Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 01, 2017 | |
Entity Information [Line Items] | ||
Entity Registrant Name | ITC HOLDINGS CORP. | |
Entity Central Index Key | 1,317,630 | |
Trading Symbol | ITC | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 224,203,112 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 | |
Current assets | |||
Cash and cash equivalents | $ 6 | $ 8 | |
Accounts receivable | 122 | 108 | |
Inventory | 29 | 29 | |
Regulatory assets | 46 | 53 | |
Income tax receivable | 14 | 17 | |
Prepaid and other current assets | 21 | 18 | |
Total current assets | 238 | 233 | |
Property, plant and equipment (net of accumulated depreciation and amortization of $1,608 and $1,575, respectively) | 6,862 | 6,698 | |
Other assets | |||
Goodwill | 950 | 950 | |
Intangible assets (net of accumulated amortization of $33 and $32, respectively) | 42 | 43 | |
Regulatory assets | 275 | 247 | |
Deferred financing fees (net of accumulated amortization of $2 and $2, respectively) | 2 | 2 | |
Other | 51 | 50 | |
Total other assets | 1,320 | 1,292 | |
TOTAL ASSETS | 8,420 | 8,223 | |
Current liabilities | |||
Accounts payable | 104 | 100 | |
Accrued compensation | 13 | 14 | |
Accrued interest | 48 | 54 | |
Accrued taxes | 42 | 49 | |
Regulatory liabilities | 157 | 129 | |
Refundable deposits from generators for transmission network upgrades | 31 | 17 | |
Debt maturing within one year | 809 | 235 | |
Other | 36 | 35 | |
Total current liabilities | 1,240 | 633 | |
Accrued pension and postretirement liabilities | 73 | 68 | |
Deferred income taxes | 1,013 | 964 | |
Regulatory liabilities | 109 | 249 | |
Refundable deposits from generators for transmission network upgrades | 15 | 27 | |
Other | 17 | 26 | |
Long-term debt | 4,005 | 4,355 | |
Commitments and contingent liabilities (Notes 4 and 11) | |||
STOCKHOLDER’S EQUITY | |||
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at March 31, 2017 and December 31, 2016 | 892 | 892 | |
Retained earnings | 1,054 | 1,007 | |
Accumulated other comprehensive income | 2 | [1],[2] | 2 |
Total stockholder’s equity | 1,948 | 1,901 | |
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | $ 8,420 | $ 8,223 | |
[1] | Includes reclassification of net loss relating to interest rate cash flow hedges from AOCI to interest expense, net of tax, of less than $1 million for the three months ended March 31, 2017 and 2016. | ||
[2] | Includes unrealized gains on available-for-sale securities, net of tax, of less than $1 million for the three months ended March 31, 2017 and 2016. |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) (Parentheticals) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Property, plant and equipment, accumulated depreciation and amortization | $ 1,608 | $ 1,575 |
Intangible assets, accumulated amortization | 33 | 32 |
Deferred financing fees, accumulated amortization | $ 2 | $ 2 |
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 235,000,000 | 235,000,000 |
Common stock, shares issued | 224,203,112 | 224,203,112 |
Common stock, shares outstanding | 224,203,112 | 224,203,112 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
OPERATING REVENUES | $ 298 | $ 280 |
OPERATING EXPENSES | ||
Operation and maintenance | 29 | 25 |
General and administrative | 31 | 46 |
Depreciation and amortization | 41 | 39 |
Taxes other than income taxes | 24 | 23 |
Total operating expenses | 125 | 133 |
OPERATING INCOME | 173 | 147 |
OTHER EXPENSES (INCOME) | ||
Interest expense — net | 53 | 50 |
Allowance for equity funds used during construction | (8) | (8) |
Other expense | 1 | 1 |
Total other expenses (income) | 46 | 43 |
INCOME BEFORE INCOME TAXES | 127 | 104 |
INCOME TAX PROVISION | 47 | 39 |
NET INCOME | $ 80 | $ 65 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
NET INCOME | $ 80 | $ 65 |
OTHER COMPREHENSIVE LOSS | ||
Derivative instruments, net of tax (Note 7) | 0 | (2) |
TOTAL COMPREHENSIVE INCOME | $ 80 | $ 63 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
NET INCOME | $ 80 | $ 65 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 41 | 39 |
Recognition, refund and collection of revenue accruals and deferrals — including accrued interest | (18) | (17) |
Deferred income tax expense | 46 | 161 |
Allowance for equity funds used during construction | (8) | (8) |
Other | 6 | 9 |
Changes in assets and liabilities, exclusive of changes shown separately: | ||
Accounts receivable | (13) | (11) |
Income tax receivable | 3 | (141) |
Other current assets | 6 | (2) |
Accounts payable | 3 | 6 |
Accrued compensation | 4 | (6) |
Accrued interest | (7) | (13) |
Accrued taxes | (14) | (11) |
Other current liabilities | 3 | (3) |
Net estimated refund related to return on equity complaints | (120) | 19 |
Other non-current assets and liabilities, net | (4) | 1 |
Net cash provided by operating activities | 8 | 88 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Expenditures for property, plant and equipment | (204) | (209) |
Contributions in aid of construction | 2 | 5 |
Other | 0 | 9 |
Net cash used in investing activities | (202) | (195) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowings under revolving credit agreements | 333 | 244 |
Borrowings under term loan credit agreements | 250 | 0 |
Net (retirement) issuance of commercial paper, net of discount | (11) | 211 |
Repayments of revolving credit agreements | (349) | (331) |
Dividends on common and restricted stock | 0 | (29) |
Dividends to ITC Investment Holdings Inc. | (33) | 0 |
Refundable deposits from generators for transmission network upgrades | 7 | 5 |
Other | (5) | 1 |
Net cash provided by financing activities | 192 | 101 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (2) | (6) |
CASH AND CASH EQUIVALENTS — Beginning of period | 8 | 14 |
CASH AND CASH EQUIVALENTS — End of period | $ 6 | $ 8 |
GENERAL
GENERAL | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL | GENERAL These condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements as of and for the year ended December 31, 2016 included in ITC Holdings’ annual report on Form 10-K for such period. The accompanying condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Rule 10-01 of Securities and Exchange Commission (“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 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. Supplementary Cash Flows Information Three months ended March 31, (in millions) 2017 2016 Supplementary cash flows information: Interest paid (net of interest capitalized) (a) $ 65 $ 61 Income taxes paid — 18 Supplementary non-cash investing and financing activities: Additions to property, plant and equipment and other long-lived assets (b) $ 80 $ 99 Allowance for equity funds used during construction 8 8 ____________________________ (a) Amount for the three months ended March 31, 2017 includes $10 million of interest paid associated with the return on equity (“ROE”) complaints. See Note 11 to the condensed consolidated financial statements for information on the ROE complaints. (b) Amounts consist of 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, 2017 or 2016 , respectively, but will be or have been included as a cash outflow from investing activities when paid. |
THE MERGER
THE MERGER | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
THE MERGER | THE MERGER On February 9, 2016 , Fortis Inc. (“Fortis”), FortisUS Inc. (“FortisUS”), Element Acquisition Sub Inc. (“Merger Sub”) and ITC Holdings entered into an agreement and plan of merger (the “Merger Agreement”), pursuant to which Merger Sub would merge with and into ITC Holdings with ITC Holdings continuing as a surviving corporation and becoming a majority owned indirect subsidiary of Fortis (the “Merger”). On April 20, 2016, FortisUS assigned its rights, interest, duties and obligations under the Merger Agreement to ITC Investment Holdings Inc. (“Investment Holdings”), a subsidiary of FortisUS formed to complete the Merger. On the same date, Fortis reached a definitive agreement with a subsidiary of GIC Private Limited (“GIC”) for GIC to acquire an indirect 19.9% equity interest in ITC Holdings and debt securities to be issued by Investment Holdings for aggregate consideration of $1.228 billion in cash upon completion of the Merger. On October 14, 2016 , ITC Holdings and Fortis completed the Merger contemplated by the Merger Agreement consistent with the terms described above. On the same date, the common shares of ITC Holdings were delisted from the New York Stock Exchange (“NYSE”) and the common shares of Fortis were listed and began trading on the NYSE. Fortis continues to have its shares listed on the Toronto Stock Exchange. In the Merger, ITC Holdings shareholders received $22.57 in cash and 0.7520 Fortis common shares for each share of common stock of ITC Holdings (the “Merger consideration”). Upon completion of the Merger, ITC Holdings shareholders held approximately 27% of the common shares of Fortis. The per share amount of Merger consideration determined in accordance with the Merger Agreement and used for purposes of settling the share-based awards was $45.72 . We elected not to apply pushdown accounting to ITC Holdings or its subsidiaries in connection with the Merger. Under the Merger Agreement, outstanding share-based awards vested as described in Note 8 . For the three months ended March 31, 2017 and 2016 , we expensed certain internal labor and associated costs related to the Merger of approximately $1 million and $3 million , respectively, and external legal, advisory and financial services fees related to the Merger of $10 million for the three months ended March 31, 2016 . The majority of these merger-related costs were recorded within general and administrative expenses. The external and internal costs related to the Merger were recorded at ITC Holdings and have not been included as components of revenue requirement at our Regulated Operating Subsidiaries. See Note 11 for legal matters associated with the Merger with Fortis. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Pronouncements Simplification of Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that simplifies several aspects of the accounting for employee share-based payment transactions. We elected to early adopt this guidance during the fourth quarter of 2016. Among other changes, the guidance requires that an entity recognize all excess tax benefits and tax deficiencies arising after the adoption date as income tax benefit or expense in the income statement. This aspect of the new guidance was required to be adopted on a prospective basis as of January 1, 2016. The following shows the impact of this adoption on our previously reported condensed consolidated statement of operations for the three months ended March 31, 2016 : (in millions) Reported Adjustment Adjusted Income tax provision $ 40 $ (1 ) $ 39 Net income 64 1 65 Recently Issued Pronouncements We have considered all new accounting pronouncements issued by the FASB and concluded the following accounting guidance, which has not yet been adopted by us, may have a material impact on our consolidated financial statements. Revenue Recognition In May 2014, the FASB issued authoritative guidance requiring entities to apply a new model for recognizing revenue from contracts with customers. The guidance will supersede the current revenue recognition guidance and requires entities to evaluate their revenue recognition arrangements using a five-step model to determine when a customer obtains control of a transferred good or service. The majority of our revenue is generated from sales based on tariff rates, as approved by the Federal Energy Regulatory Commission (“FERC”), and is considered to be in the scope of the new guidance. However, we do not expect that the adoption of this guidance will have a material impact on our consolidated results of operations, cash flows or financial position. We continue to closely monitor outstanding industry specific interpretative issues. The guidance is effective for annual reporting periods beginning after December 15, 2017 and may be adopted using either (a) a full retrospective method, whereby comparative periods would be restated to present the impact of the new standard, with the cumulative effective of applying the standard recognized as of the earliest period presented, or (b) a modified retrospective method, under which comparative periods would not be restated and the cumulative effective of applying the standard would be recognized at the date of initial adoption, January 1, 2018. While we expect to use the modified retrospective approach, we continue to monitor industry developments and the outcome of those matters may impact our ultimate decision regarding transition method. Classification and Measurement of Financial Instruments In January 2016, the FASB issued authoritative guidance amending the classification and measurement of financial instruments. The guidance requires entities to carry most investments in equity securities at fair value and recognize changes in fair value in net income, unless the investment results in consolidation or equity method accounting. Additionally, the new guidance amends certain disclosure requirements associated with the fair value of financial instruments. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The guidance is required to be adopted using a modified retrospective approach, with limited exceptions. We are currently assessing the impacts this guidance will have on our consolidated financial statements, including our disclosures. Accounting for Leases In February 2016, the FASB issued authoritative guidance on accounting for leases, which impacts accounting by lessees as well as lessors. The new guidance creates a dual approach for lessee accounting, with lease classification determined in accordance with principles in existing lease guidance. Income statement presentation differs depending on the lease classification; however, both types of leases result in lessees recognizing a right-of-use asset and a lease liability, with limited exceptions. Under existing accounting guidance, operating leases are not recorded on the balance sheet of lessees. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and will be applied using a modified retrospective approach, with possible optional practical expedients. Early adoption is permitted. We are currently assessing the impacts this guidance will have on our consolidated financial statements, including our disclosures. Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 2017, the FASB issued guidance that requires entities to disaggregate the current service cost component of net benefit cost (i.e., net periodic pension cost and net periodic postretirement benefit cost) and present it in the same income statement line item as other current compensation costs for employees. Entities are required to present the other components of net benefit cost elsewhere in the income statement and outside income from operations. The line or lines containing such other components must be appropriately described on the face of the income statement; otherwise, disclosure of the location of such other costs in the income statement is required. In addition, the new guidance allows capitalization of only the service cost component of net benefit cost. The new guidance is effective for periods beginning after December 15, 2017. The changes to the presentation of net benefit cost in the income statement are required to be adopted retrospectively (with a possible practical expedient) while the changes regarding cost capitalization are required to be adopted prospectively. We are currently assessing the impact this guidance will have on our financial statements including our disclosures. |
REGULATORY MATTERS
REGULATORY MATTERS | 3 Months Ended |
Mar. 31, 2017 | |
Regulated Operations [Abstract] | |
REGULATORY MATTERS | REGULATORY MATTERS ITCTransmission Regional Cost Allocation Refund In October 2010, MISO and ITCTransmission made a filing with the FERC under Section 205 of the Federal Power Act (“FPA”) to revise the MISO tariff to establish a methodology to allocate and recover costs of ITCTransmission’s Phase Angle Regulating Transformers (“PARs”) among MISO and other FERC-approved Regional Transmission Organizations (“RTOs”) — the New York Independent System Operator and PJM Interconnection (“other RTOs”). In December 2010, the FERC accepted the proposed revisions, subject to refund, while setting them for hearing and settlement procedures. On September 22, 2016, the FERC issued an order largely affirming the presiding administrative law judge’s initial decision issued in December 2012, which stated, among other things, that MISO and ITCTransmission failed to show that the other RTOs will benefit from the operation of ITCTransmission’s PARs. The FERC order required ITCTransmission to provide refunds within 30 days for excess amounts collected from customers of the other RTOs. The refunds, including interest, were provided to the other RTOs in October 2016. As a result of the FERC order, ITCTransmission will collect the amounts refunded, plus interest, from network customers. On December 6, 2016, ITCTransmission made a filing with the FERC, under Section 205 of the FPA, requesting to recover the amount refunded to the other RTOs (“regional cost allocation recovery”) in network rates during the next calendar year, beginning January 1, 2017. On January 30, 2017, the FERC issued an order approving collection of the regional cost allocation recovery in 2017 . ITCTransmission has recorded $22 million and $29 million for the regional cost allocation recovery, including interest, in current regulatory assets on the condensed consolidated statements of financial position as of March 31, 2017 and December 31, 2016 , respectively. MISO Funding Policy for Generator Interconnections On June 18, 2015, the FERC issued an order initiating a proceeding, pursuant to Section 206 of the FPA, to examine MISO’s funding policy for generator interconnections, which allows a transmission owner to unilaterally elect to fund network upgrades and recover such costs from the interconnection customer. In this order, the FERC suggested the MISO funding policy be revised to require mutual agreement between the interconnection customer and transmission owner to utilize the election to fund network upgrades. On January 8, 2016, MISO made a compliance filing to revise its funding policy to adopt the FERC suggestion to require mutual agreement between the customer and transmission owner (“TO”), with an effective date of June 24, 2015. ITCTransmission, METC and ITC Midwest (“MISO Regulated Operating Subsidiaries”), along with another MISO TO, are currently appealing the FERC’s orders on this issue. We do not expect the resolution of this proceeding to have a material impact on our consolidated results of operations, cash flows or financial condition. Challenge Regarding Bonus Depreciation On December 18, 2015, Interstate Power and Light Company (“IP&L”) filed a formal challenge (“IP&L challenge”) with the FERC against ITC Midwest on certain inputs to ITC Midwest’s formula rates. The IP&L challenge alleged that ITC Midwest has unreasonably and imprudently opted out of using bonus depreciation in the calculation of its federal income tax expense and thereby unduly increased the transmission charges for transmission service to customers. On March 11, 2016, the FERC granted the IP&L challenge in part by requiring ITC Midwest to recalculate its revenue requirements, effective January 1, 2015, to simulate the election of bonus depreciation for 2015. On June 8, 2016, the FERC denied ITC Midwest’s request for rehearing of the March 11, 2016 order. On August 3, 2016, ITC Midwest filed a petition for review of the FERC’s March 11, 2016 and June 8, 2016 orders in the United States Court of Appeals, District of Columbia Circuit. On September 8, 2016, ITC Midwest filed a motion to defer the petition pending the issuance of a private letter ruling from the IRS. Following ITC Midwest’s receipt of a private letter ruling, which confirmed that ITC Midwest would not violate the IRS rules related to ratemaking by following the FERC order to calculate rates to simulate the election of bonus depreciation for the historical 2015 year, and after consideration of other relevant factors, ITC Midwest moved the court for leave to withdraw our appeal on March 15, 2017, which was granted by the Court on March 20, 2017. We intend to elect bonus depreciation for 2017. Rate of Return on Equity Complaints See “Rate of Return on Equity Complaints” in Note 11 for a discussion of the complaints. Cost-Based Formula Rates with True-Up Mechanism The transmission revenue requirements at our Regulated Operating Subsidiaries are set annually, using FERC-approved formula that is used to calculate rates (“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 or 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. Our rates include a true-up mechanism, whereby our Regulated Operating Subsidiaries compare their actual revenue requirements to their billed revenues for each year to determine any over- or under-collection of revenue requirements. Revenue is recognized for services provided during each reporting period based on actual revenue requirements calculated using the formula. Our Regulated Operating Subsidiaries accrue or defer revenues to the extent that the actual revenue requirement for the reporting period is higher or lower, respectively, than the amounts billed relating to that reporting period. The amount of accrued or deferred revenues is reflected in future revenue requirements and thus flows through to customer bills within two years under the provisions of our formula rate mechanisms. 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, 2017 : (in millions) Total Net regulatory liability as of December 31, 2016 $ (1 ) Net collection of 2015 revenue deferrals and accruals, including accrued interest (4 ) Net revenue accrual for the three months ended March 31, 2017 22 Net regulatory asset as of March 31, 2017 $ 17 Regulatory assets and liabilities associated with our Regulated Operating Subsidiaries’ formula rate revenue accruals and deferrals, including accrued interest, are recorded in the condensed consolidated statements of financial position at March 31, 2017 as follows: (in millions) Total Current regulatory assets $ 22 Non-current regulatory assets 41 Current regulatory liabilities (15 ) Non-current regulatory liabilities (31 ) Net regulatory asset as of March 31, 2017 $ 17 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill At March 31, 2017 and December 31, 2016 , we had goodwill balances recorded at ITCTransmission, METC and ITC Midwest of $173 million , $454 million and $323 million , respectively, which resulted from the ITCTransmission and METC acquisitions and ITC Midwest’s acquisition of the IP&L transmission assets, respectively. Intangible Assets We have recorded intangible assets as a result of the METC acquisition in 2006. The carrying value of these assets was $27 million and $28 million (net of accumulated amortization of $32 million and $31 million ) as of March 31, 2017 and December 31, 2016 , respectively. We have also recorded intangible assets for payments made by and obligations of ITC Great Plains to certain transmission owners (“TOs”) to acquire rights, which are required under the SPP tariff to designate ITC Great Plains to build, own and operate projects within the SPP region, including two regional cost sharing projects in Kansas. The carrying amount of these intangible assets was $15 million (net of accumulated amortization of $1 million ) as of March 31, 2017 and December 31, 2016 . During each of the three month periods ended March 31, 2017 and 2016 , we recognized $1 million of amortization expense of our intangible assets. For each of the next five years, we expect the annual amortization of our intangible assets that have been recorded as of March 31, 2017 to be $3 million per year. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Derivative Instruments and Hedging Activities We may use derivative financial instruments, including interest rate swap contracts, to manage our exposure to fluctuations in interest rates. The use of these financial instruments mitigates exposure to these risks and the variability of our operating results. We are not a party to leveraged derivatives and do not enter into derivative financial instruments for trading or speculative purposes. The interest rate swaps listed below manage interest rate risk associated with the forecasted future issuance of fixed-rate debt related to the expected refinancing of the maturing ITC Holdings 6.05% Senior Notes, due January 31, 2018. As of March 31, 2017 , ITC Holdings had $385 million outstanding under the 6.05% Senior Notes. Interest Rate Swaps (in millions, except percentages) Notional Amount Weighted Average Fixed Rate Original Term Effective Date July 2016 swaps $ 75 1.616% 10 years January 2018 August 2016 swap 25 1.599% 10 years January 2018 March 2017 swaps 100 2.661% 10 years December 2017 Total $ 200 The 10-year term interest rate swaps call for ITC Holdings to receive interest quarterly at a variable rate equal to LIBOR and pay interest semi-annually at various fixed rates effective for the 10-year period beginning January 31, 2018 for the July and August swaps and December 5, 2017 for the March 2017 swaps. The agreements include a mandatory early termination provision and will be terminated no later than the effective date of the interest rate swaps of January 31, 2018 for the July and August swaps and December 5, 2017 for the March 2017 swaps. 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 expected 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. ITC Holdings entered into an additional 10-year interest rate swap contract on April 4, 2017 with a notional amount of $50 million and fixed rate of 2.440% . This additional interest rate swap also manages interest rate risk associated with the expected refinancing of the 6.05% Senior Notes and has terms comparable to the March 2017 swaps described above. 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 for the effective portion of the hedge is recorded net of tax in accumulated other comprehensive income (“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, 2017 , the fair value of the derivative instruments was an asset of $8 million and a liability of $1 million . None of the interest rate swaps contain credit-risk-related contingent features. Refer to Note 10 for additional fair value information. 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. As of March 31, 2017 , ITC Holdings had $135 million of commercial paper issued and outstanding under the program, with a weighted-average interest rate of 1.3% and weighted average remaining days to maturity of 26 days . The amount outstanding as of March 31, 2017 was classified as debt maturing within one year in the condensed consolidated statements of financial position. Term Loan Credit Agreement On March 23, 2017, ITC Holdings entered into an unsecured, unguaranteed term loan credit agreement due March 24, 2018, under which ITC Holdings borrowed $200 million . The proceeds were used for general corporate purposes, including the repayment of borrowings under ITC Holdings’ revolving credit agreement and commercial paper program. The weighted-average interest rate on the borrowing outstanding under this agreement was 1.9% at March 31, 2017. ITC Midwest On March 15, 2017, ITC Midwest priced $200 million of 4.16% First Mortgage Bonds, Series H, which were issued on April 18, 2017 and are due April 18, 2047. The proceeds were used for general corporate purposes, including the repayment of borrowings under the ITC Midwest revolving credit agreement. ITC Midwest’s First Mortgage Bonds were issued under its First Mortgage and Deed of Trust and secured by a first mortgage lien on substantially all of its property. ITCTransmission On March 23, 2017, ITCTransmission entered into an unsecured, unguaranteed term loan credit agreement due March 23, 2019, under which ITCTransmission borrowed $50 million . The proceeds were used for general corporate purposes, including the repayment of borrowings under ITCTransmission’s revolving credit agreement. The weighted-average interest rate on the borrowing outstanding under this agreement was 1.6% at March 31, 2017. Revolving Credit Agreements At March 31, 2017 , ITC Holdings and certain of its Regulated Operating Subsidiaries had the following unsecured revolving credit facilities available: (amounts in millions, except percentages) Total Capacity Outstanding Balance (a) Unused Capacity Weighted Average Interest Rate on Outstanding Balance Commitment Fee Rate (b) ITC Holdings $ 400 $ 7 $ 393 (c) 2.1% (d) 0.175 % ITCTransmission 100 18 82 1.9% (e) 0.10 % METC 100 55 45 1.9% (e) 0.10 % ITC Midwest 250 181 69 1.9% (e) 0.10 % ITC Great Plains 150 56 94 1.9% (e) 0.10 % Total $ 1,000 $ 317 $ 683 ____________________________ (a) Included within long-term debt. (b) Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating. (c) 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 $258 million as of March 31, 2017 . (d) Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. (e) Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. 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, selling or otherwise disposing of all or substantially all of our assets and paying dividends. In addition, the covenants require us to meet certain financial ratios, such as maintaining certain debt to capitalization ratios and maintaining certain interest coverage ratios. As of March 31, 2017 , we were not in violation of any debt covenant. |
STOCKHOLDER'S EQUITY
STOCKHOLDER'S EQUITY | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
STOCKHOLDER'S EQUITY | STOCKHOLDER'S EQUITY Accumulated Other Comprehensive Income The following table provides the components of changes in AOCI for the three months ended March 31, 2017 and 2016 : Three months ended March 31, (in millions) 2017 2016 Balance at the beginning of period $ 2 $ 4 Loss on interest rate swaps relating to interest rate cash flow hedges (net of tax of $2 for the three months ended March 31, 2016) (a) — (2 ) Balance at the end of period (b) (c) $ 2 $ 2 ____________________________ (a) Includes loss on interest rate swaps relating to interest rate cash flow hedges, net of tax, of less than $1 million for the three months ended March 31, 2017 . (b) Includes unrealized gains on available-for-sale securities, net of tax, of less than $1 million for the three months ended March 31, 2017 and 2016 . (c) Includes reclassification of net loss relating to interest rate cash flow hedges from AOCI to interest expense, net of tax, of less than $1 million for the three months ended March 31, 2017 and 2016 . The amount of net loss relating to interest rate cash flow hedges to be reclassified from AOCI to interest expense for the 12-month period ending March 31, 2018 is expected to be $3 million . The Merger On October 14, 2016, ITC Holdings became a wholly-owned subsidiary of Investment Holdings, which is an indirect subsidiary of Fortis and GIC, upon the closing of the Merger. On the same date, the common shares of ITC Holdings were delisted from the NYSE. Refer to Note 2 for further details of the Merger. Related Party Transactions During the three months ended March 31, 2017 , we paid dividends of $33 million to Investment Holdings. ITC Holdings also paid dividends of $45 million to Investment Holdings in April 2017. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION 2015 Long-Term Incentive Plan and Second Amended and Restated 2006 Long-Term Incentive Plan Under the Merger Agreement, outstanding options to acquire common stock of ITC Holdings vested immediately prior to closing and were converted into the right to receive the difference between the Merger consideration and the exercise price of each option in cash, restricted stock vested immediately prior to closing and was converted into the right to receive the Merger consideration in cash and performance shares vested immediately prior to closing at the higher of target or actual performance through the effective time of the Merger and were converted into the right to receive the Merger consideration in cash. The per share amount of Merger consideration determined in accordance with the Merger Agreement and used for purposes of settling the share-based awards was $45.72 . For the year ended December 31, 2016 , we recognized approximately $41 million of expense due to the accelerated vesting of the share-based awards that occurred at the completion of the Merger. Refer to Note 2 for additional discussion regarding the Merger. As of December 31, 2016 and March 31, 2017 , there were no outstanding share-based payment awards under these plans. 2017 Omnibus Plan On February 27, 2017, the ITC Holdings board of directors adopted the 2017 Omnibus Plan (the “Plan”). Under the Plan, we may grant long-term incentive awards of performance-based units (“PBUs”) and service-based units (“SBUs”) annually to employees, including executive officers, of ITC Holdings and its subsidiaries. Each PBU and SBU granted will be valued based on one share of Fortis common stock traded on the Toronto Stock Exchange, converted to U.S. dollars and settled only in cash. On March 8, ITC Holdings granted the following number of PBUs and SBUs under the Plan: Total PBUs 333,579 SBUs 259,053 The awards are classified as liability awards based on the cash settlement feature. Liability awards are measured at their fair value at the end of each reporting period, which will fluctuate based on the price of Fortis common stock, and for the PBUs, the level of achievement of the financial performance criteria. The awards vest on December 31, 2019 provided the service and performance criteria, as applicable, are satisfied and will be settled during the first quarter of 2020. |
RETIREMENT BENEFITS AND ASSETS
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST | 3 Months Ended |
Mar. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST | RETIREMENT BENEFITS AND ASSETS HELD IN TRUST Pension Plan Benefits We have a qualified defined benefit pension plan (“retirement plan”) for eligible employees, comprised of a traditional final average pay plan and a cash balance plan. The traditional final average pay plan is noncontributory, covers select employees, and provides retirement benefits based on years of benefit service, average final compensation and age at retirement. The cash balance plan is also noncontributory, covers substantially all employees and provides retirement benefits based on eligible compensation and interest credits. Our funding practice for the retirement plan is to contribute amounts necessary to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974, plus additional amounts as we determine appropriate. We expect to contribute $4 million to the retirement plan in 2017 . 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 expect to contribute $14 million to the supplemental benefit plans in 2017 . Net periodic benefit cost for the pension plans, by component, was as follows for the three months ended March 31, 2017 and 2016 : Three months ended March 31, (in millions) 2017 2016 Service cost $ 2 $ 2 Interest cost 1 1 Expected return on plan assets (1 ) (1 ) Net pension cost $ 2 $ 2 Other Postretirement Benefits We provide certain postretirement health care, dental and life insurance benefits for eligible employees. We expect to contribute $8 million to the postretirement benefit plan in 2017 . Net postretirement benefit plan cost, by component, was as follows for the three months ended March 31, 2017 and 2016 : Three months ended March 31, (in millions) 2017 2016 Service cost $ 2 $ 2 Interest cost 1 1 Expected return on plan assets (1 ) (1 ) Net postretirement cost $ 2 $ 2 Defined Contribution Plan We also sponsor a defined contribution retirement savings plan. Participation in this plan is available to substantially all employees. We match employee contributions up to certain predefined limits based upon eligible compensation and the employee’s contribution rate. The cost of this plan was $1 million and $2 million for the three months ended March 31, 2017 and 2016 , respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2017 | |
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, 2017 and the year ended December 31, 2016 , there were no transfers between levels. Our assets and liabilities measured at fair value subject to the three-tier hierarchy at March 31, 2017 , were as follows: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (in millions) (Level 1) (Level 2) (Level 3) Financial assets measured on a recurring basis: Mutual funds — fixed income securities $ 42 $ — $ — Mutual funds — equity securities 2 — — Interest rate swap derivatives — 8 — Financial liabilities measured on a recurring basis: Interest rate swap derivatives — (1 ) — Total $ 44 $ 7 $ — Our assets measured at fair value subject to the three-tier hierarchy at December 31, 2016 , were as follows: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (in millions) (Level 1) (Level 2) (Level 3) Financial assets measured on a recurring basis: Mutual funds — fixed income securities $ 42 $ — $ — Mutual funds — equity securities 1 — — Interest rate swap derivatives — 8 — Total $ 43 $ 8 $ — As of March 31, 2017 and December 31, 2016 , we held certain assets and liabilities that are required to be measured at fair value on a recurring basis. The assets included in the table consist of investments recorded within cash and cash equivalents and other long-term assets, including investments held in a trust associated with our supplemental nonqualified, noncontributory, retirement benefit plans for selected management employees. Our mutual funds consist of publicly traded mutual funds 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. Gain and losses are recorded in earnings for investments classified as trading securities and AOCI for investments classified as available-for-sale. The asset and liability related to derivatives consist of interest rate swaps discussed in Note 6 . The fair value of our interest rate swap derivatives is determined based on a discounted cash flow (“DCF”) method using LIBOR 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, 2017 and 2016 . For additional information on our goodwill and intangible assets, please refer to the notes to the consolidated financial statements as of and for the year ended December 31, 2016 included in our Form 10-K for such period and to Note 5 of this Form 10-Q. Fair Value of Financial Assets and Liabilities Fixed Rate Debt Based on the borrowing rates obtained from third party lending institutions currently available for bank loans with similar terms and average maturities from active markets, the fair value of our consolidated long-term debt and debt maturing within one year, excluding revolving and term loan credit agreements and commercial paper, was $4,316 million and $4,306 million at March 31, 2017 and December 31, 2016 , respectively. These fair values represent Level 2 measurements under the three-tier hierarchy described above. The total book value of our consolidated long-term debt and debt maturing within one year, net of discount and deferred financing fees and excluding revolving and term loan credit agreements and commercial paper, was $4,112 million at March 31, 2017 and December 31, 2016 . Revolving and Term Loan Credit Agreements At March 31, 2017 and December 31, 2016 , we had a consolidated total of $567 million and $334 million , respectively, outstanding under our revolving and term loan credit agreements, which are variable rate loans. The fair value of these loans approximates book value based on the borrowing rates currently available for variable rate loans obtained from third party lending institutions. These fair values represent Level 2 under the three-tier hierarchy described above. Other Financial Instruments The carrying value of other financial instruments included in current assets and current liabilities, including cash and cash equivalents, special deposits and commercial paper, approximates their fair value due to the short-term nature of these instruments. |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENT LIABILITIES | COMMITMENTS AND CONTINGENT LIABILITIES Environmental Matters We are subject to federal, state and local environmental laws and regulations, which impose limitations on the discharge of pollutants into the environment, establish standards for the management, treatment, storage, transportation and disposal of solid and hazardous wastes and hazardous materials, and impose obligations to investigate and remediate contamination in certain circumstances. Liabilities relating to investigation and remediation of contamination, as well as other liabilities concerning hazardous materials or contamination, such as claims for personal injury or property damage, may arise at many locations, including formerly owned or operated properties and sites where wastes have been treated or disposed of, as well as properties currently owned or operated by us. Such liabilities may arise even where the contamination does not result from noncompliance with applicable environmental laws. Under some environmental laws, such liabilities may also be joint and several, meaning that a party can be held responsible for more than its share of the liability involved, or even the entire share. Although environmental requirements generally have become more stringent and compliance with those requirements more expensive, we are not aware of any specific developments that would increase our costs for such compliance in a manner that would be expected to have a material adverse effect on our results of operations, financial position or liquidity. Our assets and operations also involve the use of materials classified as hazardous, toxic or otherwise dangerous. Many of the properties that we own or operate have been used for many years, and include older facilities and equipment that may be more likely than newer ones to contain or be made from such materials. Some of these properties include aboveground or underground storage tanks and associated piping. Some of them also include large electrical equipment filled with mineral oil, which may contain or previously have contained polychlorinated biphenyls, or PCBs. Our facilities and equipment are often situated on or near property owned by others so that, if they are the source of contamination, others’ property may be affected. For example, aboveground and underground transmission lines sometimes traverse properties that we do not own and transmission assets that we own or operate are sometimes commingled at our transmission stations with distribution assets owned or operated by our transmission customers. Some properties in which we have an ownership interest or at which we operate are, or are suspected of being, affected by environmental contamination. We are not aware of any pending or threatened claims against us with respect to environmental contamination relating to these properties, or of any investigation or remediation of contamination at these properties, that entail costs likely to materially affect us. Some facilities and properties are located near environmentally sensitive areas such as wetlands. Claims have been made or threatened against electric utilities for bodily injury, disease or other damages allegedly related to exposure to electromagnetic fields associated with electric transmission and distribution lines. While we do not believe that a causal link between electromagnetic field exposure and injury has been generally established and accepted in the scientific community, the liabilities and costs imposed on our business could be significant if such a relationship is established or accepted. We are not aware of any pending or threatened claims against us for bodily injury, disease or other damages allegedly related to exposure to electromagnetic fields and electric transmission and distribution lines that entail costs likely to have a material adverse effect on our results of operations, financial position or liquidity. 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. Michigan Sales and Use Tax Audit The Michigan Department of Treasury has conducted sales and use tax audits of ITCTransmission for the audit periods April 1, 2005 through June 30, 2008 and October 1, 2009 through September 30, 2013. The Michigan Department of Treasury has denied ITCTransmission’s claims of the industrial processing exemption from use tax that it has taken beginning January 1, 2007. The exemption claim denials resulted in use tax assessments against ITCTransmission. ITCTransmission filed administrative appeals to contest these use tax assessments. In a separate, but related case involving a Michigan-based public utility that made similar industrial processing exemption claims, the Michigan Supreme Court ruled in July 2015 that the electric system, which involves altering voltage, constitutes an exempt, industrial processing activity. However, the ruling further held the electric system is also used for other functions that would not be exempt, and remanded the case to the Michigan Court of Claims to determine how the exemption applies to assets that are used in electric distribution activities. On March 30, 2016, ITCTransmission withdrew its administrative appeals, and subsequently filed a civil action in the Michigan Court of Claims seeking to have the use tax assessments at issue canceled. On November 2, 2016, the Michigan Court of Claims denied a motion filed by the Michigan Department of Treasury for partial summary disposition of the ITCTransmission civil action. The Michigan Department of Treasury appealed this denial with the Michigan Court of Appeals. The Court of Claims consolidated our civil action with similar, pending litigation involving another company, and ordered both cases to mediation. On March 23, 2017, following the facilitated court ordered mediation, the parties entered into a settlement agreement. Pursuant to that agreement, the Court of Appeals dismissed the appeal filed by the Michigan Department of Treasury on March 30, 2017. On April 3, 2017, the Court of Claims dismissed the civil action filed by ITCTransmission. The amount of use tax and interest associated with the settlement agreement is presented as a current liability as of March 31, 2017 and has been recorded primarily as an increase to property, plant and equipment, which is a component of revenue requirement in our cost based formula rate. METC has also taken the industrial processing exemption, estimated to be approximately $11 million for open periods. METC has not been assessed any use tax liability and has not recorded any contingent liability as of March 31, 2017 associated with this matter. In the event it becomes appropriate to record additional use tax liability relating to this matter, METC would record the additional use tax primarily as an increase to the cost of property, plant and equipment, as the majority of purchases for which the exemption was taken relate to equipment purchases associated with capital projects. Rate of Return on Equity Complaints On November 12, 2013, the Association of Businesses Advocating Tariff Equity, Coalition of MISO Transmission Customers, Illinois Industrial Energy Consumers, Indiana Industrial Energy Consumers, Inc., Minnesota Large Industrial Group and Wisconsin Industrial Energy Group (collectively, the “complainants”) filed a complaint with the FERC under Section 206 of the FPA (the “Initial Complaint”), requesting that the FERC find the then current 12.38% MISO regional base ROE rate (the “base ROE”) for all MISO TOs, including ITCTransmission, METC and ITC Midwest, to no longer be just and reasonable. The complainants sought a FERC order reducing the base ROE used in the formula transmission rates for our MISO Regulated Operating Subsidiaries to 9.15% , reducing the equity component of our capital structure from the FERC approved 60% to 50% and terminating the ROE adders approved for certain ITC Holdings Regulated Operating Subsidiaries, including adders currently utilized by ITCTransmission and METC. On June 19, 2014, in a separate Section 206 complaint against the regional base ROE rate for Independent System Operator (“ISO”) New England TOs, FERC adopted a new methodology for establishing base ROE rates for electric transmission utilities. The new methodology is based on a two-step DCF analysis that uses both short-term and long-term growth projections in calculating ROE rates for a proxy group of electric utilities. FERC also reiterated that it can apply discretion in determining how ROE rates are established within a zone of reasonableness and reiterated its policy for limiting the overall ROE rate for any company, including the base and all applicable adders, at the high end of the zone of reasonableness set by the two-step DCF methodology. The new method presented in the ISO New England ROE case is also applicable in resolving the MISO ROE cases. On October 16, 2014, the FERC granted the complainants’ request in part by setting the base ROE for hearing and settlement procedures, while denying all other aspects of the Initial Complaint. The FERC also denied the request to terminate ITCTransmission’s and METC’s ROE incentives, subject to the top end of a zone of reasonableness. The FERC set the refund effective date for the Initial Complaint as November 12, 2013. On December 22, 2015, the presiding administrative law judge issued an initial decision on the Initial Complaint, consistent with the new methodology adopted in the ISO New England decision in June of 2014. On September 28, 2016, the FERC issued an order (the “September 2016 Order”) affirming the presiding administrative law judge’s initial decision and setting the base ROE at 10.32% , with a maximum ROE of 11.35% , effective for the period from November 12, 2013 through February 11, 2015 (the “Initial Refund Period”). Additionally, the rates established by the September 2016 Order will be used prospectively from the date of that order until a new approved rate is established by the FERC in ruling on the Second Complaint described below, resulting in an ROE used currently by ITCTransmission, METC and ITC Midwest of 11.35% , 11.35% and 11.32% , respectively. The September 2016 Order required all MISO TOs, including our MISO Regulated Operating Subsidiaries, to provide refunds within 30 days for the Initial Refund Period. On October 21, 2016, the MISO TOs, including our MISO Regulated Operating Subsidiaries, filed a request with the FERC for an extension of nine months, until July 28, 2017, to provide refunds, which was granted by the FERC on October 28, 2016. The total estimated refund for the Initial Complaint resulting from this FERC order, including interest, was $118 million for our MISO Regulated Operating Subsidiaries as of December 31, 2016, recorded in current liabilities on the condensed consolidated statements of financial position. During the first quarter of 2017 , we provided a refund of $121 million , including interest, pursuant to the September 2016 Order. This refund is subject to a final true-up pursuant to the refund process. As of March 31, 2017 , we have recognized regulatory assets of $3 million for the true-up of the refund, which we expect to be substantially finalized during the second quarter of 2017 . We do not believe the total amount of the refund, including interest and the associated true-up, for the Initial Complaint will be materially different from the estimated amount recorded as of December 31, 2016 . Additionally, 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 future exclusion of certain short-term growth projections in the two-step DCF analysis used by FERC to determine the cost of equity of public utilities. On October 28, 2016, the complainants also filed a request with the FERC for rehearing, citing that FERC erred in several material respects in the September 2016 Order. The FERC issued a tolling order on November 28, 2016 to allow for additional time to address the rehearing requests. On February 12, 2015, an additional complaint was filed with the FERC under Section 206 of the FPA (the “Second Complaint”) 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 18, 2015, the FERC set the Second Complaint for hearing and settlement procedures. The FERC also set the refund effective date for the Second Complaint as February 12, 2015. On June 30, 2016, the presiding administrative law judge issued an initial decision on the Second Complaint, which recommended a base ROE of 9.70% for February 12, 2015 through May 11, 2016 (the “Second Refund Period”), with a maximum ROE of 10.68% . The initial decision is a non-binding recommendation to the FERC on the Second Complaint, and all parties, including the MISO TOs and the complainants, have filed briefs contesting various parts of the proposed findings and recommendations. In resolving the Second Complaint, we expect the FERC to establish a new base ROE and zone of reasonable returns that will be used, along with any ROE adders, to calculate the refund liability for the Second Refund Period. In addition to the refund issued for the Initial Complaint noted above, we believe it is probable that a refund will be required in connection with the Second Complaint. As of March 31, 2017 , the estimated range of refunds for the Second Refund Period is expected to be from $103 million to $140 million on a pre-tax basis. Our MISO Regulated Operating Subsidiaries recorded an estimated current regulatory liability for the Second Complaint of $140 million as of March 31, 2017 and an aggregate estimated regulatory liability for the Initial Complaint and Second Complaint of $258 million as of December 31, 2016 , representing the best estimate of the probable aggregate refunds based on the resolution of the Initial Complaint in the September 2016 Order. The recognition of the obligations associated with the Initial Complaint and the Second Complaint resulted in additional interest expense of $1 million and less than a $1 million reduction to net income for the three months ended March 31, 2017 . For the three months ended March 31, 2016 , the obligations associated with the Initial Complaint and the Second Complaint resulted in a reduction to revenues and net income of $18 million and $12 million , respectively, and an increase to interest expense of $1 million . It is possible that the outcome of these matters could differ from the estimated range of losses and materially affect our consolidated results of operations due to the uncertainty of the calculation of an authorized base ROE along with the zone of reasonableness under the newly adopted two-step DCF methodology, which is subject to significant discretion by the FERC. Further uncertainty regarding the outcome of the Initial Complaint and the Second Complaint and the timing of completion of these matters has been introduced due to a recent court action around the June 2014 FERC Order involving the New England TOs, which was remanded to the FERC for further justification of its calculation of the new base ROE for those TOs. As of March 31, 2017 , our MISO Regulated Operating Subsidiaries had a total of approximately $3 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 reduction in the authorized ROE would reduce annual consolidated net income by approximately $3 million . In a separate but related matter, in November 2014, METC, ITC Midwest and other MISO TOs filed a request with the FERC, under FPA Section 205, for authority to include a 50 basis point incentive adder for RTO participation in each of the TOs’ formula rates. On January 5, 2015, the FERC approved the use of this incentive adder, effective January 6, 2015. Additionally, ITC Midwest filed a request with the FERC, under FPA Section 205, in January 2015 for authority to include a 100 basis point incentive adder for independent transmission ownership, which is currently authorized for ITCTransmission and METC. On March 31, 2015, the FERC approved the use of a 50 basis point incentive adder for independence, effective April 1, 2015. On April 30, 2015, ITC Midwest and an intervenor, Resale Power Group of Iowa (“RPGI”), filed separate requests with the FERC for rehearing on the approved incentive adder for independence, and both requests were subsequently denied by the FERC on January 6, 2016. RPGI has filed an appeal of the FERC’s decisions, which remains pending. Beginning September 28, 2016, these incentive adders have been applied to METC’s and ITC Midwest’s base ROEs in establishing their total authorized ROE rates, subject to the maximum ROE limitation in the September 2016 Order of 11.35% . Legal Matters Associated with the Merger Following the announcement of the Merger, four putative state class action lawsuits were filed by purported shareholders of ITC Holdings on behalf of a purported class of ITC Holdings shareholders. Initially, the four actions (Paolo Guerra v. Albert Ernst, et al., Harvey Siegelman v. Joseph L. Welch, et al., Alan Poland v. Fortis Inc., et al., Sanjiv Mehrotra v. Joseph L. Welch, et al.) were filed in the Oakland County Circuit Court of the State of Michigan. The complaints name as defendants a combination of ITC Holdings and the individual members of the ITC Holdings board of directors, Fortis, FortisUS and Merger Sub. The complaints generally allege, among other things, that (1) ITC Holdings’ directors breached their fiduciary duties in connection with the Merger Agreement, (including, but not limited to, various alleged breaches of duties of good faith, loyalty, care and independence), (2) ITC Holdings’ directors failed to take appropriate steps to maximize shareholder value and claims that the Merger Agreement contains several deal protection provisions that are unnecessarily preclusive and (3) a combination of ITC Holdings, Fortis, FortisUS and Merger Sub aided and abetted the purported breaches of fiduciary duties. The complaints sought class action certification and a variety of relief including, among other things, enjoining defendants from completing the Merger, unspecified damages, and costs, including attorneys’ fees and expenses. The Siegelman case was voluntarily dismissed by the plaintiff on March 22, 2016. On March 23, 2016, the state court entered an order directing that the related cases be consolidated under the caption In re ITC Holdings Corporation Shareholder Litigation. On April 8, 2016, Poland filed an amended complaint to add derivative claims on behalf of ITC Holdings. On March 14, 2016, the Guerra state court action was dismissed by the plaintiff and refiled in the United States District Court, Eastern District of Michigan, as Paolo Guerra v. Albert Ernst, et al. The federal complaint named the same defendants (plus FortisUS), asserted the same general allegations and sought the same types of relief as in the state court cases. On March 25, 2016, Guerra amended his federal complaint. The amended complaint dropped Fortis US, Fortis and Merger Sub as defendants and added claims alleging that the defendants violated Sections 14(a) and 20(a) of the Exchange Act because the preliminary proxy statement/prospectus, filed with the SEC in connection with the special meeting of shareholders to approve the Merger Agreement, was allegedly materially misleading and allegedly omitted material facts that were necessary to render it non-misleading. Another lawsuit was filed on April 8, 2016 in the United States District Court, Eastern District of Michigan captioned Harold Severance v. Joseph L. Welch et al. against the individual members of the ITC Holdings board of directors, Fortis, FortisUS and Merger Sub, asserting the same general allegations and seeking the same type of relief as Guerra. On April 22, 2016, the Mehrotra state court action was dismissed by the plaintiff and refiled in the United States District Court, Eastern District of Michigan, as Sanjiv Mehrotra v. Joseph L. Welch, et al. With the exception of Fortis, the federal complaint named the same defendants and asserted the same general allegations as the other federal complaints. On June 8, 2016, the Oakland County Circuit Court of the State of Michigan denied a motion for summary disposition filed by ITC Holdings and the individual members of the ITC Holdings board of directors. ITC Holdings voluntarily made supplemental disclosures related to the Merger in response to certain allegations, which are set forth in a Form 8-K filed with the SEC on June 13, 2016. Nothing in those supplemental disclosures shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the disclosures set forth therein. On July 6, 2016, the federal actions were voluntarily dismissed by the federal plaintiffs. The federal plaintiffs reserved the right to make certain other claims, and ITC Holdings and the individual members of the ITC Holdings board of directors reserved the right to oppose any such claim. On July 8, 2016, the plaintiffs in Poland filed a motion for class certification. On July 13, 2016, ITC Holdings and the individual members of the ITC Holdings board of directors filed their respective answers to the amended complaint in Poland. On July 19, 2016, the Poland state court issued a scheduling order, which, among other things, requires the parties to complete discovery by March 10, 2017, and sets a trial date for June 5, 2017. On July 25, 2016, the Poland state court issued an order allowing a new plaintiff, Washtenaw County Employees’ Retirement System, to intervene in the Poland case. On January 20, 2017, the defendants filed an additional motion for summary disposition, which was expected to be heard by the Poland state court in March 2017. A hearing on class certification was held on February 9, 2017. In March 2017, the parties reached an agreement in principle to settle the case, subject to formal documentation and court approval. The court stayed the matter, except for settlement-related proceedings, and scheduled a hearing on preliminary settlement approval for May 25, 2017. ITC Holdings does not expect the settlement, if approved, to have a significant impact on its financial condition or results of operations. Additional lawsuits arising out of or relating to the Merger Agreement or the Merger may be filed in the future. See Note 2 for additional discussion on the Merger. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2017 | |
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. During the second quarter of 2016, ITC Interconnection became a transmission owner in the FERC-approved RTO, PJM Interconnection. As a result, the newly regulated transmission business at ITC Interconnection is included in the Regulated Operating Subsidiaries, starting June 1, 2016. The following tables show our financial information by reportable segment: Three months ended OPERATING REVENUES: March 31, (in millions) 2017 2016 Regulated Operating Subsidiaries $ 305 $ 280 Intercompany eliminations (7 ) — Total Operating Revenues $ 298 $ 280 Three months ended INCOME (LOSS) BEFORE INCOME TAXES: March 31, (in millions) 2017 2016 Regulated Operating Subsidiaries $ 162 $ 153 ITC Holdings and other (35 ) (49 ) Total Income Before Income Taxes $ 127 $ 104 Three months ended NET INCOME: March 31, (in millions) 2017 2016 Regulated Operating Subsidiaries $ 99 $ 94 ITC Holdings and other 80 65 Intercompany eliminations (99 ) (94 ) Total Net Income $ 80 $ 65 TOTAL ASSETS: March 31, December 31, (in millions) 2017 2016 Regulated Operating Subsidiaries $ 8,355 $ 8,162 ITC Holdings and other 4,589 4,503 Reconciliations / Intercompany eliminations (a) (4,524 ) (4,442 ) Total Assets $ 8,420 $ 8,223 ____________________________ (a) Reconciliation of total assets results primarily from differences in the netting of deferred tax assets and liabilities at our subsidiaries in the Regulated Operating Subsidiaries segment as compared to the classification in our condensed consolidated statements of financial position. |
GENERAL (Tables)
GENERAL (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplementary Cash Flows Information | Three months ended March 31, (in millions) 2017 2016 Supplementary cash flows information: Interest paid (net of interest capitalized) (a) $ 65 $ 61 Income taxes paid — 18 Supplementary non-cash investing and financing activities: Additions to property, plant and equipment and other long-lived assets (b) $ 80 $ 99 Allowance for equity funds used during construction 8 8 ____________________________ (a) Amount for the three months ended March 31, 2017 includes $10 million of interest paid associated with the return on equity (“ROE”) complaints. See Note 11 to the condensed consolidated financial statements for information on the ROE complaints. (b) Amounts consist of 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, 2017 or 2016 , respectively, but will be or have been included as a cash outflow from investing activities when paid. |
RECENT ACCOUNTING PRONOUNCEME20
RECENT ACCOUNTING PRONOUNCEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following shows the impact of this adoption on our previously reported condensed consolidated statement of operations for the three months ended March 31, 2016 : (in millions) Reported Adjustment Adjusted Income tax provision $ 40 $ (1 ) $ 39 Net income 64 1 65 |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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, 2017 : (in millions) Total Net regulatory liability as of December 31, 2016 $ (1 ) Net collection of 2015 revenue deferrals and accruals, including accrued interest (4 ) Net revenue accrual for the three months ended March 31, 2017 22 Net regulatory asset as of March 31, 2017 $ 17 |
Schedule of Regulatory Assets and Liabilities | Regulatory assets and liabilities associated with our Regulated Operating Subsidiaries’ formula rate revenue accruals and deferrals, including accrued interest, are recorded in the condensed consolidated statements of financial position at March 31, 2017 as follows: (in millions) Total Current regulatory assets $ 22 Non-current regulatory assets 41 Current regulatory liabilities (15 ) Non-current regulatory liabilities (31 ) Net regulatory asset as of March 31, 2017 $ 17 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Interest Rate Swaps | The interest rate swaps listed below manage interest rate risk associated with the forecasted future issuance of fixed-rate debt related to the expected refinancing of the maturing ITC Holdings 6.05% Senior Notes, due January 31, 2018. As of March 31, 2017 , ITC Holdings had $385 million outstanding under the 6.05% Senior Notes. Interest Rate Swaps (in millions, except percentages) Notional Amount Weighted Average Fixed Rate Original Term Effective Date July 2016 swaps $ 75 1.616% 10 years January 2018 August 2016 swap 25 1.599% 10 years January 2018 March 2017 swaps 100 2.661% 10 years December 2017 Total $ 200 |
Schedule of Revolving Credit Agreements | At March 31, 2017 , ITC Holdings and certain of its Regulated Operating Subsidiaries had the following unsecured revolving credit facilities available: (amounts in millions, except percentages) Total Capacity Outstanding Balance (a) Unused Capacity Weighted Average Interest Rate on Outstanding Balance Commitment Fee Rate (b) ITC Holdings $ 400 $ 7 $ 393 (c) 2.1% (d) 0.175 % ITCTransmission 100 18 82 1.9% (e) 0.10 % METC 100 55 45 1.9% (e) 0.10 % ITC Midwest 250 181 69 1.9% (e) 0.10 % ITC Great Plains 150 56 94 1.9% (e) 0.10 % Total $ 1,000 $ 317 $ 683 ____________________________ (a) Included within long-term debt. (b) Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating. (c) 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 $258 million as of March 31, 2017 . (d) Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. (e) Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. |
STOCKHOLDER'S EQUITY (Tables)
STOCKHOLDER'S EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Income | The following table provides the components of changes in AOCI for the three months ended March 31, 2017 and 2016 : Three months ended March 31, (in millions) 2017 2016 Balance at the beginning of period $ 2 $ 4 Loss on interest rate swaps relating to interest rate cash flow hedges (net of tax of $2 for the three months ended March 31, 2016) (a) — (2 ) Balance at the end of period (b) (c) $ 2 $ 2 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] | On March 8, ITC Holdings granted the following number of PBUs and SBUs under the Plan: Total PBUs 333,579 SBUs 259,053 |
RETIREMENT BENEFITS AND ASSET25
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Defined Benefit Plans | |
Defined Benefit Plan Disclosure | |
Schedule of Net Defined Benefit Cost Components | Net periodic benefit cost for the pension plans, by component, was as follows for the three months ended March 31, 2017 and 2016 : Three months ended March 31, (in millions) 2017 2016 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 | |
Schedule of Net Defined Benefit Cost Components | Net postretirement benefit plan cost, by component, was as follows for the three months ended March 31, 2017 and 2016 : Three months ended March 31, (in millions) 2017 2016 Service cost $ 2 $ 2 Interest cost 1 1 Expected return on plan assets (1 ) (1 ) Net postretirement cost $ 2 $ 2 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities at Fair Value Subject to Three-Tier Hierarchy | Our assets and liabilities measured at fair value subject to the three-tier hierarchy at March 31, 2017 , were as follows: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (in millions) (Level 1) (Level 2) (Level 3) Financial assets measured on a recurring basis: Mutual funds — fixed income securities $ 42 $ — $ — Mutual funds — equity securities 2 — — Interest rate swap derivatives — 8 — Financial liabilities measured on a recurring basis: Interest rate swap derivatives — (1 ) — Total $ 44 $ 7 $ — Our assets measured at fair value subject to the three-tier hierarchy at December 31, 2016 , were as follows: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (in millions) (Level 1) (Level 2) (Level 3) Financial assets measured on a recurring basis: Mutual funds — fixed income securities $ 42 $ — $ — Mutual funds — equity securities 1 — — Interest rate swap derivatives — 8 — Total $ 43 $ 8 $ — |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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) 2017 2016 Regulated Operating Subsidiaries $ 305 $ 280 Intercompany eliminations (7 ) — Total Operating Revenues $ 298 $ 280 Three months ended INCOME (LOSS) BEFORE INCOME TAXES: March 31, (in millions) 2017 2016 Regulated Operating Subsidiaries $ 162 $ 153 ITC Holdings and other (35 ) (49 ) Total Income Before Income Taxes $ 127 $ 104 Three months ended NET INCOME: March 31, (in millions) 2017 2016 Regulated Operating Subsidiaries $ 99 $ 94 ITC Holdings and other 80 65 Intercompany eliminations (99 ) (94 ) Total Net Income $ 80 $ 65 TOTAL ASSETS: March 31, December 31, (in millions) 2017 2016 Regulated Operating Subsidiaries $ 8,355 $ 8,162 ITC Holdings and other 4,589 4,503 Reconciliations / Intercompany eliminations (a) (4,524 ) (4,442 ) Total Assets $ 8,420 $ 8,223 ____________________________ (a) Reconciliation of total assets results primarily from differences in the netting of deferred tax assets and liabilities at our subsidiaries in the Regulated Operating Subsidiaries segment as compared to the classification in our condensed consolidated statements of financial position. |
GENERAL (Details)
GENERAL (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Supplementary cash flows information: | |||
Interest paid (net of interest capitalized) (a) | [1] | $ 65 | $ 61 |
Income taxes paid | 0 | 18 | |
Interest paid associated with the ROE complaints | 10 | ||
Supplementary non-cash investing and financing activities: | |||
Additions to property, plant and equipment and other long-lived assets | [2] | 80 | 99 |
Allowance for equity funds used during construction | $ 8 | $ 8 | |
[1] | Amount for the three months ended March 31, 2017 includes $10 million of interest paid associated with the return on equity (“ROE”) complaints. See Note 11 to the condensed consolidated financial statements for information on the ROE complaints. | ||
[2] | Amounts consist of accrued liabilities for construction, labor, materials and other costs that have not been included in investing activities. These amounts have not been paid for as of March 31, 2017 or 2016, respectively, but will be or have been included as a cash outflow from investing activities when paid. |
THE MERGER (Details)
THE MERGER (Details) - USD ($) | Oct. 14, 2016 | Apr. 20, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Certain Internal Labor and Associated Costs | ||||
The Merger | ||||
Merger related expenses | $ 1,000,000 | $ 3,000,000 | ||
External Legal, Advisory and Financial Services Fees | ||||
The Merger | ||||
Merger related expenses | $ 10,000,000 | |||
GIC Private Limited | ||||
The Merger | ||||
Ownership percentage of minority investor upon completion of merger | 19.90% | |||
Business acquisition, cash consideration | $ 1,228,000,000 | |||
ITC Holdings | ||||
The Merger | ||||
Cash per common share | $ 22.57 | |||
Fortis stock per common share | $ 0.7520 | |||
Ownership percentage of Fortis after close of merger | 27.00% | |||
Merger consideration share-based compensation awards | $ 45.72 |
RECENT ACCOUNTING PRONOUNCEME30
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle | ||
INCOME TAX PROVISION | $ 47 | $ 39 |
NET INCOME | $ 80 | 65 |
Accounting Standards Update 2016-09 | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
INCOME TAX PROVISION | 39 | |
NET INCOME | 65 | |
Accounting Standards Update 2016-09 | Reported | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
INCOME TAX PROVISION | 40 | |
NET INCOME | 64 | |
Accounting Standards Update 2016-09 | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
INCOME TAX PROVISION | (1) | |
NET INCOME | $ 1 |
REGULATORY MATTERS Net Changes
REGULATORY MATTERS Net Changes in Regulatory Assets and Liabilities (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Revenue Accruals and Deferrals | |
Beginning balance | $ (1) |
Net collection of 2015 revenue deferrals and accruals, including accrued interest | (4) |
Net revenue accrual for the three months ended March 31, 2017 | 22 |
Ending balance | $ 17 |
REGULATORY MATTERS Schedule of
REGULATORY MATTERS Schedule of Regulatory Assets and Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Schedule of Regulatory Assets and Liabilities | ||
Current regulatory assets | $ 46 | $ 53 |
Non-current regulatory assets | 275 | 247 |
Current regulatory liabilities | (157) | (129) |
Non-current regulatory liabilities | (109) | $ (249) |
Revenue Deferrals, Including Accrued Interest | ||
Schedule of Regulatory Assets and Liabilities | ||
Current regulatory liabilities | (15) | |
Non-current regulatory liabilities | (31) | |
Revenue Accruals, Including Accrued Interest | ||
Schedule of Regulatory Assets and Liabilities | ||
Current regulatory assets | 22 | |
Non-current regulatory assets | $ 41 |
REGULATORY MATTERS Additional I
REGULATORY MATTERS Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Schedule of Regulatory Matters | ||
Current regulatory assets | $ 46 | $ 53 |
Transmission rate, applicable period | 1 year | |
Revenue true-up amount reflected in customer bill, period of recognition | 2 years | |
Regional Cost Allocation Refund | ||
Schedule of Regulatory Matters | ||
Current regulatory assets | $ 22 | $ 29 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Goodwill and Intangible Assets | |||
Goodwill | $ 950 | $ 950 | |
Intangible assets | 42 | 43 | |
Accumulated amortization | 33 | 32 | |
Amortization expense | 1 | $ 1 | |
Expected amortization expense, year one | 3 | ||
Expected amortization expense, year two | 3 | ||
Expected amortization expense, year three | 3 | ||
Expected amortization expense, year four | 3 | ||
Expected amortization expense, year five | 3 | ||
ITCTransmission | |||
Goodwill and Intangible Assets | |||
Goodwill | 173 | 173 | |
METC | |||
Goodwill and Intangible Assets | |||
Goodwill | 454 | 454 | |
Intangible assets | 27 | 28 | |
Accumulated amortization | 32 | 31 | |
ITC Midwest | |||
Goodwill and Intangible Assets | |||
Goodwill | 323 | 323 | |
ITC Great Plains | |||
Goodwill and Intangible Assets | |||
Intangible assets | 15 | 15 | |
Accumulated amortization | $ 1 | $ 1 |
DEBT Interest Rate Swap Agreeme
DEBT Interest Rate Swap Agreements (Details) - USD ($) $ in Millions | 1 Months Ended | |||||||
Mar. 31, 2017 | Aug. 31, 2016 | Jul. 31, 2016 | Apr. 04, 2017 | Mar. 01, 2017 | Dec. 31, 2016 | Aug. 01, 2016 | Jul. 01, 2016 | |
Derivative | ||||||||
Long-term debt | $ 4,112 | $ 4,112 | ||||||
Notional amount | $ 200 | $ 100 | $ 25 | $ 75 | ||||
Fixed rate | 2.661% | 1.599% | 1.616% | |||||
Interest Rate Swap | ||||||||
Derivative | ||||||||
Term of contract | 10 years | 10 years | 10 years | |||||
Fair Value, Inputs, Level 2 | Recurring Basis | Interest Rate Swap | ||||||||
Derivative | ||||||||
Interest rate swap fair value, asset | $ 8 | |||||||
ITC Holdings | Senior Notes, due January 31, 2018 | ||||||||
Derivative | ||||||||
Long-term debt | $ 385 | |||||||
Subsequent Event | ||||||||
Derivative | ||||||||
Notional amount | $ 50 | |||||||
Fixed rate | 2.44% |
DEBT Schedule of Revolving Cred
DEBT Schedule of Revolving Credit Agreements (Details) | 3 Months Ended | |
Mar. 31, 2017USD ($) | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 1,000,000,000 | |
Outstanding balance | 317,000,000 | [1] |
Unused capacity | 683,000,000 | |
ITC Holdings | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | 400,000,000 | |
Outstanding balance | 7,000,000 | [1] |
Unused capacity | $ 393,000,000 | [2] |
Weighted average interest rate | 2.10% | [3] |
Commitment fee rate | 0.175% | [4] |
Unused capacity, adjusted for commercial paper outstanding | $ 258,000,000 | |
Interest rate description | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. | |
ITCTransmission | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 100,000,000 | |
Outstanding balance | 18,000,000 | [1] |
Unused capacity | $ 82,000,000 | |
Weighted average interest rate | 1.90% | [5] |
Commitment fee rate | 0.10% | [4] |
Interest rate description | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |
METC | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 100,000,000 | |
Outstanding balance | 55,000,000 | [1] |
Unused capacity | $ 45,000,000 | |
Weighted average interest rate | 1.90% | [5] |
Commitment fee rate | 0.10% | [4] |
Interest rate description | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |
ITC Midwest | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 250,000,000 | |
Outstanding balance | 181,000,000 | [1] |
Unused capacity | $ 69,000,000 | |
Weighted average interest rate | 1.90% | [5] |
Commitment fee rate | 0.10% | [4] |
Interest rate description | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |
ITC Great Plains | ||
Line of Credit Facility [Line Items] | ||
Total available capacity | $ 150,000,000 | |
Outstanding balance | 56,000,000 | [1] |
Unused capacity | $ 94,000,000 | |
Weighted average interest rate | 1.90% | [5] |
Commitment fee rate | 0.10% | [4] |
Interest rate description | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. | |
[1] | Included within long-term debt. | |
[2] | ITC Holdings’ revolving credit agreement may be used for general corporate purposes, including to repay commercial paper issued pursuant to the commercial paper program described above, if necessary. 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 $258 million as of March 31, 2017. | |
[3] | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. | |
[4] | Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating. | |
[5] | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. |
DEBT Additional Information (De
DEBT Additional Information (Details) - USD ($) | Sep. 30, 2016 | Mar. 31, 2017 | Mar. 23, 2017 | Mar. 15, 2017 | |
Debt Instrument [Line Items] | |||||
Commercial paper program, maximum authorized amount outstanding | $ 400,000,000 | ||||
Commercial paper | $ 135,000,000 | ||||
Commercial paper, weighted average interest rate | 1.30% | ||||
Commercial paper, weighted average days to maturity | 26 days | ||||
ITC Holdings | |||||
Debt Instrument [Line Items] | |||||
Weighted average interest rate | [1] | 2.10% | |||
ITC Midwest | |||||
Debt Instrument [Line Items] | |||||
Weighted average interest rate | [2] | 1.90% | |||
ITCTransmission | |||||
Debt Instrument [Line Items] | |||||
Weighted average interest rate | [2] | 1.90% | |||
Unsecured Debt | Term Loan Credit Agreement, Due March 24, 2018 [Member] | ITC Holdings | |||||
Debt Instrument [Line Items] | |||||
Term loan | $ 200,000,000 | ||||
Weighted average interest rate | 1.90% | ||||
Unsecured Debt | Term Loan Credit Agreement, Due March 23, 2019 [Member] | ITCTransmission | |||||
Debt Instrument [Line Items] | |||||
Term loan | $ 50,000,000 | ||||
Weighted average interest rate | 1.60% | ||||
Secured Debt | First Mortgage Bonds, Series H, due April 18, 2047 [Member] | ITC Midwest | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 200,000,000 | ||||
Interest rate | 4.16% | ||||
[1] | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. | ||||
[2] | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. |
STOCKHOLDER'S EQUITY (Details)
STOCKHOLDER'S EQUITY (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Apr. 30, 2017 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2018 | |||||
Equity [Abstract] | ||||||||
Balance at the beginning of period | $ 2 | [1],[2] | $ 2 | $ 4 | $ 2 | [1],[2] | ||
Loss on interest rate swaps relating to interest rate cash flow hedges (net of tax of $2 for the three months ended March 31, 2016) (a) | 1 | (2) | [3] | |||||
Unrealized gains on available-for-sale securities, net of tax | 1 | 1 | ||||||
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to interest expense, net of tax | 1 | 0 | ||||||
Balance at the end of period (b) (c) | [1],[2] | 2 | $ 2 | |||||
Cash Dividends Paid to Parent Company by Consolidated Subsidiaries | $ 33 | |||||||
Expectation | ||||||||
Portion expected to be reclassified from AOCI to interest expense during the next twelve months | $ 3 | |||||||
Subsequent Event | ||||||||
Cash Dividends Paid to Parent Company by Consolidated Subsidiaries | $ 45 | |||||||
[1] | Includes reclassification of net loss relating to interest rate cash flow hedges from AOCI to interest expense, net of tax, of less than $1 million for the three months ended March 31, 2017 and 2016. | |||||||
[2] | Includes unrealized gains on available-for-sale securities, net of tax, of less than $1 million for the three months ended March 31, 2017 and 2016. | |||||||
[3] | Includes loss on interest rate swaps relating to interest rate cash flow hedges, net of tax, of less than $1 million for the three months ended March 31, 2017. |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | Oct. 14, 2016 | |
2017 Omnibus Plan | Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares issued in period | 333,579 | ||
2017 Omnibus Plan | Service-Based Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares issued in period | 259,053 | ||
Expense Recognized Upon Completion of the Merger | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Merger related expenses | $ 41,000,000 | ||
ITC Holdings | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Merger consideration share-based compensation awards | $ 45.72 |
RETIREMENT BENEFITS AND ASSET40
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST Schedule of Net Defined Benefit Cost Components (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Defined Benefit Plans | ||
Defined Benefit Plan Disclosure | ||
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 | ||
Service cost | 0 | 0 |
Interest cost | 0 | 0 |
Expected return on plan assets | 0 | 0 |
Net cost | $ 0 | $ 0 |
RETIREMENT BENEFITS AND ASSET41
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2017 | |
Defined Contribution Plan | |||
Retirement Benefits Disclosure | |||
Plan cost | $ 1 | $ 2 | |
Other Pension Plan | Expectation | |||
Retirement Benefits Disclosure | |||
Expected additional current year contribution | $ 4 | ||
Supplemental Retirement Plans | Expectation | |||
Retirement Benefits Disclosure | |||
Expected additional current year contribution | 14 | ||
Other Postretirement Benefits Plan | Expectation | |||
Retirement Benefits Disclosure | |||
Expected additional current year contribution | $ 8 |
FAIR VALUE MEASUREMENTS Assets
FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value Subject to Three-Tier Hierarchy (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Fair value, level transfers | $ 0 | $ 0 |
Recurring Basis | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Total - asset | 44,000,000 | 43,000,000 |
Recurring Basis | Fair Value, Inputs, Level 1 | Fixed Income Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Mutual funds | 42,000,000 | 42,000,000 |
Recurring Basis | Fair Value, Inputs, Level 1 | Equity Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Mutual funds | 2,000,000 | 1,000,000 |
Recurring Basis | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Total - net liability | 7,000,000 | 8,000,000 |
Recurring Basis | Fair Value, Inputs, Level 2 | Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Interest rate swap fair value, asset | 8,000,000 | $ 8,000,000 |
Interest rate swaps fair value, liability | $ (1,000,000) |
FAIR VALUE MEASUREMENTS Additio
FAIR VALUE MEASUREMENTS Additional Information (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
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 | $ 4,316 | $ 4,306 |
Book value of long-term debt and debt maturing within one year, net of discount and deferred financing fees and excluding revolving and term loan credit agreements and commercial paper | 4,112 | 4,112 |
Book value of revolving credit and term loan credit agreements | $ 567 | $ 334 |
COMMITMENTS AND CONTINGENT LI44
COMMITMENTS AND CONTINGENT LIABILITIES (Details) - USD ($) $ in Millions | 3 Months Ended | ||||||||||||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Sep. 28, 2016 | Jun. 30, 2016 | Oct. 20, 2015 | Apr. 06, 2015 | Mar. 31, 2015 | Feb. 12, 2015 | Jan. 30, 2015 | Jan. 05, 2015 | Nov. 30, 2014 | Nov. 12, 2013 | |
Commitments and Contingent Liabilities | |||||||||||||
Current regulatory liability | $ 157 | $ 129 | |||||||||||
Regulatory assets | 46 | 53 | |||||||||||
Non-current regulatory liability | 109 | 249 | |||||||||||
Interest expense | 53 | $ 50 | |||||||||||
Operating revenues | 298 | 280 | |||||||||||
NET INCOME | 80 | 65 | |||||||||||
Estimated Potential Refund Related to Return on Equity Complaints | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Current regulatory liability | 140 | ||||||||||||
Non-current regulatory liability | 258 | ||||||||||||
Rate of Return on Equity and Capital Structure Initial Complaint | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Current regulatory liability | $ 118 | ||||||||||||
Payments for Other Operating Activities | 121 | ||||||||||||
Rate of Return on Equity and Capital Structure Initial Complaint | Expert Witness Testimony | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Recommended rate of return on equity | 12.38% | ||||||||||||
Rate of Return on Equity and Capital Structure Initial Complaint | FERC Order | Minimum | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Revised rate of return on equity | 10.32% | ||||||||||||
Rate of Return on Equity and Capital Structure Initial Complaint | FERC Order | Maximum | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Revised rate of return on equity | 11.35% | ||||||||||||
Rate of Return on Equity and Capital Structure Initial Complaint True-up | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Regulatory assets | 3 | ||||||||||||
Rate of Return on Equity and Capital Structure Second Complaint | Expert Witness Testimony | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Rate of return on equity | 12.38% | ||||||||||||
Rate of Return on Equity and Capital Structure Second Complaint | Presiding Administrative Law Judge Initial Decision | Minimum | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Recommended rate of return on equity | 9.70% | ||||||||||||
Rate of Return on Equity and Capital Structure Second Complaint | Presiding Administrative Law Judge Initial Decision | Maximum | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Recommended rate of return on equity | 10.68% | ||||||||||||
Rate of Return on Equity and Capital Structure Complaints | Impact from Recognition of Liability | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Interest expense | 1 | 1 | |||||||||||
Operating revenues | (18) | ||||||||||||
NET INCOME | (1) | $ (12) | |||||||||||
Rate of Return on Equity and Capital Structure Complaints | Minimum | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Estimated potential refund | 103 | ||||||||||||
Rate of Return on Equity and Capital Structure Complaints | Maximum | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Estimated potential refund | 140 | ||||||||||||
ITCTransmission | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Rate of return on equity | 12.38% | ||||||||||||
FERC approved capital structure, equity percentage | 60.00% | ||||||||||||
Revised rate of return on equity | 11.35% | ||||||||||||
ITCTransmission | Rate of Return on Equity and Capital Structure Initial Complaint | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Reduced rate of return on equity | 9.15% | ||||||||||||
Complaint capital structure, equity percentage | 50.00% | ||||||||||||
ITCTransmission | Rate of Return on Equity and Capital Structure Second Complaint | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Reduced rate of return on equity | 8.67% | ||||||||||||
METC | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Rate of return on equity | 12.38% | ||||||||||||
FERC approved capital structure, equity percentage | 60.00% | ||||||||||||
Revised rate of return on equity | 11.35% | ||||||||||||
Approved incentive adder for RTO participation | 0.50% | ||||||||||||
Requested incentive adder for RTO participation | 0.50% | ||||||||||||
METC | Maximum | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Revised rate of return on equity | 11.35% | ||||||||||||
METC | Rate of Return on Equity and Capital Structure Initial Complaint | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Reduced rate of return on equity | 9.15% | ||||||||||||
Complaint capital structure, equity percentage | 50.00% | ||||||||||||
METC | Rate of Return on Equity and Capital Structure Second Complaint | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Reduced rate of return on equity | 8.67% | ||||||||||||
METC | Sales and Use Tax Audit | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Potential liability | 11 | ||||||||||||
ITC Midwest | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Rate of return on equity | 12.38% | ||||||||||||
FERC approved capital structure, equity percentage | 60.00% | ||||||||||||
Revised rate of return on equity | 11.32% | ||||||||||||
Approved incentive adder for RTO participation | 0.50% | ||||||||||||
Requested incentive adder for RTO participation | 0.50% | ||||||||||||
Requested incentive adder for independence | 1.00% | ||||||||||||
Approved incentive adder for independence | 0.50% | ||||||||||||
ITC Midwest | Rate of Return on Equity and Capital Structure Initial Complaint | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Reduced rate of return on equity | 9.15% | ||||||||||||
Complaint capital structure, equity percentage | 50.00% | ||||||||||||
ITC Midwest | Rate of Return on Equity and Capital Structure Second Complaint | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Reduced rate of return on equity | 8.67% | ||||||||||||
MISO Operating Subsidiaries | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||
Equity in capital structure for ratemaking purposes | 3,000 | ||||||||||||
Effect on net income from 10 basis point reduction in the authorized base return on equity | $ 3 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | ||
OPERATING REVENUES: | ||||
Operating revenues | $ 298 | $ 280 | ||
INCOME (LOSS) BEFORE INCOME TAXES: | ||||
Income before income taxes | 127 | 104 | ||
NET INCOME: | ||||
NET INCOME | 80 | 65 | ||
TOTAL ASSETS: | ||||
Assets | 8,420 | $ 8,223 | ||
Regulated operations | ||||
OPERATING REVENUES: | ||||
Operating revenues | 305 | 280 | ||
INCOME (LOSS) BEFORE INCOME TAXES: | ||||
Income before income taxes | 162 | 153 | ||
NET INCOME: | ||||
NET INCOME | 99 | 94 | ||
TOTAL ASSETS: | ||||
Assets | 8,355 | 8,162 | ||
ITC Holdings and other | ||||
INCOME (LOSS) BEFORE INCOME TAXES: | ||||
Income before income taxes | (35) | (49) | ||
NET INCOME: | ||||
NET INCOME | 80 | 65 | ||
TOTAL ASSETS: | ||||
Assets | 4,589 | 4,503 | ||
Intercompany eliminations | ||||
OPERATING REVENUES: | ||||
Operating revenues | (7) | 0 | ||
NET INCOME: | ||||
NET INCOME | (99) | $ (94) | ||
TOTAL ASSETS: | ||||
Assets | [1] | $ (4,524) | $ (4,442) | |
[1] | Reconciliation of total assets results primarily from differences in the netting of deferred tax assets and liabilities at our subsidiaries in the Regulated Operating Subsidiaries segment as compared to the classification in our condensed consolidated statements of financial position. |