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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File Number:
    001-32576
      ITC HOLDINGS CORP.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Michigan

32-0058047(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)   27175 Energy Way
 Novi, Michigan 48377
 (Address Of Principal Executive
    Offices, Including Zip Code)
 (248) 946-3000
 (Registrants Telephone
    Number, Including Area Code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon stock, without par value


New York Stock Exchange  Securities registered pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated filer
    þ

Accelerated filer
    o

Non-accelerated filer
    o
    (Do not check if a smaller reporting company)

Smaller reporting company
    o   Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





ITC Holdings
    Corp.
  Form 10-K
    for the Fiscal Year Ended December 31, 2008
  INDEX
  PagePart I


4Item 1.

Business


4Item 1A.

Risk Factors


15Item 1B.

Unresolved Staff Comments


25Item 2.

Properties


25Item 3.

Legal Proceedings


26Item 4.

Submission of Matters to a Vote of Security
    Holders


27Part II


27Item 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


27Item 6.

Selected Financial Data


28Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


30Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


57Item 8.

Financial Statements and Supplementary Data


58Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


111Item 9A.

Controls and Procedures


112Item 9B.

Other Information


112Part III


112Item 10.

Directors, Executive Officers, and Corporate
    Governance


112Item 11.

Executive Compensation


113Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


113Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


113Item 14.

Principal Accounting Fees and Services


113Part IV


114Item 15.

Exhibits and Financial Statement Schedules


114Signatures


119Exhibits


120EX-3.2EX-10.79EX-10.80EX-10.81EX-10.82EX-10.83EX-10.84EX-21EX-23.1EX-31.1EX-31.2EX-32   1




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DEFINITIONS
    ITC Holdings
    Corp. and its subsidiaries
  
    ITC Great Plains are references to ITC Great Plains,
    LLC, a wholly-owned subsidiary of ITC Grid Development, LLC;
    ITC Grid Development are references to ITC Grid
    Development, LLC, a wholly-owned subsidiary of ITC Holdings;
    Green Power Express are references to Green Power
    Express, LP, an indirect wholly-owned subsidiary of ITC Holdings;
    ITC Holdings are references to ITC Holdings Corp.
    and not any of its subsidiaries;
    ITC Midwest are references to ITC Midwest LLC, a
    wholly-owned subsidiary of ITC Holdings;
    ITCTransmission are references to International
    Transmission Company, a wholly-owned subsidiary of ITC Holdings;
    METC are references to Michigan Electric
    Transmission Company, LLC, a wholly-owned subsidiary of MTH;
    MTH are references to Michigan Transco Holdings,
    Limited Partnership, the sole member of METC and a wholly owned
    subsidiary of ITC Holdings;
    Regulated Operating Subsidiaries are references to
    ITCTransmission, METC, and ITC Midwest together; and
    We, our and us are
    references to ITC Holdings together with all of its subsidiaries.  Other
    definitions
  
    ATC are references to American Transmission Company,
    LLC, an affiliate of IP&L;
    Consumers Energy are references to Consumers Energy
    Company, a wholly-owned subsidiary of CMS Energy Corporation;
    Detroit Edison are references to The Detroit Edison
    Company, a wholly-owned subsidiary of DTE Energy;
    DTE Energy are references to DTE Energy Company;
    FERC are references to the Federal Energy Regulatory
    Commission;
    FPA are references to the Federal Power Act;
    IP&L are references to Interstate Power and
    Light Company, an Alliant Energy Corporation subsidiary;
    ISO are references to Independent System Operators;
    IUB are references to the Iowa Utilities Board;
    kV are references to kilovolts (one kilovolt
    equaling 1,000 volts);
    kW are references to kilowatts (one kilowatt
    equaling 1,000 watts);
    MISO are references to the Midwest Independent
    Transmission 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; 2




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
    MPUC are references to the Minnesota Public
    Utilities Commission;
    MW are references to megawatts (one megawatt
    equaling 1,000,000 watts);
    NERC are references to the North American Electric
    Reliability Corporation;
    NOLs are references to net operating loss
    carryforwards for income taxes;
    RTO are references to Regional Transmission
    Organizations; and
    SPP are references to Southwest Power Pool, Inc., a
    FERC-approved RTO. 3




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PART I  ITEM 1.
    BUSINESS.  Overview
        Development of
    Business
   4




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Segments
    Operations
    
    asset planning;
    engineering, design and construction;
    maintenance; and
    real time operations.  Asset
    Planning
  and/or
    Engineering,
    Design and Construction
   5




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Maintenance
    Real Time
    Operations
  ITCTransmission
    and METC
  System Operations.
  Local Balancing Authority Operator.
  ITC
    Midwest
    Operating
    Contracts
  ITCTransmission
    Master Operating Agreement.
 6




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Generator Interconnection and Operation
    Agreement.
  Coordination and Interconnection
    Agreement.
  METC
    Amended and Restated Easement Agreement.
     7




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50-year 30-day
  Amended and Restated Operating
    Agreement. 50-year
  Amended and Restated Purchase and Sale Agreement for
    Ancillary Services.
  Amended and Restated Distribution-Transmission
    Interconnection Agreement. agreed-upon
 8




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Amended and Restated Generator Interconnection
    Agreement.
  ITC
    Midwest
    Distribution-Transmission Interconnection
    Agreement.
  Large Generator Interconnection Agreement.
  Transition Services Agreement.
  Operating Agreement.
 9




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Regulatory
    Environment
        Federal
    Regulation
   10




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State of New York
    vs. FERC
      State
    Regulation
    ITCTransmission
    and METC
  Michigan
      ITC
    Midwest
  Iowa
   11




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Minnesota
      Illinois
      Missouri
      Sources of
    Revenue
    Seasonality
   12




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Principal
    Customers
    Billing
    Competition
   13




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Employees
      Environmental
    Matters
         14




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Filings Under the
    Securities Exchange Act of 1934
  Form 10-K, Form 10-Q, Form 8-K,
  
    Corporate Governance Guidelines;
    Code of Business Conduct and Ethics; and
    Committee Charters for the Audit and Finance Committee,
    Compensation Committee and Nominating/Corporate Governance
    Committee.        1-800-SEC-0330. http://www.sec.gov
 ITEM 1A.  RISK
    FACTORS.  Risks Related to
    Our Business
  Certain
    elements of our Regulated Operating Subsidiaries cost
    recovery through rates can be challenged, which could result in
    lowered rates and/or refunds of amounts previously collected and
    thus have an adverse effect on our business, financial
    condition, results of operations and cash flows. We have also
    made certain commitments to federal and state regulators with
    respect to, among other things, our rates in connection with
    recent acquisitions (including ITC Midwests asset
    acquisition) that could have an adverse effect on our business,
    financial condition, results of operations and cash
    flows.
  and/or
 15




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and/or
  true-up
  and/or
  and/or
   16




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Approval of
    ITC Midwests asset acquisition by state regulatory
    authorities in Iowa may be subject to further challenge. If such
    proceedings are decided in a manner that is unfavorable to us,
    all or part of the orders approving ITC Midwests asset
    acquisition in Iowa could be reversed, which could have a
    material adverse effect on our business, financial condition,
    results of operations and cash flows.
    Our Regulated
    Operating Subsidiaries actual capital expenditures may be
    lower than planned, which would decrease expected rate base and
    therefore our revenues. In addition, we expect to pursue
    strategic development opportunities to improve the efficiency
    and reliability of the transmission grid, but we cannot assure
    you that we will be able to initiate or complete any of these
    investments.
   17




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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.
      and/or
  Changes in
    federal energy laws, regulations or policies could impact cash
    flows and could reduce the dividends we may be able to pay our
    stockholders.
   18




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and/or
    If the network
    load or point-to-point transmission service on our Regulated
    Operating Subsidiaries transmission systems is lower than
    expected, the timing of collection of our revenues would be
    delayed.
  true-up
  Each of our
    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 would adversely affect our revenues and
    our ability to service our debt obligations and affect our
    ability to pay dividends.
      METC does not
    own the majority of the land on which its transmission assets
    are located. Additionally, a significant amount of the land on
    which ITCTransmissions and ITC Midwests
 19




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assets are located is subject to easements, mineral rights
    and other similar encumbrances and a significant amount of
    ITCTransmissions and ITC Midwests other property
    consists of easements. As a result, our Regulated Operating
    Subsidiaries must comply with the provisions of various
    easements, mineral rights and other similar encumbrances, which
    may adversely impact their ability to complete construction
    projects in a timely manner.
    If ITC
    Midwests operating agreement with IP&L is terminated
    early, ITC Midwest may face a shortage of labor or replacement
    contractors to provide the services formerly provided by
    IP&L.
    Hazards
    associated with high-voltage electricity transmission may result
    in suspension of our Regulated Operating Subsidiaries
    operations or the imposition of civil or criminal
    penalties.
   20




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Our Regulated
    Operating Subsidiaries are subject to environmental regulations
    and to laws that can give rise to substantial liabilities from
    environmental contamination.
        Our Regulated
    Operating Subsidiaries are subject to various regulatory
    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 results of operations, financial condition and cash
    flows.
   21




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Acts of war,
    terrorist attacks and threats or the escalation of military
    activity in response to such attacks or otherwise may negatively
    affect our business, financial condition and results of
    operations.
    Risks Related to
    Our Structure and Financial Leverage
  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 pay dividends and fulfill our other cash
    obligations.
    We are highly
    leveraged and our dependence on debt may limit our ability to
    fulfill our debt obligations and/or to obtain additional
    financing.
    
    If future cash flows are insufficient, we may not be able to
    make principal or interest payments on our debt obligations,
    which could result in the occurrence of an event of default
    under one or more of those debt instruments.
    If future cash flows are insufficient, we may need to incur
    further indebtedness in order to make the capital expenditures
    and other expenses or investments planned by us. 22




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
    Our indebtedness will have the general effect of reducing our
    flexibility to react to changing business and economic
    conditions insofar as they affect our financial condition and,
    therefore, may pose substantial risk to our shareholders. A
    substantial portion of the dividends and payments in lieu of
    taxes we receive from our Regulated Operating Subsidiaries will
    be dedicated to the payment of interest on our indebtedness,
    thereby reducing the funds available for the payment of
    dividends on our common stock.
    In the event that we are liquidated, our senior or subordinated
    creditors and the senior or subordinated creditors of our
    subsidiaries will be entitled to payment in full prior to any
    distributions to the holders of shares of our common stock.
    Our revolving credit facilities mature in March 2012 for ITC
    Holdings, ITCTransmission and METC and in January 2013 for ITC
    Midwest. Our ability to secure additional financing prior to or
    after that time, if needed, may be substantially restricted by
    the existing level of our indebtedness and the restrictions
    contained in our debt instruments.
    Lehman Brothers Bank, FSB (Lehman), a member of our
    revolving credit agreement syndication, was included in a
    bankruptcy filing made by its parent, Lehman Brothers Holdings
    Inc., on September 14, 2008. We are attempting to identify
    a replacement bank to fulfill Lehmans commitment but given
    the favorable terms of our existing agreement compared to
    current market conditions, it is unlikely that will be able to
    find a replacement bank. If we are unable to identify a
    replacement bank to fulfill Lehmans commitment, our
    capacity to borrow under our the currently outstanding revolving
    credit facilities would continue to be reduced.
    Current market conditions could affect our access to capital
    markets, restrict our ability to secure financing to make the
    capital expenditures and other expenses or investments planned
    by us and could adversely affect our business, financial
    condition, cash flows and results of operations.    Certain
    provisions in our debt instruments limit our financial
    flexibility.
    
    incur additional indebtedness;
    engage in sale and lease-back transactions;
    create liens or other encumbrances;
    enter into mergers, consolidations, liquidations or
    dissolutions, or sell or otherwise dispose of all or
    substantially all of our assets;
    create and acquire subsidiaries; and
    pay dividends or make distributions on our and
    ITCTransmissions capital stock and METCs and ITC
    Midwests member capital.   23




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Adverse
    changes in our credit ratings may negatively affect
    us.
    ITC
    Holdings common stock offering in October 2006 caused us
    to undergo an ownership change for purposes of
    Section 382 of the Internal Revenue Code of 1986, as
    amended (the Code) which will limit the amount of
    our federal income tax NOLs that we may use to reduce our tax
    liability in a given period.
    Provisions in
    our Articles of Incorporation and bylaws, Michigan corporate law
    and our debt agreements may impede efforts by our shareholders
    to change the direction or management of our
    company.
    
    a requirement that special meetings of our shareholders may be
    called only by our board of directors, the chairman of our board
    of directors, our president or the holders of a majority of the
    shares of our outstanding common stock;
    advance notice requirements for shareholder proposals and
    nominations; and
    the authority of our board to issue, without shareholder
    approval, common or preferred stock, including in connection
    with our implementation of any shareholders rights plan, or
    poison pill.   24




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Provisions in
    our Articles of Incorporation restrict market participants from
    voting or owning 5% or more of the outstanding shares of our
    capital stock.
   ITEM 1B.  UNRESOLVED
    STAFF COMMENTS.   ITEM 2.  PROPERTIES.      
    approximately 2,800 circuit miles of overhead and underground
    transmission lines rated at voltages of 120 kV to 345 kV;
    approximately 18,200 transmission towers and poles;
    station assets, such as transformers and circuit breakers, at
    163 stations and substations which either interconnect our
    transmission facilities or connect ITCTransmissions
    facilities with generation or distribution facilities owned by
    others;
    other transmission equipment necessary to safely operate the
    system (e.g., switching stations, breakers and metering
    equipment);
    associated land held in fee, rights of way and easements;
    an approximately 188,000 square-foot corporate headquarters
    facility and operations control room, including furniture,
    fixtures and office equipment; and
    an approximately 40,000 square-foot facility in Ann Arbor,
    Michigan that includes a
    back-up
    operations control room. 25




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
    approximately 5,500 circuit miles of overhead transmission lines
    rated at voltages of 138 kV to 345 kV;
    approximately 36,200 transmission towers and poles;
    station assets, such as transformers and circuit breakers, at 93
    stations and substations which either interconnect our
    transmission facilities or connect METCs facilities with
    generation or distribution facilities owned by others; and
    other transmission equipment necessary to safely operate the
    system (e.g., switching stations, breakers and metering
    equipment).        
    approximately 6,800 miles of transmission lines rated at
    voltages of 34.5kV to 345kV;
    transmission towers and poles;
    station assets, such as transformers and circuit breakers, at
    approximately 254 stations and substations which either
    interconnect ITC Midwests transmission facilities or
    connect ITC Midwests facilities with generation or
    distribution facilities owned by others;
    other transmission equipment necessary to safely operate the
    system (e.g., switching stations, breakers and metering
    equipment); and
    associated land held in fee, rights of way and easements.      ITEM 3.
    LEGAL
    PROCEEDINGS.   26




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true-up
    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS.   PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES.  Stock Price and
    Dividends
      Year Ended December 31, 2008

High


Low


DividendsQuarter ended December 31, 2008

$
56.00


$
32.35


$
0.305Quarter ended September 30, 2008

$
59.99


$
49.35


$
0.305Quarter ended June 30, 2008

$
57.13


$
50.42


$
0.290Quarter ended March 31, 2008

$
58.14


$
49.16


$
0.290   27




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Year Ended December 31, 2007

High


Low


DividendsQuarter ended December 31, 2007

$
58.58


$
46.24


$
0.290Quarter ended September 30, 2007

$
51.39


$
40.40


$
0.290Quarter ended June 30, 2007

$
46.42


$
39.38


$
0.275Quarter ended March 31, 2007

$
45.12


$
37.90


$
0.275         02940-3078.
    Stock
    Repurchases
    ITEM 6.
    SELECTED
    FINANCIAL DATA.   28




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Form 10-K.
  ITC Holdings and Subsidiaries (a)Year Ended December 31,(In thousands, except share and per share data)

2008


2007


2006


2005


2004OPERATING REVENUES(b)

$
617,877


$
426,249


$
223,622


$
205,274


$
126,449OPERATING EXPENSESOperation and maintenance


113,818



81,406



35,441



48,310



24,552General and administrative


81,296



62,089



40,632



25,198



24,412Depreciation and amortization


94,769



67,928



40,156



33,197



29,480Taxes other than income taxes


41,180



33,340



22,156



13,982



20,840Termination of management agreements














6,725



Other operating income and expense  net


(809
)


(688
)


(842
)






Total operating expenses


330,254



244,075



137,543



127,412



99,284OPERATING INCOME


287,623



182,174



86,079



77,862



27,165OTHER EXPENSES (INCOME)Interest expense


122,234



81,863



42,049



28,128



25,585Allowance for equity funds used during construction


(11,610
)


(8,145
)


(3,977
)


(2,790
)


(1,691
)Loss on extinguishment of debt






349



1,874







Other income


(3,415
)


(3,457
)


(2,348
)


(1,700
)


(1,289
)Other expense


3,944



1,618



1,629



615



283Total other expenses (income)


111,153



72,228



39,227



24,253



22,888INCOME BEFORE INCOME TAXES


176,470



109,946



46,852



53,609



4,277INCOME TAX PROVISION


67,262



36,650



13,658



18,938



1,669INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
    PRINCIPLE


109,208



73,296



33,194



34,671



2,608CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE(NET OF TAX OF $16)










29







NET INCOME

$
109,208


$
73,296


$
33,223


$
34,671


$
2,608Basic earnings per share

$
2.25


$
1.73


$
0.95


$
1.10


$
0.09Diluted earnings per share

$
2.19


$
1.68


$
0.92


$
1.06


$
0.08Weighted-average basic shares


48,605,951



42,298,478



35,048,049



31,455,065



30,183,886Weighted-average diluted shares


49,770,681



43,541,306



36,236,944



32,729,842



30,899,548Dividends declared per share

$
1.190


$
1.130


$
1.075


$
0.525


$
   29




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ITC Holdings and Subsidiaries (a)As of December 31,(In thousands)

2008


2007


2006


2005


2004BALANCE SHEET DATA:Cash and cash equivalents

$
58,110


$
2,616


$
13,426


$
24,591


$
14,074Working capital (deficit)


1,095



(30,370
)


10,107



19,945



(27,117
)Property, plant and equipment  net


2,304,386



1,960,433



1,197,862



603,609



513,684Total assets


3,714,565



3,213,297



2,128,797



916,639



808,847Long Term Debt:ITC Holdings


1,327,741



1,687,193



775,963



266,104



273,485Regulated Operating Subsidiaries


920,512



556,231



486,315



251,211



209,938Total Long Term Debt


2,248,253



2,243,424



1,262,278



517,315



483,423Total Stockholders Equity


929,063



563,075



532,244



263,301



196,602   ITC Holdings and Subsidiaries (a)Year Ended December 31,(In thousands)

2008


2007


2006


2005


2004CASH FLOWS DATA:Capital expenditures

$
401,840


$
287,170


$
167,496


$
118,586


$
76,779     (a)
    
    METCs results of operations, cash flows and balances are
    included for the periods presented subsequent to its acquisition
    on October 10, 2006. In addition, ITC Midwests
    results of operations, cash flows and balances are included for
    the periods presented subsequent to its asset acquisition of the
    electric transmission assets of IP&L on December 20,
    2007.(b)
    
    The ITCTransmission rate freeze ended December 31, 2004
    resulted in an increase in operating revenues for the years
    presented subsequent to December 31, 2004. Refer to
    discussion of the ITCTransmission rate freeze in Note 5 to
    the consolidated financial statements. Additionally,
    ITCTransmissions and METCs implementation of
    forward-looking Attachment O for rates beginning January 1,
    2007 resulted in increases in operating revenues for the years
    presented subsequent to December 31, 2006. Refer to the
    discussion of forward-looking Attachment O in Note 5 to the
    consolidated financial statements.  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS.  Safe Harbor
    Statement Under The Private Securities Litigation Reform Act of
    1995
     30




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Overview
            
    Capital investment of $399.4 million at our Regulated
    Operating Subsidiaries ($121.8 million, $121.1 million
    and $156.5 million at ITCTransmission, METC and ITC
    Midwest, respectively) for the year ended December 31,
    2008, resulting primarily from our focus on improving system
    reliability;
    ITC Midwests acquisition of the transmission assets of
    IP&L on December 20, 2007 and the related financing
    activities (described in Notes 4 and 8 to the consolidated
    financial statements);
    Lower actual monthly peak loads as compared to what had been
    forecasted in developing the transmission network rates
    applicable for 2008 at ITCTransmission and METC, resulting in a
    reduction in operating cash flows of $22.8 million and
    $13.6 million, respectively, from what had been projected; 31




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
    Debt issuances and borrowings under our revolving credit
    agreements in 2008 and 2007 to fund capital investment at our
    Regulated Operating Subsidiaries, resulting in higher interest
    expense; and
    ITC Great Plains and Green Power Express each filed an
    application with the FERC for the approval of rates that would
    apply to their potential investment in transmission projects in
    Kansas and elsewhere in the SPP region.    Recent
    Developments
  Development
    Activities
     32




---



##### Table of Contents



Complaint of
    IP&L
  true-up
  Michigan Sales
    and Use Tax Audit
       33




---



##### Table of Contents



Iowa Flood
    Damage
    Financial
    Markets
    Rate Setting and
    Attachment O
  Network
    Transmission Rates
   34




---



##### Table of Contents



Network Transmission Rate

ITCTransmission


METC(a)


ITC Midwest(b)January 1, 2006 to May 31, 2006

$
1.594June 1, 2006 to December 31, 2006

$
1.744


$
1.524January 1, 2007 to December 31, 2007

$
2.099


$
1.524


$
2.373January 1, 2008 to December 31, 2008

$
2.350


$
1.985


$
2.446January 1, 2009 to December 31, 2009

$
2.520


$
2.522


$
4.162     (a)
    
    METCs results of operations and cash flows are included
    for the periods subsequent to its acquisition on
    October 10, 2006.(b)
    
    ITC Midwests results of operations and cash flows are
    included for the periods subsequent to its asset acquisition of
    the electric transmission assets of IP&L on
    December 20, 2007.  Forward-Looking
    Attachment O
    true-up two-year true-up true-up
   35




---



##### Table of Contents



Net Revenue
    Requirement Calculation
    Step
    One  Establish Projected Rate Base and Calculate
    Projected Allowed Return
      Step
    Two  Calculate Projected Gross Revenue
    Requirement
    Step
    Three  Calculate Projected Net Revenue
    Requirement
    Step
    Four  Calculate
    True-up
    Adjustment
  true-up true-up true-up
  Illustration of Attachment O Rate Setting.
 36




---



##### Table of Contents



Line


Attachment O Items


Instructions


Amount1


Projected rate base (the average of the 13 months ended
    December 31, 2008 through December 31, 2009)





$
922,700,0002


Multiply by projected 13 month weighted average cost of
    capital(a)






10.59%3


Projected allowed return on rate base


(Line 1 × Line 2)


$
97,713,9304


Projected recoverable operating expenses for 2009





$
66,400,0005


Projected taxes and depreciation and amortization for 2009





$
144,350,0006


Projected gross revenue requirements for 2009


(Line 3 + Line 4 + Line 5)


$
308,463,9307


Less projected revenue credits for 2009





$
(42,500,000
)8


Plus/(less) 2007
    true-up
    adjustment(b)





$
(236,017
)9


Projected net revenue requirement for 2009


(Line 6 -Line 7 + Line 8)


$
265,727,91310


Projected 2009 network load (in kW)






8,787,00011


Annual component of the joint zone network transmission rate


(Line 9 divided by Line 10)


$
30.24112


Monthly component of the joint zone network transmission rate
    ($/kW per month)


(Line 11 divided by 12 months)


$
2.520     WeightedPercentage of




AverageITC Transmissions




Cost ofTotal Capitalization


Cost of Capital

CapitalDebt


40.00
%

5.64%(Pre-tax) =


2.26
%Equity


60.00
%

13.88% (After tax) =


8.33
%100.00
%




10.59
%   (b)
    The 2007
    true-up
    adjustment is included in ITC Transmissions component of
    the 2009 billed joint zone network transmission rate. The 2008
    true-up
    adjustment will not impact ITC Transmissions component of
    the 2009 billed joint zone network transmission rate, but it
    will be included as a component of the projected net revenue
    requirement in the Attachment O rate calculation for 2010.  Trends and
    Seasonality
  Network
    Revenues
   37




---



##### Table of Contents



Ten-Year Capital



Capital Investment(In millions)

Investment Program






Actual For The Year EndedRegulated Operating Subsidiary

2008-2017(a)



Expected in 2009


December 31, 2008(b)ITCTransmission

$
700



$
70 - $85


$
121.8METC

$
1,150



$
110 - $130


$
121.1ITC Midwest

$
1,050



$
90 - $110
(c)

$
156.5
(d)     (a)
    
    The expected amounts for our ten-year program do not include
    $150 million for ITCTransmission and METC combined and
    $250 million at ITC Midwest for estimated transmission
    network upgrades for generator interconnections due to a high
    degree of uncertainty on whether these projects will ultimately
    be built and because they could replace other transmission
    projects currently being planned. This estimate for network
    upgrades could change significantly due to factors beyond our
    control, such as changes in the MISO queue for generation
    projects and whether the generator meets the various criteria of
    Attachment FF of the MISO Transmission and Energy Market Tariff
    for the project to qualify as a refundable network upgrade,
    among other factors. In addition, these amounts do not include
    any possible capital investment associated with the projects
    discussed under Item 7 Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations  Recent Developments 
    Development Activities.(b)
    
    Capital investment amounts differ from cash expenditures for
    property, plant and equipment included in our consolidated
    statements of cash flows due in part to differences in
    construction costs incurred compared to cash paid during that
    period, as well as payments for major equipment inventory that
    are included in cash expenditures but not included in capital
    investment until transferred to construction work in progress,
    among other factors.(c)
    
    Amounts do not include an estimated additional $30 million
    that we expect to incur at ITC Midwest to purchase and complete
    construction on a substation and to purchase a transmission line.(d)
    
    In December 2008, refundable advances from a generator received
    by ITC Midwest for transmission network upgrades were
    reclassified to a contribution in aid of construction,
    effectively reducing the property, plant and equipment recorded
    for these network upgrades to $0. The generator did not meet the
    various criteria of Attachment FF of the MISO Transmission and
    Energy Market Tariff at its commercial operation date for the
    project to qualify for refund. Consequently, $6.7 million
    of contributions in aid of construction for network upgrades
    reduced the amount of ITC Midwests capital 38




---



##### Table of Contents



investments in 2008, all of which had previously been reported
    as capital investment in Form 10Q for the period ended
    September 30, 2008. Additionally, upon reclassifying the
    refundable advances to a contribution in aid of construction,
    the cash receipts from the generator become taxable income for
    income tax reporting purposes. We are permitted to charge a tax
    gross-up to
    the generator for the difference between the total taxable
    income to be reported compared to the present value of tax
    depreciation of the property constructed using the contribution
    in aid of construction. This
    tax-gross up
    is anticipated to be approximately $2.3 million and will be
    recorded as other operating income when collectability from the
    generator is reasonably assured.    Seasonality
    and Attachment O Revenue Accrual
       39




---



##### Table of Contents



Monthly Peak Load
    (in MW) (a)
  2008



2007



2006ITCTransmission


METC


ITC Midwest



ITCTransmission


METC


ITC Midwest(b)



ITCTransmission


METC(c)January


7,890



6,215



2,974




7,876



6,051








7,754February


7,715



6,159



2,890




8,170



6,227








7,667March


7,532



5,797



2,733




7,739



6,006








7,554April


6,926



5,223



2,455




7,141



5,473








7,035May


7,051



5,328



2,431




9,927



6,981








10,902June


10,624



7,241



2,888




11,761



8,511








9,752July


11,016



8,042



3,376




11,706



8,672








12,392August


10,890



7,818



3,259




12,087



8,955








12,745September


10,311



7,667



3,191




11,033



7,908








8,415October


6,893



5,519



2,786




10,365



7,524








7,302



5,642November


7,205



5,820



2,944




7,812



6,200








7,724



6,103December


7,636



6,280



3,003




8,022



6,215



2,706




8,257



6,527Total


101,689



77,109



34,930




113,639



84,723



2,706




107,499



18,272     (a)
    
    Each of our Regulated Operating Subsidiaries is part of a joint
    rate zone. The load data presented is for all transmission
    owners in the respective joint rate zone and is used for billing
    network revenues. Each of our Regulated Operating Subsidiaries
    makes up the significant portion of network load within their
    respective joint rate zone.(b)
    
    ITC Midwests results of operations and cash flows are
    included for the periods subsequent to its acquisition of the
    electric transmission assets of IP&L on December 20,
    2007.(c)
    
    METCs results of operations and cash flows are included
    for the periods subsequent to its acquisition on
    October 10, 2006.  Significant
    Components of Results of Operations
  Revenues
    Network Revenues
  multiply
  divide
 40




---



##### Table of Contents



Point-to-Point Revenues
  Regional Cost Sharing Revenues No. ER06-18).
  Scheduling, Control and Dispatch Revenues
  Other Revenues
  Operating
    Expenses
  Operation and Maintenance Expenses
      General and Administrative Expenses
    Depreciation and Amortization Expenses
  Taxes other than Income Taxes
  Other Operating Income and Expense  Net gross-ups
 41




---



##### Table of Contents



Other items of
    income or expense
  Interest Expense
  Allowance for Equity Funds Used During Construction
    (AFUDC Equity)
  Income tax
    provision
    Results of
    Operations
    Year Ended





Percentage


Year Ended





PercentageDecember 31,


Increase


increase


December 31,


Increase


increase2008


2007


(decrease)


(decrease)


2006


(decrease)


(decrease)(In thousands)OPERATING REVENUES

$
617,877


$
426,249


$
191,628



45.0
%

$
223,622


$
202,627



90.6
%OPERATING EXPENSESOperation and maintenance


113,818



81,406



32,412



39.8
%


35,441



45,965



129.7
%General and administrative


81,296



62,089



19,207



30.9
%


40,632



21,457



52.8
%Depreciation and amortization


94,769



67,928



26,841



39.5
%


40,156



27,772



69.2
%Taxes other than income taxes


41,180



33,340



7,840



23.5
%


22,156



11,184



50.5
%Other operating income and expense- net


(809
)


(688
)


(121
)


17.6
%


(842
)


154



(18.3
)%Total operating expenses


330,254



244,075



86,179



35.3
%


137,543



106,532



77.5
%OPERATING INCOME


287,623



182,174



105,449



57.9
%


86,079



96,095



111.6
%OTHER EXPENSES (INCOME)Interest expense


122,234



81,863



40,371



49.3
%


42,049



39,814



94.7
%Allowance for equity funds used during construction


(11,610
)


(8,145
)


(3,465
)


42.5
%


(3,977
)


(4,168
)


104.8
%Loss on extinguishment of debt






349



(349
)


(100.0
)%


1,874



(1,525
)


(81.4
)%Other income


(3,415
)


(3,457
)


42



(1.2
)%


(2,348
)


(1,109
)


47.2
%Other expense


3,944



1,618



2,326



143.8
%


1,629



(11
)


(0.7
)%Total other expenses (income)


111,153



72,228



38,925



53.9
%


39,227



33,001



84.1
%INCOME BEFORE INCOME TAXES


176,470



109,946



66,524



60.5
%


46,852



63,094



134.7
%INCOME TAX PROVISION


67,262



36,650



30,612



83.5
%


13,658



22,992



168.3
%INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
    PRINCIPLE


109,208



73,296



35,912



49.0
%


33,194



40,102



120.8
%CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (NET OF
    TAX OF $16)














n/a



29



(29
)


(100.0
)%NET INCOME

$
109,208


$
73,296


$
35,912



49.0
%

$
33,223


$
40,073



120.6
%  42




---



##### Table of Contents



Operating
    Revenues
  Year Ended
    December 31, 2008 compared to Year Ended December 31,
    2007
    2008


2007





PercentageAmount


Percentage


Amount


Percentage


Increase


Increase(In thousands)Network revenues

$
558,896



90.5
%

$
390,331



91.6
%

$
168,565



43.2
%Point-to-point


23,417



3.8
%


19,321



4.5
%


4,096



21.2
%Scheduling, control and dispatch


16,972



2.7
%


14,674



3.4
%


2,298



15.7
%Regional cost sharing revenues


15,534



2.5
%






0.0
%


15,534



100.0
%Other


3,058



0.5
%


1,923



0.5
%


1,135



59.0
%Total

$
617,877



100.0
%

$
426,249



100.0
%

$
191,628



45.0
%       Total RevenueLine


Item

ITCTransmission(c)


METC(c)


ITC Midwest(d)


Accrual(In thousands)1


Estimated net revenue requirement (network revenues)(a)

$
257,156


$
165,803


$
135,9372


Network revenues billed(b)


239,473



153,530



85,0853


Attachment O revenue accrual (line 1  line 2)

$
17,683


$
12,273


$
50,852


$
80,808     (a)
    
    The calculation of net revenue requirement is described in
    Item 7 Managements Discussion and Analysis of
    Financial Condition and Results of Operations  Rate
    Setting and Attachment O  Net Revenue Requirement
    Calculation. The amount is estimated until such time FERC
    Form No. 1s are completed for our Regulated
    Operating Subsidiaries and the calculations are filed with and
    reviewed by MISO each year.(b)
    
    Network revenues billed at our Regulated Operating Subsidiaries
    are calculated based on the joint zone monthly network peak load
    multiplied by our effective monthly network rates of $2.350 per
    kW/month, $1.985 per kW/month and $2.446 per kW/month applicable
    to ITCTransmission, METC and ITC Midwest, respectively, adjusted
    for the actual number of days in the month.(c)
    
    The amount of revenue accrual at ITCTransmission and METC were
    primarily the result of lower peak loads compared to what had
    been forecasted in developing the transmission network rates
    applicable for 2008.(d)
    
    ITC Midwests billed network rate was frozen during 2008,
    which was the primary reason for the revenue accrual.     43




---



##### Table of Contents



Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Percentage2007


2006


Increase


increaseAmount


Percentage


Amount


Percentage


(decrease)


(decrease)(In thousands)Network revenues

$
390,331



91.6
%

$
206,514



92.4
%

$
183,817



89.0
%Point-to-point


19,321



4.5
%


7,012



3.1
%


12,309



175.5
%Scheduling, control and dispatch


14,674



3.4
%


8,274



3.7
%


6,400



77.4
%Other


1,923



0.5
%


1,822



0.8
%


101



5.5
%Total

$
426,249



100.0
%

$
223,622



100.0
%

$
202,627



90.6
%       Total RevenueLine


Item

ITCTransmission


METC(b)


Accrual-net(In thousands)1


Estimated net revenue requirement (network revenues)

$
238,599


$
149,2622


Network revenues billed(a)


238,803



129,2763


Attachment O revenue accrual (deferral)-net
    (line 1  line 2)

$
(204
)

$
19,986


$
19,782     (a)
    
    Network revenues billed at our Regulated Operating Subsidiaries
    are calculated based on the joint zone monthly network peak load
    multiplied by our effective monthly network rates of $2.099 per
    kW/month and $1.524 per kW/month applicable to ITCTransmission
    and METC, respectively, adjusted for the actual number of days
    in the month.(b)
    
    METCs billed network rate was frozen during 2007, which
    was the primary reason for the revenue accrual.   44




---



##### Table of Contents



Operating
    Expenses
  Operation and
    maintenance expenses
  Year Ended
    December 31, 2008 compared to Year Ended December 31,
    2007
    Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    General and
    administrative expenses
  Year Ended
    December 31, 2008 compared to Year Ended December 31,
    2007
    Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
   45




---



##### Table of Contents



Depreciation and
    amortization expenses
  Year Ended
    December 31, 2008 compared to Year Ended December 31,
    2007
    Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Taxes other than
    income taxes
  Year Ended
    December 31, 2008 compared to Year Ended December 31,
    2007
    Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Other operating
    income and expense  net
     46




---



##### Table of Contents



Other expenses
    (income)
  Year Ended
    December 31, 2008 compared to Year Ended December 31,
    2007
        Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
      Income Tax
    Provision
  Year Ended
    December 31, 2008 compared to Year Ended December 31,
    2007
    Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Liquidity and
    Capital Resources
   47




---



##### Table of Contents




    Fund capital expenditures at our Regulated Operating
    Subsidiaries. Our plans with regard to property, plant and
    equipment investments are described in detail above under
    Item 7 Managements Discussion and Analysis of
    Financial Condition and Results of Operations  Trends
    and Seasonality.
    Fund working capital requirements.
    Fund our debt service requirements, which are described in
    detail below under Item 7 Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Contractual Obligations. We expect
    our interest payments to increase during 2009 compared to 2008
    as a result of additional debt incurred in 2008 and 2009 to fund
    our capital expenditures.
    Fund dividends to holders of our common stock.
    Fund contributions to our retirement plans, as described in
    Note 11 to the consolidated financial statements. The
    impact of the growth in the number of participants in our
    retirement benefit plans, the recent financial market conditions
    that have caused a decrease in the value of our retirement plan
    assets and changes in the requirements of the Pension Protection
    Act may require contributions to our retirement plans to be
    higher than we have experienced in the past.
    Fund business development expenses and related capital
    expenditures. We are pursuing other development activities
    described above under Item 7 Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations  Recent Developments 
    Development Activities that result in development expense
    and could result in significant capital expenditures.       48




---



##### Table of Contents



Credit
    Ratings
  Standard and Poors

Moodys InvestorIssuer

Issuance

Ratings Services(a)

Service, Inc.(b)ITC Holdings

Senior Notes

BBB−

Baa3ITCTransmission

First Mortgage Bonds

A−

A3METC

Senior Secured Notes

A−

A3ITC Midwest

First Mortgage Bonds

A−

A3     (a)
    
    Our Standard and Poors Rating Services credit ratings have
    a stable outlook.(b)
    
    Our Moodys Investor Service, Inc. credit ratings have a
    positive outlook.    Covenants
    
    incur additional indebtedness;
    engage in sale and lease-back transactions;
    create liens or other encumbrances;
    enter into mergers, consolidations, liquidations or
    dissolutions, or sell or otherwise dispose of all or
    substantially all of our assets;
    create or acquire subsidiaries; and
    pay dividends or make distributions on ITC Holdings and
    ITCTransmissions capital stock or METCs and ITC
    Midwests members capital.   49




---



##### Table of Contents



Cash
    Flows
    Year Ended December 31,2008


2007


2006(In thousands)CASH FLOWS FROM OPERATING ACTIVITIESNet income

$
109,208


$
73,296


$
33,223Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization expense


94,769



67,928



40,156Attachment O revenue accrual  including accrued
    interest


(83,390
)


(20,325
)


Deferred income tax expense


65,054



36,650



13,230Other


(1,240
)


(1,523
)


3,309Changes in assets and liabilities, exclusive of changes shown
    separately


11,020



(20,242
)


(28,050
)Net cash provided by operating activities


195,421



135,784



61,868CASH FLOWS FROM INVESTING ACTIVITIESExpenditures for property, plant and equipment


(401,840
)


(287,170
)


(167,496
)ITC Midwests asset acquisition, including acquisition
    direct fees


(5,722
)


(794,490
)


METC acquisition, including acquisition direct fees and net of
    cash acquired






(254
)


(495,645
)Other


6,242



6,384



1,697Net cash used in investing activities


(401,320
)


(1,075,530
)


(661,444
)CASH FLOWS FROM FINANCING ACTIVITIESNet issuance/repayment of long-term debt (including revolving
    credit agreements)


4,516



981,000



436,286Issuance of common stock


310,543



3,402



202,253Dividends on common stock


(58,935
)


(48,168
)


(38,307
)Other


5,269



(7,298
)


(11,821
)Net cash provided by financing activities


261,393



928,936



588,411NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS


55,494



(10,810
)


(11,165
)CASH AND CASH EQUIVALENTS  Beginning of period


2,616



13,426



24,591CASH AND CASH EQUIVALENTS  End of period

$
58,110


$
2,616


$
13,426   Cash Flows
    From Operating Activities
  Year Ended
    December 31, 2008 compared to Year Ended December 31,
    2007
   50




---



##### Table of Contents



Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Cash Flows
    From Investing Activities
  Year Ended
    December 31, 2008 compared to Year Ended December 31,
    2007
    Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Cash Flows
    From Financing Activities
  Year Ended
    December 31, 2008 compared to Year Ended December 31,
    2007
   51




---



##### Table of Contents



Year Ended
    December 31, 2007 compared to Year Ended December 31,
    2006
    Contractual
    Obligations
    Less Than








More Than(In thousands)

Total


1 Year


1-3 Years


4-5 Years


5 YearsLong-term debt:ITC Holdings Senior Notes

$
1,262,000


$



$



$
317,000


$
945,000ITC Holdings revolving credit agreement


67,953







67,953







ITCTransmission First Mortgage Bonds


385,000











185,000



200,000ITCTransmission/METC revolving credit agreement


42,064







42,064







METC Senior Secured Notes


225,000











50,000



175,000ITC Midwest First Mortgage Bonds


250,000















250,000ITC Midwest revolving credit agreement


19,218











19,218



Interest payments:ITC Holdings Senior Notes


938,645



74,683



200,756



142,980



520,226ITCTransmission First Mortgage Bonds


277,630



20,108



60,323



36,465



160,734METC Senior Secured Notes


103,185



13,378



40,133



26,755



22,919ITC Midwest First Mortgage Bonds


385,472



16,176



48,526



32,350



288,420Operating leases


530



326



166



38



Deferred payables


1,222



1,222











Purchase obligations


42,795



30,540



9,426



2,829



METC Easement Agreement


420,000



10,000



30,000



20,000



360,000Total obligations

$
4,420,714


$
166,433


$
499,347


$
832,635


$
2,922,299      52




---



##### Table of Contents



50-year
  Critical
    Accounting Policies
    and/or
  Regulation
  Accounting for
    the Effects of Certain Types of Regulation
    Revenue
    Recognition under Forward-Looking Attachment O
    true-up
 53




---



##### Table of Contents



true-up No. 92-7, Accounting by Rate-Regulated Utilities for the Effects of
    Certain Alternative Revenue Programs (EITF 92-7). true-up
  ITCTransmissions
    Attachment O Rate Freeze Revenue Deferral
  EITF 92-7. EITF 92-7 EITF 92-7
  Purchase
    Accounting
  Business Combinations Business
    Combinations
   54




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##### Table of Contents



Valuation of
    Goodwill
  Goodwill and Other Intangible Assets and/or
  Contingent
    Obligations
    
    Changes in existing state or federal regulation by governmental
    authorities having jurisdiction over air quality, water quality,
    control of toxic substances, hazardous and solid wastes, and
    other environmental matters.
    Changes in existing federal income tax laws or Internal Revenue
    Service regulations.
    Identification and evaluation of potential lawsuits or
    complaints in which we may be or have been named as a defendant.
    Resolution or progression of existing matters through the
    legislative process, the courts, the Internal Revenue Service,
    or the Environmental Protection Agency.  Valuation of
    Share-Based Payment
    Pension and
    Postretirement Costs
   55




---



##### Table of Contents



Off-Balance Sheet
    Arrangements
    Recent Accounting
    Pronouncements
   56




---



##### Table of Contents



ITEM 7A.  QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Commodity Price
    Risk
    Interest Rate
    Risk
  Fixed Rate
    Long Term Debt
    Revolving
    Credit Agreements
    Credit
    Risk
   57




---



##### 



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    PageManagements Report on Internal Control over
    Financial Reporting


59Report of Independent Registered Public
    Accounting Firm


60Report of Independent Registered Public
    Accounting Firm


61Consolidated Statements of Financial Position as
    of December 31, 2008 and 2007


62Consolidated Statements of Operations for the
    Years Ended December 31, 2008, 2007 and 2006


63Consolidated Statements of Changes in
    Stockholders Equity and Comprehensive Income for the Years
    Ended December 31, 2008, 2007 and 2006


64Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008, 2007 and 2006


65Notes to Consolidated Financial Statements


66Schedule I  Condensed Financial
    Information of Registrant


115   58




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##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING    Internal
    Control  Integrated Framework
   59




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control  Integrated Framework
  
    60




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     Internal Control  Integrated Framework
        Internal Control  Integrated Framework
    
    61




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF FINANCIAL POSITION  December 31,(In thousands, except share data)

2008


2007ASSETSCurrent assetsCash and cash equivalents

$
58,110


$
2,616Accounts receivable


57,638



40,919Inventory


25,077



26,315Deferred income taxes






2,689Regulatory assets- Attachment O revenue accrual (including
    accrued interest of $1,637)


22,301



Other


4,147



3,518Total current assets


167,273



76,057Property, plant and equipment(net of accumulated
    depreciation and amortization of $925,890 and $879,843,
    respectively)


2,304,386



1,960,433Other assetsGoodwill


951,319



959,042Intangible assets (net of accumulated amortization of $6,050 and
    $3,025, respectively)


52,357



55,382Regulatory assets- Attachment O revenue accrual (including
    accrued interest of $1,512 and $552, respectively)


81,643



20,537Regulatory assets- Acquisition adjustments (net of accumulated
    amortization of $22,393 and $17,004, respectively)


80,665



86,054Other regulatory assets


39,848



29,449Deferred financing fees (net of accumulated amortization of
    $8,048 and $5,138, respectively)


21,410



14,201Other


15,664



12,142Total other assets


1,242,906



1,176,807TOTAL ASSETS

$
3,714,565


$
3,213,297LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable

$
79,403


$
47,627Accrued payroll


10,331



8,928Accrued interest


37,779



23,088Accrued taxes


18,104



15,065Deferred income taxes


6,476



ITC Midwests asset acquisition additional purchase price
    accrual






5,402Refundable deposits from generators for transmission network
    upgrades


8,701



2,352Other


5,384



3,965Total current liabilities


166,178



106,427Accrued pension and postretirement liabilities


24,295



13,934Deferred income taxes


144,889



90,617Regulatory liabilities


196,656



189,727Other


5,231



6,093Long-term debt


2,248,253



2,243,424Commitments and contingent liabilities (Notes 5
    and 15)STOCKHOLDERS EQUITYCommon stock, without par value, 100,000,000 shares
    authorized, 49,654,518 and 42,916,852 shares issued and
    outstanding at December 31, 2008 and 2007, respectively


848,624



532,103Retained earnings


81,268



31,864Accumulated other comprehensive loss


(829
)


(892
)Total stockholders equity


929,063



563,075TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
3,714,565


$
3,213,297    62




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  Year Ended December 31,(In thousands, except share and per share data)

2008


2007


2006OPERATING REVENUES

$
617,877


$
426,249


$
223,622OPERATING EXPENSESOperation and maintenance


113,818



81,406



35,441General and administrative


81,296



62,089



40,632Depreciation and amortization


94,769



67,928



40,156Taxes other than income taxes


41,180



33,340



22,156Other operating income and expense  net


(809
)


(688
)


(842
)Total operating expenses


330,254



244,075



137,543OPERATING INCOME


287,623



182,174



86,079OTHER EXPENSES (INCOME)Interest expense


122,234



81,863



42,049Allowance for equity funds used during construction


(11,610
)


(8,145
)


(3,977
)Loss on extinguishment of debt






349



1,874Other income


(3,415
)


(3,457
)


(2,348
)Other expense


3,944



1,618



1,629Total other expenses (income)


111,153



72,228



39,227INCOME BEFORE INCOME TAXES


176,470



109,946



46,852INCOME TAX PROVISION


67,262



36,650



13,658INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
    PRINCIPLE


109,208



73,296



33,194CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
    (NET OF TAX OF $16)










29NET INCOME

$
109,208


$
73,296


$
33,223Basic earnings per share

$
2.25


$
1.73


$
0.95Diluted earnings per share

$
2.19


$
1.68


$
0.92Weighted-average basic shares


48,605,951



42,298,478



35,048,049Weighted-average diluted shares


49,770,681



43,541,306



36,236,944Dividends declared per common share

$
1.190


$
1.130


$
1.075    63




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF CHANGES IN
    STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME  AccumulatedOther


TotalCommon Stock


Retained


Comprehensive


Stockholders


ComprehensiveShares


Amount


Earnings


Loss


Equity


Income(In thousands, except share data)BALANCE, DECEMBER 31, 2005


33,228,638


$
251,681


$
11,792


$
(172
)

$
263,301Net income










33,223







33,223


$
33,223Issuance of common stock


6,580,987



200,549











200,549



Issuance of common stock in MTH and METC Acquisition


2,195,045



72,458











72,458



Repurchase and retirement of common stock


(30,605
)


(1,040
)










(1,040
)


Common stock issuance costs






(2,364
)










(2,364
)


Dividends declared on common stock










(38,307
)






(38,307
)


Stock option exercises


191,685



1,704











1,704



Issuance of restricted stock


236,160



















Forfeiture of restricted stock


(6,150
)






6







6



Amortization of share-based compensation, net of forfeitures






3,497











3,497



Settlement of interest rate lock cash flow hedges, net of tax
    $522














(969
)


(969
)


(969
)Amortization of interest rate lock cash flow hedges, net of tax
    $8














14



14



14Minimum pension liability adjustment, net of tax $174














(322
)


(322
)


(322
)Comprehensive income





















$
31,946Reclassify the accumulated minimum pension liability adjustment
    to other regulatory assets, net of tax $266














494



494BALANCE, DECEMBER 31, 2006


42,395,760


$
526,485


$
6,714


$
(955
)

$
532,244Net income










73,296







73,296


$
73,296Repurchase and retirement of common stock


(41,867
)


(1,841
)










(1,841
)


Common stock issuance costs






(5
)










(5
)


Dividends declared on common stock










(48,168
)






(48,168
)


Stock option exercises


351,172



3,081











3,081



Shares issued under the Employee Stock Purchase Plan


8,922



321











321



Issuance of restricted stock


228,644



















Forfeiture of restricted stock


(25,779
)






22







22



Amortization of share-based compensation, net of forfeitures






4,062











4,062



Amortization of interest rate lock cash flow hedges, net of tax
    $34














63



63



63Comprehensive income





















$
73,359BALANCE, DECEMBER 31, 2007


42,916,852


$
532,103


$
31,864


$
(892
)

$
563,075Net income










109,208







109,208


$
109,208Common stock issuance costs






(755
)










(755
)


Dividends declared on common stock










(58,953
)






(58,953
)


Issuance of common stock


6,420,737



308,317











308,317



Stock option exercises


141,883



1,460











1,460



Shares issued under the Employee Stock Purchase Plan


18,593



766











766



Issuance of restricted stock


172,261



















Forfeiture of restricted stock


(15,808
)






21







21



Amortization of share-based compensation, net of forfeitures






7,251











7,251



Amortization of interest rate lock cash flow hedges, net of tax
    $34














63



63



63Other






(518
)










(518
)


Comprehensive income





















$
109,271Statement of Financial Accounting Standards No. 158 change
    in measurement date provisions, Note 11:Service cost, interest cost, and expected return on plan assets
    for October 1  December 31, 2007, net of tax of
    $400










(647
)






(647
)Amortization of prior service cost and losses for October
    1  December 31, 2007, net of tax of $140










(225
)






(225
)BALANCE, DECEMBER 31, 2008


49,654,518


$
848,624


$
81,268


$
(829
)

$
929,063    64




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,(In thousands)

2008


2007


2006CASH FLOWS FROM OPERATING ACTIVITIESNet income

$
109,208


$
73,296


$
33,223Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization expense


94,769



67,928



40,156Attachment O revenue accrual  including accrued
    interest


(83,390
)


(20,325
)


Deferred income tax expense


65,054



36,650



13,230Allowance for equity funds used during construction


(11,610
)


(8,145
)


(3,977
)Other


10,370



6,622



7,286Changes in assets and liabilities, exclusive of changes shown
    separately:Accounts receivable


(14,455
)


(3,023
)


996Inventory


(10,237
)


(18,016
)


(3,431
)Other current assets


(629
)


6,469



(4,834
)Accounts payable


14,948



9,533



(17,938
)Accrued payroll


778



3,401



(818
)Accrued interest


14,693



4,172



4,112Accrued taxes


3,600



779



2,130METC rate case accrued liability






(20,000
)


Other current liabilities


1,191



(2,952
)


(7,327
)Non-current assets and liabilities, net


1,131



(605
)


(940
)Net cash provided by operating activities


195,421



135,784



61,868CASH FLOWS FROM INVESTING ACTIVITIESExpenditures for property, plant and equipment


(401,840
)


(287,170
)


(167,496
)ITC Midwests asset acquisition purchase price


(4,714
)


(783,113
)


ITC Midwests asset acquisition direct fees


(1,008
)


(11,377
)


Acquisition of MTH and METC, net of cash acquired










(484,189
)MTH and METC asset acquisition direct fees






(254
)


(11,456
)Other


6,242



6,384



1,697Net cash used in investing activities


(401,320
)


(1,075,530
)


(661,444
)CASH FLOWS FROM FINANCING ACTIVITIESIssuance of long-term debt


782,782



865,000



609,627Repayment of long-term debt


(765,000
)






(123,541
)Borrowings under ITC Holdings Term Loan agreement






25,000



Repayment of ITC Holdings Term Loan agreement






(25,000
)


Borrowings under revolving credit agreements


657,733



678,200



128,400Repayments of revolving credit agreements


(670,999
)


(562,200
)


(178,200
)Issuance of common stock


310,543



3,402



202,253Dividends on common stock


(58,935
)


(48,168
)


(38,307
)Refundable deposits from generators for transmission network
    upgrades


15,661







Repayment of refundable deposits from generators for
    transmission network upgrades


(2,352
)






Debt issuance costs


(7,159
)


(5,409
)


(6,969
)Other


(881
)


(1,889
)


(4,852
)Net cash provided by financing activities


261,393



928,936



588,411NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS


55,494



(10,810
)


(11,165
)CASH AND CASH EQUIVALENTS  Beginning of period


2,616



13,426



24,591CASH AND CASH EQUIVALENTS  End of period

$
58,110


$
2,616


$
13,426    65




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  1.
    GENERAL          2.
    SIGNIFICANT
    ACCOUNTING POLICIES    Principles of Consolidation 
  Use of Estimates 
  Regulation  Accounting for the Effects of Certain Types of
    Regulation
  Cash and Cash Equivalents 
 66




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidated Statements of Cash Flows 
  Year Ended December 31,2008


2007


2006(In thousands)Supplementary cash flows information:Interest paid (net of interest capitalized)

$
102,149


$
73,489


$
40,038Federal and state income taxes paid


2,012



2,058



561Supplementary non-cash investing and financing activities:Additions to property, plant and equipment(a)


54,689



33,998



33,282Allowance for equity funds used during construction


11,610



8,145



3,977ITC Holdings common stock issued in the METC acquisition










72,458Assumption of MTH and METC debt and other long term interest
    bearing obligations










307,749     (a)
    
    Amounts consist of current liabilities for construction labor
    and materials that have not been included in investing
    activities. These amounts have not been paid for as of
    December 31, 2008, 2007 or 2006, respectively, but have
    been or will be included as a cash outflow from investing
    activities for expenditures for property, plant and equipment
    when paid.  Accounts Receivable 
  Inventories 
  Property, Plant and Equipment 
     67




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Software Costs 
  Impairment of Long-Lived Assets 
  Goodwill and Intangible Assets  Goodwill and Other Intangible Assets
  Deferred Financing Fees 
  Asset Retirement Obligations  Accounting for Conditional Asset Retirement Obligations Accounting for
    Asset Retirement Obligations and/or
 68




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Contingent Obligations 
  Revenues
  by
  by
  by
      true-up
  Property Taxes 
  Share-Based Payment  Share-Based Payment
 69




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Comprehensive Income (Loss) 
  Income Taxes 
  Accounting for Uncertainty in Income Taxes Accounting
    for Income Taxes
    3.
    RECENT ACCOUNTING
    PRONOUNCEMENTS  FASB Staff
    Position No. EITF
    03-6-1,
    Determining Whether Instruments Granted in Share-Based Payment
    Transactions Are Participating Securities
  No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities EITF 03-6-1). EITF 03-6-1 states EITF 03-6, Participating Securities and the Two-Class Method under
    FASB Statement No. 128 EITF 03-6-1, EITF 03-6-1 Form 10-Q.
 70




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  EITF 03-6-1 earnings-per-share EITF 03-6-1 EITF 03-6-1 earnings-per-share
  Statement of
    Financial Accounting Standards No. 141(R), Business
    Combinations
  Business Combinations
  Statement of
    Financial Accounting Standards No. 157, Fair Value
    Measurements
  Fair Value Measurements FAS No. 157-2: Effective Date of FASB Statement No. 157
  FAS No. 157-3, Fair Value Measurements FAS 157-3), FAS 157-3
    Accounting for Certain Investments
 71




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  in Debt and Equity Securities
    Fair Value Measurements at Reporting Date UsingQuoted prices in





Significantactive markets for


Significant other


unobservableidentical assets


observable inputs


inputs(Level 1)


(Level 2)


(Level 3)(In thousands)Cash equivalents

$
57,310


$



$
Trading securities


4,980







   Statement of
    Financial Accounting Standards No. 158, Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    88, 106, and 132(R)
  Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans  an amendment of FASB
    Statements No. 87, 88, 106, and 132(R) Accounting for the Effects of Certain Types of
    Regulation Employers Accounting for
    Pensions Employers
    Accounting for Postretirement Benefits Other Than Pensions
    Statement of
    Financial Accounting Standards No. 161, Disclosures about
    Derivative Instruments and Hedging Activities, an amendment of
    FASB Statement No. 133
  Disclosures about Derivative Instruments and Hedging
    Activities, an amendment of FASB Statement No. 133
 72




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting for Derivative Instruments
    and Hedging Activities
  FASB Staff
    Position FAS 132(R)-1, Employers Disclosures About
    Postretirement Benefit Plan Assets
  Employers Disclosures About Pensions
    and Other Postretirement Benefits  an amendment of
    FASB Statements No. 87, 88, and 106
  4.
    GOODWILL AND
    INTANGIBLE ASSETS  Goodwill
  ,
    2008


2007(In thousands)Goodwill balance, beginning of period

$
959,042


$
624,385Changes to goodwill:ITC Midwests asset acquisition


(7,723
)


330,315METC acquisition






5,188$ITCTransmission acquisition






(846
)Goodwill balance, end of period

$
951,319


$
959,042  73




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ITC
    Midwests Goodwill
    Business Combinations
      METCs
    Goodwill
       74




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ITCTransmissions
    Goodwill
    Intangible
    Assets
      (In thousands)2009

$
3,0252010


3,0252011


3,0252012


3,0252013


3,0252014 and thereafter


37,232Total

$
52,357   5.
    REGULATORY
    MATTERS  Attachment O
    Network Transmission Rates
   75




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Forward-Looking
    Attachment O
    true-up
  true-up No. 92-7, Accounting by Rate-Regulated Utilities for the Effects of
    Certain Alternative Revenue Programs (EITF 92-7). true-up true-up true-up
 76




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Network
    Transmission Rates
    Period

ITCTransmission


METC


ITC MidwestJanuary 1, 2006 to May 31, 2006

$
1.594June 1, 2006 to December 31, 2006(a)

$
1.744


$
1.524January 1, 2007 to December 31, 2007(b)

$
2.099


$
1.524


$
2.373January 1, 2008 to December 31, 2008

$
2.350


$
1.985


$
2.446January 1, 2009 to December 31, 2009

$
2.520


$
2.522


$
4.162     (a)
    
    Our consolidated results of operations include METC revenues for
    the periods subsequent to October 10, 2006.(b)
    
    Our consolidated results of operations include revenues from the
    assets acquired by ITC Midwest for the periods subsequent to
    December 20, 2007.  Complaint of
    IP&L
  true-up
  METC Rate Case
    Settlement
   77




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  30-day and/or
    20-year 18-year
    ITC
    Midwests Rate Discount
    ITCTransmission
    Rate Freeze Revenue Deferral
   78




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  EITF 92-7. EITF 92-7 EITF 92-7
  Long Term
    Pricing
  No. EL02-111 through-and-out
   79




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    REGULATORY ASSETS
    AND LIABILITIES  Regulatory
    Assets
    2008


2007(In thousands)Regulatory Assets:Attachment O revenue accrual:Current (including accrued interest of $1,637 as of
    December 31, 2008)

$
22,301


$
Non-current (including accrued interest of $1,512 and $552 as of
    December 31, 2008 and 2007, respectively)


81,643



20,537Acquisition adjustments:ITCTransmission ADIT Deferral (net of accumulated amortization
    of 17,676 and $14,645 as of December 31, 2008 and 2007,
    respectively)


42,926



45,957METC ADIT Deferral (net of accumulated amortization of $4,717
    and $2,359 as of December 31, 2008 and 2007, respectively)


37,739



40,097Other:METC Regulatory Deferrals


13,885



14,657Unamortized loss on reacquired debt


382



2,552AFUDC Equity


15,329



8,608Pensions & postretirement


10,252



3,632Total

$
224,457


$
136,040   Attachment O
    Revenue Accrual
  true-up true-up true-up true-up
  ITCTransmission
    ADIT Deferral
   80




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    METC ADIT
    Deferrals
    METC
    Regulatory Deferrals
    Unamortized
    Loss on Reacquired Debt
    AFUDC
    Equity
  true-up
 81




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Pensions and
    Postretirement
  Employers Accounting
    for Pensions Employers
    Accounting for Postretirement Benefits Other Than Pensions
  Regulatory
    Liabilities
    2008


2007(In thousands)Regulatory Liabilities:Accrued asset removal costs

$
196,656


$
189,515Attachment O revenue deferral(a)Current (including accrued interest of $24 as of
    December 31, 2008)(b)


228



Non-current (including accrued interest of $8 as of
    December 31, 2007)






212Total

$
196,884


$
189,727     (a)
    
    Refer to discussion above under Attachment O revenue
    accrual.(b)
    
    Current portion of Regulatory Liabilities Attachment O revenue
    deferral, including accrued interest, is recorded with other
    current liabilities on our consolidated statement of financial
    position.  Accrued Asset
    Removal Costs
   82




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    PROPERTY, PLANT
    AND EQUIPMENT  equipment-net
  2008


2007(In thousands)Property, plant and equipmentRegulated Operating Subsidiaries:Property, plant and equipment in service

$
3,003,312


$
2,637,452Construction work in progress


163,655



164,622Capital equipment inventory


45,282



16,157Other


10,843



14,863ITC Holdings and other


7,184



7,182Total


3,230,276



2,840,276Less accumulated depreciation and amortization


(925,890
)


(879,843
)Property, plant and
    equipment-net

$
2,304,386


$
1,960,433    83




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    LONG-TERM
    DEBT    2008


2007(In thousands)ITC Holdings Bridge Facility

$



$
765,000ITC Holdings 5.25% Senior Notes due July 15, 2013 (net
    of discount of $540 and $658, respectively)


266,460



266,342ITC Holdings 6.04% Senior Notes, Series A, due
    September 20, 2014


50,000



50,000ITC Holdings 5.875% Senior Notes due September 30,
    2016 (net of discount of $26 and $29, respectively)


254,974



254,971ITC Holdings 6.23% Senior Notes, Series B, due
    September 20, 2017


50,000



50,000ITC Holdings 6.375% Senior Notes due September 30,
    2036 (net of discount of $212 and $220, respectively)


254,788



254,780ITC Holdings 6.050% Senior Notes due January 31, 2018
    (net of discount of $1,434)


383,566



ITC Holdings Credit Agreement


67,953



46,100ITCTransmission 4.45% First Mortgage Bonds, Series A, due
    July 15, 2013 (net of discount of $54 and $66, respectively)


184,946



184,934ITCTransmission 6.125% First Mortgage Bonds, Series C, due
    March 31, 2036 (net of discount of $100 and $103,
    respectively)


99,900



99,897ITCTransmission 5.75% First Mortgage Bonds, Series D, due
    April 18, 2018 (net of discount of $106)


99,894



ITCTransmission/METC Credit Agreement


42,065



96,400METC 5.75% Senior Secured Notes due December 10, 2015


175,000



175,000METC 6.63% Senior Secured Notes due December 18, 2014


50,000



ITC Midwest 6.15% First Mortgage Bonds, Series A, due
    January 31, 2038 (net of discount of $511)


174,489



ITC Midwest 7.12% First Mortgage Bonds, Series B, due
    December 22, 2017


40,000



ITC Midwest 7.27% First Mortgage Bonds, Series C, due
    December 22, 2020


35,000



ITC Midwest Credit Agreement


19,218



Total long-term debt

$
2,248,253


$
2,243,424     (In thousands)2009

$
2010


2011


2012


110,0182013


471,2182014 and thereafter


1,670,000Total

$
2,251,236  84




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ITC
    Holdings
  Bridge
    Facility
  364-day
    Senior
    Notes
    ITCTransmission
  First Mortgage
    Bonds
    METC
  Senior Secured
    Notes
   85




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ITC
    Midwest
  First Mortgage
    Bonds
      Revolving Credit
    Agreements
    ITC Holdings
    Credit Agreement
    ITCTransmission/METC
    Credit Agreement
   86




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ITC Midwest
    Credit Agreement
    Fair Value of
    Long Term Debt
  Fixed Rate
    Long Term Debt
   87




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Revolving
    Credit Agreements
    9.
    EARNINGS PER
    SHARE    2008


2007


2006(In thousands, except share and per share data)Basic earnings per share:Net income

$
109,208


$
73,296


$
33,223Weighted-average shares outstanding


48,605,951



42,298,478



35,048,049Basic earnings per share

$
2.25


$
1.73


$
0.95Diluted earnings per share:Net income

$
109,208


$
73,296


$
33,223Weighted-average shares outstanding


48,605,951



42,298,478



35,048,049Incremental shares of share-based awards


1,164,730



1,242,828



1,188,895Weighted-average dilutive shares outstanding


49,770,681



43,541,306



36,236,944Diluted earnings per share

$
2.19


$
1.68


$
0.92      88




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    INCOME
    TAXES    2008


2007


2006(In thousands)Income tax expense at 35% statutory rate

$
61,765


$
38,481


$
16,398State income taxes (net of federal benefit)


6,769



(4,047
)


Valuation allowance  state income taxes


1,829



4,047



AFUDC Equity


(3,601
)


(2,691
)


(2,909
)Other  net


500



860



169Income tax provision

$
67,262


$
36,650


$
13,658Components of the income tax provision were as follows:2008


2007


2006(In thousands)Current income tax expense

$
2,208


$



$
428Deferred income tax expense


65,054



36,650



13,230Total income tax provision

$
67,262


$
36,650


$
13,658    89




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007(In thousands)Property, plant and equipment

$
(132,295
)

$
(81,847
)Federal income tax NOLs


78,186



32,178Michigan Business Tax deductions


22,316



24,621METC regulatory deferral(a)


(19,250
)


(19,213
)Acquisition adjustments  ADIT deferral(a)


(16,216
)


(13,761
)Goodwill


(39,298
)


(29,144
)Attachment O revenue accrual (deferral)-net (including accrued
    interest)


(41,051
)


(7,730
)Pension and postretirement liabilities


9,180



5,861State income tax NOLs


14,874



3,199Other  net


(14,617
)


1,955Deferred tax asset valuation allowance(b)


(13,194
)


(4,047
)Net deferred tax assets (liabilities)

$
(151,365
)

$
(87,928
)Gross deferred income tax liabilities

$
(280,554
)

$
(165,443
)Gross deferred income tax assets


142,383



81,562Deferred tax asset valuation allowance(b)


(13,194
)


(4,047
)Net deferred tax assets (liabilities)

$
(151,365
)

$
(87,928
)     (a)
    
    Described in Note 6.(b)
    
    The deferred tax asset valuation allowance relates primarily to
    state income tax NOLs for which it is more likely than not that
    a tax benefit will not be realized.    Accounting for Stock-Based
    Compensation
 90




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Michigan Business
    Tax
    11.
    RETIREMENT
    BENEFITS AND ASSETS HELD IN TRUST  Incremental
    Effect of Applying SFAS 158 Measurement
    Provisions
      Before





AfterApplication of





Application ofMeasurement





MeasurementDate Provision





Date Provisionof SFAS 158


Adjustments


of SFAS 158(In thousands)Other regulatory assets

$
40,213


$
(365
)

$
39,848Total assets


3,714,930



(365
)


3,714,565Accrued pension and postretirement liabilities


23,248



1,047



24,295Deferred income taxes (non-current)


145,429



(540
)


144,889Retained earnings


82,140



(872
)


81,268Total stockholders equity


929,935



(872
)


929,063Total liabilities and stockholders equity


3,714,930



(365
)


3,714,565   Retirement Plan
    Benefits
     91




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting for Certain Investments in
    Debt and Equity Securities
      Asset Category

2008


2007Fixed income securities


61.9
%


48.4
%Equity securities


38.1
%


51.6
%Total


100.0
%


100.0
%     2008


2007


2006(In thousands)Service cost

$
1,977


$
1,493


$
1,165Interest cost


1,164



996



961Expected return on plan assets


(1,038
)


(650
)


(426
)Amortization of prior service cost


(882
)


(1,101
)


(23
)Amortization of actuarial loss


1,762



1,952



1,835Net pension cost

$
2,983


$
2,690


$
3,512    92




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007(In thousands)Change in Benefit Obligation:Beginning projected benefit obligation

$
(18,869
)

$
(16,161
)SFAS 158 measurement date adjustment


(785
)


Service cost


(1,977
)


(1,493
)Interest cost


(1,164
)


(996
)Actuarial net loss


(3,692
)


(101
)Plan amendments






(145
)Benefits paid


312



27Ending projected benefit obligation

$
(26,175
)

$
(18,869
)Change in Plans Assets:Beginning plan assets at fair value

$
13,424


$
8,379SFAS 158 measurement date adjustment


259



Actual (loss) return on plan assets


(3,179
)


1,072Employer contributions


2,102



4,000Benefits paid


(312
)


(27
)Ending plan assets at fair value

$
12,294


$
13,424Funded status, underfunded

$
(13,881
)

$
(5,445
)Ending accumulated benefit obligation

$
(22,178
)

$
(16,233
)Amounts recorded as:Funded Status:Other assets

$



$
1,560Accrued pension and postretirement liabilities


(13,881
)


(7,006
)Total

$
(13,881
)

$
(5,446
)Unrecognized Amounts in Other Regulatory Assets:Net actuarial loss

$
8,490


$
2,782Prior service credit


(226
)


(1,328
)Total

$
8,264


$
1,454       2008


2007


2006Discount rate


5.95
%


6.19
%


5.95
%Annual rate of salary increases


5.00
%


5.00
%


3.50
%  93




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007


2006Discount rate


6.19
%


5.95
%


5.50
%Annual rate of salary increases


5.00
%


5.00
%


3.50
%Expected long-term rate of return on plan assets


7.25
%


7.00
%


7.00
%       (In thousands)2009


5552010


8382011


1,6632012


2,1542013


2,0542014 through 2018


12,427   Other
    Postretirement Benefits
        Asset Category

2008


2007Fixed income securities


73.7
%


42.0
%Equity securities


26.3
%


58.0
%Total


100.0
%


100.0
%   No. 106-2,
 94




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007


2006(In thousands)Service cost

$
1,632


$
982


$
1,181Interest cost


672



330



272Expected return on plan assets


(218
)


(93
)


(42
)Amortization of unrecognized prior service cost


580



235



Amortization of actuarial (gain) loss






(94
)


76Net postretirement cost

$
2,666


$
1,360


$
1,487     2008


2007(In thousands)Change in Benefit Obligation:Beginning accumulated postretirement obligation

$
(9,139
)

$
(4,859
)SFAS 158 measurement date adjustment


(576
)


Service cost


(1,632
)


(982
)Interest cost


(672
)


(330
)Obligation assumed in ITC Midwests asset acquisition


(1,669
)


Amendments






(2,025
)Actuarial gain (loss)


239



(943
)Benefits paid


30



Ending accumulated postretirement obligation

$
(13,419
)

$
(9,139
)Change in Plans AssetsBeginning plan assets at fair value

$
2,211


$
1,591SFAS 158 measurement date adjustment


55



Actual (loss) return on plan assets


(558
)


225Employer contributions


1,297



395Employer provided retiree premiums


30



Benefits paid


(30
)


Ending Plan assets at fair value

$
3,005


$
2,211Funded status, underfunded

$
(10,414
)

$
(6,928
)Amounts recorded as:Funded Status:Accrued pension and postretirement liabilities

$
(10,414
)

$
(6,928
)Total

$
(10,414
)

$
(6,928
)Unrecognized Amounts in Other Regulatory Assets:Net actuarial loss

$
923


$
388Prior service cost


1,065



1,790Total

$
1,988


$
2,178  95




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2008


2007


2006Discount rate


5.95
%


6.19
%


5.95
%Annual rate of salary increases


5.00
%


5.00
%


3.50
%Health care cost trend rate assumed for next year


11.00
%


10.50
%


11.00
%Rate to which the cost trend rate is assumed to decline


5.00
%


5.00
%


5.00
%Year that the rate reaches the ultimate trend rate


2016



2015



2015Annual rate of increase in dental benefit costs


5.00
%


5.00
%


5.00
%     2008


2007


2006Discount rate


6.19
%


5.95
%


5.50
%Annual rate of salary increases


5.00
%


5.00
%


3.50
%Health care cost trend rate assumed for next year


11.00
%


11.00
%


12.00
%Rate to which the cost trend rate is assumed to decline


5.00
%


5.00
%


5.00
%Year that the rate reaches the ultimate trend rate


2016



2015



2015     (In thousands)2009


1342010


1932011


2562012


3342013


4822014 through 2018


5,010     One-Percentage-


One-Percentage-Point Increase


Point Decrease(In thousands)Effect on total of service and interest cost

$
252


$
(205
)Effect on postretirement benefit obligation


1,318



(1,081
)  96




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Defined
    Contribution Plans
    12.
    OTHER
    COMPENSATION PLANS  Special Bonus
    Plans
        Deferred
    Compensation Plan
   97




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    13.
    STOCKHOLDERS
    EQUITY AND SHARE-BASED COMPENSATION  Common
    Stock
  General 
  
    100 million shares of common stock, without par
    value; and
    10 million shares of preferred stock, without par value.    Voting Rights 
  Dividends 
     98




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Liquidation Rights 
  Preemptive and Other Rights 
  Repurchases 
  ITC
    Holdings Common Stock Offerings
         99




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ITC Holdings
    Sales Agency Financing Agreement
  Form S-3 No. 333-140026)
  Share-Based
    Compensation
      2008


2007


2006(In thousands)Operation and maintenance expenses

$
1,152


$
868


$
472General and administrative expenses


4,674



2,509



2,579Cumulative effect of a change in accounting principle (before
    tax effect)










(45
)Amounts capitalized to property, plant and equipment


1,446



707



491Total share-based compensation

$
7,272


$
4,084


$
3,497Total tax benefit recognized for compensation expense

$
2,328


$
1,147


$
1,052  100




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Options
    WeightedNumber of


AverageOptions


Exercise PriceOutstanding at January 1, 2008 (1,364,826 exercisable with
    a weighted average exercise price of $11.03)


2,503,272


$
16.92Granted


244,316



56.88Exercised


(141,883
)


10.28Forfeited


(2,590
)


40.54Outstanding at December 31, 2008 (1,792,020 exercisable
    with a weighted average exercise price of $12.61)


2,603,115


$
21.01     2008


2007


2006Option Grants


Options Grants


Options GrantsWeighted-average grant-date fair value per option

$
13.31


$
9.08


$
6.77Weighted-average expected volatility(a)


24.7
%


21.3
%


22.2
%Weighted-average risk-free interest rate


3.4
%


4.5
%


4.8
%Weighted-average expected term(b)


6 years



6 years



6 yearsWeighted-average expected dividend yield


2.14
%


2.71
%


3.33
%Estimated fair value of underlying shares

$
56.88


$
42.82


$
33.00     (a)
    
    We estimated volatility using the volatility of our stock for
    the 2008 and 2007 option awards. We estimated volatility using
    the volatility of the stock of similar companies, as well as our
    own stock for the 2006 option awards, since we became a publicly
    traded company in July 2005.(b)
    
    The expected term represents the period of time that options
    granted are expected to be outstanding. We have utilized the
    simplified method permitted under Staff Accounting
    Bulletin No. 110 in determining the expected term for
    all option grants as we do not have sufficient historical
    exercise data to provide a reasonable basis upon which to
    estimate expected term due to the limited period of time our
    equity shares have been publicly traded. 101




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Restricted Stock
    Awards
        Number of


Weighted-Restricted


AverageStock


Grant DateAwards


Fair ValueUnvested restricted stock awards at January 1, 2008


439,964


$
41.14Granted


172,261



55.07Vested


(4,970
)


29.89Forfeited


(15,808
)


43.07Unvested restricted stock awards at December 31, 2008


591,447


$
45.52      102




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Employee Stock
    Purchase Plan
    Deferred Stock
    Units
      14.
    JOINTLY OWNED
    UTILITY PLANT/COORDINATED SERVICES   103




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ConstructionNet Investment(a)


Work in Progress(In thousands)Substations

$
89,835


$
5,068Lines


87,434



5,683Total

$
177,269


$
10,751     (a)
    
    Amount represents our investment in jointly held plant, which
    has been reduced by the ownership interest amounts of other
    parties.  ITCTransmission
    METC
    ITC
    Midwest
   104




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    COMMITMENTS AND
    CONTINGENCIES  Environmental
    Matters
         105




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Litigation
    CSX
    Transportation, Inc.
    Michigan Sales
    and Use Tax Audit
         106




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Purchase
    Obligations and Leases
        (In thousands)2009

$
3262010


572011


572012


522013 and thereafter


38Total minimum lease payments

$
530   Other
    Commitments
  ITCTransmission
  Service Level Agreements (SLA) with Detroit
    Edison.
 107




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      METC
  Amended and Restated Purchase and Sale Agreement for
    Ancillary Services with Consumers Energy.
  Amended and Restated Easement Agreement with Consumers
    Energy. 50-year
  ITC
    Midwest
  Transition Services Agreement.
 108




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    The Operating Agreement.
  Concentration of
    Credit Risk
    16.
    SEGMENT
    INFORMATION  Disclosures about Segments of an Enterprise and Related
    Information
  Regulated
    Operating Subsidiaries
    ITC
    Holdings and Other
    109




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  RegulatedOperating


ITC Holdings2008

Subsidiaries


and Other


Reconciliations


Eliminations


Total(In thousands)Operating revenues

$
617,924


$
254


$



$
(301
)

$
617,877Depreciation and amortization


94,477



292











94,769Interest expense


43,579



79,394







(739
)


122,234Income before income taxes


267,530



(91,060
)










176,470Income tax provision (benefit)(a)


82,919



(15,657
)










67,262Net income(a)


184,611



109,208







(184,611
)


109,208Property, plant and equipment, net


2,297,799



6,587











2,304,386Goodwill


951,319















951,319Total assets(b)


3,667,660



2,354,510



(3,154
)


(2,304,451
)


3,714,565Capital expenditures


398,618



492







2,730



401,840   RegulatedOperating


ITC Holdings2007

Subsidiaries(c)


and Other


Reconciliations


Eliminations


Total(In thousands)Operating revenues

$
426,249


$
181


$



$
(181
)

$
426,249Depreciation and amortization


67,637



291











67,928Interest expense


28,336



53,830







(303
)


81,863Income before income taxes


175,568



(65,622
)










109,946Income tax provision (benefit)(a)


39,202



(2,552
)










36,650Net income(a)


136,366



73,296







(136,366
)


73,296Property, plant and equipment, net


1,953,556



6,877











1,960,433Goodwill


959,042















959,042Total assets(b)


3,177,561



2,313,701



(540
)


(2,277,425
)


3,213,297Capital expenditures


287,069



1,062







(961
)


287,170   RegulatedOperating


ITC Holdings2006

Subsidiaries(d)


and Other


Reconciliations


Eliminations


Total(In thousands)Operating revenues

$
223,622


$



$



$



$
223,622Depreciation and amortization


40,142



14











40,156Interest expense


18,758



23,378







(87
)


42,049Income before income taxes


76,212



(29,360
)










46,852Income tax provision (benefit)(a)


22,186



(8,528
)










13,658Cumulative effect of a change in accounting principle


29















29Net income(a)


54,055



33,223







(54,055
)


33,223Property, plant and equipment, net


1,192,305



5,557











1,197,862Goodwill


624,385















624,385Total assets(b)


2,091,574



1,341,360



(1,245
)


(1,302,892
)


2,128,797Capital expenditures


161,926



5,570











167,496  110




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (a)
    
    Income tax provision (benefit) and net income for our Regulated
    Operating Subsidiaries do not include any allocation of taxes
    for METC. METC is treated as a branch of MTH, which is taxed as
    a multiple-partner limited partnership for federal income tax
    purposes. Since METC and MTH, its immediate parent, file as a
    partnership for federal income tax purposes, they are exempt
    from federal income taxes. As a result, METC does not record a
    provision for federal income taxes in its statements of
    operations or record amounts for federal deferred income tax
    assets or liabilities on its statements of financial position.
    For FERC regulatory reporting, however, METC computes
    theoretical federal income taxes as well as the associated
    deferred income taxes and includes an annual allowance for
    income taxes in its net revenue requirement used to determine
    its rates.(b)
    
    Reconciliation of total assets results primarily from
    differences in the netting of deferred tax assets and
    liabilities under the provisions of SFAS 109 at our Regulated
    Operating Subsidiaries as compared to the classification in our
    consolidated statement of financial position.(c)
    
    Amounts include the results of operations from the electric
    transmission business acquired by ITC Midwest for the period
    December 20, 2007 through December 31, 2007.(d)
    
    Amounts include the results of operations from METC for the
    period October 11, 2006 through December 31, 2006.  17.
    SUPPLEMENTARY
    QUARTERLY FINANCIAL INFORMATION (UNAUDITED)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(a)


Year(In thousands, except per share data)2008Operating revenue

$
141,914


$
160,616


$
163,279


$
152,068


$
617,877Operating income


69,268



74,039



74,432



69,884



287,623Net income


25,521



28,661



28,045



26,981



109,208Basic earnings per share

$
0.54


$
0.58


$
0.57


$
0.55


$
2.25Diluted earnings per share

$
0.53


$
0.57


$
0.56


$
0.54


$
2.192007Operating revenue

$
101,274


$
106,303


$
109,272


$
109,400


$
426,249Operating income


42,819



47,820



48,132



43,403



182,174Net income


16,855



19,999



20,800



15,642



73,296Basic earnings per share

$
0.40


$
0.47


$
0.49


$
0.37


$
1.73Diluted earnings per share

$
0.39


$
0.46


$
0.48


$
0.36


$
1.68     (a)
    
    ITC Midwests asset acquisition closed on December 20,
    2007. The fourth quarter 2007 amounts include the results of
    operations from ITC Midwest for the period December 20,
    2007 through December 31, 2007.  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.   111




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ITEM 9A.  CONTROLS
    AND PROCEDURES.  Form 10-K. Form 10-K.
  Disclosure
    Controls and Procedures
    Rule 13a-15
  Changes in
    Internal Control over Financial Reporting
   ITEM 9B.  OTHER
    INFORMATION.   PART III ITEM 10.  DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.   112




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   ITEM 11.  EXECUTIVE
    COMPENSATION.    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS.    Equity
    Compensation Plans
      Number of SharesRemaining AvailableNumber of Shares





for Future Issuanceto be Issued


Weighted-Average


Under EquityUpon Exercise of


Exercise Price of


CompensationPlan Category

Outstanding Options


Outstanding Options


Plans(a)Equity compensation plans approved by shareholders


2,603


$
21.01



4,190     (a)
    
    The number of shares remaining available for future issuance
    under equity compensation plans has been reduced by 1) the
    common shares issued through December 31, 2008 upon
    exercise of stock options; 2) the number of common shares
    to be issued upon the future exercise of outstanding stock
    options and 3) the number of restricted stock awards
    granted that have not been forfeited. The LTIP imposes a
    separate restriction so that no more than 3,250,000 of the
    shares may be granted as awards to be settled in shares of
    common stock other than options or stock appreciation rights.  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE.   ITEM 14.  PRINCIPAL
    ACCOUNTING FEES AND SERVICES.   113




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##### Table of Contents



PART IV ITEM 15.  EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES                        Regulation S-X
  At the request of any shareholder, ITC Holdings
    will furnish any exhibit upon the payment of a fee of $.10 per
    page to cover the costs of furnishing the exhibit.
 114




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##### Table of Contents



SCHEDULE I 
    Condensed Financial Information of Registrant



ITC HOLDINGS
    CORP.
    CONDENSED STATEMENTS OF FINANCIAL POSITION (PARENT COMPANY
    ONLY)  December 31,(In thousands)

2008


2007ASSETSCurrent assetsCash and cash equivalents

$
19,372


$
1,520Accounts receivable from subsidiaries


21,716



37,387Deferred income taxes


3,926



3,370Other


420



424Total current assets


45,434



42,701Other assetsInvestment in subsidiaries


2,229,875



2,035,483Intercompany advance to ITC Midwest






175,000Deferred income taxes


22,554



19,245Deferred financing fees (net of accumulated amortization of
    $4,311 and $2,341, respectively)


9,698



8,165Other


15,368



14,754Total other assets


2,277,495



2,252,647TOTAL ASSETS

$
2,322,929


$
2,295,348LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccrued payable

$
3,684


$
3,950Accrued payroll


10,329



8,481Accrued interest


25,835



17,480Other


294



112Total current liabilities


40,142



30,023Accrued pension and other postretirement liabilities


24,295



13,934Other


1,688



1,123Long-term debt(net of discounts of $2,212 and $907,
    respectively)


1,327,741



1,687,193STOCKHOLDERS EQUITYCommon stock, without par value, 100,000,000 shares
    authorized, 49,654,518 and 42,916,852 shares issued and
    outstanding at December 31, 2008 and 2007, respectively


848,624



532,103Retained earnings


81,268



31,864Accumulated other comprehensive loss


(829
)


(892
)Total stockholders equity


929,063



563,075TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
2,322,929


$
2,295,348    115




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##### Table of Contents



SCHEDULE I 
    Condensed Financial Information of Registrant
  ITC HOLDINGS
    CORP.
    CONDENSED STATEMENTS OF OPERATIONS (PARENT COMPANY
    ONLY)
  Year Ended December 31,(In thousands)

2008


2007


2006Other income

$
1,392


$
833


$
1,225General and administrative expense


(5,232
)


(9,768
)


(3,569
)Interest expense


(79,394
)


(53,830
)


(22,862
)Loss on extinguishment of debt






(349
)


Other expense


(1,965
)


(754
)


(1,151
)LOSS BEFORE INCOME TAXES


(85,199
)


(63,868
)


(26,357
)INCOME TAX BENEFIT


(35,881
)


(22,750
)


(9,419
)LOSS AFTER TAXES


(49,318
)


(41,118
)


(16,938
)EQUITY IN SUBSIDIARIES EARNINGS


158,526



114,414



50,161NET INCOME

$
109,208


$
73,296


$
33,223    116




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##### Table of Contents



SCHEDULE I 
    Condensed Financial Information of Registrant
  ITC HOLDINGS
    CORP.
    CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY
    ONLY)
  Year Ended December 31,(In thousands)

2008


2007


2006CASH FLOWS FROM OPERATING ACTIVITIESNet income

$
109,208


$
73,296


$
33,223Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Equity in subsidiaries earnings


(158,526
)


(114,414
)


(50,161
)Dividends from subsidiaries


84,039



82,799



31,313Deferred income tax expense


(36,109
)


(22,750
)


(9,419
)Intercompany tax payments from subsidiaries


30,900



33,681



Share-based compensation expense


7,272



4,084



644Amortization of deferred financing fees and debt discount


2,244



1,341



703Other


97



(61
)


28Changes in assets and liabilities, exclusive of changes shown
    separately:Accounts receivable from subsidiaries


15,376



(37,871
)


Other current assets


4



29



(417
)Accrued payable


622



3,215



141Accrued payable to subsidiary






(4,170
)


3,450Accrued payroll


1,848



8,481



Accrued interest


8,355



4,075



6,942Other current liabilities


(528
)


(84
)


29Non-current assets and liabilities, net


4,673



5,561



(1,003
)Net cash provided by operating activities


69,475



37,212



15,473CASH FLOWS FROM INVESTING ACTIVITIESEquity contributions to subsidiaries


(117,050
)


(752,504
)


(186,303
)Intercompany advance to ITC Midwest






(175,000
)


Repayment of advance to ITC Midwest


175,000







Return of capital from subsidiary






26,997



Acquisition of MTH and METC, net of cash acquired










(484,189
)MTH and METC direct acquisition fees






(254
)


(11,456
)Net cash provided by (used in) investing activities


57,950



(900,761
)


(681,948
)CASH FLOWS FROM FINANCING ACTIVITIESIssuance of long-term debt


383,422



865,000



509,737Repayment of long-term debt


(765,000
)






Borrowings under ITC Holdings Term Loan agreement






25,000



Repayment of ITC Holdings Term Loan agreement






(25,000
)


Borrowings under revolving credit agreements


153,807



294,700



74,700Repayments of revolving credit agreements


(131,954
)


(248,600
)


(74,700
)Issuance of common stock


310,543



3,402



202,253Dividends on common stock


(58,935
)


(48,168
)


(38,307
)Common stock issuance costs


(881
)


(48
)


(2,321
)Debt issuance costs


(575
)


(5,113
)


(5,231
)Other






(1,841
)


(2,531
)Net cash provided by (used in) financing activities


(109,573
)


859,332



663,600NET INCREASE IN CASH AND CASH EQUIVALENTS


17,852



(4,217
)


(2,875
)CASH AND CASH EQUIVALENTS  Beginning of period


1,520



5,737



8,612CASH AND CASH EQUIVALENTS  End of period

$
19,372


$
1,520


$
5,737Supplementary cash flows information:Interest paid

$
68,794


$
48,414


$
15,130Income taxes paid


1,317



2,058



561Supplementary noncash investing and financing activities:Value of shares issued in MTH and METC acquisition










72,458Equity transfers to subsidiaries


3,537



545



2,853    117




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##### Table of Contents



SCHEDULE I 
    Condensed Financial Information of Registrant
  ITC HOLDINGS
    CORP.
  NOTES TO
    CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY)
  1.
    GENERAL  Form 10-K.
      2.
    LONG-TERM
    DEBT    (In thousands)2009

$
2010


2011


2012


67,9532013


267,0002014 and thereafter


995,000Total

$
1,329,953         3.
    RELATED-PARTY
    TRANSACTIONS   118




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##### Table of Contents



SIGNATURES    ITC HOLDINGS CORP.
  By:
    /s/  Joseph
    L. Welch        Signature

Title

Date/s/  Joseph
    L. WelchJoseph
    L. Welch

Chairman, President, Chief Executive Officer and Treasurer
    (principal executive officer)

February 26, 2009/s/  Edward
    M. RahillEdward
    M. Rahill

Senior Vice President  Finance and Chief Financial
    Officer (principal financial officer and principal accounting
    officer)

February 26, 2009/s/  Edward
    G. JepsenEdward
    G. Jepsen

Director

February 26, 2009/s/  Richard
    D. McLellanRichard
    D. McLellan

Director

February 26, 2009/s/  William
    J. MuselerWilliam
    J. Museler

Director

February 26, 2009/s/  Hazel
    R. OLearyHazel
    R. OLeary

Director

February 26, 2009/s/  Gordon
    Bennett Stewart, IIIGordon
    Bennett Stewart, III

Director

February 26, 2009/s/  Lee
    C. StewartLee
    C. Stewart

Director

February 26, 2009  119




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##### Table of Contents



EXHIBITS  001-32576.
  Exhibit No.

Description of Exhibit2
.1

Stock Purchase Agreement by and between DTE Energy Company and
    the Registrant, dated December 3, 2002 (filed with
    Registrants Registration Statement on Form S-1, as
    amended, Reg. No. 333-123657)2
.2

Purchase Agreement among Evercore Co-Investment
    Partnership II L.P., Evercore METC Capital Partners II
    L.P., MEAP US Holdings, Ltd., Macquarie Essential Assets
    Partnership, TE Power Opportunities Investors, L.P., TE
    Management Shareholders, MICH 1400 LLC, the Registrant, GFI
    Transmission Opportunities GP, LLC, OCM/GFI Power Opportunities
    Fund II, L.P., OCM.GFI Power Opportunities Fund II (Cayman)
    LP, and Macquarie Holdings (USA), Inc., dated as of May 11, 2006
    (filed with Registrants Form 8-K filed on May 17, 2006)2
.3

Asset Sale Agreement by and between Interstate Power and Light
    Company and ITC Midwest LLC, dated as of January 18, 2007 (filed
    with Registrants Form 8-K filed on January 24, 2007)2
.4

Parent Guaranty, by the Registrant in favor of Interstate Power
    and Light Company, dated as of January 18, 2007 (filed with
    Registrants Form 8-K filed on January 24, 2007)3
.1

Amended and Restated Articles of Incorporation of the Registrant
    (filed with Registrants Registration Statement on Form
    S-1, as amended, Reg. No. 333-123657)3
.2

Amended and Restated Bylaws of Registrant dated as of November
    19, 20084
.1

Form of Certificate of Common Stock (filed with
    Registrants Registration Statement on Form S-1, as
    amended, Reg. No. 333-123657)4
.2

Registration Rights Agreement, dated as of February 28, 2003,
    among the Registrant and International Transmission Holdings
    Limited Partnership (filed with Registrants Registration
    Statement on Form S-1, as amended, Reg. No. 333-123657)4
.3

Indenture, dated as of July 16, 2003, between the Registrant and
    BNY Midwest Trust Company, as trustee (filed with
    Registrants Registration Statement on Form S-1, as
    amended, Reg. No. 333-123657)4
.4

First Supplemental Indenture, dated as of July 16, 2003,
    supplemental to the Indenture dated as of July 16, 2003, between
    the Registrant and BNY Midwest Trust Company, as trustee (filed
    with Registrants Registration Statement on Form S-1, as
    amended, Reg. No. 333-123657)4
.5

First Mortgage and Deed of Trust, dated as of July 15, 2003,
    between International Transmission Company and BNY Midwest Trust
    Company, as trustee (filed with Registrants Registration
    Statement on Form S-1, as amended, Reg. No. 333-123657)4
.6

First Supplemental Indenture, dated as of July 15, 2003,
    supplementing the First Mortgage and Deed of Trust dated as of
    July 15, 2003, between International Transmission Company and
    BNY Midwest Trust Company, as trustee (filed with
    Registrants Registration Statement on Form S-1, as
    amended, Reg. No. 333-123657)4
.7

Second Supplemental Indenture, dated as of July 15, 2003,
    supplementing the First Mortgage and Deed of Trust dated as of
    July 15, 2003, between International Transmission Company and
    BNY Midwest Trust Company, as trustee (filed with
    Registrants Registration Statement on Form S-1, as
    amended, Reg. No. 333-123657)4
.8

Amendment to Second Supplemental Indenture, dated as of January
    19, 2005, between International Transmission Company and BNY
    Midwest Trust Company, as trustee (filed with Registrants
    Registration Statement on Form S-1, as amended, Reg. No.
    333-123657)4
.9

Second Amendment to Second Supplemental Indenture, dated as of
    March 24, 2006, between International Transmission Company and
    The Bank of New York Trust Company, N.A. (as successor to BNY
    Midwest Trust Company, as trustee (filed with Registrants
    Form 8-K filed on March 30, 2006) 120




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##### Table of Contents



Exhibit No.

Description of Exhibit4
.10

Third Supplemental Indenture, dated as of March 28, 2006,
    supplementing the First Mortgage and Deed of Trust dated as of
    July 15, 2003, between International Transmission Company and
    BNY Midwest Trust Company, as trustee (filed with
    Registrants Form 8-K filed on March 30, 2006)4
.12

Second Supplemental Indenture, dated as of October 10, 2006,
    supplemental to the Indenture dated as of July 16, 2003, between
    the Registrant and The Bank of New York Trust Company, N.A., (as
    successor to BNY Midwest Trust Company, as trustee) (filed with
    Registrants Form 8-K filed on October 10, 2006)4
.13

Shareholders Agreement by and between the Registrant and
    Macquarie Essential Assets Partnership, dated as of October 10,
    2006 (filed with Registrants Form 8-K filed on October 16,
    2006)4
.14

First Mortgage Indenture between Michigan Electric Transmission
    Company, LLC and JPMorgan Chase Bank, dated as of December 10,
    2003 (filed with Registrants Form 10-Q for the quarter
    ended September 30, 2006)4
.15

First Supplemental Indenture, dated as of December 10, 2003,
    supplemental to the First Mortgage Indenture between Michigan
    Electric Transmission Company, LLC and JPMorgan Chase Bank,
    dated as of December 10, 2003 (filed with Registrants Form
    10-Q for the quarter ended September 30, 2006)4
.16

Second Supplemental Indenture, dated as of December 10, 2003,
    supplemental to the First Mortgage Indenture between Michigan
    Electric Transmission Company, LLC and JPMorgan Chase Bank, to
    the First Mortgage Indenture between Michigan Electric
    Transmission Company, LLC and JPMorgan Chase Bank, dated as of
    December 10, 2003  (filed with Registrants Form 10-Q for
    the quarter ended September 30, 2006)4
.17

ITC Holdings Corp. Note Purchase Agreement, dated as of
    September 20, 2007 (filed with Registrants Form 10-Q for
    the quarter ended September 30, 2007)4
.18

Third Supplemental Indenture, dated as of January 24, 2008,
    supplemental to the Indenture dated as of July 16, 2003, between
    the Registrant and The Bank of New York Trust Company, N.A. (as
    successor to BNY Midwest Trust Company, as trustee (filed with
    Registrants Form 8-K filed on January 25, 2008)4
.19

First Mortgage and Deed of Trust, dated as of January 14, 2008,
    between ITC Midwest LLC and The Bank of New York Trust Company,
    N.A., as trustee (filed with Registrants Form 8-K filed on
    February 1, 2008)4
.20

First Supplemental Indenture, dated as of January 14, 2008,
    supplemental to the First Mortgage Indenture between ITC Midwest
    LLC and The Bank of New York Trust Company, N.A., as trustee,
    First Mortgage and Deed of Trust, dated as of January 14, 2008
    (filed with Registrants Form 8-K filed on February 1, 2008)4
.21

Fourth Supplemental Indenture, dated as of March 25, 2008,
    between International Transmission Company and The Bank of New
    York Trust Company, N.A., as trustee, to the First Mortgage and
    Deed of Trust dated as of July 15, 2003, (filed with
    Registrants Form 8-K filed on March 27, 2008)4
.22

Fourth Supplemental Indenture, dated as of December 11, 2008,
    between METC and The Bank of New York Mellon Trust Company, N.A.
    (as successor to JPMorgan Chase Bank, N.A.), as trustee, to the
    First Mortgage Indenture between Michigan Electric Transmission
    Company, LLC and JPMorgan Chase Bank, dated as of December 10,
    2003 (filed with Registrants Form 8-K filed on December
    23, 2008) 121




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##### Table of Contents



Exhibit No.

Description of Exhibit4
.23

Second Supplemental Indenture, dated as of December 15, 2008,
    between ITC Midwest LLC and The Bank of New York Mellon Trust
    Company, N.A. (as successor to The Bank of New York Trust
    Company, N.A.), as trustee, to the First Mortgage and Deed of
    Trust, dated as of January 14, 2008, (filed with
    Registrants Form 8-K filed on December 23, 2008)4
.24

Third Supplemental Indenture, dated as of November 25, 2008,
    between METC and The Bank of New York Mellon Trust Company, N.A.
    (as successor to JPMorgan Chase Bank, N.A.), as trustee, to the
    First Mortgage Indenture between Michigan Electric Transmission
    Company, LLC and JPMorgan Chase Bank, dated as of December 10,
    2003 (filed with Registrants Form 8-K filed on December
    23, 2008)*10
.7

Forms of Management Stockholders Agreements (filed as an
    exhibit to Registrants Registration Statement on Form S-1,
    as amended, Reg. No. 333-123657)*10
.8

Form of First Amendment to Management Stockholders
    Agreement (filed as Exhibit 10.8 to Registrants 2005 Form
    10-K)*10
.9

Forms of Waiver and Agreement for Executive Stockholders (filed
    as an exhibit to Registrants Registration Statement on
    Form S-1, as amended, Reg. No. 333-123657)*10
.10

Form of Waiver and Agreement for Non-Executive Stockholders
    (filed as an exhibit to Registrants Registration Statement
    on Form S-1, as amended, Reg. No. 333-123657)*10
.11

Form of Sale Participation Agreement (filed as an exhibit to
    Registrants Registration Statement on Form S-1, as
    amended, Reg. No. 333-123657)*10
.13

Amended and Restated 2003 Stock Purchase and Option Plan for Key
    Employees of the Registrant and its Subsidiaries (filed as an
    exhibit to Registrants Registration Statement on Form S-1,
    as amended, Reg. No. 333-123657)*10
.15

Form of Short Term Incentive Plan of the Registrant (filed as an
    exhibit to Registrants Registration Statement on Form S-1,
    as amended, Reg. No. 333-123657)*10
.27

Deferred Compensation Plan (filed as an exhibit to
    Registrants Registration Statement on Form S-1, as
    amended, Reg. No. 333-123657)10
.28

Service Level Agreement  Construction and
    Maintenance/Engineering/System Operations, dated February 28,
    2003, between The Detroit Edison Company and International
    Transmission Company (filed as an exhibit to Registrants
    Registration Statement on Form S-1, as amended, Reg. No.
    333-123657)*10
.34

Form of stock option agreement for executive officers under
    Amended and Restated 2003 Stock Purchase and Option Plan for Key
    Employees of the Registrant and its subsidiaries (filed as
    Exhibit 10.34 to Registrants Form 10-Q for the quarter
    ended September 30, 2005)*10
.35

Form of restricted stock award agreement for directors and
    executive officers under Amended and Restated 2003 Stock
    Purchase and Option Plan for Key Employees of the Registrant and
    its subsidiaries (filed as Exhibit 10.35 to Registrants
    2005 Form 10-K)*10
.36

Executive Cash Bonus Agreement, dated as of February 8, 2006,
    between the Registrant and Daniel J. Oginsky (filed as Exhibit
    10.36 to Registrants Form 8-K filed on February 14, 2006)*10
.38

Amendment No. 1 dated as of February 8, 2006, to Amended and
    Restated 2003 Stock Purchase and Option Plan for Key Employees
    of the Registrant (filed as Exhibit 10.38 to Registrants
    Form 8-K filed on February 14, 2006)*10
.44

Form of Restricted Stock Award Agreement for Non-employee
    Directors under Amended and Restated 2003 Stock Purchase and
    Option Plan for Key Employees of the Registrant and its
    subsidiaries (filed with Registrants Form 8-K filed on
    August 18, 2006)*10
.45

Form of Restricted Stock Award Agreement for Employees under the
    Registrants 2006 Long Term Incentive Plan (filed with
    Registrants Form 8-K filed on August 18, 2006)*10
.46

Form of Stock Option Agreement for Employees under the
    Registrants 2006 Long Term Incentive Plan (filed with
    Registrants Form 8-K filed on August 18, 2006)*10
.47

Form of Amendment to Management Stockholders Agreement
    (filed with Registrants Form 8-K filed on August 18, 2006) 122




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##### Table of Contents



Exhibit No.

Description of Exhibit*10
.48

Summary of Stock Ownership Agreement, effective August 16, 2006,
    for Registrants Directors and Executive Officers (filed
    with Registrants Form 8-K filed on August 18, 2006)*10
.49

Form of Waiver and Agreement for Employees pursuant to the
    Management Stockholders Agreement (filed with
    Registrants Form S-1/A filed on September 25, 2006)10
.51

Form of Amended and Restated Easement Agreement between
    Consumers Energy Company and Michigan Electric Transmission
    Company (filed with Registrants Form 10-Q for the quarter
    ended September 30, 2006)10
.52

Amendment and Restatement of the April 1, 2001 Operating
    Agreement by and between Michigan Electric Transmission Company
    and Consumers Energy Company, effective May 1, 2002 (filed with
    Registrants Form 10-Q for the quarter ended September 30,
    2006)10
.53

Amendment and Restatement of the April 1, 2001 Purchase and Sale
    Agreement for Ancillary Services between Consumers Energy
    Company and Michigan Electric Transmission Company, effective
    May 1, 2002 (filed with Registrants Form 10-Q for the
    quarter ended September 30, 2006)10
.54

Amendment and Restatement of the April 1, 2001
    Distribution-Transmission Interconnection Agreement by and
    between Michigan Electric Transmission Company, as Transmission
    Provider and Consumers Energy Company, as Local Distribution
    Company, effective May 1, 2002 (filed with Registrants
    Form 10-Q for the quarter ended September 30, 2006)10
.55

Amendment and Restatement of the April 1, 2001 Generator
    Interconnection Agreement between Michigan Electric Transmission
    Company and Consumers Energy Company, LLC, dated as of May 1,
    2002 (filed with Registrants Form 10-Q for the quarter
    ended September 30, 2006)10
.56

Non-Competition Agreement, dated as of May 1, 2002, by and
    between Consumers Energy Company, Michigan Transco Holdings,
    Limited Partnership and Michigan Electric Transmission Company,
    LLC (filed with Registrants Form 10-Q for the quarter
    ended September 30, 2006)10
.57

Settlement Agreement, dated January 19, 2007, by Michigan
    Electric Transmission Company, LLC, on behalf of itself, Midwest
    Independent Transmission System Operator, Inc., Consumers Energy
    Company, the Michigan Public Power Agency, Michigan South
    Central Power Agency, Wolverine Power Supply Cooperative, Inc.,
    and International Transmission Company (filed with
    Registrants Form 8-K filed on January 23, 2007)10
.58

Revolving Credit Agreement, dated as of March 29, 2007, among
    the Registrant, as the Borrower, Various Financial Institutions
    and Other Persons from Time to Time Parties Hereto, as the
    Lenders, JPMorgan Chase Bank, N.A., as the Administrative Agent,
    J.P. Morgan Securities Inc., as Sole Lead Arranger and Sole
    Bookrunner, and Comerica Bank, Credit Suisse (Cayman Islands
    Branch) and Lehman Brothers Bank, FSB, as Co-Syndication Agents
    (filed with Registrants Form 8-K filed on April 4, 2007)10
.59

Revolving Credit Agreement, dated as of March 29, 2007, among
    International Transmission Company and Michigan Electric
    Transmission Company, LLC, as the Borrowers, Various Financial
    Institutions and Other Persons from Time to Time Parties Hereto,
    as the Lenders, JPMorgan Chase Bank, N.A., as the Administrative
    Agent, J.P. Morgan Securities Inc., as Sole Lead Arranger
    and Sole Bookrunner, and Comerica Bank, Credit Suisse (Cayman
    Islands Branch) and Lehman Brothers Bank, FSB, as Co-Syndication
    Agents (filed with Registrants Form 8-K filed on April 4,
    2007)10
.60

Bridge Loan Agreement, dated as of September 26, 2007, among the
    Registrant, as the Borrower, Various Financial Institutions and
    Other Persons from Time to Time Parties Hereto, as the Lenders,
    Lehman Commercial Paper Inc., as the Administrative Agent and
    Lehman Brothers Inc., as Sole Lead Arranger and Sole Bookrunner
    (filed with Registrants Form 8-K filed on December 21,
    2007)10
.61

Form of Distribution-Transmission Interconnection Agreement, by
    and between ITC Midwest LLC, as Transmission Owner and
    Interstate Power and Light Company, as Local Distribution
    Company, dated as of December 17, 2007 (filed with
    Registrants Form 8-K filed on December 21, 2007) 123




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##### Table of Contents



Exhibit No.

Description of Exhibit10
.62

Form of Large Generator Interconnection Agreement, entered into
    by the Midwest Independent Transmission System Operator, Inc.,
    Interstate Power and Light Company and ITC Midwest LLC (filed
    with Registrants Form 8-K filed on December 21, 2007)10
.63

Revolving Credit Agreement, dated as of January 29, 2008, among
    ITC Midwest LLC, as the Borrower, Various Financial Institutions
    and Other Persons from Time to Time Parties Hereto, as the
    Lenders, JPMorgan Chase Bank, N.A., as the Administrative Agent,
    J.P. Morgan Securities Inc., as Sole Lead Arranger and Sole
    Bookrunner, Credit Suisse (Cayman Islands Branch), as
    Syndication Agent and Lehman Brothers Bank, FSB, as
    Documentation Agent (filed with Registrants Form 8-K filed
    on January 31, 2008)*10
.64

Form of Amended and Restated Executive Group Special Bonus Plan
    of the Registrant, dated November 12, 2007 (filed with
    Registrants 2007 Form 10-K*10
.65

Form of Amended and Restated Special Bonus Plan of the
    Registrant, dated November 12, 2007 (filed with
    Registrants 2007 Form 10-K)*10
.66

ITC Holdings Corp. Employee Stock Purchase Plan, as amended June
    8, 2007 (filed with Registrants 2007 Form 10-K)10
.67

Commitment Increase Supplements of the Lenders, dated December
    27, 2007, related to the Revolving Credit Agreement, dated as of
    March 29, 2007, among International Transmission Company and
    Michigan Electric Transmission Company, LLC, as the Borrowers,
    Various Financial Institutions and Other Persons from Time to
    Time Parties Hereto, as the Lenders, JPMorgan Chase Bank, N.A.,
    as the Administrative Agent, J.P. Morgan Securities Inc.,
    as Sole Lead Arranger and Sole Bookrunner, and Comerica Bank,
    Credit Suisse (Cayman Islands Branch) and Lehman Brothers Bank,
    FSB, as Co-Syndication Agents (filed with Registrants 2007
    Form 10-K).*10
.68

Deferred Stock Unit Award Agreement, dated February 25, 2008,
    pursuant to the 2006 Long-Term Incentive Plan of Registrant,
    between the Registrant and Joseph L. Welch (filed with
    Registrants Form 10-Q for the quarter ended March 31, 2008)*10
.69

Amended and Restated Registrant 2006 Long Term Incentive Plan
    effective May 21, 2008 (filed with Registrants Form 8-K
    filed on May 23, 2008)10
.70

Sales Agency Financing Agreement, dated June 27, 2008, between
    Registrant and BNY Mellon Capital Markets, LLC (filed with
    Registrants Form 8-K filed on June 27, 2008)*10
.71

Form of Amendment to Stock Option Agreement under 2003 Plan
    (Initial Option) (August 2008) (filed with Registrants
    Form 8-K filed on August 19, 2008)*10
.72

Form of Amendment to Stock Option Agreement under 2003 Plan (IPO
    Option) (August 2008) (filed with Registrants Form 8-K
    filed on August 19, 2008)*10
.73

Form of Amendment to Restricted Stock Agreement under 2003 Plan
    (August 2008) (filed with Registrants Form 8-K filed on
    August 19, 2008)*10
.74

Form of Amendment to Management Stockholders Agreement
    (August 2008) (filed with Registrants Form 8-K filed on
    August 19, 2008)*10
.75

Form of Amendment to Stock Option Agreements under 2006 LTIP
    (August 2008) (filed with Registrants Form 8-K filed on
    August 19, 2008)*10
.76

Form of Amendment Restricted Stock Agreements under 2006 LTIP)
    (August 2008) (filed with Registrants Form 8-K filed on
    August 19, 2008)*10
.77

Form of Stock Option Agreement under 2006 LTIP (August 2008)
    (filed with Registrants Form 8-K filed on August 19, 2008)*10
.78

Form of Restricted Stock Award Agreement under 2006 LTIP (August
    2008) (filed with Registrants Form 8-K filed on August 19,
    2008)*10
.79

Form of Restricted Stock Award Agreement for Non-employee
    Directors under Amended and Restated 2003 Stock Purchase and
    Option Plan for Key Employees of the Registrant and its
    subsidiaries*10
.80

Management Supplemental Benefit Plan*10
.81

Executive Supplemental Retirement Plan 124




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##### Table of Contents



Exhibit No.

Description of Exhibit*10
.82

Employment Agreement between the Registrant and Joseph L. Welch*10
.83

Form of Employment Agreements between the Registrant and Linda
    H. Blair, Jon E. Jipping and Edward M. Rahill*10
.84

Form of Employment Agreement between the Registrant and Daniel
    J. Oginsky21


List of Subsidiaries23
.1

Consent of Deloitte & Touche LLP relating to the Registrant
    and subsidiaries31
.1

Certification of Chief Executive Officer pursuant to Rule 13a-14
    of the Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200231
.2

Certification of Chief Financial Officer pursuant to Rule 13a-14
    of the Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232


Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002     *
    
    Management contract or compensatory plan or arrangement. 125