, plant and equipment (a)	$	265	$	4,004

____________________________

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

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

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

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

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RESULTS OF OPERATIONS

Results of Operations and Variances

	Three months ended						Percentage
	March 31,				Increase		increase
(In millions of USD)	2022		2021		(decrease)		(decrease)
OPERATING REVENUES
Transmission and other services	$	327	$	299	$	28	9	%
Formula Rate true-up	38		37		1		3	%
Total operating revenues	365		336		29		9	%
OPERATING EXPENSES
Operation and maintenance	27		22		5		23	%
General and administrative	33		35		(2)		(6)	%
Depreciation and amortization	72		57		15		26	%
Taxes other than income taxes	36		35		1		3	%
Total operating expenses	168		149		19		13	%
OPERATING INCOME	197		187		10		5	%
OTHER EXPENSES (INCOME)
Interest expense, net	64		62		2		3	%
Allowance for equity funds used during construction	(9)		(7)		(2)		29	%
Other expenses (income), net	2		(1)		3		(300)	%
Total other expenses (income)	57		54		3		6	%
INCOME BEFORE INCOME TAXES	140		133		7		5	%
INCOME TAX PROVISION	34		33		1		3	%
NET INCOME	$	106	$	100	$	6	6	%

Operating Revenues

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

											Percentage
	2022				2021				Increase		increase
(In millions of USD)	Amount		Percentage		Amount		Percentage		(decrease)		(decrease)
Network revenues (a)	$	255	71	%	$	231	68	%	$	24	10	%
Regional cost sharing revenues (a)	95		26	%	91		27	%	4		4	%
Point-to-point	5		1	%	5		2	%	—		—	%
Scheduling, control and dispatch (a)	5		1	%	5		2	%	—		—	%
Other	5		1	%	4		1	%	1		25	%
Total	$	365	100	%	$	336	100	%	$	29	9	%

____________________________

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

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

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Operating Expenses

Operation and maintenance expenses

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

Depreciation and amortization expense

Depreciation and amortization expenses increased due to a combination of updated depreciation rates at our MISO Regulated Operating Subsidiaries, which became effective January 1, 2022, and a higher depreciable base resulting from property, plant and equipment in-service additions during the three months ended March 31, 2022 compared to the same period in 2021.

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

•Fund working capital requirements.

In addition to the expected capital requirements above, any adverse determinations or settlements relating to the regulatory matters or contingencies described in Notes 4 and 11 to the condensed consolidated interim financial statements would result in additional capital requirements. Our contractual obligations are described in our Form 10-K for the year ended December 31, 2021. There have been no material changes to that information since December 31, 2021, other than the items described in Note 5 to the condensed consolidated interim financial statements.

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

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

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

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

Credit Ratings

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

Covenants

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

Cash Flows From Operating Activities

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

Cash Flows From Investing Activities

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

Cash Flows From Financing Activities

Net cash provided by financing activities was $108 million and $94 million for the three months ended March 31, 2022 and 2021, respectively. The increase in cash provided by financing activities was primarily due to an increase in issuances of long term debt of $150 million. This increase was partially offset by a decrease in net borrowings under our revolving credit agreements of $93 million, a decrease in net issuances of commercial paper of $31 million and an increase in dividend payments of $6 million during the three months ended March 31, 2022 compared to the same period in 2021.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

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

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

RECENT ACCOUNTING PRONOUNCEMENTS

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Fixed Rate Debt

Based on the borrowing rates currently available for bank loans with similar terms and average maturities, the fair value of our consolidated long-term debt and debt maturing within one year, excluding revolving credit agreements and commercial paper was $6,482 million and $6,995 million at March 31, 2022 and December 31, 2021, respectively. The total book value of our consolidated long-term debt and debt maturing within one year, net of discount and deferred financing fees and excluding revolving credit agreements and commercial paper, was $6,328 million and $6,179 million at March 31, 2022 and December 31, 2021, respectively. A increase in interest rates of 10% (from 5.0% to 5.5%, for example) at March 31, 2022 and December 31, 2021 would decrease the fair value of debt by $245 million and $217 million, respectively, and a decrease in interest rates of 10% at March 31, 2022 and December 31, 2021 would increase the fair value of debt by $264 million and $231 million, respectively.

Revolving Credit Agreements

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

Commercial Paper

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

Derivative Instruments and Hedging Activities

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

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

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

Other

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

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

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

Changes in Internal Control Over Financial Reporting

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

For information regarding risk factors affecting us, see “Item 1A Risk Factors” of our Form 10-K for the year ended December 31, 2021. There have been no material changes to the risk factors set forth therein.

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ITEM 6. EXHIBITS

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

Exhibit No.	Description of Document
4.56	Ninth Supplemental Indenture, dated as of November 5, 2021, between International Transmission Company and The Bank of New York Mellon Trust Company, N.A. (as successor to BNY Midwest Trust Company), as trustee (including Form of 2.93% First Mortgage Bonds, Series I, due 2052 and Form of 2.93% First Mortgage Bonds, Series J, due 2052) (filed with Registrant’s Form 8-K on January 14, 2022)
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Database
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL

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SIGNATURES

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

Dated: May 3, 2022

ITC HOLDINGS CORP.
By:	/s/ Linda H. Apsey
	Linda H. Apsey
	President and Chief Executive Officer (duly authorized officer)
By:	/s/ Gretchen L. Holloway
	Gretchen L. Holloway
	Senior Vice President and Chief Financial Officer (principal financial and accounting officer)

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Linda H. Apsey, certify that:

1.I have reviewed this report on Form 10-Q for the quarterly period ended March 31, 2022 of ITC Holdings Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 3, 2022

/s/ Linda H. Apsey

Linda H. Apsey
President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gretchen L. Holloway, certify that:

1.I have reviewed this report on Form 10-Q for the quarterly period ended March 31, 2022 of ITC Holdings Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 3, 2022

/s/ Gretchen L. Holloway

Gretchen L. Holloway
Senior Vice President and Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ITC Holdings Corp. (the “Registrant”) on Form 10-Q for the quarterly period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Linda H. Apsey, President and Chief Executive Officer of the Registrant, and Gretchen L. Holloway, Senior Vice President and Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: May 3, 2022

/s/ Linda H. Apsey

Linda H. Apsey
President and Chief Executive Officer

/s/ Gretchen L. Holloway

Gretchen L. Holloway
Senior Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 03, 2022
Entity Information [Line Items]
Document Type	10-Q
Document Transition Report	false
Entity File Number	001-32576
Entity Registrant Name	ITC HOLDINGS CORP.
Entity Incorporation, State or Country Code	MI
Entity Tax Identification Number	32-0058047
Entity Address, Address Line One	27175 Energy Way
Entity Address, City or Town	Novi
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48377
City Area Code	248
Local Phone Number	946-3000
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Central Index Key	0001317630
Current Fiscal Year End Date	--12-31
Document Period End Date	Mar. 31, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Common Stock, Shares Outstanding	true
Amendment Flag	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		224,203,112

XML

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 3	$ 5
Accounts receivable	125	128
Inventory	45	45
Regulatory assets	17	21
Prepaid and other current assets	40	18
Total current assets	230	217
Property, plant and equipment (net of accumulated depreciation and amortization of $2,248 and $2,199, respectively)	10,148	9,961
Other assets
Goodwill	950	950
Intangible assets (net of accumulated amortization of $50 and $49, respectively)	25	26
Regulatory assets	218	190
Other assets	95	101
Other Assets	1,288	1,267
TOTAL ASSETS	11,666	11,445
Current liabilities
Accounts payable	126	127
Accrued compensation	43	72
Accrued interest	70	56
Accrued taxes	55	64
Regulatory liabilities	15	14
Refundable deposits and advances for construction	64	44
Debt maturing within one year	736	654
Other current liabilities	11	16
Total current liabilities	1,120	1,047
Accrued pension and postretirement liabilities	51	52
Deferred Income Taxes and Other Liabilities, Noncurrent	1,205	1,161
Regulatory liabilities	612	619
Refundable deposits	8	28
Other liabilities	39	55
Long-term debt	6,099	6,009
Liabilities	9,134	8,971
STOCKHOLDER’S EQUITY
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at March 31, 2022 and December 31, 2021	892	892
Retained earnings	1,626	1,584
Accumulated other comprehensive income (loss)	14	(2)
Total stockholder’s equity	2,532	2,474
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$ 11,666	$ 11,445

XML

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) (Parentheticals) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Property, plant and equipment, accumulated depreciation and amortization	$ 2,248	$ 2,199
Intangible assets, accumulated amortization	$ 50	$ 49
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

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
OPERATING REVENUES
Transmission and other services	$ 327	$ 299
Formula Rate true-up	38	37
Total operating revenues	365	336
OPERATING EXPENSES
Operation and maintenance	27	22
General and administrative	33	35
Depreciation and amortization	72	57
Taxes other than income taxes	36	35
Total operating expenses	168	149
OPERATING INCOME	197	187
OTHER EXPENSES (INCOME)
Interest expense, net	64	62
Allowance for equity funds used during construction	(9)	(7)
Other expenses (income), net	2	(1)
Nonoperating Income (Expense)	57	54
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest, Total	140	133
Income Tax Expense (Benefit)	34	33
NET INCOME	106	100
OTHER COMPREHENSIVE INCOME
Derivative instruments, net of tax (Note 8)	16	1
Total other comprehensive income, net of tax	16	1
TOTAL COMPREHENSIVE INCOME	$ 122	$ 101

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (UNAUDITED) - USD ($) $ in Millions	Total	Retained Earnings [Member]	AOCI Attributable to Parent [Member]
Stockholders' Equity Attributable to Parent	$ 2,294
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at March 31, 2022 and December 31, 2021	892
Retained earnings	1,410
Accumulated other comprehensive income (loss)	(8)
NET INCOME	100	$ 100
Dividends to ITC Investment Holdings Inc.	(58)	(58)
Total other comprehensive income, net of tax	1		$ 1
Revenues	336
Transmission and other services	299
Formula Rate true-up	37
Operation and maintenance	22
General and administrative	35
Depreciation and amortization	57
Operating Income (Loss)	187
Interest expense, net	62
Public Utilities, Allowance for Funds Used During Construction, Capitalized Cost of Equity	(7)
Other expenses (income), net	(1)
Nonoperating Income (Expense)	54
Income Tax Expense (Benefit)	33
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	101
Taxes other than income taxes	35
Stockholders' Equity Attributable to Parent	2,337
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at March 31, 2022 and December 31, 2021	892
Retained earnings	1,452
Accumulated other comprehensive income (loss)	(7)
Stockholders' Equity Attributable to Parent	2,474
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at March 31, 2022 and December 31, 2021	892
Retained earnings	1,584
Accumulated other comprehensive income (loss)	(2)
NET INCOME	106	106
Dividends to ITC Investment Holdings Inc.	(64)	$ (64)
Total other comprehensive income, net of tax	16		$ 16
Revenues	365
Transmission and other services	327
Formula Rate true-up	38
Operation and maintenance	27
General and administrative	33
Depreciation and amortization	72
Operating Income (Loss)	197
Interest expense, net	64
Public Utilities, Allowance for Funds Used During Construction, Capitalized Cost of Equity	(9)
Other expenses (income), net	2
Nonoperating Income (Expense)	57
Income Tax Expense (Benefit)	34
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	122
Taxes other than income taxes	36
Stockholders' Equity Attributable to Parent	2,532
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at March 31, 2022 and December 31, 2021	892
Retained earnings	1,626
Accumulated other comprehensive income (loss)	$ 14

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME	$ 106	$ 100
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	72	57
Recognition, refund and collection of revenue accruals and deferrals — including accrued interest	(37)	(26)
Deferred income tax expense	33	33
Allowance for equity funds used during construction	(9)	(7)
Employee Benefits and Share-based Compensation	6	7
Other	5	1
Changes in assets and liabilities, exclusive of changes shown separately:
Accounts receivable	7	(6)
Accrued compensation	(22)	(8)
Accrued interest	14	13
Accrued taxes	(9)	(9)
Other current and non-current assets and liabilities, net	(17)	(17)
Net cash provided by operating activities	154	142
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(265)	(239)
Net cash used in investing activities	(264)	(237)
Issuance of long-term debt	150	0
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under revolving credit agreements	239	263
Net issuance of commercial paper	82	113
Repayments of revolving credit agreements	(298)	(229)
Dividends to ITC Investment Holdings Inc.	(64)	(58)
Other	(1)	5
Net cash provided by financing activities	108	94
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(2)	(1)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period	7	6
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	5	5
Increase (Decrease) in Accounts Payable	5	(4)
Estimated Refund Related to Return on Equity Complaint	0	8
Payments for (Proceeds from) Other Investing Activities	$ 1	$ 2

XML

GENERAL

3 Months Ended

Mar. 31, 2022

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

Basis of Presentation

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

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

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

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REVENUE

3 Months Ended

Mar. 31, 2022

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, and Formula Rate true-up. As other services revenue is immaterial, it is presented in combination with transmission services on the condensed consolidated statements of comprehensive income.

Transmission Services

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

We recognize revenue for transmission services over time as transmission services are provided to customers (generally using an output measure of progress based on transmission load delivered). Customers simultaneously receive and consume the benefits provided by the Regulated Operating Subsidiaries’ services. We recognize revenue in the amount to which we have the right to invoice because we have a right to consideration in an amount that corresponds directly with the value to the customer of performance completed to date. As billing agents, MISO and SPP independently bill our customers on a monthly basis and 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 3 for information on changes in unbilled accounts receivable.

Other Services

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

Formula Rate True-Up

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

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ACCOUNTS RECEIVABLE

3 Months Ended

Mar. 31, 2022

Receivables [Abstract]

ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE

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

	March 31,		December 31,
(In millions of USD)	2022		2021
Trade accounts receivable	$	2	$	3
Unbilled accounts receivable	111		116
Other	12		9
Total accounts receivable	$	125	$	128

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REGULATORY MATTERS

3 Months Ended

Mar. 31, 2022

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

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

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 three months ended March 31, 2022:

(In millions of USD)	Total
Net regulatory liabilities as of December 31, 2021	$	(2)
Net collection of 2020 revenue deferrals and accruals, including accrued interest	(2)
Net revenue accrual, including accrued interest	39
Net regulatory assets as of March 31, 2022	$	35

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

	March 31,		December 31,
(In millions of USD)	2022		2021
Current regulatory assets	$	17	$	20
Non-current regulatory assets	47		10
Current regulatory liabilities	(14)		(13)
Non-current regulatory liabilities	(15)		(19)
Net regulatory assets (liabilities)	$	35	$	(2)

ROE and Incentive Adders for Transmission Rates

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

MISO Regulated Operating Subsidiaries

For the three months ended March 31, 2022 and 2021, the authorized ROE used by the MISO Regulated Operating Subsidiaries was 10.77% and is composed of a base ROE of 10.02% with a 25 basis point adder for independent transmission ownership and a 50 basis point adder for RTO participation. See “Rate of Return on Equity Complaints” in Note 11 for a discussion of the MISO ROE Complaints.

ITC Great Plains

For the three months ended March 31, 2022 and 2021, the authorized ROE used by ITC Great Plains was 11.41% and is composed of a base ROE of 10.66% with a 25 basis point adder for independent transmission ownership and a 50 basis point adder for RTO participation.

Depreciation Rate Filings

During 2021, our MISO Regulated Operating Subsidiaries filed revised depreciation rates for their assets which were approved by the FERC in December 2021. The overall depreciation expense at our MISO Regulated Operating Subsidiaries increased beginning on January 1, 2022, which will result in higher revenue as the increase in depreciation expense flows through to customer bills.

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DEBT

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

DEBT

DEBT

ITC Holdings

Commercial Paper Program

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

program, if necessary. As of March 31, 2022, ITC Holdings had $237 million of commercial paper issued and outstanding under the program, with a weighted-average interest rate of 1.1% and weighted-average remaining days to maturity of 43 days. The amount outstanding as of March 31, 2022 was classified as debt maturing within one year in the condensed consolidated statements of financial position. As of December 31, 2021 ITC Holdings had $155 million of commercial paper issued and outstanding.

ITCTransmission

First Mortgage Bonds

On January 14, 2022, ITCTransmission issued $130 million of aggregate principal amount of 2.93% First Mortgage Bonds, Series J, due January 14, 2052. The proceeds were used to repay existing indebtedness under the revolving credit agreement and intercompany loan agreement and will also be used to partially fund capital expenditures and for general corporate purposes. ITCTransmission also issued an additional $20 million of aggregate principal amount of 2.93% First Mortgage Bonds, Series I, due January 14, 2052, the proceeds of which are expected to fund or refinance a portfolio of eligible renewable energy projects based on the green bond framework established by ITC Holdings. All of ITCTransmission’s First Mortgage Bonds are 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 have entered into interest rate swaps to manage interest rate risk associated with the forecasted future issuance of fixed-rate debt at ITC Holdings, the proceeds of which will be used for the expected repayment of the ITC Holdings 2.70% Senior Notes, due November 15, 2022. At March 31, 2022, ITC Holdings had the following interest rate swaps:

Interest Rate Swaps (in millions of USD, except percentages)	Notional Amount		Weighted Average Fixed Rate	Benchmark Rate	Interest Received	Interest Paid
July 2021 swap	$	45	1.113%	LIBOR	Quarterly	Semi-annually
November 2021 swap	45		1.581%	LIBOR	Quarterly	Semi-annually
November 2021 swap	45		1.492%	LIBOR	Quarterly	Semi-annually
November 2021 swap	45		1.497%	LIBOR	Quarterly	Semi-annually
November 2021 swap	50		1.544%	LIBOR	Quarterly	Semi-annually
December 2021 swap	50		1.560%	LIBOR	Quarterly	Semi-annually
December 2021 swap	50		1.489%	LIBOR	Quarterly	Semi-annually
December 2021 swap	45		1.475%	LIBOR	Quarterly	Semi-annually
March 2022 swap	40		1.546%	SOFR	Semi-annually	Annually
March 2022 swap	35		1.533%	SOFR	Semi-annually	Annually
Total	$	450	1.483%

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

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

Revolving Credit Agreements

At March 31, 2022, ITC Holdings and certain of its Regulated Operating Subsidiaries had the following unsecured revolving credit facilities available:

(In millions of USD, except percentages)	Total Available 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	%
ITC Transmission	100		17		83			1.5%	0.10	%
METC	100		60		40			1.5%	0.10	%
ITC Midwest	225		164		61			1.5%	0.10	%
ITC Great Plains	75		29		46			1.5%	0.10	%
Total	$	900	$	270	$	630

____________________________

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

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

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

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

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RETIREMENT BENEFITS AND ASSETS HELD IN TRUST

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits Disclosure

RETIREMENT BENEFITS AND ASSETS HELD IN TRUST

Pension Plan Benefits

We have a qualified defined benefit pension plan (the “retirement plan”) for eligible employees, comprised of a traditional final average pay plan and a cash balance plan. The traditional final average pay plan is noncontributory, covers select employees, and provides retirement benefits based on years of benefit service, average final compensation and age at retirement. The cash balance plan is also noncontributory, covers substantially all employees and provides retirement benefits based on eligible compensation and interest credits. Our funding practice for the retirement plan is generally to fund the annual net pension cost, though we may contribute additional amounts as necessary to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974 or as we deem appropriate. We expect to contribute $3 million to the retirement plan in 2022.

We also have two supplemental nonqualified, noncontributory, defined benefit pension plans for selected management employees (the “supplemental benefit plans” and, collectively with the retirement plan, the “pension plans”). The supplemental benefit plans provide for benefits that supplement those provided by the retirement plan. We do not expect to contribute to the supplemental benefit plans in 2022.

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

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Service cost	$	2	$	2
Interest cost	1		1
Expected return on plan assets	(1)		(1)
Net pension cost	$	2	$	2

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

Other Postretirement Benefits

We provide certain postretirement health care, dental and life insurance benefits for eligible employees. We expect to contribute $7 million to the postretirement benefit plan in 2022.

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

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Service cost	$	3	$	2
Interest cost	1		1
Expected return on plan assets	(2)		(1)
Net postretirement cost	$	2	$	2

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

Defined Contribution Plan

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

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2022

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 three months ended March 31, 2022 and the year ended December 31, 2021, there were no transfers between levels.

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

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In millions of USD)	(Level 1)		(Level 2)		(Level 3)
Financial assets measured on a recurring basis:
Mutual funds — fixed income securities	$	48	$	—	$	—
Mutual funds — equity securities	12		—		—
Interest rate swap derivatives	—		23		—
Total	$	60	$	23	$	—

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

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In millions of USD)	(Level 1)		(Level 2)		(Level 3)
Financial assets measured on a recurring basis:
Mutual funds — fixed income securities	$	51	$	—	$	—
Mutual funds — equity securities	12		—		—
Interest rate swap derivatives	—		2		—
Total	$	63	$	2	$	—

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

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

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

Fair Value of Financial Assets and Liabilities

Fixed Rate Debt

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

Revolving Credit Agreements

At March 31, 2022 and December 31, 2021, we had a consolidated total of $270 million and $329 million, respectively, outstanding under our revolving 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.

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STOCKHOLDER'S EQUITY

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

STOCKHOLDER'S EQUITY

STOCKHOLDER'S EQUITY

Accumulated Other Comprehensive Income (Loss)

The following table provides the components of changes in AOCI:

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Balance at the beginning of period	$	(2)	$	(8)
Derivative instruments
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to earnings (net of tax of less than $1 for the three months ended March 31, 2022 and 2021) (a)	1		1
Gain on interest rate swaps relating to interest rate cash flow hedges (net of tax of $6 for the three months ended March 31, 2022)	15		—
Total other comprehensive income, net of tax	16		1
Balance at the end of period	$	14	$	(7)

____________________________

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

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

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SHARE-BASED COMPENSATION AND EMPLOYEE SHARE PURCHASE PLAN

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION AND EMPLOYEE SHARE PURCHASE PLAN

SHARE-BASED COMPENSATION

Long-Term Incentive Plans

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

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

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2022

Related Party Transactions [Abstract]

Related Party Transactions Disclosure

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 $2 million at March 31, 2022 and December 31, 2021. At March 31, 2022 and December 31, 2021 we had intercompany payables to Fortis and such subsidiaries of less than $1 million.

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

for each of the three months ended March 31, 2022 and 2021 for ITC Holdings was $4 million and $3 million, respectively. Related party charges for services to Fortis and other subsidiaries, recorded as an offset to general and administrative expenses for ITC Holdings, were $1 million for each of the three months ended March 31, 2022 and 2021.

Dividends

During the three months ended March 31, 2022 and 2021, we paid dividends of $64 million and $58 million, respectively, to ITC Investment Holdings. We also paid dividends of $64 million to ITC Investment Holdings in April 2022.

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COMMITMENTS AND CONTINGENT LIABILITIES

3 Months Ended

Mar. 31, 2022

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

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

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

Litigation

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

Rate of Return on Equity Complaints

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

Initial Complaint

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

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

Second Complaint

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

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

November 2019 Order

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

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

May 2020 Order

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

Financial Statement Impacts

As of December 31, 2021, we had recorded an aggregate current regulatory asset and liability of $1 million and less than $1 million, respectively, in the consolidated statements of financial position. These impacts reflect amounts owed from or due to customers under the terms outlined in the May 2020 Order and the November 2019 Order on the Initial Complaint and the periods subsequent to the September 2016 Order. During the three months ended March 31, 2022, we settled the remaining regulatory assets and liabilities and, as of March 31, 2022, there are no remaining regulatory assets or liabilities recorded related to this matter. During the three months ended March 31, 2021, we received net settlement payments of $8 million owed from customers related to this matter.

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

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

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

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SUPPLEMENTAL FINANCIAL INFORMATION

3 Months Ended

Mar. 31, 2022

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:

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

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

Supplementary Cash Flows Information

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Supplementary cash flows information:
Interest paid (net of interest capitalized)	$	47	$	44
Supplementary non-cash investing and financing activities:
Additions to property, plant and equipment and other long-lived assets (a)	118		111
Allowance for equity funds used during construction	9		7

____________________________

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

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2022

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
OPERATING REVENUES:	March 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	374	$	346
Intercompany eliminations	(9)		(10)
Total Operating Revenues	$	365	$	336

	Three months ended
INCOME (LOSS) BEFORE INCOME TAXES:	March 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	180	$	171
ITC Holdings and other	(40)		(38)
Total Income Before Income Taxes	$	140	$	133

	Three months ended
NET INCOME:	March 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	135	$	126
ITC Holdings and other	106		100
Intercompany eliminations	(135)		(126)
Total Net Income	$	106	$	100

TOTAL ASSETS:	March 31,		December 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	11,526	$	11,317
ITC Holdings and other	6,199		6,134
Reconciliations / Intercompany eliminations (a)	(6,059)		(6,006)
Total Assets	$	11,666	$	11,445

____________________________

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

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GENERAL (Policies)

3 Months Ended

Mar. 31, 2022

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, 2021 included in ITC Holdings’ annual report on Form 10-K for such period.

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

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

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REVENUE (Policies)

3 Months Ended

Mar. 31, 2022

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 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.

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 3 for information on changes in unbilled accounts receivable.

Other Services

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

Formula Rate True-Up

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

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ACCOUNTS RECEIVABLE (Tables)

3 Months Ended

Mar. 31, 2022

Receivables [Abstract]

Components of accounts receivable

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

	March 31,		December 31,
(In millions of USD)	2022		2021
Trade accounts receivable	$	2	$	3
Unbilled accounts receivable	111		116
Other	12		9
Total accounts receivable	$	125	$	128

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REGULATORY MATTERS (Tables)

3 Months Ended

Mar. 31, 2022

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 three months ended March 31, 2022:

(In millions of USD)	Total
Net regulatory liabilities as of December 31, 2021	$	(2)
Net collection of 2020 revenue deferrals and accruals, including accrued interest	(2)
Net revenue accrual, including accrued interest	39
Net regulatory assets as of March 31, 2022	$	35

Schedule of Other Assets and Other 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 as follows:

	March 31,		December 31,
(In millions of USD)	2022		2021
Current regulatory assets	$	17	$	20
Non-current regulatory assets	47		10
Current regulatory liabilities	(14)		(13)
Non-current regulatory liabilities	(15)		(19)
Net regulatory assets (liabilities)	$	35	$	(2)

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DEBT (Tables)

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Schedule of Revolving Credit Agreements

At March 31, 2022, ITC Holdings and certain of its Regulated Operating Subsidiaries had the following unsecured revolving credit facilities available:

(In millions of USD, except percentages)	Total Available 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	%
ITC Transmission	100		17		83			1.5%	0.10	%
METC	100		60		40			1.5%	0.10	%
ITC Midwest	225		164		61			1.5%	0.10	%
ITC Great Plains	75		29		46			1.5%	0.10	%
Total	$	900	$	270	$	630

____________________________

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

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

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

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

^{[1],[2],[3],[4]}

Schedule of Interest Rate Derivatives [Table Text Block]

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

Interest Rate Swaps (in millions of USD, except percentages)	Notional Amount		Weighted Average Fixed Rate	Benchmark Rate	Interest Received	Interest Paid
July 2021 swap	$	45	1.113%	LIBOR	Quarterly	Semi-annually
November 2021 swap	45		1.581%	LIBOR	Quarterly	Semi-annually
November 2021 swap	45		1.492%	LIBOR	Quarterly	Semi-annually
November 2021 swap	45		1.497%	LIBOR	Quarterly	Semi-annually
November 2021 swap	50		1.544%	LIBOR	Quarterly	Semi-annually
December 2021 swap	50		1.560%	LIBOR	Quarterly	Semi-annually
December 2021 swap	50		1.489%	LIBOR	Quarterly	Semi-annually
December 2021 swap	45		1.475%	LIBOR	Quarterly	Semi-annually
March 2022 swap	40		1.546%	SOFR	Semi-annually	Annually
March 2022 swap	35		1.533%	SOFR	Semi-annually	Annually
Total	$	450	1.483%

[1] Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating.

[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. While outstanding commercial paper does not reduce available capacity under ITC Holdings’ revolving credit agreement, the unused capacity under this agreement adjusted for the commercial paper outstanding was $163 million as of March 31, 2022.

[3] Included within long-term debt in the condensed consolidated statements of financial position.

[4] Interest charged on borrowings depends on the variable rate structure we elected at the time of each borrowing.

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RETIREMENT BENEFITS AND ASSETS HELD IN TRUST (Tables)

3 Months Ended

Mar. 31, 2022

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:

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Service cost	$	2	$	2
Interest cost	1		1
Expected return on plan assets	(1)		(1)
Net pension cost	$	2	$	2

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:

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Service cost	$	3	$	2
Interest cost	1		1
Expected return on plan assets	(2)		(1)
Net postretirement cost	$	2	$	2

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Assets and Liabilities at Fair Value Subject to Three-Tier Hierarchy

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

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In millions of USD)	(Level 1)		(Level 2)		(Level 3)
Financial assets measured on a recurring basis:
Mutual funds — fixed income securities	$	48	$	—	$	—
Mutual funds — equity securities	12		—		—
Interest rate swap derivatives	—		23		—
Total	$	60	$	23	$	—

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

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In millions of USD)	(Level 1)		(Level 2)		(Level 3)
Financial assets measured on a recurring basis:
Mutual funds — fixed income securities	$	51	$	—	$	—
Mutual funds — equity securities	12		—		—
Interest rate swap derivatives	—		2		—
Total	$	63	$	2	$	—

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STOCKHOLDER'S EQUITY (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table provides the components of changes in AOCI:

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Balance at the beginning of period	$	(2)	$	(8)
Derivative instruments
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to earnings (net of tax of less than $1 for the three months ended March 31, 2022 and 2021) (a)	1		1
Gain on interest rate swaps relating to interest rate cash flow hedges (net of tax of $6 for the three months ended March 31, 2022)	15		—
Total other comprehensive income, net of tax	16		1
Balance at the end of period	$	14	$	(7)

____________________________

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

^[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.

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SUPPLEMENTAL FINANCIAL INFORMATION TABLE TAGS (Tables)

3 Months Ended

Mar. 31, 2022

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:

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

Supplementary Cash Flow Information

Supplementary Cash Flows Information

	Three months ended
	March 31,
(In millions of USD)	2022		2021
Supplementary cash flows information:
Interest paid (net of interest capitalized)	$	47	$	44
Supplementary non-cash investing and financing activities:
Additions to property, plant and equipment and other long-lived assets (a)	118		111
Allowance for equity funds used during construction	9		7

____________________________

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

^[1]

[1] 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 March 31, 2022 or 2021, respectively, but will be or have been included as a cash outflow from investing activities for expenditures for property, plant and equipment or repayments of contributions in aid of construction when paid.

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Schedule of Financial Information by Reportable Segment

The following tables show our financial information by reportable segment:

	Three months ended
OPERATING REVENUES:	March 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	374	$	346
Intercompany eliminations	(9)		(10)
Total Operating Revenues	$	365	$	336

	Three months ended
INCOME (LOSS) BEFORE INCOME TAXES:	March 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	180	$	171
ITC Holdings and other	(40)		(38)
Total Income Before Income Taxes	$	140	$	133

	Three months ended
NET INCOME:	March 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	135	$	126
ITC Holdings and other	106		100
Intercompany eliminations	(135)		(126)
Total Net Income	$	106	$	100

TOTAL ASSETS:	March 31,		December 31,
(In millions of USD)	2022		2021
Regulated Operating Subsidiaries	$	11,526	$	11,317
ITC Holdings and other	6,199		6,134
Reconciliations / Intercompany eliminations (a)	(6,059)		(6,006)
Total Assets	$	11,666	$	11,445

____________________________

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

^[1]

[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

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GENERAL GENERAL (Details)	3 Months Ended
	Mar. 31, 2022
Ownership Percentage of Minority Investor	19.90%

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REVENUE (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation of Revenue [Line Items]
Transmission Rate, Applicable Period	1 year
Transmission and other services	$ 327	$ 299
Other services
Disaggregation of Revenue [Line Items]
Transmission and other services	$ 1	$ 1

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ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	$ 125	$ 128
Unbilled accounts receivable	111	116
Other	12	9
Trade accounts receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	$ 2	$ 3

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REGULATORY MATTERS Net Changes in Regulatory Assets and Liabilities (Details) $ in Millions	3 Months Ended
	Mar. 31, 2022 USD ($)
Revenue Accruals and Deferrals
Net regulatory liabilities as of December 31, 2021	$ (2)
Net collection of 2020 revenue deferrals and accruals, including accrued interest	(2)
Net revenue accrual, including accrued interest	39
Net regulatory assets (liabilities)	$ 35

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REGULATORY MATTERS Schedule of Regulatory Assets and Liabilities (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Schedule of Regulatory Assets and Liabilities [Line Items]
Current regulatory assets	$ 17	$ 21
Non-current regulatory assets	218	190
Current regulatory liabilities	(15)	(14)
Non-current regulatory liabilities	(612)	(619)
Net regulatory assets (liabilities)	35	(2)
Revenue Deferrals, Including Accrued Interest
Schedule of Regulatory Assets and Liabilities [Line Items]
Current regulatory liabilities	(14)	(13)
Non-current regulatory liabilities	(15)	(19)
Revenue Accruals, Including Accrued Interest
Schedule of Regulatory Assets and Liabilities [Line Items]
Current regulatory assets	17	20
Non-current regulatory assets	$ 47	$ 10

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REGULATORY MATTERS (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	May 21, 2020	Nov. 21, 2019	Sep. 28, 2016
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	$ (365)	$ (336)
Current regulatory liability	15		$ 14
Accrued interest	$ 14	$ 13
METC LLC [Member]
Regulatory Liabilities [Line Items]
Rate Of Return On Equity						12.38%
ITC Midwest LLC [Member]
Regulatory Liabilities [Line Items]
Rate Of Return On Equity						12.38%
MISO Operating Subsidiaries
Regulatory Liabilities [Line Items]
Incentive Adder for Independent Transmission Ownership	25	25
Basis Point Incentive Adder for RTO Participation	50	50
Revised Rate Of Return On Equity	10.77%	10.77%
ITC Great Plains LLC [Member]
Regulatory Liabilities [Line Items]
Incentive Adder for Independent Transmission Ownership	25	25
Basis Point Incentive Adder for RTO Participation	50	50
Revised Rate Of Return On Equity	11.41%	11.41%
Minimum [Member] | MISO Operating Subsidiaries
Regulatory Liabilities [Line Items]
Revised Rate Of Return On Equity	10.02%	10.02%		10.02%	9.88%	10.32%
Minimum [Member] | ITC Great Plains LLC [Member]
Regulatory Liabilities [Line Items]
Revised Rate Of Return On Equity	10.66%	10.66%
Maximum [Member] | MISO Operating Subsidiaries
Regulatory Liabilities [Line Items]
Revised Rate Of Return On Equity				12.62%	12.24%	11.35%

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GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets [Line Items]
Accumulated amortization	$ 50	$ 49

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DEBT Schedule of Revolving Credit Agreements (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2022	Dec. 31, 2021
Line of Credit Facility [Line Items]
Total available capacity		$ 900
Outstanding Balance	[1]	270
Unused Capacity		630
Commercial Paper		237	$ 155
Capacity
Line of Credit Facility [Line Items]
Commercial Paper		163
ITC Holdings Corp. [Member]
Line of Credit Facility [Line Items]
Total available capacity		400
Outstanding Balance	[1]	0
Unused Capacity	[2]	$ 400
Debt, Weighted Average Interest Rate	[3]	0.00%
Commitment Fee Rate	[4]	0.175%
ITCTransmission [Member]
Line of Credit Facility [Line Items]
Total available capacity		$ 100
Outstanding Balance	[1]	17
Unused Capacity		$ 83
Debt, Weighted Average Interest Rate	[3]	1.50%
Commitment Fee Rate	[4]	0.10%
METC LLC [Member]
Line of Credit Facility [Line Items]
Total available capacity		$ 100
Outstanding Balance	[1]	60
Unused Capacity		$ 40
Debt, Weighted Average Interest Rate	[3]	1.50%
Commitment Fee Rate	[4]	0.10%
ITC Midwest LLC [Member]
Line of Credit Facility [Line Items]
Total available capacity		$ 225
Outstanding Balance	[1]	164
Unused Capacity		$ 61
Debt, Weighted Average Interest Rate	[3]	1.50%
Commitment Fee Rate	[4]	0.10%
ITC Great Plains LLC [Member]
Line of Credit Facility [Line Items]
Total available capacity		$ 75
Outstanding Balance	[1]	29
Unused Capacity		$ 46
Debt, Weighted Average Interest Rate	[3]	1.50%
Commitment Fee Rate	[4]	0.10%

[1] Included within long-term debt in the condensed consolidated statements of financial position.

[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. While outstanding commercial paper does not reduce available capacity under ITC Holdings’ revolving credit agreement, the unused capacity under this agreement adjusted for the commercial paper outstanding was $163 million as of March 31, 2022.

[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.

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DEBT (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 04, 2022	Mar. 01, 2022	Jan. 14, 2022	Dec. 31, 2021	Dec. 17, 2021	Dec. 16, 2021	Dec. 14, 2021	Nov. 30, 2021	Nov. 08, 2021	Nov. 05, 2021	Nov. 01, 2021	Jul. 20, 2021	Nov. 14, 2017
Debt Instrument [Line Items]
Debt maturing within one year	$ 736,000,000				$ 654,000,000
Commercial Paper Program, Maximum Authorized Amount Outstanding	$ 400,000,000
Short-term Debt, Weighted Average Interest Rate, at Point in Time	1.10%
Commercial Paper	$ 237,000,000				155,000,000
Short-Term Debt, Weighted Average Days to Maturity	43 days
Derivative, Notional Amount	$ 450,000,000				$ 375,000,000
Derivative, Fixed Interest Rate	1.483%	1.533%	1.546%			1.475%	1.489%	1.56%	1.544%	1.497%	1.492%	1.581%	1.113%
Interest Rate Swap [Member]
Debt Instrument [Line Items]
Derivative, Notional Amount		$ 35,000,000	$ 40,000,000			$ 45,000,000	$ 50,000,000	$ 50,000,000	$ 50,000,000	$ 45,000,000	$ 45,000,000	$ 45,000,000	$ 45,000,000
Derivative Asset, Fair Value, Gross Asset	$ 23,000,000
ITC Holdings Corp. [Member] | Unsecured Debt [Member] | Senior Note, Due November 15, 2022
Debt Instrument [Line Items]
Interest Rate														2.70%
ITCTransmission [Member] | Unsecured Debt [Member] | First Mortgage Bonds, Series J due January 14, 2052
Debt Instrument [Line Items]
Interest Rate				2.93%
Principal amount				$ 130,000,000
ITCTransmission [Member] | Unsecured Debt [Member] | First Mortgage Bonds, Series I due January 14, 2052
Debt Instrument [Line Items]
Interest Rate				2.93%
Principal amount				$ 20,000,000

XML

RETIREMENT BENEFITS AND ASSETS HELD IN TRUST Schedule of Net Defined Benefit Cost Components (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Defined Benefit Plan Disclosure [Line Items]
Defined Contribution Plan, Cost	$ 3	$ 3
Pension plans
Defined Benefit Plan Disclosure [Line Items]
Service cost	2	2
Interest cost	1	1
Expected return on plan assets	(1)	(1)
Net cost	2	2
Other Postretirement Benefits Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	3	2
Interest cost	1	1
Expected return on plan assets	(2)	(1)
Net cost	$ 2	$ 2

XML

RETIREMENT BENEFITS AND ASSETS HELD IN TRUST (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]
Defined Contribution Plan, Cost	$ 3,000,000	$ 3,000,000
Other Pension Plan [Member] | Forecast [Member]
Defined Benefit Plan, Expected Future Employer Contributions [Abstract]
Defined Benefit Plan, Expected Future Employer Contributions, Next Fiscal Year			$ 3,000,000
Pension plans
Defined Benefit Plan, Expected Future Employer Contributions [Abstract]
Service cost	2,000,000	2,000,000
Interest cost	1,000,000	1,000,000
Defined Benefit Plan, Expected Return (Loss) on Plan Assets	(1,000,000)	(1,000,000)
Defined Benefit Plan, Net Periodic Benefit Cost (Credit)	2,000,000	2,000,000
Other Postretirement Benefits Plan
Defined Benefit Plan, Expected Future Employer Contributions [Abstract]
Service cost	3,000,000	2,000,000
Interest cost	1,000,000	1,000,000
Defined Benefit Plan, Expected Return (Loss) on Plan Assets	(2,000,000)	(1,000,000)
Defined Benefit Plan, Net Periodic Benefit Cost (Credit)	$ 2,000,000	$ 2,000,000
Other Postretirement Benefits Plan | Forecast [Member]
Defined Benefit Plan, Expected Future Employer Contributions [Abstract]
Defined Benefit Plan, Plan Assets, Contributions by Employer			$ 7,000,000

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FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value Subject to Three-Tier Hierarchy (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair Value, Net Asset (Liability)	$ 60	$ 63
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair Value, Net Asset (Liability)	23	2
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Fair Value, Net Asset (Liability)	0	0
Mutual fund - fixed income securities [Member] | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Mutual funds	48	51
Mutual fund - equity securities [Member] | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Mutual funds	12	12
Derivative | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Interest Rate Derivative Assets, at Fair Value	$ 23	$ 2

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FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Fair Value Disclosures [Abstract]
Fair value of long-term debt and debt maturing within one year, excluding revolving and term loan credit agreements and commercial paper	$ 6,482	$ 6,995
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	6,328	6,179
Book value of revolving credit and term loan credit agreements	$ 270	$ 329

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STOCKHOLDER'S EQUITY (Details) - USD ($)		3 Months Ended		12 Months Ended
		Mar. 31, 2022	Mar. 31, 2021	Mar. 31, 2023
Balance at the beginning of period		$ (2,000,000)	$ (8,000,000)	$ 14,000,000
Interest Rate Cash Flow Hedge Gain (Loss) Reclassified to Earnings, Net		15,000,000	0
Total other comprehensive income, net of tax		16,000,000	1,000,000
Balance at the end of period		14,000,000	(7,000,000)
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	[1]	1,000,000	1,000,000
Reclassification from AOCI, Current Period, Tax		1,000,000	1,000,000
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, Tax		$ 6,000,000	$ 0
Forecast [Member]
Other Comprehensive Loss, reclassification adjustment from AOCI to earnings, Tax of less than $1 million				1,000,000
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax				$ 3,000,000

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

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SHARE-BASED COMPENSATION AND EMPLOYEE SHARE PURCHASE PLAN (Details) - 2017 Omnibus Plan $ in Millions	3 Months Ended
	Mar. 31, 2022 USD ($) shares
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.
Performance Share Units (PSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted | shares	253,476
Aggregate fair value of PBUs or SBUs	$ 56
Total unrecognized compensation cost	$ 26
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted | shares	197,926
Aggregate fair value of PBUs or SBUs	$ 30
Total unrecognized compensation cost	$ 16

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RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions		3 Months Ended
	Apr. 28, 2022	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party		$ 4	$ 3
Accounts Receivable, Related Parties, Current		2		$ 2
Accounts Payable, Related Parties, Current		1		$ 1
Payments of Dividends		64	58
Related Party Transaction, Expenses from Transactions with Related Party		$ 1	$ 1
Subsequent Event
Payments of Dividends	$ 64

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COMMITMENTS AND CONTINGENT LIABILITIES (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	May 21, 2020	Nov. 21, 2019	Jun. 30, 2017	Sep. 28, 2016	Feb. 12, 2015	Nov. 12, 2013
Commitments and Contingent Liabilities [Line Items]
Current regulatory liability	$ 15		$ 14
Net Income (Loss) Attributable to Parent	(106)	$ (100)
Regulatory assets	17		21
Revenues	365	$ 336
Accounts receivable	125		128
Accounts payable	$ 126		127
MISO Operating Subsidiaries
Commitments and Contingent Liabilities [Line Items]
Revised Rate Of Return On Equity	10.77%	10.77%
Customer Refund Liability, Current		$ 8
Equity in capital structure for ratemaking purposes	$ 5,000
Incentive Adder for Independent Transmission Ownership	10
Effect on net income from 10 basis point reduction in the authorized base return on equity	$ 5
Basis Point Incentive Adder for RTO Participation	50	50
METC LLC [Member]
Commitments and Contingent Liabilities [Line Items]
Reduced rate of return on equity								8.67%	9.15%
Rate Of Return On Equity							12.38%
ITCTransmission [Member]
Commitments and Contingent Liabilities [Line Items]
Reduced rate of return on equity								8.67%	9.15%
Rate Of Return On Equity							12.38%
ITC Midwest LLC [Member]
Commitments and Contingent Liabilities [Line Items]
Reduced rate of return on equity								8.67%	9.15%
Rate Of Return On Equity							12.38%
Estimated Potential Refund Related to Return on Equity Complaints
Commitments and Contingent Liabilities [Line Items]
Regulatory assets			1
Minimum [Member] | MISO Operating Subsidiaries
Commitments and Contingent Liabilities [Line Items]
Revised Rate Of Return On Equity	10.02%	10.02%		10.02%	9.88%		10.32%
Recommended rate of return on equity						9.70%
Maximum [Member] | MISO Operating Subsidiaries
Commitments and Contingent Liabilities [Line Items]
Revised Rate Of Return On Equity				12.62%	12.24%		11.35%
Recommended rate of return on equity						10.68%
Estimated Potential Refund Related to Return on Equity Complaints
Commitments and Contingent Liabilities [Line Items]
Current regulatory liability			$ 1

XML

SUPPLEMENTAL FINANCIAL INFORMATION Restricted cash reconciliation (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Supplemental Cash Flow Elements [Abstract]
Cash and cash equivalents	$ 3	$ 5	$ 3	$ 4
Restricted Cash, included in other non-current assets	2	2	2	2
Cash, Cash Equivalents and Restricted Cash	$ 5	$ 7	$ 5	$ 6

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SUPPLEMENTAL FINANCIAL INFORMATION Supplemental Cash Flows (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2022	Mar. 31, 2021
Supplemental Cash Flow Elements [Abstract]
Interest paid (net of interest capitalized)		$ 47	$ 44
Additions to property, plant and equipment and other long-lived assets	[1]	118	111
Allowance for equity funds used during construction		$ 9	$ 7

[1] 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 March 31, 2022 or 2021, respectively, but will be or have been included as a cash outflow from investing activities for expenditures for property, plant and equipment or repayments of contributions in aid of construction when paid.

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SEGMENT INFORMATION (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
OPERATING REVENUES:
Operating revenues		$ 365	$ 336
NET INCOME:
NET INCOME		106	100
TOTAL ASSETS:
Assets		11,666		$ 11,445
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest, Total		140	133
Regulated Operating Subsidiaries
OPERATING REVENUES:
Operating revenues		374	346
NET INCOME:
NET INCOME		135	126
TOTAL ASSETS:
Assets		11,526		11,317
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest, Total		180	171
ITC Holdings and other
NET INCOME:
NET INCOME		106	100
TOTAL ASSETS:
Assets		6,199		6,134
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest, Total		(40)	(38)
Intercompany eliminations
OPERATING REVENUES:
Operating revenues		(9)	(10)
NET INCOME:
NET INCOME		(135)	$ (126)
TOTAL ASSETS:
Assets	[1]	$ (6,059)		$ (6,006)

[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