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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Itc Holdings Corp. | NYSE:ITC | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 45.50 | 0.00 | 01:00:00 |
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☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Quarterly Period Ended
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March 31, 2020
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Michigan
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32-0058047
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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None
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None
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None
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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☐
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☐
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☑
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☐
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☐
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Page
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•
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“ITC Great Plains” are references to ITC Great Plains, LLC, a wholly-owned subsidiary of ITC Holdings;
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•
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“ITC Holdings” are references to ITC Holdings Corp. and not any of its subsidiaries;
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•
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“ITC Interconnection” are references to ITC Interconnection LLC, a wholly-owned subsidiary of ITC Holdings;
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•
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“ITC Midwest” are references to ITC Midwest LLC, a wholly-owned subsidiary of ITC Holdings;
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•
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“ITCTransmission” are references to International Transmission Company, a wholly-owned subsidiary of ITC Holdings;
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•
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“METC” are references to Michigan Electric Transmission Company, LLC, a wholly-owned subsidiary of MTH;
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•
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“MISO Regulated Operating Subsidiaries” are references to ITCTransmission, METC and ITC Midwest together;
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•
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“MTH” are references to Michigan Transco Holdings, LLC, the sole member of METC and a wholly-owned subsidiary of ITC Holdings;
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•
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“Regulated Operating Subsidiaries” are references to ITCTransmission, METC, ITC Midwest, ITC Great Plains and ITC Interconnection together; and
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•
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“Company,” “we,” “our” and “us” are references to ITC Holdings together with all of its subsidiaries.
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•
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“ADIT” are references to accumulated deferred income tax;
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•
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“AFUDC” are references to an allowance for funds used during construction;
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•
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“ALJ” are references to an administrative law judge;
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•
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“AOCI” are references to accumulated other comprehensive income or (loss);
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•
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“Consumers Energy” are references to Consumers Energy Company, a wholly-owned subsidiary of CMS Energy Corporation;
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•
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“COVID-19” are references to the Coronavirus disease 2019 that the World Health Organization declared a pandemic in March 2020;
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•
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“D.C. Circuit Court” are references to the U.S. Court of Appeals for the District of Columbia Circuit;
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•
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“DCF” are references to discounted cash flow;
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•
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“DTE Electric” are references to DTE Electric Company, a wholly-owned subsidiary of DTE Energy Company;
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•
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“ESPP” are references to the Fortis Amended and Restated 2012 Employee Share Purchase Plan;
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•
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“FASB” are references to the Financial Accounting Standards Board;
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•
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“FERC” are references to the Federal Energy Regulatory Commission;
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•
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“Fortis” are references to Fortis Inc.;
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•
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“Formula Rate” are references to a FERC-approved formula template used to calculate an annual revenue requirement;
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•
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“FPA” are references to the Federal Power Act;
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•
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“GAAP” are references to accounting principles generally accepted in the United States of America;
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•
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“GIC” are references to GIC Private Limited;
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•
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“Initial Complaint” are references to a November 2013 complaint to the FERC under Section 206 of the FPA regarding the base ROE;
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•
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“ITC Investment Holdings” are references to ITC Investment Holdings Inc., a majority owned indirect subsidiary of Fortis in which GIC has an indirect minority ownership interest;
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•
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“IP&L” are references to Interstate Power and Light Company, an Alliant Energy Corporation subsidiary;
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•
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“IRS” are references to the Internal Revenue Service;
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•
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“ISO” are references to Independent System Operators;
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•
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“KCC” are references to the Kansas Corporation Commission;
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•
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“kW” are references to kilowatts (one kilowatt equaling 1,000 watts);
|
•
|
“MISO” are references to the Midcontinent Independent System Operator, Inc., a FERC-approved RTO which oversees the operation of the bulk power transmission system for a substantial portion of the Midwestern United States and Manitoba, Canada, and of which ITCTransmission, METC and ITC Midwest are members;
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•
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“MISO ROE Complaints” are references to the Initial Complaint and the Second Complaint;
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•
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“NERC” are references to the North American Electric Reliability Corporation;
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•
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“NOLs” are references to net operating loss carryforwards for income taxes;
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•
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“NOPR” are references to a Notice of Proposed Rulemaking issued by the FERC;
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•
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“November 2018 Order” are references to an order issued by the FERC on November 15, 2018 regarding MISO ROE Complaints;
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•
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“November 2019 Order” are references to an order issued by the FERC on November 21, 2019 regarding MISO ROE Complaints;
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•
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“PBU” are references to a performance-based unit;
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•
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“PCBs” are references to polychlorinated biphenyls;
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•
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“ROE” are references to return on equity;
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•
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“RTO” are references to Regional Transmission Organizations;
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•
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“SBU” are references to a service-based unit;
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•
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“SEC” are references to the Securities and Exchange Commission;
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•
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“Second Complaint” are references to an additional complaint filed on February 12, 2015 with the FERC under Section 206 of the FPA regarding the base ROE;
|
•
|
“September 2016 Order” are references to an order issued by the FERC on September 28, 2016 regarding the Initial Complaint;
|
•
|
“SPP” are references to Southwest Power Pool, Inc., a FERC-approved RTO which oversees the operation of the bulk power transmission system for a substantial portion of the South Central United States, and of which ITC Great Plains is a member;
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•
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“TCJA” are references to the Tax Cuts and Jobs Act of 2017, a comprehensive tax reform bill enacted on December 22, 2017; and
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•
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“TO” are references to transmission owner.
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March 31,
|
|
December 31,
|
||||
(in millions, except share data)
|
2020
|
|
2019
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6
|
|
|
$
|
4
|
|
Accounts receivable
|
110
|
|
|
117
|
|
||
Inventory
|
37
|
|
|
39
|
|
||
Regulatory assets
|
20
|
|
|
12
|
|
||
Prepaid and other current assets
|
16
|
|
|
15
|
|
||
Total current assets
|
189
|
|
|
187
|
|
||
Property, plant and equipment (net of accumulated depreciation and amortization of $1,970 and $1,930, respectively)
|
8,723
|
|
|
8,582
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
950
|
|
|
950
|
|
||
Intangible assets (net of accumulated amortization of $43 and $42, respectively)
|
32
|
|
|
33
|
|
||
Regulatory assets
|
255
|
|
|
229
|
|
||
Other assets
|
75
|
|
|
77
|
|
||
Total other assets
|
1,312
|
|
|
1,289
|
|
||
TOTAL ASSETS
|
$
|
10,224
|
|
|
$
|
10,058
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
91
|
|
|
$
|
82
|
|
Accrued compensation
|
39
|
|
|
61
|
|
||
Accrued interest
|
57
|
|
|
48
|
|
||
Accrued taxes
|
52
|
|
|
66
|
|
||
Regulatory liabilities
|
110
|
|
|
123
|
|
||
Refundable deposits and advances for construction
|
37
|
|
|
27
|
|
||
Debt maturing within one year
|
142
|
|
|
235
|
|
||
Other current liabilities
|
34
|
|
|
16
|
|
||
Total current liabilities
|
562
|
|
|
658
|
|
||
Accrued pension and postretirement liabilities
|
77
|
|
|
73
|
|
||
Deferred income taxes
|
902
|
|
|
873
|
|
||
Regulatory liabilities
|
585
|
|
|
584
|
|
||
Refundable deposits
|
16
|
|
|
19
|
|
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Other liabilities
|
30
|
|
|
47
|
|
||
Long-term debt
|
5,826
|
|
|
5,572
|
|
||
Commitments and contingent liabilities (Notes 5 and 13)
|
|
|
|
|
|
||
TOTAL LIABILITIES
|
7,998
|
|
|
7,826
|
|
||
STOCKHOLDER’S EQUITY
|
|
|
|
||||
Common stock, without par value, 235,000,000 shares authorized, 224,203,112 shares issued and outstanding at March 31, 2020 and December 31, 2019
|
892
|
|
|
892
|
|
||
Retained earnings
|
1,343
|
|
|
1,333
|
|
||
Accumulated other comprehensive (loss) income
|
(9
|
)
|
|
7
|
|
||
Total stockholder’s equity
|
2,226
|
|
|
2,232
|
|
||
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY
|
$
|
10,224
|
|
|
$
|
10,058
|
|
|
Three months ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
OPERATING REVENUES
|
|
|
|
||||
Transmission and other services
|
$
|
289
|
|
|
$
|
289
|
|
Formula rate true-up
|
33
|
|
|
18
|
|
||
Total operating revenues
|
322
|
|
|
307
|
|
||
OPERATING EXPENSES
|
|
|
|
||||
Operation and maintenance
|
27
|
|
|
25
|
|
||
General and administrative
|
31
|
|
|
38
|
|
||
Depreciation and amortization
|
54
|
|
|
47
|
|
||
Taxes other than income taxes
|
31
|
|
|
31
|
|
||
Total operating expenses
|
143
|
|
|
141
|
|
||
OPERATING INCOME
|
179
|
|
|
166
|
|
||
OTHER EXPENSES (INCOME)
|
|
|
|
||||
Interest expense, net
|
59
|
|
|
59
|
|
||
Allowance for equity funds used during construction
|
(6
|
)
|
|
(8
|
)
|
||
Other (income) and expenses, net
|
2
|
|
|
—
|
|
||
Total other expenses (income)
|
55
|
|
|
51
|
|
||
INCOME BEFORE INCOME TAXES
|
124
|
|
|
115
|
|
||
INCOME TAX PROVISION
|
32
|
|
|
31
|
|
||
NET INCOME
|
92
|
|
|
84
|
|
||
OTHER COMPREHENSIVE (LOSS) INCOME
|
|
|
|
||||
Derivative instruments, net of tax (Note 10)
|
(16
|
)
|
|
—
|
|
||
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX
|
(16
|
)
|
|
—
|
|
||
TOTAL COMPREHENSIVE INCOME
|
$
|
76
|
|
|
$
|
84
|
|
|
|
|
|
|
Accumulated
|
|
|
||||||||
|
|
|
|
|
Other
|
|
Total
|
||||||||
|
|
|
Retained
|
|
Comprehensive
|
|
Stockholder’s
|
||||||||
(in millions)
|
Common Stock
|
|
Earnings
|
|
Income (Loss)
|
|
Equity
|
||||||||
BALANCE, DECEMBER 31, 2018
|
$
|
892
|
|
|
$
|
1,155
|
|
|
$
|
4
|
|
|
$
|
2,051
|
|
Net income
|
—
|
|
|
84
|
|
|
—
|
|
|
84
|
|
||||
Dividends to ITC Investment Holdings Inc.
|
—
|
|
|
(72
|
)
|
|
—
|
|
|
(72
|
)
|
||||
BALANCE, MARCH 31, 2019
|
$
|
892
|
|
|
$
|
1,167
|
|
|
$
|
4
|
|
|
$
|
2,063
|
|
|
|
|
|
|
|
|
|
||||||||
BALANCE, DECEMBER 31, 2019
|
$
|
892
|
|
|
$
|
1,333
|
|
|
$
|
7
|
|
|
$
|
2,232
|
|
Net income
|
—
|
|
|
92
|
|
|
—
|
|
|
92
|
|
||||
Dividends to ITC Investment Holdings Inc.
|
—
|
|
|
(82
|
)
|
|
—
|
|
|
(82
|
)
|
||||
Other comprehensive (loss), net of tax (Note 10)
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(16
|
)
|
||||
BALANCE, MARCH 31, 2020
|
$
|
892
|
|
|
$
|
1,343
|
|
|
$
|
(9
|
)
|
|
$
|
2,226
|
|
|
Three months ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
92
|
|
|
$
|
84
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
54
|
|
|
47
|
|
||
Recognition, refund and collection of revenue accruals and deferrals — including accrued interest
|
(43
|
)
|
|
(21
|
)
|
||
Deferred income tax expense
|
35
|
|
|
30
|
|
||
Allowance for equity funds used during construction
|
(6
|
)
|
|
(8
|
)
|
||
Share-based compensation
|
4
|
|
|
7
|
|
||
Other
|
5
|
|
|
2
|
|
||
Changes in assets and liabilities, exclusive of changes shown separately:
|
|
|
|
||||
Accounts receivable
|
8
|
|
|
(9
|
)
|
||
Accrued compensation
|
(17
|
)
|
|
—
|
|
||
Accrued interest
|
9
|
|
|
24
|
|
||
Accrued taxes
|
(14
|
)
|
|
(13
|
)
|
||
Other current and non-current assets and liabilities, net
|
(19
|
)
|
|
(2
|
)
|
||
Net cash provided by operating activities
|
108
|
|
|
141
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Expenditures for property, plant and equipment
|
(190
|
)
|
|
(178
|
)
|
||
Contributions in aid of construction
|
1
|
|
|
—
|
|
||
Other
|
1
|
|
|
—
|
|
||
Net cash used in investing activities
|
(188
|
)
|
|
(178
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Issuance of long-term debt
|
—
|
|
|
50
|
|
||
Borrowings under revolving credit agreements
|
363
|
|
|
231
|
|
||
Borrowings under term loan credit agreements
|
275
|
|
|
—
|
|
||
Net (payment) issuance of commercial paper
|
(168
|
)
|
|
84
|
|
||
Repayments of revolving credit agreements
|
(310
|
)
|
|
(261
|
)
|
||
Dividends to ITC Investment Holdings Inc.
|
(82
|
)
|
|
(72
|
)
|
||
Other
|
4
|
|
|
2
|
|
||
Net cash provided by financing activities
|
82
|
|
|
34
|
|
||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
2
|
|
|
(3
|
)
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period
|
6
|
|
|
10
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period
|
$
|
8
|
|
|
$
|
7
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2020
|
|
2019
|
||||
Trade accounts receivable
|
$
|
2
|
|
|
$
|
2
|
|
Unbilled accounts receivable
|
95
|
|
|
102
|
|
||
Due from affiliates
|
—
|
|
|
1
|
|
||
Other
|
13
|
|
|
12
|
|
||
Total accounts receivable
|
$
|
110
|
|
|
$
|
117
|
|
(in millions)
|
Total
|
||
Net regulatory assets as of December 31, 2019
|
$
|
3
|
|
Net refund of 2018 revenue deferrals and accruals, including accrued interest
|
10
|
|
|
Net revenue accrual for the three months ended March 31, 2020
|
33
|
|
|
Net regulatory assets as of March 31, 2020
|
$
|
46
|
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2020
|
|
2019
|
||||
Current regulatory assets
|
$
|
20
|
|
|
$
|
12
|
|
Non-current regulatory assets
|
66
|
|
|
43
|
|
||
Current regulatory liabilities
|
(39
|
)
|
|
(51
|
)
|
||
Non-current regulatory liabilities
|
(1
|
)
|
|
(1
|
)
|
||
Net regulatory assets
|
$
|
46
|
|
|
$
|
3
|
|
Interest Rate Swaps
(in millions, except percentages) |
|
Notional Amount
|
|
Weighted Average Fixed Rate
|
|
Original Term
|
|
Effective Date
|
|||
July 2019 swap
|
|
$
|
50
|
|
|
1.816
|
%
|
|
5 years
|
|
November 2020
|
August 2019 swap
|
|
50
|
|
|
1.488
|
%
|
|
5 years
|
|
November 2020
|
|
October 2019 swaps
|
|
100
|
|
|
1.288
|
%
|
|
5 years
|
|
November 2020
|
|
January 2020 swaps
|
|
188
|
|
|
1.437
|
%
|
|
5 years
|
|
October 2020
|
|
February 2020 swap
|
|
62
|
|
|
1.141
|
%
|
|
5 years
|
|
October 2020
|
|
Total
|
|
$
|
450
|
|
|
|
|
|
|
|
(in millions)
|
Total
Available
Capacity
|
|
Outstanding
Balance (a)
|
|
Unused
Capacity
|
|
Weighted Average
Interest Rate on
Outstanding Balance (b)
|
|
Commitment
Fee Rate (c)
|
|||||||
ITC Holdings
|
$
|
400
|
|
|
$
|
110
|
|
|
$
|
290
|
|
(d)
|
1.9%
|
|
0.175
|
%
|
ITCTransmission
|
100
|
|
|
50
|
|
|
50
|
|
|
1.7%
|
|
0.10
|
%
|
|||
METC
|
100
|
|
|
25
|
|
|
75
|
|
|
1.7%
|
|
0.10
|
%
|
|||
ITC Midwest
|
225
|
|
|
138
|
|
|
87
|
|
|
1.7%
|
|
0.10
|
%
|
|||
ITC Great Plains
|
75
|
|
|
29
|
|
|
46
|
|
|
1.7%
|
|
0.10
|
%
|
|||
Total
|
$
|
900
|
|
|
$
|
352
|
|
|
$
|
548
|
|
|
|
|
|
(a)
|
Included within long-term debt in the condensed consolidated statements of financial position.
|
(b)
|
Interest charged on borrowings depends on the variable rate structure we elected at the time of each borrowing.
|
(c)
|
Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating.
|
(d)
|
ITC Holdings’ revolving credit agreement may be used for general corporate purposes, including to repay commercial paper issued pursuant to the commercial paper program described above, if necessary. While outstanding commercial paper does not reduce available capacity under ITC Holdings’ revolving credit agreement, the unused capacity under this agreement adjusted for the commercial paper outstanding was $258 million as of March 31, 2020.
|
|
Three months ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Service cost
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
1
|
|
|
1
|
|
||
Expected return on plan assets
|
(1
|
)
|
|
(1
|
)
|
||
Net pension cost
|
$
|
2
|
|
|
$
|
2
|
|
|
Three months ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Service cost
|
$
|
3
|
|
|
$
|
2
|
|
Interest cost
|
1
|
|
|
1
|
|
||
Expected return on plan assets
|
(1
|
)
|
|
(1
|
)
|
||
Net postretirement cost
|
$
|
3
|
|
|
$
|
2
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||
|
Quoted Prices in
Active Markets for
Identical Assets
|
|
Significant
Other Observable
Inputs
|
|
Significant
Unobservable
Inputs
|
||||||
(in millions)
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||
Financial assets measured on a recurring basis:
|
|
|
|
|
|
||||||
Cash equivalents
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mutual funds — fixed income securities
|
47
|
|
|
—
|
|
|
—
|
|
|||
Mutual funds — equity securities
|
8
|
|
|
—
|
|
|
—
|
|
|||
Financial liabilities measured on a recurring basis:
|
|
|
|
|
|
||||||
Interest rate swap derivatives
|
—
|
|
|
20
|
|
|
—
|
|
|||
Total
|
$
|
56
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
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
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mutual funds — equity securities
|
8
|
|
|
—
|
|
|
—
|
|
|||
Interest rate swap derivatives
|
—
|
|
|
3
|
|
|
—
|
|
|||
Total
|
$
|
58
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
Three months ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Balance at the beginning of period
|
$
|
7
|
|
|
$
|
4
|
|
Derivative instruments
|
|
|
|
||||
Loss on interest rate swaps relating to interest rate cash flow hedges (net of tax of $7 for the three months ended March 31, 2020)
|
(16
|
)
|
|
—
|
|
||
Total other comprehensive (loss) income, net of tax
|
(16
|
)
|
|
—
|
|
||
Balance at the end of period
|
$
|
(9
|
)
|
|
$
|
4
|
|
|
Three months ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Interest expense increase
|
$
|
1
|
|
|
$
|
2
|
|
Estimated net income reduction
|
(1
|
)
|
|
(1
|
)
|
|
March 31,
|
|
December 31,
|
||||||||||||
(in millions)
|
2020
|
|
2019
|
|
2019
|
|
2018
|
||||||||
Cash and cash equivalents
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
6
|
|
Restricted cash included in:
|
|
|
|
|
|
|
|
||||||||
Other non-current assets
|
2
|
|
|
3
|
|
|
2
|
|
|
4
|
|
||||
Total cash, cash equivalents and restricted cash
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
10
|
|
|
Three months ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Supplementary cash flows information:
|
|
|
|
||||
Interest paid (net of interest capitalized)
|
$
|
49
|
|
|
$
|
32
|
|
Income tax refunds received
|
—
|
|
|
1
|
|
||
Supplementary non-cash investing and financing activities:
|
|
|
|
||||
Additions to property, plant and equipment and other long-lived assets (a)
|
88
|
|
|
109
|
|
||
Allowance for equity funds used during construction
|
6
|
|
|
8
|
|
||
Right-of-use assets obtained in exchange for new operating lease liabilities
|
—
|
|
|
3
|
|
(a)
|
Amounts consist of current and accrued liabilities for construction, labor, materials and other costs that have not been included in investing activities. These amounts have not been paid for as of March 31, 2020 or 2019, respectively, but will be or have been included as a cash outflow from investing activities for expenditures for property, plant and equipment when paid.
|
|
Three months ended
|
||||||
OPERATING REVENUES:
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Regulated Operating Subsidiaries
|
$
|
331
|
|
|
$
|
317
|
|
Intercompany eliminations
|
(9
|
)
|
|
(10
|
)
|
||
Total Operating Revenues
|
$
|
322
|
|
|
$
|
307
|
|
|
Three months ended
|
||||||
INCOME (LOSS) BEFORE INCOME TAXES:
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Regulated Operating Subsidiaries
|
$
|
157
|
|
|
$
|
151
|
|
ITC Holdings and other
|
(33
|
)
|
|
(36
|
)
|
||
Total Income Before Income Taxes
|
$
|
124
|
|
|
$
|
115
|
|
|
Three months ended
|
||||||
NET INCOME:
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Regulated Operating Subsidiaries
|
$
|
116
|
|
|
$
|
111
|
|
ITC Holdings and other
|
92
|
|
|
84
|
|
||
Intercompany eliminations
|
(116
|
)
|
|
(111
|
)
|
||
Total Net Income
|
$
|
92
|
|
|
$
|
84
|
|
TOTAL ASSETS:
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
2020
|
|
2019
|
||||
Regulated Operating Subsidiaries
|
$
|
10,114
|
|
|
$
|
9,946
|
|
ITC Holdings and other
|
5,493
|
|
|
5,402
|
|
||
Reconciliations / Intercompany eliminations (a)
|
(5,383
|
)
|
|
(5,290
|
)
|
||
Total Assets
|
$
|
10,224
|
|
|
$
|
10,058
|
|
(a)
|
Reconciliation of total assets results primarily from differences in the netting of deferred tax assets and liabilities in our segments as compared to the classification in our condensed consolidated statements of financial position.
|
•
|
Certain elements of our Regulated Operating Subsidiaries’ Formula Rates have been and can be challenged, which could result in lowered rates and/or refunds of amounts previously collected and thus may have an adverse effect on our business, financial condition, results of operations and cash flows.
|
•
|
Our actual capital investment may be lower than planned, which would cause a lower than anticipated rate base and would therefore result in lower revenues, earnings and associated cash flows compared to our current expectations. In addition, we expect to incur expenses related to the pursuit of development opportunities, which may be higher than forecasted.
|
•
|
The regulations to which we are subject may limit our ability to raise capital and/or pursue acquisitions, development opportunities or other transactions or may subject us to liabilities.
|
•
|
Changes in energy laws, regulations or policies could impact our business, financial condition, results of operations and cash flows.
|
•
|
The widespread outbreak of an illness or other communicable disease, including the COVID-19 pandemic, or any other public health crisis, could have a material adverse impact on our business, results of operations, financial condition, cash flows and credit metrics.
|
•
|
Each of our MISO Regulated Operating Subsidiaries depends on its primary customer for a substantial portion of its revenues, and any material failure by those primary customers to make payments for transmission services could have a material adverse effect on our business, financial condition, results of operations and cash flows.
|
•
|
A significant amount of the land on which our assets are located is subject to easements, mineral rights and other similar encumbrances. As a result, we must comply with the provisions of various easements, mineral rights and other similar encumbrances, which may adversely impact our ability to complete construction projects in a timely manner.
|
•
|
We contract with third parties to provide services for certain aspects of our business. If any of these agreements are terminated, we may face a shortage of labor or replacement contractors to provide the services formerly provided by these third parties.
|
•
|
Hazards associated with high-voltage electricity transmission may result in suspension of our operations, costly litigation or the imposition of civil or criminal penalties.
|
•
|
We are subject to environmental regulations and to laws that can give rise to substantial liabilities from environmental contamination.
|
•
|
If amounts billed for transmission service for our Regulated Operating Subsidiaries’ transmission systems are lower than expected, or our actual revenue requirements are higher than expected, the timing of actual collection of our total revenues would be delayed.
|
•
|
We are subject to various regulatory requirements, including reliability standards; contract filing requirements; reporting, recordkeeping and accounting requirements; and transaction approval requirements. Violations of these requirements, whether intentional or unintentional, may result in penalties that, under some circumstances, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
|
•
|
Acts of war, terrorist attacks, natural disasters, severe weather and other catastrophic events may have a material adverse effect on our business, financial condition, results of operations and cash flows.
|
•
|
A cyber-attack or incident could have a material adverse effect on our business, financial condition, results of operations and cash flows.
|
•
|
Changes in tax laws or regulations may negatively affect our results of operations, net income, financial condition, cash flows and credit metrics.
|
•
|
ITC Holdings is a holding company with no operations, and unless we receive dividends or other payments from our subsidiaries, we may be unable to fulfill our cash obligations.
|
•
|
We have a considerable amount of debt and our reliance on debt financing may limit our ability to fulfill our debt obligations and/or to obtain additional financing.
|
•
|
Adverse changes in our credit ratings may negatively affect us.
|
•
|
Certain provisions in our debt instruments limit our financial and operating flexibility.
|
•
|
The recent outbreak of the COVID-19 pandemic that led to efforts to control the spread of the virus, which has resulted in the closure of various businesses and facilities and disruptions to the global economy and supply chains;
|
•
|
Our capital expenditures of $190 million at our Regulated Operating Subsidiaries during the three months ended March 31, 2020 as described below under “ — Capital Investment and Operating Results Trends,” resulting primarily from our focus on improving system reliability, increasing system capacity and upgrading the transmission network to support new generating resources;
|
•
|
Debt issuances and repayments as described in Note 7 to the condensed consolidated interim financial statements, including borrowings under our revolving and term loan credit agreements and commercial paper program to fund capital investment at our Regulated Operating Subsidiaries as well as for general corporate purposes;
|
•
|
Issuance of the November 2019 Order related to the MISO ROE Complaints, as described in Note 13 to the condensed consolidated interim financial statements and subject to the resolution of requests for rehearing, which resulted in an aggregate current regulatory liability of $69 million that has been recorded in the condensed consolidated interim statements of financial position as of March 31, 2020 and has been ordered by the FERC to be refunded to customers by December 23, 2020; and
|
•
|
Issuance of a NOPR by the FERC on March 20, 2020 including proposing to update the transmission incentives policy to grant incentives to transmission projects based upon benefits to customers ensuring reliability and reducing the cost of delivered power by reducing transmission congestion.
|
|
Three months ended
|
||||||
|
March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Interest expense increase
|
$
|
1
|
|
|
$
|
2
|
|
Estimated net income reduction
|
(1
|
)
|
|
(1
|
)
|
|
Actual Capital
|
|
Forecasted
|
||||
|
Expenditures for the
|
|
Capital
|
||||
|
Three Months Ended
|
|
Expenditures
|
||||
(in millions)
|
March 31, 2020
|
|
2020 — 2024
|
||||
Expenditures for property, plant and equipment (a)
|
$
|
190
|
|
|
$
|
3,746
|
|
(a)
|
Amounts represent the cash payments to acquire or construct property, plant and equipment, as presented in the condensed consolidated statements of cash flows. These amounts exclude non-cash additions to property, plant and equipment for the AFUDC equity as well as accrued liabilities for construction, labor and materials that have not yet been paid.
|
|
Three months ended
|
|
|
|
Percentage
|
|||||||||
|
March 31,
|
|
Increase
|
|
increase
|
|||||||||
(in millions)
|
2020
|
|
2019
|
|
(decrease)
|
|
(decrease)
|
|||||||
OPERATING REVENUES
|
|
|
|
|
|
|
|
|
|
|||||
Transmission and other services
|
$
|
289
|
|
|
$
|
289
|
|
|
$
|
—
|
|
|
—
|
%
|
Formula Rate true-up
|
33
|
|
|
18
|
|
|
15
|
|
|
83
|
%
|
|||
Total operating revenues
|
322
|
|
|
307
|
|
|
15
|
|
|
5
|
%
|
|||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|||||||
Operation and maintenance
|
27
|
|
|
25
|
|
|
2
|
|
|
8
|
%
|
|||
General and administrative
|
31
|
|
|
38
|
|
|
(7
|
)
|
|
(18
|
)%
|
|||
Depreciation and amortization
|
54
|
|
|
47
|
|
|
7
|
|
|
15
|
%
|
|||
Taxes other than income taxes
|
31
|
|
|
31
|
|
|
—
|
|
|
—
|
%
|
|||
Total operating expenses
|
143
|
|
|
141
|
|
|
2
|
|
|
1
|
%
|
|||
OPERATING INCOME
|
179
|
|
|
166
|
|
|
13
|
|
|
8
|
%
|
|||
OTHER EXPENSES (INCOME)
|
|
|
|
|
|
|
|
|||||||
Interest expense, net
|
59
|
|
|
59
|
|
|
—
|
|
|
—
|
%
|
|||
Allowance for equity funds used during construction
|
(6
|
)
|
|
(8
|
)
|
|
2
|
|
|
(25
|
)%
|
|||
Other (income) and expenses, net
|
2
|
|
|
—
|
|
|
2
|
|
|
n/a
|
|
|||
Total other expenses (income)
|
55
|
|
|
51
|
|
|
4
|
|
|
8
|
%
|
|||
INCOME BEFORE INCOME TAXES
|
124
|
|
|
115
|
|
|
9
|
|
|
8
|
%
|
|||
INCOME TAX PROVISION
|
32
|
|
|
31
|
|
|
1
|
|
|
3
|
%
|
|||
NET INCOME
|
$
|
92
|
|
|
$
|
84
|
|
|
$
|
8
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|||||||||
|
2020
|
|
2019
|
|
Increase
|
|
increase
|
|||||||||||||
(in millions)
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
|
(decrease)
|
|
(decrease)
|
|||||||||
Network revenues (a)
|
$
|
217
|
|
|
67
|
%
|
|
$
|
203
|
|
|
66
|
%
|
|
$
|
14
|
|
|
7
|
%
|
Regional cost sharing revenues (a)
|
93
|
|
|
29
|
%
|
|
91
|
|
|
30
|
%
|
|
2
|
|
|
2
|
%
|
|||
Point-to-point
|
3
|
|
|
1
|
%
|
|
3
|
|
|
1
|
%
|
|
—
|
|
|
—
|
%
|
|||
Scheduling, control and dispatch (a)
|
5
|
|
|
2
|
%
|
|
4
|
|
|
1
|
%
|
|
1
|
|
|
25
|
%
|
|||
Other
|
4
|
|
|
1
|
%
|
|
6
|
|
|
2
|
%
|
|
(2
|
)
|
|
(33
|
)%
|
|||
Total
|
$
|
322
|
|
|
100
|
%
|
|
$
|
307
|
|
|
100
|
%
|
|
$
|
15
|
|
|
5
|
%
|
(a)
|
Includes a portion of the Formula Rate true-up of $33 million and $18 million for the three months ended March 31, 2020 and 2019, respectively.
|
•
|
Fund capital expenditures at our Regulated Operating Subsidiaries. Our plans with regard to property, plant and equipment investments are described in detail above under “ — Capital Investment and Operating Results Trends.”
|
•
|
Fund business development expenses and related capital expenditures. Development activities could result in significant development expenses and capital expenditures incremental to our current plan. Refer to Note 13 to the condensed consolidated interim financial statements for a discussion of contingent payments related to development projects.
|
•
|
Fund working capital requirements.
|
•
|
Fund our debt service requirements, including principal repayments and periodic interest payments, which are further described in detail below under “— Contractual Obligations.”
|
•
|
Fund any refund obligation in connection with the pending ROE matters.
|
•
|
Changes in amounts borrowed under our unsecured, unguaranteed revolving credit agreements;
|
•
|
Changes in commercial paper issued under the commercial paper program for ITC Holdings;
|
•
|
The extension of the maturity date of our revolving credit agreements from October 21, 2022 to October 20, 2023;
|
•
|
The borrowing of the remaining $200 million under the unsecured, unguaranteed term loan credit agreement due June 11, 2021 by ITC Holdings, the proceeds of which were used for repaying outstanding commercial paper balances; and
|
•
|
The borrowing of $75 million under the unsecured, unguaranteed term loan credit agreement due January 23, 2021 by METC, the proceeds of which were used for general corporate purposes, primarily the repayment of borrowings under the METC revolving credit agreement.
|
Exhibit No.
|
|
Description of Document
|
|
|
|
|
|
*10.203
|
|
|
|
|
|
|
|
*10.204
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
32
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101.INS
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XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document
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101.SCH
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Inline XBRL Taxonomy Extension Schema
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101.CAL
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Inline XBRL Taxonomy Extension Calculation Linkbase
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101.DEF
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Inline XBRL Taxonomy Extension Definition Database
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101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase
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101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase
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104
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The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL
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ITC HOLDINGS CORP.
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By:
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/s/ Linda H. Apsey
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Linda H. Apsey
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President and Chief Executive Officer
(duly authorized officer)
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By:
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/s/ Gretchen L. Holloway
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Gretchen L. Holloway
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Senior Vice President and Chief Financial Officer
(principal financial and accounting officer)
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1 Year Itc Chart |
1 Month Itc Chart |
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