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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, 2009ORo

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

(I.R.S. EmployerIncorporation or
    Organization)

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-T o 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, 2009
  INDEX
  PagePART I


4Item 1.

Business


4Item 1A.

Risk Factors


15Item 1B.

Unresolved Staff Comments


24Item 2.

Properties


24Item 3.

Legal Proceedings


26Item 4.

Submission of Matters to a Vote of Security
    Holders


26PART II


27Item 5.

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


27Item 6.

Selected Financial Data


29Item 7.

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


31Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


56Item 8.

Financial Statements and Supplementary Data


57Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


110Item 9A.

Controls and Procedures


110Item 9B.

Other Information


111PART III


111Item 10.

Directors, Executive Officers, and Corporate
    Governance


111Item 11.

Executive Compensation


111Item 12.

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


111Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


112Item 14.

Principal Accounting Fees and Services


112PART IV


113Item 15.

Exhibits and Financial Statement Schedules


113Signatures




118Exhibits




119EX-10.85EX-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;
    MISO Regulated Operating Subsidiaries are references
    to ITCTransmission, METC and ITC Midwest together;
    MTH are references to Michigan Transco Holdings,
    Limited Partnership, the sole member of METC and an indirect
    wholly-owned subsidiary of ITC Holdings;
    Regulated Operating Subsidiaries are references to
    ITCTransmission, METC, ITC Midwest and ITC Great Plains
    together; and
    We, our and us are
    references to ITC Holdings together with all of its subsidiaries.  Other
    definitions
  
    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;
    ICC are references to the Illinois Commerce
    Commission;
    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;
    KCC are references to the Kansas Corporation
    Commission;
    kV are references to kilovolts (one kilovolt
    equaling 1,000 volts);
    kW are references to kilowatts (one kilowatt
    equaling 1,000 watts); 2




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
    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;
    MOPSC are references to the Missouri Public Service
    Commission;
    MPSC are references to the Michigan Public Service
    Commission;
    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;
    OCC are references to Oklahoma Corporation
    Commission;
    RTO are references to Regional Transmission
    Organizations; and
    SPP are references to Southwest Power Pool, Inc., a
    FERC-approved RTO which oversees the operation of the bulk power
    transmission system for a substantial portion of the South
    Central United States and of which ITC Great Plains is a member. 3




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PART I  ITEM 1.
    BUSINESS.  Overview
      True-Up
  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
  System Operations.
  Local Balancing Authority Operator.
  Operating
    Contracts
  ITCTransmission
    Master Operating Agreement. day-to-day
  Generator Interconnection and Operation
    Agreement.
 6




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Coordination and Interconnection
    Agreement.
  METC
    Amended and Restated Easement Agreement.
    right-of-way
 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
  Amended and Restated Generator Interconnection
    Agreement.
 8




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ITC
    Midwest
    Distribution-Transmission Interconnection
    Agreement.
  Large Generator Interconnection Agreement.
  Transition Services Agreement.
  ITC Great
    Plains
  Transition Services Agreement.
    Regulatory
    Environment
   9




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Federal
    Regulation
  State of New York vs.
    FERC not-for-profit
   10




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State
    Regulation
    ITCTransmission
    and METC
  Michigan
      ITC
    Midwest
  Iowa
      Minnesota
   11




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Illinois
  Right-Of-Way
    Missouri
      ITC Great
    Plains
  Kansas
      Oklahoma
   12




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Sources of
    Revenue
    Seasonality
  true-up
    Principal
    Customers
    Billing
   13




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Competition
    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 acquisition of IP&Ls electric
    transmission assets) that could have an adverse effect on our
    business, financial condition, results of operations and cash
    flows.
   15




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




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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 invest in 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.
  and/or
    If the network load or
    point-to-point
    transmission service on our MISO Regulated Operating
    Subsidiaries transmission systems is lower than expected,
    the timing of collection of our revenues would be
    delayed.
  point-to-point true-up
 18




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Each of our MISO Regulated Operating Subsidiaries depends
    on its primary customer for a substantial portion of its
    revenues, and any material failure by those primary customers to
    make payments for transmission services 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 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, ITCTransmission,
    METC and ITC Midwest 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.
  rights-of-way,
  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.
   19




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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.
    Our Regulated Operating Subsidiaries are subject to
    environmental regulations and to laws that can give rise to
    substantial liabilities from environmental contamination.
       20




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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 financial condition, results of
    operations and cash flows.
      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 cash flows.
    Risks Relating 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.
   21




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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.
    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, ITC Transmission 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 syndications, was included in a
    bankruptcy filing made by its parent, Lehman Brothers Holdings
    Inc., on September 14, 2008. Lehman has not funded its
    share of borrowing notices since its bankruptcy filing and,
    given the favorable terms of our existing agreement compared to
    current market conditions, we do not expect to replace
    Lehmans commitments on our existing credit agreements. As
    such, our capacity to borrow under our currently outstanding
    revolving credit facilities has been reduced by Lehmans
    aggregate commitment of $55.0 million.
    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.   22




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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, ITC
    Midwests, and ITC Great Plains member capital.    Adverse
    changes in our credit ratings may negatively affect
    us.
    The amount of our federal income tax NOLs that we may use
    to reduce our tax liability in any given period is
    limited.
   23




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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.    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.   24




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
    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
    169 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., monitoring and metering equipment);
    warehouses and related 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.      
    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 87
    stations and substations which either interconnect our
    transmission facilities or connect METCs facilities with
    generation or distribution facilities owned by others;
    other transmission equipment necessary to safely operate the
    system (e.g., monitoring and metering equipment); and
    warehouses and related equipment.    rights-of-way,
    
    approximately 6,800 miles of transmission lines rated at
    voltages of 34.5 kV to 345 kV;
    transmission towers and poles; 25




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
    station assets, such as transformers and circuit breakers, at
    approximately 253 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., monitoring and metering equipment);
    warehouses and related equipment; and
    associated land held in fee, rights of way and easements.        ITEM 3.
    LEGAL
    PROCEEDINGS.    true-up
      ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS.   26




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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, 2009

High

Low

DividendsQuarter ended December 31, 2009

$
52.77


$
42.90


$
0.320Quarter ended September 30, 2009

$
48.69


$
41.90


$
0.320Quarter ended June 30, 2009

$
46.82


$
40.57


$
0.305Quarter ended March 31, 2009

$
46.50


$
32.26


$
0.305   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         02940-3078.
 27




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Stock
    Repurchases
  Total Number of

Average PriceShares Purchased

Paid Per ShareOctober 1 thorough October 31, 2009





$
November 1 through November 30, 2009





$
December 1 through December 31, 2009(a)


17


$
45.67     (a)
    
    Shares acquired were delivered to us by employees as payment of
    tax withholdings due to us upon the vesting of restricted stock.
    We did not repurchase any shares of common stock during this
    period as part of a publicly announced repurchase plan or
    program and do not have such a plan or program. 28




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ITEM 6.
    SELECTED
    FINANCIAL DATA.    Form 10-K.
  ITC Holdings and Subsidiaries(a)Year Ended December 31,2009


2008


2007


2006


2005(In thousands, except per share data)OPERATING REVENUES(b)

$
621,015


$
617,877


$
426,249


$
223,622


$
205,274OPERATING EXPENSESOperation and maintenance(c)


95,730



113,818



81,406



35,441



48,310General and administrative(c)(d)


69,231



81,296



62,089



40,632



25,198Depreciation and amortization(e)


85,949



94,769



67,928



40,156



33,197Taxes other than income taxes


43,905



41,180



33,340



22,156



13,982Termination of management agreements


















6,725Other operating income and expense  net


(667
)


(809
)


(688
)


(842
)


Total operating expenses


294,148



330,254



244,075



137,543



127,412OPERATING INCOME


326,867



287,623



182,174



86,079



77,862OTHER EXPENSES (INCOME)Interest expense


130,209



122,234



81,863



42,049



28,128Allowance for equity funds used during construction


(13,203
)


(11,610
)


(8,145
)


(3,977
)


(2,790
)Loss on extinguishment of debt


1,263







349



1,874



Other income


(2,792
)


(3,415
)


(3,457
)


(2,348
)


(1,700
)Other expense


2,918



3,944



1,618



1,629



615Total other expenses (income)


118,395



111,153



72,228



39,227



24,253INCOME BEFORE INCOME TAXES


208,472



176,470



109,946



46,852



53,609INCOME TAX PROVISION


77,572



67,262



36,650



13,658



18,938INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
    PRINCIPLE


130,900



109,208



73,296



33,194



34,671CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE(NET OF TAX OF $16)














29



NET INCOME

$
130,900


$
109,208


$
73,296


$
33,223


$
34,671Basic earnings per share

$
2.62


$
2.22


$
1.72


$
0.94


$
1.09Diluted earnings per share

$
2.58


$
2.18


$
1.68


$
0.91


$
1.06Dividends declared per share

$
1.250


$
1.190


$
1.130


$
1.075


$
0.525   29




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ITC Holdings and Subsidiaries(a)As of December 31,2009


2008


2007


2006


2005(In thousands)BALANCE SHEET DATA:Cash and cash equivalents

$
74,853


$
58,110


$
2,616


$
13,426


$
24,591Working capital (deficit)


147,335



1,095



(30,370
)


10,107



19,945Property, plant and equipment  net


2,542,064



2,304,386



1,960,433



1,197,862



603,609Goodwill


950,163



951,319



959,042



624,385



174,256Total assets


4,029,716



3,714,565



3,213,297



2,128,797



916,639Long-term debt:ITC Holdings


1,458,757



1,327,741



1,687,193



775,963



266,104Regulated Operating Subsidiaries


975,641



920,512



556,231



486,315



251,211Total long-term debt


2,434,398



2,248,253



2,243,424



1,262,278



517,315Total stockholders equity


1,011,523



929,063



563,075



532,244



263,301   ITC Holdings and Subsidiaries(a)Year Ended December 31,2009

2008

2007

2006

2005(In thousands)CASH FLOWS DATA:Capital expenditures

$
404,514


$
401,840


$
287,170


$
167,496


$
118,586     (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 acquisition of the
    electric transmission assets of IP&L on December 20,
    2007.(b)
    
    ITCTransmissions and METCs implementation of
    Attachment O with a
    true-up
    mechanism for rates beginning January 1, 2007 resulted in
    increases in operating revenues for the years presented
    subsequent to December 31, 2006. Refer to Cost-Based
    Formula Rates with
    True-Up
    Mechanism in Note 4 to the consolidated financial
    statements.(c)
    
    The reduction in expenses for 2009 are due, in part, to the
    expense mitigation efforts described under Item 7
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations  Trends and
    Seasonality  Revenue Accruals  Effects of
    Monthly Peak Loads and Expense Mitigation Efforts and the
    expense capitalization process discussed under Item 7
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations  Recent
    Developments  Capitalization of Expenses.(d)
    
    During 2009, we recognized $10.0 million of regulatory
    assets associated with both the
    start-up and
    development costs at ITC Great Plains and development costs for
    the KETA project. Upon initial establishment of these regulatory
    assets in the third quarter of 2009, $8.0 million of
    general and administrative expenses were reversed of which
    $5.9 million were incurred in periods prior to 2009.(e)
    
    In 2009, the FERC accepted the depreciation studies filed by
    ITCTransmission and METC that revised depreciation rates at
    ITCTransmission and METC. This change in accounting estimate
    results in lower composite depreciation rates for
    ITCTransmission and METC primarily due to the revision of asset
    service lives and cost of removal values. The revised estimate
    of 2009 annual depreciation expense was reflected in 2009. See
    discussion in Note 4 to the consolidated financial
    statements under Depreciation Studies. 30




---



##### Table of Contents



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
      Overview
    True-Up
    point-to-point
 31




---



##### Table of Contents




    Our capital investment of $361.6 million at our Regulated
    Operating Subsidiaries ($87.2 million, $132.7 million,
    $140.1 million and $1.6 million at ITCTransmission,
    METC, ITC Midwest and ITC Great Plains, respectively) for the
    year ended December 31, 2009, primarily to improve system
    reliability and interconnect new generating resources;
    Debt issuances and borrowings under our revolving credit
    agreements in 2009 and 2008 to fund capital investment at our
    Regulated Operating Subsidiaries, resulting in higher interest
    expense; and
    Our development activities relating to ITC Great Plains and
    Green Power Express. Certain development activities are expensed
    in the period incurred as they are not yet probable of recovery
    and there is no corresponding revenue recognized for these
    expenses.    Recent
    Developments
  ITC Great
    Plains
  Formula Rate and
    Incentives
  true-up
    Substation
    Acquisitions
    Regulatory
    Assets
  start-up,
 32




---



##### Table of Contents



KETA
    Project
  215-mile 89-mile
  Kansas
    V-Plan
    Project
  180-mile V-Plan.
  Hugo to Valliant
    Project
   33




---



##### Table of Contents



Development
    Bonuses
      Green Power
    Express
        Complaint of
    IP&L
  true-up
   34




---



##### Table of Contents



Depreciation
    Studies
    Capitalization
    of Expenses
  True-Up
  Michigan Sales
    and Use Tax Audit
       35




---



##### Table of Contents



Cost-Based
    Formula Rates with
    True-Up
    Mechanism
  point-to-point true-up true-up true-up
    True-Up
    Network Transmission Rate

ITCTransmission

METC

ITC Midwest(a)January 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


$
4.162January 1, 2010 to December 31, 2010

$
2.818


$
2.370


$
6.882     (a)
    
    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.   36




---



##### Table of Contents



Net Revenue
    Requirement Calculation
  true-up true-up
  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
  true-up point-to-point,
  Step
    Four  Calculate
    True-up
    Adjustment
  true-up true-up
  Illustration of Attachment O Rate Setting.
 37




---



##### Table of Contents



Line


Attachment O Items


Instructions


Amount1


Projected rate base (the average of the 13 months ended
    December 31, 2009 through December 31, 2010)





$
963,100,0002


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






10.38%3


Projected allowed return on rate base


(Line 1 × Line 2)


$
99,969,7804


Projected recoverable operating expenses for 2010





$
57,600,0005


Projected taxes and depreciation and amortization for 2010





$
133,200,0006


Projected gross revenue requirements for 2010


(Line 3 + Line 4 + Line 5)


$
290,769,7807


Less projected revenue credits for 2010





$
(40,500,000
)8


Plus/(less) 2008
    true-up
    adjustment





$
18,490,0279


Projected net revenue requirement for 2010


(Line 6 + Line 7 + Line 8)


$
268,759,80710


Projected average monthly 2010 network load (in kW)






7,949,00011


Annual component of the joint zone network transmission rate


(Line 9 divided by Line 10)


$
33.81112


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


(Line 11 divided by 12 months)


$
2.818   (a)
    
    The weighted average cost of capital for purposes of this
    illustration is calculated as follows:  WeightedPercentage of



AverageITC Transmissions



Cost ofTotal Capitalization

Cost of Capital

CapitalDebt


40.00
%

5.13% (Pre-tax) =


2.05
%Equity


60.00
%

13.88% (After tax) =


8.33
%100.00
%




10.38
%   Trends and
    Seasonality
  Network
    Revenues
   38




---



##### Table of Contents



Capital Investment(b)Actual for the

Forecast for theFive-Year Capital


Year Ended

Year Ending(In millions)

Investment Program


December 31,

December 31,Regulated Operating Subsidiary

2010-2014(a)


2009

2010ITCTransmission

$
445



$
87.2


$
50  60METC


750




132.7



140  155ITC Midwest


1,147




140.1



205  225ITC Great Plains


637




1.6



10  20Other(c)


91








Total

$
3,070



$
361.6


$
405  460     (a)
    
    The expected amounts for our five-year program include estimates
    for 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,
    these estimates 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 tariff for the
    project to qualify as a refundable network upgrade, among other
    factors.(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)
    
    Includes Green Power Express and other development initiatives.    Revenue
    Accruals  Effects of Monthly Peak Loads and Expense
    Mitigation Efforts
  true-up
 39




---



##### Table of Contents



Monthly Peak Load
    (in MW)(a)
  2009


2008


2007ITCTransmission

METC

ITC Midwest


ITCTransmission

METC

ITC Midwest


ITCTransmission

METC

ITC Midwest(b)January


7,314



6,009



2,996




7,890



6,215



2,963




7,876



6,051February


7,176



5,818



2,830




7,715



6,159



2,916




8,170



6,227March


7,070



5,548



2,723




7,532



5,797



2,756




7,739



6,006April


6,761



5,112



2,437




6,926



5,223



2,455




7,141



5,473May


6,801



5,296



2,408




7,051



5,328



2,431




9,927



6,981June


10,392



8,022



3,504




10,624



7,241



2,888




11,761



8,511July


8,720



6,512



2,832




11,016



8,042



3,376




11,706



8,672August


9,846



7,120



3,181




10,890



7,816



3,259




12,087



8,955September


8,043



6,062



2,529




10,311



7,622



3,191




11,033



7,908October


6,446



5,360



2,528




6,893



5,514



2,786




10,365



7,524November


6,996



5,780



2,734




7,205



5,823



2,944




7,812



6,200December


7,661



6,190



2,855




7,636



6,280



3,003




8,022



6,215



2,706Total


93,226



72,829



33,557




101,689



77,060



34,968




113,639



84,723



2,706     (a)
    
    Our MISO Regulated Operating Subsidiaries are each 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 MISO Regulated Operating
    Subsidiaries makes up the significant portion of network load
    within their respective joint rate zone. 40




---



##### Table of Contents



(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.  Significant
    Components of Results of Operations
  Revenues
  point-to-point
  Network Revenues true-up True-Up
  multiply
  divide
    Point-to-Point
    Revenues Point-to-point
  Regional Cost Sharing Revenues No. ER06-18). true-up
  Scheduling, Control and Dispatch Revenues
  Other Revenues
 41




---



##### Table of Contents



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 gross-up
  Other items of
    income or expense
  Interest Expense
  Allowance for Equity Funds Used During Construction
    (AFUDC equity)
  Income tax
    provision
   42




---



##### Table of Contents



Results of
    Operations
    Year Ended





Percentage


Year Ended





PercentageDecember 31,


Increase


Increase


December 31,


Increase


Increase2009


2008


(Decrease)


(Decrease)


2007


(Decrease)


(Decrease)(In thousands)OPERATING REVENUES

$
621,015


$
617,877


$
3,138



0.5
%

$
426,249


$
191,628



45.0
%OPERATING EXPENSESOperation and maintenance


95,730



113,818



(18,088
)


(15.9
)%


81,406



32,412



39.8
%General and administrative


69,231



81,296



(12,065
)


(14.8
)%


62,089



19,207



30.9
%Depreciation and amortization


85,949



94,769



(8,820
)


(9.3
)%


67,928



26,841



39.5
%Taxes other than income taxes


43,905



41,180



2,725



6.6
%


33,340



7,840



23.5
%Other operating income and expense  net


(667
)


(809
)


142



(17.6
)%


(688
)


(121
)


17.6
%Total operating expenses


294,148



330,254



(36,106
)


(10.9
)%


244,075



86,179



35.3
%OPERATING INCOME


326,867



287,623



39,244



13.6
%


182,174



105,449



57.9
%OTHER EXPENSES (INCOME)Interest expense


130,209



122,234



7,975



6.5
%


81,863



40,371



49.3
%Allowance for equity funds used during construction


(13,203
)


(11,610
)


(1,593
)


13.7
%


(8,145
)


(3,465
)


42.5
%Loss on extinguishment of debt


1,263







1,263



n/a



349



(349
)


(100.0
)%Other income


(2,792
)


(3,415
)


623



(18.2
)%


(3,457
)


42



(1.2
)%Other expense


2,918



3,944



(1,026
)


(26.0
)%


1,618



2,326



143.8
%Total other expenses (income)


118,395



111,153



7,242



6.5
%


72,228



38,925



53.9
%INCOME BEFORE INCOME TAXES


208,472



176,470



32,002



18.1
%


109,946



66,524



60.5
%INCOME TAX PROVISION


77,572



67,262



10,310



15.3
%


36,650



30,612



83.5
%NET INCOME

$
130,900


$
109,208


$
21,692



19.9
%

$
73,296


$
35,912



49.0
%   Operating
    Revenues
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
    Percentage2009


2008


Increase


IncreaseAmount


Percentage


Amount


Percentage


(Decrease)


(Decrease)(In thousands)Network revenues

$
547,279



88.1
%

$
558,896



90.5
%

$
(11,617
)


(2.1
)%Regional cost sharing revenues


39,710



6.4
%


15,534



2.5
%


24,176



155.6
%Point-to-point


17,087



2.8
%


23,417



3.8
%


(6,330
)


(27.0
)%Scheduling, control and dispatch


14,578



2.3
%


16,972



2.7
%


(2,394
)


(14.1
)%Other


2,361



0.4
%


3,058



0.5
%


(697
)


(22.8
)%Total

$
621,015



100.0
%

$
617,877



100.0
%

$
3,138



0.5
%    43




---



##### Table of Contents



TotalITC


Net RevenueLine


Item

ITCTransmission


METC


ITC Midwest


Great Plains


Accrual(In thousands)1


Estimated net revenue requirement (network revenues
    recognized)(a)

$
232,253


$
154,280


$
159,960


$
7862


Network revenues billed(b)(c)


235,216



161,299



140,136



2613


Revenue accrual (deferral) (line 1  line 2)

$
(2,963
)

$
(7,019
)

$
19,824


$
525


$
10,367     (a)
    
    The calculation of net revenue requirement for our MISO
    Regulated Operating Subsidiaries is described in
    Item 7 Managements Discussion and Analysis of
    Financial Condition and Results of Operations 
    Cost-Based Formula Rates with
    True-Up
    Mechanism  Net Revenue Requirement Calculation.
    The amount is estimated until such time as FERC
    Form No. 1s are completed for our MISO Regulated
    Operating Subsidiaries and the calculations are filed with and
    reviewed by MISO each year and posted on OASIS, which provides
    information by electronic means about transmission rates,
    available transmission capability for
    point-to-point
    service and a process for requesting transmission service on a
    non-discriminatory basis. The calculation of net revenue
    requirement for ITC Great Plains is also based on a cost-based
    formula rate and is estimated until FERC Form No. 1 is
    completed and will be posted on the SPP OASIS each year.(b)
    
    Network revenues billed at our MISO Regulated Operating
    Subsidiaries were calculated based on the joint zone monthly
    network peak load multiplied by our 2009 effective monthly
    network rates of $2.520 per kW/month, $2.522 per kW/month and
    $4.162 per kW/month applicable to ITCTransmission, METC and ITC
    Midwest, respectively, adjusted for the actual number of days in
    the month less amounts recovered or refunded associated with
    ITCTransmissions and METCs 2007 Attachment O
    true-up.
    ITCTransmissions and METCs effective transmission
    rates include their 2007
    true-up
    adjustment and associated accrued interest. Amounts billed
    through ITCTransmissions effective transmission rate
    reduced ITCTransmissions regulatory liability associated
    with the 2007
    true-up and
    accrued interest by $0.2 million during the year ended
    December 31, 2009. Additionally, amounts billed through
    METCs effective transmission rate reduced METCs
    regulatory asset associated with the 2007
    true-up and
    its accrued interest by $22.8 million for the year ended
    December 31, 2009.(c)
    
    SPP began to bill ITC Great Plains network revenues in
    January 2010, retroactive to August 18, 2009, discussed
    above under Recent Developments  ITC Great
    Plains  Formula Rate and Incentives.    Point-to-point point-to-point
 44




---



##### Table of Contents



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
%       ITC


Total RevenueLine


Item

ITCTransmission


METC


Midwest(b)


Accrual(In thousands)1


Estimated net revenue requirement (network revenues)

$
257,156


$
165,803


$
135,9372


Network revenues billed(a)


239,473



153,530



85,0853


Revenue accrual (line 1  line 2)

$
17,683


$
12,273


$
50,852


$
80,808     (a)
    
    Network revenues billed at our MISO 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.(b)
    
    ITC Midwests billed network rate was frozen during 2008,
    which was the primary reason for the revenue accrual.  Point-to-point
     45




---



##### Table of Contents



Operating
    Expenses
  Operation and
    maintenance expenses
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
    Year ended
    December 31, 2008 compared to year ended December 31,
    2007
    General and
    administrative expenses
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
  start-up
  Year ended
    December 31, 2008 compared to year ended December 31,
    2007
   46




---



##### Table of Contents



Depreciation and
    amortization expenses
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
    Year ended
    December 31, 2008 compared to year ended December 31,
    2007
    Taxes other than
    income taxes
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
    Year ended
    December 31, 2008 compared to year ended December 31,
    2007
    Other expenses
    (income)
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
      Year ended
    December 31, 2008 compared to year ended December 31,
    2007
       47




---



##### Table of Contents



Income Tax
    Provision
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
    Year ended
    December 31, 2008 compared to year ended December 31,
    2007
    Liquidity and
    Capital Resources
    
    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 business development expenses and related capital
    expenditures. We are pursuing development activities described
    above under Item 7 Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Recent Developments  Green
    Power Express as well as at ITC Grid Development that will
    continue to result in the incurrence of development expenses and
    could result in significant capital expenditures.
    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 2010 compared to 2009
    as a result of additional debt incurred in 2009 and 2010 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. 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−

A2METC

Senior Secured Notes

A−

A2ITC Midwest

First Mortgage Bonds

A−

A2     (a)
    
    Our Standard and Poors Rating Services credit ratings have
    a stable outlook.(b)
    
    On December 4, 2009, Moodys placed the ratings of ITC
    Holdings, and its three rated subsidiaries, ITCTransmission,
    METC and ITC Midwest, under review for possible upgrade.   49




---



##### Table of Contents



Covenants
    Cash
    Flows
    Year Ended December 31,2009


2008


2007(In thousands)CASH FLOWS FROM OPERATING ACTIVITIESNet income

$
130,900


$
109,208


$
73,296Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization expense


85,949



94,769



67,928Revenue accrual  including accrued interest


10,912



(83,390
)


(20,325
)Deferred income tax expense


75,001



65,054



36,650Other


(7,574
)


(1,240
)


(1,523
)Changes in assets and liabilities, exclusive of changes shown
    separately


(27,253
)


11,020



(20,242
)Net cash provided by operating activities


267,935



195,421



135,784CASH FLOWS FROM INVESTING ACTIVITIESExpenditures for property, plant and equipment


(404,514
)


(401,840
)


(287,170
)ITC Midwests asset acquisition, including acquisition
    direct fees






(5,722
)


(794,490
)Other


(4,448
)


6,242



6,130Net cash used in investing activities


(408,962
)


(401,320
)


(1,075,530
)CASH FLOWS FROM FINANCING ACTIVITIESNet issuance/repayment of long-term debt (including revolving
    credit agreements)


185,802



4,516



981,000Issuance of common stock


3,575



310,543



3,402Dividends on common stock


(62,408
)


(58,935
)


(48,168
)Refundable deposits from and repayments to generators for
    transmission network upgrades  net


35,051



13,309



Other


(4,250
)


(8,040
)


(7,298
)Net cash provided by financing activities


157,770



261,393



928,936NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS


16,743



55,494



(10,810
)CASH AND CASH EQUIVALENTS  Beginning of period


58,110



2,616



13,426CASH AND CASH EQUIVALENTS  End of period

$
74,853


$
58,110


$
2,616  50




---



##### Table of Contents



Cash Flows
    From Operating Activities
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
    Year ended
    December 31, 2008 compared to year ended December 31,
    2007
    Cash Flows
    From Investing Activities
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
    Year ended
    December 31, 2008 compared to year ended December 31,
    2007
    Cash Flows
    From Financing Activities
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
    Year ended
    December 31, 2008 compared to year ended December 31,
    2007
   51




---



##### Table of Contents



Contractual
    Obligations
    Less Than


1-3


4-5


More ThanTotal


1 Year


Years


Years


5 Years(In thousands)Long-term debt:ITC Holdings Senior Notes

$
1,462,000


$



$
267,000


$
50,000


$
1,145,000ITCTransmission First Mortgage Bonds


385,000







185,000







200,000ITCTransmission/METC revolving credit agreement


57,803







57,803







METC Senior Secured Notes


225,000











225,000



ITC Midwest First Mortgage Bonds


285,000















285,000ITC Midwest revolving credit agreement


23,564







23,564







Interest payments:ITC Holdings Senior Notes


922,681



85,683



250,624



139,472



446,902ITCTransmission First Mortgage Bonds


237,376



20,108



56,549



23,750



136,969METC Senior Secured Notes


76,272



13,378



40,133



22,761



ITC Midwest First Mortgage Bonds


413,934



19,146



58,816



39,210



296,762Operating leases


2,079



482



1,257



333



7Purchase obligations


57,349



30,318



21,668



5,363



METC Easement Agreement


409,925



10,041



30,123



20,082



349,679Total obligations

$
4,557,983


$
179,156


$
992,537


$
525,971


$
2,860,319       rights-of-way, rights-of-way 50-year
 52




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##### Table of Contents



Critical
    Accounting Policies
    and/or
  Regulation
      Revenue
    Recognition under Cost-Based Formula Rates with
    True-Up
    Mechanisms
  true-up
  point-to-point true-up
 53




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##### Table of Contents



true-up true-up
  ITCTransmissions
    Rate Freeze Revenue Deferral
    Valuation of
    Goodwill
  and/or
  Contingent
    Obligations
   54




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##### Table of Contents




    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 Payments
    Pension and
    Postretirement Costs
    Off-Balance Sheet
    Arrangements
    Recent Accounting
    Pronouncements
   55




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##### 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
   56




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##### Table of Contents



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


58Report of Independent Registered Public
    Accounting Firm


59Report of Independent Registered Public
    Accounting Firm


60Consolidated Statements of Financial Position as
    of December 31, 2009 and 2008


61Consolidated Statements of Operations for the
    Years Ended December 31, 2009, 2008 and 2007


62Consolidated Statements of Changes in
    Stockholders Equity and Comprehensive Income for the Years
    Ended December 31, 2009, 2008 and 2007


63Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2009, 2008 and 2007


64Notes to Consolidated Financial Statements


65Schedule I  Condensed Financial
    Information of Registrant


115  57




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##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING    Internal
    Control  Integrated Framework
   58




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control  Integrated Framework
       59




---



##### Table of Contents



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




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##### Table of Contents



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

2009


2008ASSETSCurrent assetsCash and cash equivalents

$
74,853


$
58,110Accounts receivable


72,352



57,638Inventory


36,834



25,077Deferred income taxes


23,859



Regulatory assets revenue accrual (including accrued
    interest of $2,652 and $1,637, respectively)


82,871



22,301Other


3,244



4,147Total current assets


294,013



167,273Property, plant and equipment(net of accumulated
    depreciation and amortization of $1,051,045 and $925,890,
    respectively)


2,542,064



2,304,386Other assetsGoodwill


950,163



951,319Intangible assets (net of accumulated amortization of $9,095 and
    $6,050, respectively)


51,987



52,357Regulatory assets revenue accrual (including accrued
    interest of $75 and $1,512, respectively)


20,406



81,643Other regulatory assets


134,924



120,513Deferred financing fees (net of accumulated amortization of
    $9,616 and $8,048, respectively)


21,672



21,410Other


14,487



15,664Total other assets


1,193,639



1,242,906TOTAL ASSETS

$
4,029,716


$
3,714,565LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable

$
43,508


$
79,403Accrued payroll


13,648



10,331Accrued interest


39,099



37,779Accrued taxes


21,188



18,104Deferred income taxes






6,476Refundable deposits from generators for transmission network
    upgrades


25,891



8,701Other


3,344



5,384Total current liabilities


146,678



166,178Accrued pension and postretirement liabilities


31,158



24,295Deferred income taxes


255,516



144,889Regulatory liabilities  revenue deferral(including accrued interest of $186)


10,238



Regulatory liabilities  accrued asset removal
    costs


112,430



196,656Refundable deposits from generators for transmission network
    upgrades


17,664



1,500Other


10,111



3,731Long-term debt


2,434,398



2,248,253Commitments and contingent liabilities(Notes 4 and
    16)STOCKHOLDERS EQUITYCommon stock, without par value, 100,000,000 shares
    authorized, 50,084,061 and 49,654,518 shares issued and
    outstanding at December 31, 2009 and 2008, respectively


862,512



848,624Retained earnings


149,776



81,268Accumulated other comprehensive loss


(765
)


(829
)Total stockholders equity


1,011,523



929,063TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
4,029,716


$
3,714,565    61




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##### Table of Contents



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

2009


2008


2007OPERATING REVENUES

$
621,015


$
617,877


$
426,249OPERATING EXPENSESOperation and maintenance


95,730



113,818



81,406General and administrative


69,231



81,296



62,089Depreciation and amortization


85,949



94,769



67,928Taxes other than income taxes


43,905



41,180



33,340Other operating income and expense  net


(667
)


(809
)


(688
)Total operating expenses


294,148



330,254



244,075OPERATING INCOME


326,867



287,623



182,174OTHER EXPENSES (INCOME)Interest expense


130,209



122,234



81,863Allowance for equity funds used during construction


(13,203
)


(11,610
)


(8,145
)Loss on extinguishment of debt


1,263







349Other income


(2,792
)


(3,415
)


(3,457
)Other expense


2,918



3,944



1,618Total other expenses (income)


118,395



111,153



72,228INCOME BEFORE INCOME TAXES


208,472



176,470



109,946INCOME TAX PROVISION


77,572



67,262



36,650NET INCOME

$
130,900


$
109,208


$
73,296Basic earnings per common share (Note 9)

$
2.62


$
2.22


$
1.72Diluted earnings per common share (Note 9)

$
2.58


$
2.18


$
1.68Dividends declared per common share

$
1.250


$
1.190


$
1.130    62




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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 and per share data)BALANCE, 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 ($1.130 per share)










(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 ($1.190 per share)










(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





















$
109,271Employers accounting for defined benefit pension and other
    postretirement plans change in measurement date provisionsService 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
)

$
929,063Net income










130,900







130,900


$
130,900Repurchase and retirement of common stock


(700
)


(31
)










(31
)


Dividends declared on common stock ($1.250 per share)










(62,421
)






(62,421
)


Stock option exercises


223,975



2,522











2,522



Shares issued under the Employee Stock Purchase Plan


28,681



1,053











1,053



Issuance of restricted stock


189,264



















Forfeiture of restricted stock


(16,894
)






29







29



Vesting of deferred stock units


5,217



















Amortization of share-based compensation, net of forfeitures






9,977











9,977



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














64



64



64State tax deduction for stock compensation exceeding book value






129











129



Other






238











238



Comprehensive income





















$
130,964BALANCE, DECEMBER 31, 2009


50,084,061


$
862,512


$
149,776


$
(765
)

$
1,011,523    63




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,(In thousands)

2009


2008


2007CASH FLOWS FROM OPERATING ACTIVITIESNet income

$
130,900


$
109,208


$
73,296Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization expense


85,949



94,769



67,928Revenue accrual and deferral  including accrued
    interest


10,912



(83,390
)


(20,325
)Deferred income tax expense


75,001



65,054



36,650Allowance for equity funds used during construction


(13,203
)


(11,610
)


(8,145
)Recognition of ITC Great Plains regulatory assets


(8,191
)






Other


13,820



10,370



6,622Changes in assets and liabilities, exclusive of changes shown
    separately:Accounts receivable


(12,986
)


(14,455
)


(3,023
)Inventory


(14,599
)


(10,237
)


(18,016
)Other current assets


903



(629
)


6,469Accounts payable


(6,097
)


14,948



9,533Accrued payroll


2,003



778



3,401Accrued interest


1,320



14,693



4,172Accrued taxes


3,073



3,600



779METC rate case accrued liability










(20,000
)Other current liabilities


(2,049
)


1,191



(2,952
)Other non-current assets and liabilities, net


1,179



1,131



(605
)Net cash provided by operating activities


267,935



195,421



135,784CASH FLOWS FROM INVESTING ACTIVITIESExpenditures for property, plant and equipment


(404,514
)


(401,840
)


(287,170
)ITC Midwests asset acquisition purchase price






(4,714
)


(783,113
)ITC Midwests asset acquisition direct fees






(1,008
)


(11,377
)Other


(4,448
)


6,242



6,130Net cash used in investing activities


(408,962
)


(401,320
)


(1,075,530
)CASH FLOWS FROM FINANCING ACTIVITIESIssuance of long-term debt


333,670



782,782



865,000Repayment of long-term debt


(100,000
)


(765,000
)


Borrowings under short-term loan agreement










25,000Repayment of short-term loan agreement










(25,000
)Borrowings under revolving credit agreements


623,966



657,733



678,200Repayments of revolving credit agreements


(671,834
)


(670,999
)


(562,200
)Issuance of common stock


3,575



310,543



3,402Dividends on common stock


(62,408
)


(58,935
)


(48,168
)Refundable deposits from generators for transmission network
    upgrades


40,279



15,661



Repayment of refundable deposits from generators for
    transmission network upgrades


(5,228
)


(2,352
)


Other


(4,250
)


(8,040
)


(7,298
)Net cash provided by financing activities


157,770



261,393



928,936NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS


16,743



55,494



(10,810
)CASH AND CASH EQUIVALENTS  Beginning of period


58,110



2,616



13,426CASH AND CASH EQUIVALENTS  End of period

$
74,853


$
58,110


$
2,616    64




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    GENERAL            cost-of-service
  2.
    SIGNIFICANT
    ACCOUNTING POLICIES    Principles of Consolidation 
  Use of Estimates 
 65




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##### Table of Contents



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

2009

2008

2007Supplementary cash flows information:Interest paid (net of interest capitalized)

$
125,254


$
102,149


$
73,489Federal and state income taxes paid


1,971



2,012



2,058Supplementary non-cash investing and financing activities:Additions to property, plant and equipment(a)


23,169



54,689



33,998Allowance for equity funds used during construction


13,203



11,610



8,145     (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, 2009, 2008 or 2007, 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 
   66




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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 
  Deferred Financing Fees 
 67




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Asset Retirement Obligations  and/or
  Contingent Obligations 
  Generator Interconnection Projects 
  gross-up. gross-up gross-up expense-net.
  Revenues
 68




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  true-up True-Up
  Property Taxes 
  Share-Based Payment 
    Comprehensive Income (Loss) 
  Income Taxes 
     69




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   3.
    RECENT ACCOUNTING
    PRONOUNCEMENTS  The FASB
    Accounting Standards Codification and the Hierarchy of Generally
    Accepted Accounting Principles
  Form 10-K.
  Earnings per
    Share
    Business
    Combinations
    Fair Value
    Measurements
    Derivative
    Instruments and Hedging Activities
   70




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Employers
    Disclosures about Postretirement Benefit Plan Assets
    Subsequent
    Events
    Consolidation of
    Variable Interest Entities
    4.
    REGULATORY
    MATTERS  ITC Great
    Plains
  true-up start-up
 71




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    the establishment of regulatory assets for
    start-up and
    development costs of ITC Great Plains and pre-construction costs
    specific to the KETA Project and the Kansas V-Plan to be
    recovered subsequent to a future FERC filing;
    an incentive return on common equity of 12.16 percent;
    inclusion of 100 percent of construction work in progress
    for the KETA and V-Plan projects in rate base;
    abandoned plant recovery, in the event either the KETA Project
    or the Kansas V-Plan must be abandoned for reasons outside of
    ITC Great Plains control; and
    a capital structure comprised of 60 percent equity and
    40 percent debt.    start-up,
     72




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Green Power
    Express
  true-up
    
    the establishment of a regulatory asset for
    start-up and
    development costs of Green Power Express and pre-construction
    costs for the project to be recovered subsequent to a future
    FERC filing;
    an incentive return on common equity of 12.38 percent;
    inclusion of 100 percent of construction work in progress
    in rate base;
    abandoned plant recovery, in the event the project must be
    abandoned for reasons outside of Green Power Express
    control; and
    use of a hypothetical capital structure comprised of
    60 percent equity and 40 percent debt until any
    portion of the Green Power Express project is placed in service,
    at which date the actual capital structure, also expected to be
    60 percent equity and 40 percent debt, will apply.      Cost-Based
    Formula Rates with
    True-Up
    Mechanism
   73




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    true-up true-up
  Complaint of
    IP&L
  true-up
    METC Rate Case
    Settlement
  30-day and/or
 74




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    20-year 18-year
    ITC
    Midwests Rate Discount
    ITCTransmission
    Rate Freeze Revenue Deferral
   75




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Depreciation
    Studies
   76




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   5.
    REGULATORY ASSETS
    AND LIABILITIES  Regulatory
    Assets
    (In thousands)

2009


2008Regulatory Assets:Formula rate revenue accruals:Current (including accrued interest of $2,652 and $1,637 as of
    December 31, 2009 and 2008, respectively)

$
82,871


$
22,301Non-current (including accrued interest of $75 and $1,512 as of
    December 31, 2009 and 2008, respectively)


20,406



81,643Other:ITCTransmission ADIT Deferral (net of accumulated amortization
    of $20,706 and $17,676 as of December 31, 2009 and 2008,
    respectively)


39,896



42,926METC ADIT Deferral (net of accumulated amortization of $7,076
    and $4,717 as of December 31, 2009 and 2008, respectively)


35,380



37,739METC Regulatory Deferrals (net of accumulated amortization of
    $2,314 and $1,543 as of December 31, 2009 and 2008,
    respectively)


13,114



13,885Unamortized loss on reacquired debt






382Income taxes recoverable related to AFUDC equity


22,296



15,329ITC Great Plains
    Start-up and
    Development Regulatory Asset


8,757



KETA Project Regulatory Asset


1,202



Pensions and postretirement


14,279



10,252Total

$
238,201


$
224,457   Revenue
    Accruals
  True-Up true-up
  ITCTransmission
    ADIT Deferral
    METC ADIT
    Deferrals
   77




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    METC
    Regulatory Deferrals
    Unamortized
    Loss on Reacquired Debt
    Income Taxes
    Recoverable Related to AFUDC Equity
  true-up true-up
  ITC Great
    Plains
    Start-up and
    Development Regulatory Asset
  start-up
   78




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    start-up start-up
  KETA Project
    Regulatory Asset
      Pensions and
    Postretirement
   79




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Regulatory
    Liabilities
    (In thousands)

2009


2008Regulatory Liabilities:Accrued asset removal costs

$
112,430


$
196,656Formula rate revenue deferrals(a)Current (including accrued interest of $24 as of
    December 31, 2008)(b)






228Non-current (including accrued interest of $186 as of
    December 31, 2009)


10,238



Total

$
122,668


$
196,884     (a)
    
    Refer to discussion of revenue deferrals in Note 4 under
    Cost-Based Formula Rates with
    True-Up
    Mechanism. Our Regulated Operating Subsidiaries do not
    earn an equity return on the balance of the revenue deferrals,
    but do accrue interest on the
    true-up
    amount.(b)
    
    Current portion of Regulatory Liabilities revenue deferral,
    including accrued interest, is recorded with other current
    liabilities on our consolidated statement of financial position.  Accrued Asset
    Removal Costs
    6.
    GOODWILL AND
    INTANGIBLE ASSETS  ,
  Intangible
    Assets
   80




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        (In thousands)2010

$
3,0782011


3,0782012


3,0782013


3,0782014


3,0782015 and thereafter


36,597Total

$
51,987   7.
    PROPERTY, PLANT
    AND EQUIPMENT  equipment-net
  (In thousands)

2009


2008Property, plant and equipmentRegulated Operating Subsidiaries:Property, plant and equipment in service

$
3,330,057


$
3,003,312Construction work in progress


167,092



163,655Capital equipment inventory


76,697



45,282Other


12,114



10,843ITC Holdings and other


7,149



7,184Total


3,593,109



3,230,276Less accumulated depreciation and amortization


(1,051,045
)


(925,890
)Property, plant and
    equipment-net

$
2,542,064


$
2,304,386    81




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   8.
    LONG-TERM
    DEBT    2009


2008(In thousands)ITC Holdings 5.25% Senior Notes due July 15, 2013 (net
    of discount of $421 and $540, respectively)

$
266,579


$
266,460ITC 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 $22 and $26, respectively)


254,978



254,974ITC 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 $205 and $212, respectively)


254,795



254,788ITC Holdings 6.050% Senior Notes due January 31, 2018
    (net of discount of $1,276 and $1,434, respectively)


383,724



383,566ITC Holdings 5.500% Senior Notes due January 15, 2020
    (net of discount of $1,319)


198,681



ITC Holdings Revolving Credit Agreement due March 29, 2012






67,953ITCTransmission 4.45% First Mortgage Bonds, Series A, due
    July 15, 2013 (net of discount of $42 and $54, respectively)


184,958



184,946ITCTransmission 6.125% First Mortgage Bonds, Series C, due
    March 31, 2036 (net of discount of $96 and $100,
    respectively)


99,904



99,900ITCTransmission 5.75% First Mortgage Bonds, Series D, due
    April 18, 2018 (net of discount of $95 and $106,
    respectively)


99,905



99,894ITCTransmission/METC Revolving Credit Agreement due
    March 29, 2012


57,803



42,065METC 5.75% Senior Secured Notes due December 10, 2015


175,000



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


50,000



50,000ITC Midwest 6.15% First Mortgage Bonds, Series A, due
    January 31, 2038 (net of discount of $493 and $511,
    respectively)


174,507



174,489ITC Midwest 7.12% First Mortgage Bonds, Series B, due
    December 22, 2017


40,000



40,000ITC Midwest 7.27% First Mortgage Bonds, Series C, due
    December 22, 2020


35,000



35,000ITC Midwest 4.60% First Mortgage Bonds, Series D, due
    December 17, 2024


35,000



ITC Midwest Revolving Credit Agreement due January 29, 2013


23,564



19,218Total long-term debt

$
2,434,398


$
2,248,253  82




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands)2010

$
2011


2012


57,8032013


475,5642014


100,0002015 and thereafter


1,805,000Total

$
2,438,367   ITC
    Holdings
  Term Loan
    Agreement
      Senior
    Notes
    ITCTransmission
    METC
   83




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  ITC
    Midwest
    Revolving Credit
    Agreements
    ITC Holdings
    Revolving Credit Agreement
    ITCTransmission/METC
    Revolving Credit Agreement
   84




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ITC Midwest
    Revolving Credit Agreement
    Covenants
   85




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    EARNINGS PER
    SHARE    (In thousands, except share, per share data and
    percentages)

2009


2008


2007Numerator:Net income

$
130,900


$
109,208


$
73,296Less: dividends declared  common shares, restricted
    shares and deferred stock units


(62,392
)


(58,933
)


(48,146
)Undistributed earnings


68,508



50,275



25,150Percentage allocated to common shares(a)


98.6
%


98.9
%


99.3
%Undistributed earnings  common shares


67,549



49,722



24,974Add: dividends declared  common shares


61,517



58,318



47,829Numerator for basic and diluted earnings per common share

$
129,066


$
108,040


$
72,803Denominator:Denominator for basic earnings per common share 
    weighted-average common shares


49,196,470



48,592,534



42,298,478Incremental shares for stock options and employee stock purchase
    plan


880,963



1,035,353



1,155,637Denominator for diluted earnings per common share 
    adjusted weighted-average shares and assumed conversion


50,077,433



49,627,887



43,454,115Per common share net income:Basic

$
2.62


$
2.22


$
1.72Diluted

$
2.58


$
2.18


$
1.68(a) Weighted-average common shares outstanding


49,196,470



48,592,534



42,298,478Weighted-average restricted shares and deferred stock units
    (participating securities)


705,716



517,248



306,232Total


49,902,186



49,109,782



42,604,710Percentage allocated to common shares


98.6
%


98.9
%


99.3
%     Form 10-K
 86




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##### Table of Contents



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

2009


2008


2007Income tax expense at 35% statutory rate

$
72,965


$
61,765


$
38,481State income taxes (net of federal benefit)


7,230



6,769



(4,047
)Valuation allowance  state income taxes


785



1,829



4,047AFUDC equity


(4,336
)


(3,601
)


(2,691
)Other  net


928



500



860Income tax provision

$
77,572


$
67,262


$
36,650     (In thousands)

2009


2008


2007Current income tax expense

$
2,571


$
2,208


$
Deferred income tax expense


74,001



65,054



36,650Benefits of operating loss carryforward


1,000







Total income tax provision

$
77,572


$
67,262


$
36,650    87




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##### Table of Contents



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

2009


2008Property, plant and equipment

$
(209,169
)

$
(132,295
)Federal income tax NOLs


80,437



78,186Michigan Business Tax deductions


21,697



22,316METC regulatory deferral(a)


(17,395
)


(19,250
)Acquisition adjustments  ADIT deferrals(a)


(15,704
)


(16,216
)Goodwill


(57,555
)


(39,298
)Revenue accrual/deferral-net (including accrued interest)


(41,970
)


(41,051
)Pension and postretirement liabilities


12,506



9,180State income tax NOLs


17,103



14,874Other  net


(18,994
)


(14,617
)Deferred tax asset valuation allowance(b)


(2,613
)


(13,194
)Net deferred tax assets (liabilities)

$
(231,657
)

$
(151,365
)Gross deferred income tax liabilities

$
(382,244
)

$
(280,554
)Gross deferred income tax assets


153,200



142,383Deferred tax asset valuation allowance(b)


(2,613
)


(13,194
)Net deferred tax assets (liabilities)

$
(231,657
)

$
(151,365
)     (a)
    
    Described in Note 5.(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.      Michigan Business
    Tax
   88




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    METC Uncertain
    Tax Position
    11.
    RETIREMENT
    BENEFITS AND ASSETS HELD IN TRUST  Retirement Plan
    Benefits
     89




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##### Table of Contents



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

2009


2008Fixed income securities


57.8
%


61.9
%Equity securities


42.2
%


38.1
%Total


100.0
%


100.0
%     (In thousands)

2009


2008


2007Service cost

$
2,674


$
1,977


$
1,493Interest cost


1,691



1,164



996Expected return on plan assets


(987
)


(1,038
)


(650
)Amortization of prior service cost


(42
)


(882
)


(1,101
)Amortization of actuarial loss


2,250



1,762



1,952Net pension cost

$
5,586


$
2,983


$
2,690    90




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##### Table of Contents



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

2009


2008Change in Benefit Obligation:Beginning projected benefit obligation

$
(26,175
)

$
(18,869
)Employers accounting for defined benefit pension and other
    postretirement plan measurement date adjustment






(785
)Service cost


(2,674
)


(1,977
)Interest cost


(1,691
)


(1,164
)Actuarial net loss


(5,820
)


(3,692
)Benefits paid


626



312Ending projected benefit obligation

$
(35,734
)

$
(26,175
)Change in Plans Assets:Beginning plan assets at fair value

$
12,294


$
13,424Employers accounting for defined benefit pension and other
    postretirement plan measurement date adjustment






259Actual (loss) return on plan assets


1,648



(3,179
)Employer contributions


3,187



2,102Benefits paid


(626
)


(312
)Ending plan assets at fair value

$
16,503


$
12,294Funded status, underfunded

$
(19,231
)

$
(13,881
)Ending accumulated benefit obligation

$
(25,534
)

$
(22,178
)Amounts recorded as:Funded Status:Accrued pension and postretirement liabilities

$
(19,231
)

$
(13,881
)Total

$
(19,231
)

$
(13,881
)Unrecognized Amounts in Other Regulatory Assets:Net actuarial loss

$
11,398


$
8,490Prior service credit


(184
)


(226
)Total

$
11,214


$
8,264       2009

2008

2007Discount rate


6.00
%


5.95
%


6.19
%Annual rate of salary increases


5.00
%


5.00
%


5.00
%  91




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009


2008


2007Discount rate


5.95
%


6.19
%


5.95
%Annual rate of salary increases


5.00
%


5.00
%


5.00
%Expected long-term rate of return on plan assets


7.25
%


7.25
%


7.00
%     (In thousands)2010

$
5872011


6772012


1,1882013


1,8242014


3,2482015 through 2019


19,339   Other
    Postretirement Benefits
      Asset Category

2009


2008Fixed income securities


73.3
%


73.7
%Equity securities


26.7
%


26.3
%Total


100.0
%


100.0
%       (In thousands)

2009


2008


2007Service cost

$
1,841


$
1,632


$
982Interest cost


921



672



330Expected return on plan assets


(228
)


(218
)


(93
)Amortization of unrecognized prior service cost


314



580



235Amortization of actuarial (gain) loss


166







(94
)Net postretirement cost

$
3,014


$
2,666


$
1,360    92




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##### Table of Contents



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

2009


2008Change in Benefit Obligation:Beginning accumulated postretirement obligation

$
(13,419
)

$
(9,139
)Employers accounting for defined benefit pension and other
    postretirement plan measurement date adjustment






(576
)Service cost


(1,841
)


(1,632
)Interest cost


(921
)


(672
)Obligation assumed in ITC Midwests asset acquisition






(1,669
)Amendments






Actuarial gain (loss)


(1,625
)


239Benefits paid


49



30Ending accumulated postretirement obligation

$
(17,757
)

$
(13,419
)Change in PlansAssetsBeginning plan assets at fair value

$
3,005


$
2,211Employers accounting for defined benefit pension and other
    postretirement plan measurement date adjustment






55Actual (loss) return on plan assets


297



(558
)Employer contributions


2,528



1,297Employer provided retiree premiums


49



30Benefits paid


(49
)


(30
)Ending Plan assets at fair value

$
5,830


$
3,005Funded status, underfunded

$
(11,927
)

$
(10,414
)Amounts recorded as:Funded Status:Accrued pension and postretirement liabilities

$
(11,927
)

$
(10,414
)Total

$
(11,927
)

$
(10,414
)Unrecognized Amounts in Other Regulatory Assets:Net actuarial loss

$
2,314


$
923Prior service cost


751



1,065Total

$
3,065


$
1,988    93




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009


2008


2007Discount rate


6.00
%


5.95
%


6.19
%Annual rate of salary increases


5.00
%


5.00
%


5.00
%Health care cost trend rate assumed for next year


9.00
%


10.00
%


10.50
%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


2015



2015



2015Annual rate of increase in dental benefit costs


5.00
%


5.00
%


5.00
%     2009


2008


2007Discount rate


5.95
%


6.19
%


5.95
%Annual rate of salary increases


5.00
%


5.00
%


5.00
%Health care cost trend rate assumed for next year


10.00
%


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


2015



2015



2015     (In thousands)2010

$
1792011


2552012


3512013


5232014


7642015 through 2019


7,484     One-Percentage-


One-Percentage-(In thousands)

Point Increase


Point DecreaseEffect on total of service and interest cost

$
444


$
(359
)Effect on postretirement benefit obligation


1,756



(1,442
)   Investment
    Objectives and Fair Value Measurement
   94




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Fair Value Measurements at Reporting Date UsingQuoted Prices in


Significant


SignificantActive Markets for


Other Observable


Unobservable(In thousands)

Identical Assets


Inputs


Inputs(Level 1)


(Level 2)


(Level 3)Financial assets measured on a recurring basis:Cash and cash equivalents

$
2,836


$



$
Short term investments






3,599



Common collective trusts  U.S. equity securities






6,210



Common collective trusts  international equity
    securities






1,643



Common collective trusts  fixed income securities






5,367



Mutual funds  equity securities


662







Mutual funds  fixed income securities


519







Guaranteed deposit fund






1,497



Total

$
4,017


$
18,316


$
   Defined
    Contribution Plans
    12.
    FAIR VALUE
    MEASUREMENTS   95




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair Value Measurements at Reporting Date UsingQuoted Prices in


Significant


SignificantActive Markets for


Other Observable


Unobservable(In thousands)

Identical Assets


Inputs


Inputs(Level 1)


(Level 2)


(Level 3)Financial assets measured on a recurring basis:Cash and cash equivalents  cash equivalents

$
70,558


$



$
Other non current assets  trading securities


9,866







Total

$
80,424


$



$
       Fair Value of
    Long-Term Debt
  Fixed Rate
    Long-Term Debt
    Revolving
    Credit Agreements
   96




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   13.
    OTHER
    COMPENSATION PLANS  Special Bonus
    Plans
        14.
    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 
 97




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Regulation S-X Rule 4-08(e),
  Liquidation Rights 
  Preemptive and Other Rights 
  Repurchases 
  ITC
    Holdings Common Stock Offerings
     98




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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-
  Share-Based
    Compensation
   99




---



##### Table of Contents



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

2009


2008


2007Operation and maintenance expenses

$
1,581


$
1,152


$
868General and administrative expenses


4,999



4,674



2,509Amounts capitalized to property, plant and equipment


3,426



1,446



707Total share-based compensation

$
10,006


$
7,272


$
4,084Total tax benefit recognized in the consolidated statement of
    operations

$
2,621


$
2,328


$
1,147     Options
    WeightedNumber of


AverageOptions


Exercise PriceOutstanding at January 1, 2009 (1,792,020 exercisable with
    a weighted average exercise price of $12.61)


2,603,115


$
21.01Granted


317,830



41.37Exercised


(223,975
)


11.26Forfeited


(23,849
)


37.95Outstanding at December 31, 2009 (1,852,682 exercisable
    with a weighted average exercise price of $16.50)


2,673,121


$
24.10  100




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009

2008

2007Option Grants

Option Grants

Options GrantsWeighted-average grant-date fair value per option

$
11.93


$
13.31


$
9.08Weighted-average expected volatility(a)


37.5
%


24.7
%


21.3
%Weighted-average risk-free interest rate


2.4
%


3.4
%


4.5
%Weighted-average expected term(b)


6 years



6 years



6 yearsWeighted-average expected dividend yield


2.95
%


2.14
%


2.71
%Estimated fair value of underlying shares

$
41.37


$
56.88


$
42.82     (a)
    
    We estimated volatility using the historical volatility of our
    stock.(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 share-based award accounting
    standards 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.      Restricted Stock
    Awards
     101




---



##### Table of Contents



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


Weighted-Restricted


AverageStock


Grant DateAwards


Fair ValueUnvested restricted stock awards at January 1, 2009


591,447


$
45.52Granted


189,264



41.81Vested


(6,878
)


40.55Forfeited


(16,894
)


50.35Unvested restricted stock awards at December 31, 2009


756,939


$
44.55       Employee Stock
    Purchase Plan
    Deferred Stock
    Units
   102




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    15.
    JOINTLY OWNED
    UTILITY PLANT/COORDINATED SERVICES      Construction(In thousands)

Net Investment(a)


Work in ProgressSubstations

$
127,540


$
3,154Lines


87,642



356Total

$
215,182


$
3,510     (a)
    
    Amount represents our investment in jointly held plant, which
    has been reduced by the ownership interest amounts of other
    parties.  ITCTransmission
    METC
   103




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    ITC
    Midwest
    16.
    COMMITMENTS AND
    CONTINGENCIES  Environmental
    Matters
     104




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Litigation
    Michigan Sales
    and Use Tax Audit
       105




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Purchase
    Obligations and Leases
        (In thousands)2010

$
4822011


4282012


4242013


4052014 and thereafter


340Total minimum lease payments

$
2,079   Other
    Commitments
  ITCTransmission
  Service Level Agreements (SLA) with Detroit
    Edison.
    METC
  Amended and Restated Purchase and Sale Agreement for
    Ancillary Services with Consumers Energy.
 106




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Amended and Restated Easement Agreement with Consumers
    Energy. rights-of-way, rights-of-way 50-year
  ITC
    Midwest
  Transition Services Agreement.
  ITC Great
    Plains
  Transition Services Agreement.
  Concentration of
    Credit Risk
   107




---



##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    17.
    SEGMENT
    INFORMATION    Regulated
    Operating Subsidiaries
    ITC Holdings
    and Other
    RegulatedOperating

ITC Holdings2009

Subsidiaries(a)

and Other

Reconciliations

Eliminations

Total(In thousands)Operating revenues

$
621,061


$
329


$



$
(375
)

$
621,015Depreciation and amortization


85,622



327











85,949Interest expense


49,605



80,604











130,209Income before income taxes


297,241



(88,769
)










208,472Income tax provision (benefit)(b)


90,532



(12,960
)










77,572Net income(b)


206,709



130,900







(206,709
)


130,900Property, plant and equipment, net


2,535,826



6,238











2,542,064Goodwill


950,163















950,163Total assets(c)


3,890,874



2,614,394



(1,940
)


(2,473,612
)


4,029,716Capital expenditures


410,086



47







(5,619
)


404,514   108




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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)(b)


82,919



(15,657
)










67,262Net income(b)


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(c)


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(d)

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)(b)


39,202



(2,552
)










36,650Net income(b)


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(c)


3,177,561



2,313,701



(540
)


(2,277,425
)


3,213,297Capital expenditures


287,069



1,062







(961
)


287,170     (a)
    
    Amounts include the results of operations from ITC Great Plains
    for the period August 18, 2009 through December 31,
    2009.(b)
    
    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.(c)
    
    Reconciliation of total assets results primarily from
    differences in the netting of deferred tax assets and
    liabilities under the guidance for accounting for income taxes
    at our Regulated Operating Subsidiaries as compared to the
    classification in our consolidated statement of financial
    position.(d)
    
    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. 109




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   18.
    SUPPLEMENTARY
    QUARTERLY FINANCIAL INFORMATION (UNAUDITED)    First

Second

Third

FourthQuarter

Quarter

Quarter(a)

Quarter

Year(In thousands, except per share data)2009Operating revenue

$
155,941


$
157,238


$
151,328


$
156,508


$
621,015Operating income


74,661



78,267



89,057



84,882



326,867Net income


28,725



30,793



37,818



33,564



130,900Basic earnings per share

$
0.58


$
0.62


$
0.76


$
0.67


$
2.62Diluted earnings per share

$
0.57


$
0.61


$
0.74


$
0.66


$
2.582008Operating 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(b)

$
0.53


$
0.58


$
0.57


$
0.54


$
2.22Diluted earnings per share(b)

$
0.52


$
0.57


$
0.55


$
0.53


$
2.18     (a)
    
    During 2009, we recognized $10.0 million of regulatory
    assets associated with both the
    start-up and
    development costs at ITC Great Plains and development costs for
    the KETA project. Upon initial establishment of these regulatory
    assets in the third quarter of 2009, $8.2 million of
    operating expenses were reversed of which $5.9 million were
    incurred in periods prior to 2009. This resulted in an increase
    in operating income, net income and earnings per share in the
    third quarter of 2009 as compared to other quarters in 2009.(b)
    
    The retroactive application of the two-class method resulted in
    a decrease in basic and diluted earnings per share of $0.01 per
    share for the fourth quarter ended December 31, 2008, as
    compared to the earnings per share calculations used and
    disclosed for the fourth quarter in our
    Form 10-K
    for the year ended December 31, 2008.  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.    ITEM 9A.
    CONTROLS
    AND PROCEDURES.  Form 10-K. Form 10-K.
  Disclosure
    Controls and Procedures
   110




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##### Table of Contents



ITC HOLDINGS
    CORP. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Rule 13a-15
  Changes in
    Internal Control over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION.   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.    ITEM 11.
    EXECUTIVE
    COMPENSATION.    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS.    Equity
    Compensation Plans
   111




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##### Table of Contents



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


2,673


$
24.10



3,695     (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, 2009 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.   112




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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.
 113




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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 31,2009


2008(In thousands, except share data)ASSETSCurrent assetsCash and cash equivalents

$
70,583


$
19,372Accounts receivable from subsidiaries


30,373



21,716Deferred income taxes


4,672



3,926Other


438



420Total current assets


106,066



45,434Other assetsInvestment in subsidiaries


2,375,583



2,229,875Deferred income taxes


30,675



22,554Deferred financing fees (net of accumulated amortization of
    $4,610 and $4,311, respectively)


10,296



9,698Other


24,156



15,368Total other assets


2,440,710



2,277,495TOTAL ASSETS

$
2,546,776


$
2,322,929LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccrued payable

$
3,432


$
3,684Accrued payroll


13,648



10,329Accrued interest


26,352



25,835Other


52



294Total current liabilities


43,484



40,142Accrued pension and other postretirement liabilities


31,158



24,295Other


1,854



1,688Long-term debt(net of discounts of $3,243 and $2,212,
    respectively)


1,458,757



1,327,741STOCKHOLDERS EQUITYCommon stock, without par value, 100,000,000 shares
    authorized, 50,084,061 and 49,654,518 shares issued and
    outstanding at December 31, 2009 and 2008, respectively


862,512



848,624Retained earnings


149,776



81,268Accumulated other comprehensive loss


(765
)


(829
)Total stockholders equity


1,011,523



929,063TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
2,546,776


$
2,322,929    114




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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 31,2009


2008


2007(In thousands)Other income

$
1,154


$
1,392


$
833General and administrative expense


(5,539
)


(5,232
)


(9,768
)Interest expense


(80,638
)


(79,394
)


(53,830
)Loss on extinguishment of debt


(1,263
)






(349
)Other expense


(344
)


(1,965
)


(754
)LOSS BEFORE INCOME TAXES


(86,630
)


(85,199
)


(63,868
)INCOME TAX BENEFIT


(35,798
)


(35,881
)


(22,750
)LOSS AFTER TAXES


(50,832
)


(49,318
)


(41,118
)EQUITY IN SUBSIDIARIES EARNINGS


181,732



158,526



114,414NET INCOME

$
130,900


$
109,208


$
73,296    115




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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 31,2009


2008


2007(In thousands)CASH FLOWS FROM OPERATING ACTIVITIESNet income

$
130,900


$
109,208


$
73,296Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Equity in subsidiaries earnings


(181,732
)


(158,526
)


(114,414
)Dividends from subsidiaries


189,200



84,039



82,799Deferred income tax expense


(31,776
)


(36,109
)


(22,750
)Intercompany tax payments from subsidiaries


26,950



30,900



33,681Share-based compensation expense


10,006



7,272



4,084Other


3,369



2,341



1,280Changes in assets and liabilities, exclusive of changes shown
    separately:Accounts receivable from subsidiaries


(14,377
)


15,376



(37,871
)Other current assets


(18
)


4



29Accrued payable


(342
)


622



3,215Accrued payable to subsidiary










(4,170
)Accrued payroll


3,319



1,848



8,481Accrued interest


517



8,355



4,075Other current liabilities


(2,617
)


(528
)


(84
)Non-current assets and liabilities, net


(1,731
)


4,673



5,561Net cash provided by operating activities


131,668



69,475



37,212CASH FLOWS FROM INVESTING ACTIVITIESEquity contributions to subsidiaries


(152,522
)


(117,050
)


(752,504
)Intercompany advance to ITC Midwest










(175,000
)Repayment of advance to ITC Midwest






175,000



Return of capital from subsidiary


3,495







26,997MTH and METC direct acquisition fees










(254
)Net cash provided by (used in) investing activities


(149,027
)


57,950



(900,761
)CASH FLOWS FROM FINANCING ACTIVITIESIssuance of long-term debt


298,670



383,422



865,000Repayment of long-term debt


(100,000
)


(765,000
)


Borrowings under short-term loan agreement










25,000Repayment of short-term loan agreement










(25,000
)Borrowings under revolving credit agreements


90,715



153,807



294,700Repayments of revolving credit agreements


(158,668
)


(131,954
)


(248,600
)Issuance of common stock


3,575



310,543



3,402Dividends on common stock


(62,408
)


(58,935
)


(48,168
)Debt issuance costs


(3,412
)


(575
)


(5,113
)Other


98



(881
)


(1,889
)Net cash provided by (used in) financing activities


68,570



(109,573
)


859,332NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS


51,211



17,852



(4,217
)CASH AND CASH EQUIVALENTS  Beginning of period


19,372



1,520



5,737CASH AND CASH EQUIVALENTS  End of period

$
70,583


$
19,372


$
1,520Supplementary cash flows information:Interest paid

$
78,181


$
68,794


$
48,414Income taxes paid


1,967



1,317



2,058Supplementary noncash investing and financing activities:Equity transfers to subsidiaries


4,149



3,537



545    116




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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)2010

$
2011


2012


2013


267,0002014


50,0002015 and thereafter


1,145,000Total

$
1,462,000         3.
    RELATED-PARTY
    TRANSACTIONS   117




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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 and Chief Executive Officer (principal
    executive officer)

February 25, 2010/s/  Cameron
    M. BreadyCameron
    M. Bready

Senior Vice President, Treasurer and Chief Financial Officer
    (principal financial officer and principal
    accounting officer)

February 25, 2010/s/  Edward
    G. JepsenEdward
    G. Jepsen

Director

February 25, 2010/s/  Richard
    D. McLellanRichard
    D. McLellan

Director

February 25, 2010/s/  William
    J. MuselerWilliam
    J. Museler

Director

February 25, 2010/s/  Hazel
    R. OLearyHazel
    R. OLeary

Director

February 25, 2010/s/  Gordon
    Bennett Stewart, IIIGordon
    Bennett Stewart, III

Director

February 25, 2010/s/  Lee
    C. StewartLee
    C. Stewart

Director

February 25, 2010  118




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##### Table of Contents



EXHIBITS  001-32576.
  Exhibit No

Description of Exhibit2
.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, 2008 (filed with Registrants 2008
    Form 10-K)4
.1

Form of Certificate of Common Stock (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)4
.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
.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) 119




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##### Table of Contents



Exhibit No

Description of Exhibit4
.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)4
.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)4
.25

Fourth Supplemental Indenture, dated as of December 11,
    2009, between ITC Holdings Corp. and The Bank of New York Mellon
    Trust Company, N.A. (f.k.a. 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 December 14, 2009)4
.26

Fourth Supplemental Indenture, dated as of December 10,
    2009, 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 (filed with
    Registrants
    Form 8-K
    filed on December 17, 2009)*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) 120




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##### Table of Contents



Exhibit No

Description of Exhibit*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)*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) 121




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##### Table of Contents



Exhibit No

Description of Exhibit10
.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
.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)10
.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) 122




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##### Table of Contents



Exhibit No

Description of Exhibit10
.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 (filed with Registrants 2008
    Form 10-K)*10
.80

Management Supplemental Benefit Plan (filed with
    Registrants 2008
    Form 10-K)*10
.81

Executive Supplemental Retirement Plan (filed with
    Registrants 2008
    Form 10-K)*10
.82

Employment Agreement between the Registrant and Joseph L. Welch
    (filed with Registrants 2008
    Form 10-K)*10
.83

Form of Employment Agreements between the Registrant and Linda
    H. Blair, Jon E. Jipping, Edward M. Rahill and Cameron Bready
    (filed with Registrants 2008
    Form 10-K)*10
.84

Form of Employment Agreement between the Registrant and Daniel
    J. Oginsky (filed with Registrants 2008
    Form 10-K)10
.85

Term Loan Agreement, dated as of April 29, 2009, among the
    Registrant, as the Borrower, Various Financial Institutions and
    Other Parties from Time to Time Parties Thereto, 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 PNC Bank, National Association, as Syndication
    Agent21


List of Subsidiaries (filed with Registrants 2008
    Form 10-K)23
.1

Consent of Deloitte & Touche LLP relating to the
    Registrant and subsidiaries 123




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##### Table of Contents



Exhibit No

Description of Exhibit31
.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. 124