##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 001-32576
 ITC HOLDINGS CORP.
  Michigan
    
    32-0058047(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification No.)Incorporation or Organization)
 27175 Energy Way
Novi, MI 48377
 (248) 946-3000
 þ o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



ITC Holdings Corp.
Form 10-Q for the Quarterly Period Ended June 30, 2008
 INDEX
 PagePart I. Financial Information
    
    
    4Item 1. Financial Statements
    
    
    4Condensed Consolidated Statements of Financial Position (Unaudited)
    
    
    4Condensed Consolidated Statements of Operations (Unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    29Part II. Other Information
    
    
    30Item 1A. Risk Factors
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    31Item 6. Exhibits
    
    
    32Signatures
    
    
    33Exhibit Index302 Certification of Chief Executive Officer302 Certification of Chief Financial OfficerSection 906 Certification
  2




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DEFINITIONS
  ITC Holdings Corp. and its subsidiaries
 
    
    ITC Grid Development are references to ITC Grid Development, LLC, a 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, an indirect,
wholly-owned subsidiary of ITC Holdings;
    
    Regulated Operating Subsidiaries are references to ITCTransmission, METC, and ITC
Midwest together; and
    
    We, our and us are references to ITC Holdings together with all of its
subsidiaries.
 Other definitions
 
    
    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 Company;
    
    FERC are references to the Federal Energy Regulatory Commission;
    
    IP&L are references to Interstate Power and Light Company, an Alliant Energy
Corporation subsidiary;
    
    IUB are references to the Iowa Utilities Board;
    
    kV are references to kilovolts (one kilovolt equaling 1,000 volts);
    
    kW are references to kilowatts (one kilowatt equaling 1,000 watts);
    
    MISO are references to the Midwest Independent Transmission System Operator, Inc., a
FERC-approved regional transmission organization, 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;
    
    MW are references to megawatts (one megawatt equaling 1,000,000 watts); and
    
    NERC are references to the North American Electric Reliability Corporation.
 3




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 ITC HOLDINGS CORP. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
 June 30,
    
    
    December 31,(in thousands, except share data)
    
    2008
    
    
    2007ASSETSCurrent assetsCash and cash equivalents
    
    $
    13,400
    
    
    $
    2,616Accounts receivable
    
    
    55,854
    
    
    
    40,919Inventory
    
    
    22,786
    
    
    
    26,315Deferred income taxes
    
    
    12,910
    
    
    
    2,689Other
    
    
    5,876
    
    
    
    3,518Total current assets
    
    
    110,826
    
    
    
    76,057Property, plant and equipment(net of accumulated depreciation and amortization of $898,729
and $879,843, respectively)
    
    
    2,114,617
    
    
    
    1,960,433Other assetsGoodwill
    
    
    960,071
    
    
    
    959,042Intangible assets (net of accumulated amortization of $4,537 and $3,025, respectively)
    
    
    53,870
    
    
    
    55,382Regulatory assets- acquisition adjustments
    
    
    83,359
    
    
    
    86,054Regulatory assets- Attachment O revenue accrual (including accrued interest of $1,141 and
$552, respectively)
    
    
    72,492
    
    
    
    20,537Other regulatory assets
    
    
    29,732
    
    
    
    29,449Deferred financing fees (net of accumulated amortization of $6,981 and $5,138, respectively)
    
    
    20,656
    
    
    
    14,201Other
    
    
    21,441
    
    
    
    12,142Total other assets
    
    
    1,241,621
    
    
    
    1,176,807TOTAL ASSETS
    
    $
    3,467,064
    
    
    $
    3,213,297LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    63,493
    
    
    $
    47,627Accrued payroll
    
    
    7,915
    
    
    
    8,928Accrued interest
    
    
    37,970
    
    
    
    23,088Accrued taxes
    
    
    22,647
    
    
    
    15,065ITC Midwests asset acquisition additional purchase price accrual
    
    
    4,960
    
    
    
    5,402Refundable deposits from generators for transmission network upgrades
    
    
    9,902
    
    
    
    2,352Other
    
    
    3,811
    
    
    
    3,965Total current liabilities
    
    
    150,698
    
    
    
    106,427Accrued pension and postretirement liabilities
    
    
    16,515
    
    
    
    13,934Deferred income taxes
    
    
    135,917
    
    
    
    90,617Regulatory liabilities
    
    
    193,500
    
    
    
    189,727Other
    
    
    4,490
    
    
    
    6,093Long-term debt
    
    
    2,065,652
    
    
    
    2,243,424STOCKHOLDERS EQUITYCommon stock, without par value, 100,000,000 shares authorized, 49,463,885 and 42,916,852
shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively
    
    
    843,777
    
    
    
    532,103Retained earnings
    
    
    57,375
    
    
    
    31,864Accumulated other comprehensive loss
    
    
    (860
    )
    
    
    (892
    )Total stockholders equity
    
    
    900,292
    
    
    
    563,075TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,467,064
    
    
    $
    3,213,297
  4




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ITC HOLDINGS CORP. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(in thousands, except share and per share data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007OPERATING REVENUES
    
    $
    160,616
    
    
    $
    106,303
    
    
    $
    302,530
    
    
    $
    207,577OPERATING EXPENSESOperation and maintenance
    
    
    32,902
    
    
    
    21,503
    
    
    
    54,357
    
    
    
    40,043General and administrative
    
    
    21,361
    
    
    
    12,203
    
    
    
    39,343
    
    
    
    27,226Depreciation and amortization
    
    
    23,446
    
    
    
    16,711
    
    
    
    45,770
    
    
    
    32,833Taxes other than income taxes
    
    
    10,313
    
    
    
    8,066
    
    
    
    21,198
    
    
    
    16,836Gain on sale of asset
    
    
    (1,445
    )
    
    
    
    
    
    
    (1,445
    )
    
    
    Total operating expenses
    
    
    86,577
    
    
    
    58,483
    
    
    
    159,223
    
    
    
    116,938OPERATING INCOME
    
    
    74,039
    
    
    
    47,820
    
    
    
    143,307
    
    
    
    90,639OTHER EXPENSES (INCOME)Interest expense
    
    
    29,946
    
    
    
    19,940
    
    
    
    60,716
    
    
    
    39,072Allowance for equity funds used during construction
    
    
    (2,284
    )
    
    
    (1,613
    )
    
    
    (5,380
    )
    
    
    (2,853
    )Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    349Other income
    
    
    (552
    )
    
    
    (1,018
    )
    
    
    (1,062
    )
    
    
    (1,720
    )Other expense
    
    
    597
    
    
    
    336
    
    
    
    1,434
    
    
    
    669Total other expenses (income)
    
    
    27,707
    
    
    
    17,645
    
    
    
    55,708
    
    
    
    35,517INCOME BEFORE INCOME TAXES
    
    
    46,332
    
    
    
    30,175
    
    
    
    87,599
    
    
    
    55,122INCOME TAX PROVISION
    
    
    17,671
    
    
    
    10,176
    
    
    
    33,417
    
    
    
    18,268NET INCOME
    
    $
    28,661
    
    
    $
    19,999
    
    
    $
    54,182
    
    
    $
    36,854Basic earnings per share
    
    $
    0.58
    
    
    $
    0.47
    
    
    $
    1.13
    
    
    $
    0.87Diluted earnings per share
    
    $
    0.57
    
    
    $
    0.46
    
    
    $
    1.10
    
    
    $
    0.85Weighted-average basic shares
    
    
    49,002,365
    
    
    
    42,269,646
    
    
    
    48,153,011
    
    
    
    42,180,993Weighted-average diluted shares
    
    
    50,205,625
    
    
    
    43,424,029
    
    
    
    49,355,024
    
    
    
    43,432,526Dividends declared per common share
    
    $
    0.290
    
    
    $
    0.275
    
    
    $
    0.580
    
    
    $
    0.550
  5




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ITC HOLDINGS CORP. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Six months endedJune 30,(in thousands)
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    54,182
    
    
    $
    36,854Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization expense
    
    
    45,770
    
    
    
    32,833Attachment O revenue accrual  including accrued interest
    
    
    (51,946
    )
    
    
    (23,541
    )Deferred income tax expense
    
    
    32,564
    
    
    
    18,268Allowance for equity funds used during construction
    
    
    (5,380
    )
    
    
    (2,853
    )Stock-based compensation expense
    
    
    3,220
    
    
    
    1,622Amortization of loss on reacquired debt, deferred financing fees and debt discounts
    
    
    3,075
    
    
    
    2,190Other
    
    
    (1,435
    )
    
    
    (76
    )Changes in assets and liabilities, exclusive of changes shown separately:Accounts receivable
    
    
    (13,623
    )
    
    
    (14,703
    )Inventory
    
    
    1,783
    
    
    
    (10,256
    )Other current assets
    
    
    (2,358
    )
    
    
    5,893Accounts payable
    
    
    15,969
    
    
    
    14,922Accrued interest
    
    
    14,882
    
    
    
    727Accrued taxes
    
    
    7,582
    
    
    
    1,513Other current liabilities
    
    
    (1,502
    )
    
    
    (5,599
    )Non-current assets and liabilities, net
    
    
    (1,639
    )
    
    
    1,288Net cash provided by operating activities
    
    
    101,144
    
    
    
    59,082CASH FLOWS FROM INVESTING ACTIVITIESExpenditures for property, plant and equipment
    
    
    (193,793
    )
    
    
    (148,162
    )ITC Midwests asset acquisition direct fees
    
    
    (981
    )
    
    
    (1,459
    )Other
    
    
    1,445
    
    
    
    926Net cash used in investing activities
    
    
    (193,329
    )
    
    
    (148,695
    )CASH FLOWS FROM FINANCING ACTIVITIESIssuance of long-term debt
    
    
    657,782
    
    
    
    Borrowings under ITC Holdings Term Loan Agreement
    
    
    
    
    
    
    25,000Repayment of long-term debt
    
    
    (765,000
    )
    
    
    Borrowings under revolving credit agreements
    
    
    282,500
    
    
    
    293,300Repayments of revolving credit agreements
    
    
    (353,200
    )
    
    
    (209,600
    )Issuance of common stock
    
    
    309,427
    
    
    
    1,759Common stock issuance costs
    
    
    (755
    )
    
    
    (5
    )Dividends on common stock
    
    
    (28,662
    )
    
    
    (23,363
    )Repurchase and retirement of common stock
    
    
    
    
    
    
    (1,841
    )Debt issuance costs
    
    
    (5,409
    )
    
    
    (565
    )Refundable deposits from generators for transmission network upgrades
    
    
    6,286
    
    
    
    Net cash provided by financing activities
    
    
    102,969
    
    
    
    84,685NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    10,784
    
    
    
    (4,928
    )CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    2,616
    
    
    
    13,426CASH AND CASH EQUIVALENTS  End of period
    
    $
    13,400
    
    
    $
    8,498
  6




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 1. GENERAL
    Supplementary Cash Flows Information
 Six months endedJune 30,(in thousands)
    
    2008
    
    2007Supplementary cash flows information:Interest paid (excluding interest capitalized)
    
    $
    42,758
    
    
    $
    36,505Income taxes paid
    
    
    1,314
    
    
    
    2,058Supplementary noncash investing and financing activities:Additions to property, plant and equipment (a)
    
    
    35,772
    
    
    
    26,472Allowance for equity funds used during construction
    
    
    5,380
    
    
    
    2,853
 
 (a)
    
    Amounts consist primarily 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
June 30, 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. Comprehensive Income
   Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    28,661
    
    
    $
    19,999
    
    
    $
    54,182
    
    
    $
    36,854Amortization of
interest rate lock
cash flow hedges,
net of tax of $9
for the three
months ended June
30, 2008 and 2007,
respectively, and
net of tax of $17
for the six months
ended June 30, 2008
and 2007,
respectively
    
    
    16
    
    
    
    16
    
    
    
    32
    
    
    
    32Comprehensive income
    
    $
    28,677
    
    
    $
    20,015
    
    
    $
    54,214
    
    
    $
    36,886
 7




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##### Table of Contents



2. RECENT ACCOUNTING PRONOUNCEMENTS
 FASB Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities
 Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities Participating Securities and the Two-Class
Method under FASB Statement No. 128
 Statement of Financial Accounting Standards No. 141(R), Business Combinations
 Business Combinations
 Statement of Financial Accounting Standards No. 157, Fair Value Measurements
 Fair Value Measurements Effective Date of FASB Statement No. 157
  Accounting for Certain
Investments in Debt and Equity Securities
 8




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Fair Value Measurements at Reporting Date UsingQuoted prices in
    
    
    
    
    
    Significantactive markets for
    
    Significant other
    
    unobservableidentical assets
    
    observable inputs
    
    inputs(in thousands)
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Trading securities
    
    $
    6,285
    
    
    $
    
    
    
    $
    
 Statement of Financial Accounting Standards No. 158, Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106, and
132(R)
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106, and
132(R) Accounting for the Effects of Certain Types of Regulation Employers Accounting
for Pensions Employers
Accounting for Postretirement Benefits Other Than Pensions
   Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities
 The Fair Value Option for Financial
Assets and Financial Liabilities
 Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133
 Disclosures about Derivative Instruments
and Hedging Activities, an amendment of FASB Statement No. 133 Accounting for
Derivative Instruments and Hedging Activities
 9




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##### Table of Contents



Statement of Financial Accounting Standards No. 162, The Hierarchy of Generally Accepted Accounting
Principles
 The Hierarchy of Generally Accepted
Accounting Principles
 3. ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS
 ITC Midwests Acquisition of IP&L Transmission Assets
  Business Combinations
   Intangible Assets
  10




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##### Table of Contents



4. REGULATORY MATTERS
 Attachment O Network Transmission Rates
   Forward-Looking Attachment O
   Accounting by Rate-Regulated Utilities for the Effects of Certain
Alternative Revenue Programs
  Long Term Pricing
  11




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5. LONG-TERM DEBT
 ITC Midwests Asset Acquisition Debt Financing
 ITC Holdings Bridge Facility
   ITC Holdings Senior Notes
  ITC Midwest First Mortgage Bonds
   12




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ITCTransmission First Mortgage Bonds
  Revolving Credit Agreements
 ITC Holdings Revolving Credit Agreement
  ITCTransmission/METC Revolving Credit Agreement
  ITC Midwest Revolving Credit Agreement
  6. EQUITY
 ITC Holdings Sales Agency Financing Agreement
  Public Securities Offering
  Options
 
 7. EARNINGS PER SHARE
  13




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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(in thousands, except share and per share data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Basic earnings per share:Net income
    
    $
    28,661
    
    
    $
    19,999
    
    
    $
    54,182
    
    
    $
    36,854Weighted-average shares outstanding
    
    
    49,002,365
    
    
    
    42,269,646
    
    
    
    48,153,011
    
    
    
    42,180,993Basic earnings per share
    
    $
    0.58
    
    
    $
    0.47
    
    
    $
    1.13
    
    
    $
    0.87Diluted earnings per share:Net income
    
    $
    28,661
    
    
    $
    19,999
    
    
    $
    54,182
    
    
    $
    36,854Weighted-average shares outstanding
    
    
    49,002,365
    
    
    
    42,269,646
    
    
    
    48,153,011
    
    
    
    42,180,993Incremental shares of stock-based awards
    
    
    1,203,260
    
    
    
    1,154,383
    
    
    
    1,202,013
    
    
    
    1,251,533Weighted-average dilutive shares outstanding
    
    
    50,205,625
    
    
    
    43,424,029
    
    
    
    49,355,024
    
    
    
    43,432,526Diluted earnings per share
    
    $
    0.57
    
    
    $
    0.46
    
    
    $
    1.10
    
    
    $
    0.85
   8. TAXES
 Michigan Business Tax
 Accounting
for Income Taxes
 9. RETIREMENT BENEFITS AND ASSETS HELD IN TRUST
 Retirement Plan Benefits
   14




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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    498
    
    
    $
    347
    
    
    $
    981
    
    
    $
    747Interest cost
    
    
    293
    
    
    
    248
    
    
    
    577
    
    
    
    498Expected return on plan assets
    
    
    (261
    )
    
    
    (175
    )
    
    
    (517
    )
    
    
    (325
    )Amortization of prior service cost
    
    
    (232
    )
    
    
    (276
    )
    
    
    (453
    )
    
    
    (551
    )Amortization of unrecognized loss
    
    
    455
    
    
    
    526
    
    
    
    890
    
    
    
    976Net pension cost
    
    $
    753
    
    
    $
    670
    
    
    $
    1,478
    
    
    $
    1,345
 Other Postretirement Benefits
   Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    406
    
    
    $
    191
    
    
    $
    819
    
    
    $
    491Interest cost
    
    
    167
    
    
    
    65
    
    
    
    337
    
    
    
    165Expected return on plan assets
    
    
    (54
    )
    
    
    (47
    )
    
    
    (109
    )
    
    
    (47
    )Amortization of prior service cost
    
    
    145
    
    
    
    18
    
    
    
    292
    
    
    
    118Amortization of unrecognized actuarial loss
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    (47
    )Net postretirement cost
    
    $
    664
    
    
    $
    180
    
    
    $
    1,339
    
    
    $
    680
 Defined Contribution Plans
  10. CONTINGENCIES
 Litigation
  CSX Transportation, Inc.
  15




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11. SEGMENT INFORMATION
 Disclosures about Segments of an Enterprise and Related Information
 Three months ended
    
    
    Six months endedOPERATING REVENUES:
    
    June 30,
    
    
    June 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Regulated Operating Subsidiaries
    
    $
    160,641
    
    
    $
    106,303
    
    
    $
    302,555
    
    
    $
    207,577ITC Holdings and other
    
    
    69
    
    
    
    58
    
    
    
    139
    
    
    
    58Intercompany eliminations
    
    
    (94
    )
    
    
    (58
    )
    
    
    (164
    )
    
    
    (58
    )Total Operating Revenues
    
    $
    160,616
    
    
    $
    106,303
    
    
    $
    302,530
    
    
    $
    207,577
 Three months ended
    
    
    Six months endedINCOME BEFORE INCOME TAXES:
    
    June 30,
    
    
    June 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Regulated Operating Subsidiaries
    
    $
    67,587
    
    
    $
    44,645
    
    
    $
    131,925
    
    
    $
    84,028ITC Holdings and other
    
    
    (21,255
    )
    
    
    (14,470
    )
    
    
    (44,326
    )
    
    
    (28,906
    )Total Income Before Income Taxes
    
    $
    46,332
    
    
    $
    30,175
    
    
    $
    87,599
    
    
    $
    55,122
 Three months ended
    
    
    Six months endedNET INCOME:
    
    June 30,
    
    
    June 30,(in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Regulated Operating Subsidiaries (a)
    
    $
    46,650
    
    
    $
    34,961
    
    
    $
    91,908
    
    
    $
    65,326ITC Holdings and other
    
    
    28,661
    
    
    
    19,999
    
    
    
    54,182
    
    
    
    36,854Intercompany eliminations
    
    
    (46,650
    )
    
    
    (34,961
    )
    
    
    (91,908
    )
    
    
    (65,326
    )Total Net Income
    
    $
    28,661
    
    
    $
    19,999
    
    
    $
    54,182
    
    
    $
    36,854
 ASSETS:
    
    June 30,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Regulated Operating Subsidiaries
    
    $
    3,416,058
    
    
    $
    3,177,561ITC Holdings and other
    
    
    2,257,205
    
    
    
    2,313,701Reconciliations(b)
    
    
    89
    
    
    
    (540
    )Intercompany eliminations
    
    
    (2,206,288
    )
    
    
    (2,277,425
    )Total Assets
    
    $
    3,467,064
    
    
    $
    3,213,297
 
 (a)
    
    Net income for our Regulated Operating Subsidiaries
does not include any allocation of federal taxes for
METC, as METC is organized as a multiple-member LLC
and is exempt from federal taxation for the periods
presented. METC does include an allowance for income
taxes for ratemaking purposes.(b)
    
    Reconciliations of total assets result primarily
from differences in the netting of deferred tax
assets and liabilities under the provisions of SFAS
109 at our Regulated Operating Subsidiaries as
compared to the classification in our consolidated
statement of financial position. 16




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
  
    
    unless we receive dividends or other payments from our Regulated Operating Subsidiaries,
we will be unable to pay dividends to our stockholders and fulfill our cash obligations;
    
    certain elements of our Regulated Operating Subsidiaries cost recovery through rates can
be challenged, which could result in lowered rates and/or refunds of amounts previously
collected and thus have an adverse effect on our business, financial condition, results of
operations and cash flows. We have also made certain commitments to federal and state
regulators with respect to, among other things, our rates in connection with recent
acquisitions (including ITC Midwests asset acquisition) that could have an adverse effect
on our business, financial condition, results of operations and cash flows;
    
    approval of ITC Midwests asset acquisition by state regulatory authorities in Iowa has
been appealed. If such proceedings are decided in a manner that is unfavorable to us, all or
part of the orders approving ITC Midwests asset acquisition in Iowa could be reversed,
which could have a material adverse effect on our business, financial condition, results of
operations and cash flows;
    
    our Regulated Operating Subsidiaries actual capital expenditures may be lower than
planned, which would decrease their respective expected rate bases and therefore our
revenues;
    
    the regulations to which we are subject may limit our ability to raise capital and/or
pursue acquisitions or development opportunities or other transactions or may subject us to
liabilities;
    
    our Regulated Operating Subsidiaries are subject to various regulatory requirements.
Violations of these requirements, whether intentional or unintentional, may result in
penalties that, under some circumstances, could have a material adverse effect on our
results of operations, financial condition and cash flows;
    
    changes in federal energy laws, regulations or policies could reduce the dividends we may
be able to pay our stockholders;
    
    adverse changes in interest rates or our credit ratings may negatively affect us;
    
    hazards associated with high-voltage electricity transmission, such as explosions, fires,
inclement weather, natural disasters, mechanical failure and related matters, may result in
suspension of our Regulated Operating Subsidiaries operations or the imposition of civil or
criminal penalties;
    
    if the network load or point-to-point transmission service on our Regulated Operating
Subsidiaries transmission systems is lower than expected, the timing of collection of our
revenues would be delayed.
    
    each of our Regulated Operating Subsidiaries depends on its primary customer for a
substantial portion of its revenues (Detroit Edison for ITCTransmission, Consumers Energy
for METC and IP&L for ITC Midwest), 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;
 17




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##### Table of Contents




    
    METC does not own the majority of the land on which its transmission assets are located.
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 and ITC Midwests other property consists of
easements. As a result each of our Regulated Operating Subsidiaries must comply with the
provisions of various easements, mineral rights and other similar encumbrances, which may
adversely impact their ability to complete construction projects in a timely manner;
    
    deregulation and/or increased competition may adversely affect customers of our Regulated
Operating Subsidiaries, or customers of Detroit Edison, Consumers Energy or IP&L, which may
affect our ability to collect revenues;
    
    we are subject to environmental regulations and to laws that can give rise to substantial
liabilities from environmental contamination;
    
    acts of war, terrorist attacks and threats or the escalation of military activity in
response to such attacks or otherwise may negatively affect our business, financial
condition and results of operations;
    
    the purchase price for ITC Midwests asset acquisition remains subject to adjustment and,
therefore, the final purchase price cannot be determined at this time;
    
    we may encounter difficulties consolidating IP&Ls electric transmission assets into our
business and may not fully attain or retain, or achieve within a reasonable time frame,
expected strategic objectives and other expected benefits of ITC Midwests asset
acquisition;
    
    if one or both of ITC Midwests operating agreements with IP&L and American Transmission
Company, LLC were terminated early, ITC Midwest may face a shortage of labor or replacement
contractors to provide the services formerly provided by IP&L and American Transmission
Company, LLC;
    
    we are highly leveraged and our dependence on debt may limit our ability to fulfill our
debt obligations, pay dividends and/or obtain additional financing;
    
    certain provisions in our debt instruments may limit our financial flexibility;
    
    we have limitations on the amount of federal income tax net operating loss carryforwards
that we may use to reduce our tax liability in a given period;
    
    provisions in our Articles of Incorporation and bylaws, Michigan corporate law and our
debt agreements may impede efforts by our shareholders to change the direction or management
of our company;
    
    provisions in our Articles of Incorporation restrict market participants from voting or
owning 5% or more of the outstanding shares of our capital stock;
    
    future sales of our shares could depress the market price of our common stock;
    
    our Regulated Operating Subsidiaries ability to raise capital may be restricted which
may, in turn, restrict our ability to make capital expenditures or pay dividends to our
stockholders; and
    
    other risk factors discussed herein and listed from time to time in our public filings
with the Securities and Exchange Commission (SEC).
  18




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##### Table of Contents



OVERVIEW
     Recent Developments
  
    
    Capital investment of $72.3 million, $54.1 million and $49.6 million at ITCTransmission,
METC and ITC Midwest, respectively, for the six months ended June 30, 2008, resulting from
our focus on improving system reliability;
    
    ITC Midwests acquisition of the transmission assets of IP&L on December 20, 2007 and the
related financing activities (described in Notes 3, 5 and 6 to the condensed consolidated
financial statements);
    
    Lower than expected monthly peak loads at ITCTransmission and METC and the resulting
effect on operating cash flows; and
    
    Debt issuances and borrowings under our revolving credit agreements in 2007 and 2008 to
fund capital investment at our Regulated Operating Subsidiaries, resulting in higher
interest expense.
   19




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##### Table of Contents



Trends and Seasonality
 Network Revenues
   Long-Term Capital Investment Program
    
    2008 Capital InvestmentRegulated Operating
    
    
    
    
    
    
    
    Amounts through
    
    
    
    
    
    Six Months EndedSubsidiary
    
    Period
    
    Expectation
    
    June 30, 2008
    
    Expected in 2008
    
    June 30, 2008 (a)ITCTransmission
    
    January 1, 2005  December 31, 2011
    
    $1 billion
    
    $572.3 million
    
    $95 million  
$110 million
    
    $72.3 millionMETC
    
    January 1, 2007  December 31, 2013
    
    $600 million
    
    $129.6 million
    
    $105 million  
$130 million
    
    $54.1 millionITC Midwest
    
    Seven- to ten-year
period beginning January 1, 2008
    
    $1 billion (b)
    
    $49.6 million
    
    $85 million  
$100 million
    
    $49.6 million
 
 (a)
    
    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.(b)
    
    As part of the regulatory proceedings approving ITC Midwests asset acquisition, ITC Midwest has made several investment commitments
relating to our transmission systems, including completing projects anticipated to cost at least approximately $100 million over the next
five years dedicated to reducing transmission constraints as well as investing at least an additional $250 million in other projects over
the next five years.  20




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##### Table of Contents



Seasonality and Attachment O Revenue Accrual
    Monthly Peak Load (in MW) (a)
 2008
    
    2007
    
    2006ITC Midwest
    
    METC
    
    ITCTransmission
    
    ITC Midwest
    
    METC
    
    ITCTransmission
    
    METC
    
    ITCTransmissionJanuary
    
    
    2,974
    
    
    
    6,215
    
    
    
    7,889
    
    
    
    
    
    
    
    6,051
    
    
    
    7,876
    
    
    
    
    
    
    
    7,754February
    
    
    2,890
    
    
    
    6,139
    
    
    
    7,713
    
    
    
    
    
    
    
    6,227
    
    
    
    8,170
    
    
    
    
    
    
    
    7,667March
    
    
    2,733
    
    
    
    5,797
    
    
    
    7,511
    
    
    
    
    
    
    
    6,006
    
    
    
    7,739
    
    
    
    
    
    
    
    7,554April
    
    
    2,455
    
    
    
    5,223
    
    
    
    6,926
    
    
    
    
    
    
    
    5,473
    
    
    
    7,141
    
    
    
    
    
    
    
    7,035May
    
    
    2,431
    
    
    
    5,320
    
    
    
    7,039
    
    
    
    
    
    
    
    6,981
    
    
    
    9,927
    
    
    
    
    
    
    
    10,902June
    
    
    2,888
    
    
    
    7,243
    
    
    
    10,624
    
    
    
    
    
    
    
    8,511
    
    
    
    11,761
    
    
    
    
    
    
    
    9,752July
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,672
    
    
    
    11,706
    
    
    
    
    
    
    
    12,392August
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,955
    
    
    
    12,087
    
    
    
    
    
    
    
    12,745September
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,908
    
    
    
    11,033
    
    
    
    
    
    
    
    8,415October
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,524
    
    
    
    10,365
    
    
    
    5,642
    
    
    
    7,302November
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,200
    
    
    
    7,812
    
    
    
    6,103
    
    
    
    7,724December
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,244
    
    
    
    6,215
    
    
    
    8,022
    
    
    
    6,527
    
    
    
    8,257Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,244
    
    
    
    84,723
    
    
    
    113,639
    
    
    
    18,272
    
    
    
    107,499
 
 (a)
    
    Each of our Regulated Operating Subsidiaries is part of a joint rate zone. The load data
presented is for all transmission owners in the respective joint rate
zone and is used for billing network revenues. Each of our
Regulated Operating Subsidiaries makes up the significant portion of billed network revenues within their respective joint rate zone.   21




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##### Table of Contents



(in thousands)Line
    
    
    Item
    
    ITCTransmission
    
    
    METC
    
    
    ITC Midwest
    
    
    Total1
    
    
    Estimated net revenue requirement
    
    $
    127,404
    
    
    $
    85,512
    
    
    $
    60,7002
    
    
    Network revenues billed (a)
    
    
    111,541
    
    
    
    70,853
    
    
    
    39,8573
    
    
    Six months ended June 30, 2008
Attachment O revenue accrual
(line 1  line 2)
    
    $
    15,863
    
    
    $
    14,659
    
    
    $
    20,843
    
    
    $
    51,365
 
 (a)
    
    Network revenues billed at our Regulated Operating Subsidiaries is 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. RESULTS OF OPERATIONS
  Results of Operations and Variances
 Three months ended
    
    
    
    
    
    
    Percentage
    
    
    Six months ended
    
    
    
    
    
    
    PercentageJune 30,
    
    
    Increase
    
    
    increase
    
    
    June 30,
    
    
    Increase
    
    
    increase(in thousands)
    
    2008
    
    
    2007
    
    
    (decrease)
    
    
    (decrease)
    
    
    2008
    
    
    2007
    
    
    (decrease)
    
    
    (decrease)OPERATING REVENUES
    
    $
    160,616
    
    
    $
    106,303
    
    
    $
    54,313
    
    
    
    51.1
    %
    
    $
    302,530
    
    
    $
    207,577
    
    
    $
    94,953
    
    
    
    45.7
    %OPERATING EXPENSESOperation and maintenance
    
    
    32,902
    
    
    
    21,503
    
    
    
    11,399
    
    
    
    53.0
    %
    
    
    54,357
    
    
    
    40,043
    
    
    
    14,314
    
    
    
    35.7
    %General and administrative
    
    
    21,361
    
    
    
    12,203
    
    
    
    9,158
    
    
    
    75.0
    %
    
    
    39,343
    
    
    
    27,226
    
    
    
    12,117
    
    
    
    44.5
    %Depreciation and amortization
    
    
    23,446
    
    
    
    16,711
    
    
    
    6,735
    
    
    
    40.3
    %
    
    
    45,770
    
    
    
    32,833
    
    
    
    12,937
    
    
    
    39.4
    %Taxes other than income taxes
    
    
    10,313
    
    
    
    8,066
    
    
    
    2,247
    
    
    
    27.9
    %
    
    
    21,198
    
    
    
    16,836
    
    
    
    4,362
    
    
    
    25.9
    %Gain on sale of asset
    
    
    (1,445
    )
    
    
    
    
    
    
    (1,445
    )
    
    
    n/a
    
    
    
    (1,445
    )
    
    
    
    
    
    
    (1,445
    )
    
    
    n/aTotal operating expenses
    
    
    86,577
    
    
    
    58,483
    
    
    
    28,094
    
    
    
    48.0
    %
    
    
    159,223
    
    
    
    116,938
    
    
    
    42,285
    
    
    
    36.2
    %OPERATING INCOME
    
    
    74,039
    
    
    
    47,820
    
    
    
    26,219
    
    
    
    54.8
    %
    
    
    143,307
    
    
    
    90,639
    
    
    
    52,668
    
    
    
    58.1
    %OTHER EXPENSES (INCOME)Interest expense
    
    
    29,946
    
    
    
    19,940
    
    
    
    10,006
    
    
    
    50.2
    %
    
    
    60,716
    
    
    
    39,072
    
    
    
    21,644
    
    
    
    55.4
    %Allowance for equity funds used during construction
    
    
    (2,284
    )
    
    
    (1,613
    )
    
    
    (671
    )
    
    
    41.6
    %
    
    
    (5,380
    )
    
    
    (2,853
    )
    
    
    (2,527
    )
    
    
    88.6
    %Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    
    349
    
    
    
    (349
    )
    
    
    (100.0
    )%Other income
    
    
    (552
    )
    
    
    (1,018
    )
    
    
    466
    
    
    
    (45.8
    )%
    
    
    (1,062
    )
    
    
    (1,720
    )
    
    
    658
    
    
    
    (38.3
    )%Other expense
    
    
    597
    
    
    
    336
    
    
    
    261
    
    
    
    77.7
    %
    
    
    1,434
    
    
    
    669
    
    
    
    765
    
    
    
    114.3
    %Total other expenses (income)
    
    
    27,707
    
    
    
    17,645
    
    
    
    10,062
    
    
    
    57.0
    %
    
    
    55,708
    
    
    
    35,517
    
    
    
    20,191
    
    
    
    56.8
    %INCOME BEFORE INCOME TAXES
    
    
    46,332
    
    
    
    30,175
    
    
    
    16,157
    
    
    
    53.5
    %
    
    
    87,599
    
    
    
    55,122
    
    
    
    32,477
    
    
    
    58.9
    %INCOME TAX PROVISION
    
    
    17,671
    
    
    
    10,176
    
    
    
    7,495
    
    
    
    73.7
    %
    
    
    33,417
    
    
    
    18,268
    
    
    
    15,149
    
    
    
    82.9
    %NET INCOME
    
    $
    28,661
    
    
    $
    19,999
    
    
    $
    8,662
    
    
    
    43.3
    %
    
    $
    54,182
    
    
    $
    36,854
    
    
    $
    17,328
    
    
    
    47.0
    %
 22




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##### Table of Contents



Operating Revenues
 Three months ended June 30, 2008 compared to three months ended June 30, 2007
  Percentage2008
    
    
    2007
    
    
    Increase
    
    
    increase(in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    (decrease)
    
    
    (decrease)Network revenues
    
    $
    145,567
    
    
    
    90.6
    %
    
    $
    98,314
    
    
    
    92.5
    %
    
    $
    47,253
    
    
    
    48.1
    %Point-to-point
    
    
    6,587
    
    
    
    4.1
    %
    
    
    3,781
    
    
    
    3.5
    %
    
    
    2,806
    
    
    
    74.2
    %Scheduling, control and dispatch
    
    
    4,207
    
    
    
    2.6
    %
    
    
    3,711
    
    
    
    3.5
    %
    
    
    496
    
    
    
    13.4
    %Regional cost sharing revenues
    
    
    3,693
    
    
    
    2.3
    %
    
    
    
    
    
    
    0.0
    %
    
    
    3,693
    
    
    
    n/aOther
    
    
    562
    
    
    
    0.4
    %
    
    
    497
    
    
    
    0.5
    %
    
    
    65
    
    
    
    13.1
    %Total
    
    $
    160,616
    
    
    
    100.0
    %
    
    $
    106,303
    
    
    
    100.0
    %
    
    $
    54,313
    
    
    
    51.1
    %
     Six months ended June 30, 2008 compared to six months ended June 30, 2007
  Percentage2008
    
    
    2007
    
    
    Increase
    
    
    increase(in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    (decrease)
    
    
    (decrease)Network revenues
    
    $
    273,616
    
    
    
    90.5
    %
    
    $
    192,264
    
    
    
    92.6
    %
    
    $
    81,352
    
    
    
    42.3
    %Point-to-point
    
    
    11,961
    
    
    
    4.0
    %
    
    
    7,429
    
    
    
    3.6
    %
    
    
    4,532
    
    
    
    61.0
    %Scheduling, control and dispatch
    
    
    8,277
    
    
    
    2.7
    %
    
    
    6,880
    
    
    
    3.3
    %
    
    
    1,397
    
    
    
    20.3
    %Regional cost sharing revenues
    
    
    7,365
    
    
    
    2.4
    %
    
    
    
    
    
    
    0.0
    %
    
    
    7,365
    
    
    
    n/aOther
    
    
    1,311
    
    
    
    0.4
    %
    
    
    1,004
    
    
    
    0.5
    %
    
    
    307
    
    
    
    30.6
    %Total
    
    $
    302,530
    
    
    
    100.0
    %
    
    $
    207,577
    
    
    
    100.0
    %
    
    $
    94,953
    
    
    
    45.7
    %
   23




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##### Table of Contents



Operating Expenses
 Operation and maintenance expenses
 Three months ended June 30, 2008 compared to three months ended June 30, 2007
  Six months ended June 30, 2008 compared to six months ended June 30, 2007
  General and administrative expenses
 Three months ended June 30, 2008 compared to three months ended June 30, 2007
  Six months ended June 30, 2008 compared to six months ended June 30, 2007
  24




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Depreciation and amortization expenses
 Three months ended June 30, 2008 compared to three months ended June 30, 2007
  Six months ended June 30, 2008 compared to six months ended June 30, 2007
  Taxes other than income taxes
 Three months ended June 30, 2008 compared to three months ended June 30, 2007
  Six months ended June 30, 2008 compared to six months ended June 30, 2007
  Gain on sale of assets
 Three and six months ended June 30, 2008 compared to three and six months ended June 30, 2007
  Other expenses (income)
 Three and six months ended June 30, 2008 compared to three and six months ended June 30, 2007
   Income Tax Provision
 Three and six months ended June 30, 2008 compared to three and six months ended June 30, 2007
  25




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LIQUIDITY AND CAPITAL RESOURCES
  
    
    Fund capital expenditures. Our plans with regard to property, plant and equipment
investments are described in detail above under Trends and Seasonality. Additionally, we
are pursuing other development activities as described in Recent Developments Development
Activities in our most recent Form 10-K that could result in significant capital
expenditures.
    
    Fund additional purchase price for ITC Midwests acquisition of the transmission assets
of IP&L.
    
    Fund working capital requirements.
    
    Fund our debt service requirements, which are described in more detail under
Contractual Obligations in our Form 10-K for the year ended December 31, 2007 and as
updated in this Form 10-Q. We expect our interest payments to increase during 2008 compared
to 2007 as a result of additional debt incurred in 2007 and 2008, primarily in connection
with ITC Midwests acquisition of IP&Ls transmission assets and our capital expenditures
for system improvements.
    
    Fund dividends to holders of our common stock.
    
    Fund contributions to our retirement plans, as described in Note 9 to the condensed
consolidated financial statements.
    
    Fund business development expenses, consisting primarily of expenses at ITC Grid Development and its subsidiaries in 2008.
   Cash Flows From Operating Activities
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Cash Flows From Investing Activities
  Cash Flows From Financing Activities
  CONTRACTUAL OBLIGATIONS
  CRITICAL ACCOUNTING POLICIES
  RECENT ACCOUNTING PRONOUNCEMENTS
  27




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Fixed Rate Long-Term Debt
  Revolving Credit Agreements
  Other
  28




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ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  29




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PART II. OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
   Approval of ITC Midwests asset acquisition by state regulatory authorities in Iowa has been
appealed. If such proceedings are decided in a manner that is unfavorable to us, all or part of
the orders approving ITC Midwests asset acquisition in Iowa could be reversed, which could have
a material adverse effect on our business, financial condition, results of operations and cash
flows.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Total votesTotal votes for
    
    withheld for eachNominee
    
    each nominee
    
    nomineeEdward G. Jepsen
    
    
    42,703,808
    
    
    
    581,787Richard D. McLellan
    
    
    38,670,205
    
    
    
    4,615,390William J. Museler
    
    
    42,703,350
    
    
    
    582,245Hazel R. OLeary
    
    
    42,836,653
    
    
    
    448,942Gordon Bennett Stewart, III
    
    
    42,701,340
    
    
    
    584,255Lee C. Stewart
    
    
    42,548,576
    
    
    
    737,019Joseph L. Welch
    
    
    42,842,623
    
    
    
    442,972
 Proposal
    
    For
    
    Against
    
    Abstain
    
    Broker Non-VotesApproval of Amended and Restated 2006 Long Term
Incentive Plan
    
    
    33,192,258
    
    
    
    4,470,732
    
    
    
    207,640
    
    
    
    5,414,965Ratification of Appointment of Deloitte & Touche LLP
    
    
    42,348,109
    
    
    
    930,164
    
    
    
    7,332
    
    
    
    
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ITEM 6. EXHIBITS
  Exhibit No.
    
    Description of Document10.69
    
    Amended and Restated ITC Holdings Corp. 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 as of June 27, 2008,
between the Registrant and BNY Mellon Capital Markets, LLC
(filed with Registrants Form 8-K filed on June 27, 2008)31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13a-14 of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 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
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SIGNATURES
   ITC HOLDINGS CORP.By:
    /s/ Joseph L. WelchJoseph L. WelchPresident, Chief Executive Officer
and Treasurer (principal executive officer)By:
    /s/ Edward M. RahillEdward M. RahillSenior Vice President  Finance and
Chief Financial Officer
(principal financial officer and
principal accounting officer) 33