þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended March 31, 2015 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Michigan (State or Other Jurisdiction of Incorporation or Organization) | 32-0058047 (I.R.S. Employer Identification No.) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Page | |
Exhibit Index | |
• | “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; |
• | “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, LLC, 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. |
• | “Consumers Energy” are references to Consumers Energy Company, a wholly-owned subsidiary of CMS Energy Corporation; |
• | “DTE Electric” are references to DTE Electric Company, a wholly-owned subsidiary of DTE Energy Company; |
• | “FERC” are references to the Federal Energy Regulatory Commission; |
• | “FPA” are references to the Federal Power Act; |
• | “IP&L” are references to Interstate Power and Light Company, an Alliant Energy Corporation subsidiary; |
• | “ITC Holdings’ annual report on Form 10-K” are references to the annual report on Form 10-K filed on February 26, 2015; |
• | “kV” are references to kilovolts (one kilovolt equaling 1,000 volts); |
• | “kW” are references to kilowatts (one kilowatt equaling 1,000 watts); |
• | “LIBOR” are references to the London Interbank Offered Rate; |
• | “MISO” are references to the Midcontinent Independent System Operator, Inc., a FERC-approved RTO which oversees the operation of the bulk power transmission system for a substantial portion of the Midwestern United States and Manitoba, Canada, and of which ITCTransmission, METC and ITC Midwest are members; |
• | “NERC” are references to the North American Electric Reliability Corporation; |
• | “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. |
March 31, | December 31, | ||||||
(in thousands, except share data) | 2015 | 2014 | |||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 9,114 | $ | 27,741 | |||
Accounts receivable | 102,760 | 100,998 | |||||
Inventory | 30,964 | 30,892 | |||||
Deferred income taxes | 18,085 | 14,511 | |||||
Regulatory assets | 7,183 | 5,393 | |||||
Prepaid and other current assets | 17,201 | 7,281 | |||||
Total current assets | 185,307 | 186,816 | |||||
Property, plant and equipment (net of accumulated depreciation and amortization of $1,414,073 and $1,388,217, respectively) | 5,634,544 | 5,496,875 | |||||
Other assets | |||||||
Goodwill | 950,163 | 950,163 | |||||
Intangible assets (net of accumulated amortization of $25,748 and $24,917, respectively) | 47,971 | 48,794 | |||||
Regulatory assets | 231,847 | 223,712 | |||||
Deferred financing fees (net of accumulated amortization of $14,535 and $15,972, respectively) | 31,516 | 30,311 | |||||
Other | 42,314 | 37,418 | |||||
Total other assets | 1,303,811 | 1,290,398 | |||||
TOTAL ASSETS | $ | 7,123,662 | $ | 6,974,089 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 95,149 | $ | 107,969 | |||
Accrued payroll | 11,959 | 23,502 | |||||
Accrued interest | 37,366 | 50,538 | |||||
Accrued taxes | 30,473 | 41,614 | |||||
Regulatory liabilities | 38,523 | 39,972 | |||||
Refundable deposits from generators for transmission network upgrades | 3,104 | 10,376 | |||||
Debt maturing within one year | 175,000 | 175,000 | |||||
Other | 4,383 | 14,043 | |||||
Total current liabilities | 395,957 | 463,014 | |||||
Accrued pension and postretirement liabilities | 71,876 | 69,562 | |||||
Deferred income taxes | 690,789 | 656,562 | |||||
Regulatory liabilities | 166,712 | 160,070 | |||||
Refundable deposits from generators for transmission network upgrades | 7,622 | 9,384 | |||||
Other | 19,104 | 17,354 | |||||
Long-term debt | 4,056,131 | 3,928,586 | |||||
Commitments and contingent liabilities (Note 10) | |||||||
STOCKHOLDERS’ EQUITY | |||||||
Common stock, without par value, 300,000,000 shares authorized, 155,197,816 and 155,140,967 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively | 927,814 | 923,191 | |||||
Retained earnings | 783,462 | 741,550 | |||||
Accumulated other comprehensive income | 4,195 | 4,816 | |||||
Total stockholders’ equity | 1,715,471 | 1,669,557 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 7,123,662 | $ | 6,974,089 |
Three months ended | |||||||
March 31, | |||||||
(in thousands, except per share data) | 2015 | 2014 | |||||
OPERATING REVENUES | $ | 272,487 | $ | 258,603 | |||
OPERATING EXPENSES | |||||||
Operation and maintenance | 25,562 | 24,861 | |||||
General and administrative | 40,894 | 27,962 | |||||
Depreciation and amortization | 34,435 | 31,378 | |||||
Taxes other than income taxes | 22,380 | 21,193 | |||||
Other operating (income) and expenses — net | (236 | ) | (232 | ) | |||
Total operating expenses | 123,035 | 105,162 | |||||
OPERATING INCOME | 149,452 | 153,441 | |||||
OTHER EXPENSES (INCOME) | |||||||
Interest expense — net | 48,474 | 45,309 | |||||
Allowance for equity funds used during construction | (7,549 | ) | (5,012 | ) | |||
Other income | (253 | ) | (161 | ) | |||
Other expense | 1,188 | 1,333 | |||||
Total other expenses (income) | 41,860 | 41,469 | |||||
INCOME BEFORE INCOME TAXES | 107,592 | 111,972 | |||||
INCOME TAX PROVISION | 40,460 | 42,836 | |||||
NET INCOME | $ | 67,132 | $ | 69,136 | |||
Basic earnings per common share | $ | 0.43 | $ | 0.44 | |||
Diluted earnings per common share | $ | 0.43 | $ | 0.43 | |||
Dividends declared per common share | $ | 0.1625 | $ | 0.1425 |
Three months ended | ||||||||
March 31, | ||||||||
(in thousands) | 2015 | 2014 | ||||||
NET INCOME | $ | 67,132 | $ | 69,136 | ||||
OTHER COMPREHENSIVE INCOME | ||||||||
Derivative instruments, net of tax (Note 6) | (727 | ) | 106 | |||||
Available-for-sale securities, net of tax (Note 6) | 106 | 50 | ||||||
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX | (621 | ) | 156 | |||||
TOTAL COMPREHENSIVE INCOME | $ | 66,511 | $ | 69,292 |
Three months ended | |||||||
March 31, | |||||||
(in thousands) | 2015 | 2014 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 67,132 | $ | 69,136 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization expense | 34,435 | 31,378 | |||||
Recognition, refund and collection of revenue accruals and deferrals — including accrued interest | (12,484 | ) | (5,139 | ) | |||
Deferred income tax expense | 27,823 | 28,243 | |||||
Allowance for equity funds used during construction | (7,549 | ) | (5,012 | ) | |||
Other | 6,777 | 3,841 | |||||
Changes in assets and liabilities, exclusive of changes shown separately: | |||||||
Accounts receivable | (3,826 | ) | (11,555 | ) | |||
Inventory | (72 | ) | 1,775 | ||||
Prepaid and other current assets | (9,920 | ) | (4,525 | ) | |||
Accounts payable | (4,855 | ) | (23,339 | ) | |||
Accrued payroll | (7,540 | ) | (8,011 | ) | |||
Accrued interest | (13,172 | ) | (24,079 | ) | |||
Accrued taxes | (11,140 | ) | (1,653 | ) | |||
Other current liabilities | (1,676 | ) | (7,299 | ) | |||
Other non-current assets and liabilities, net | 3,000 | 1,954 | |||||
Net cash provided by operating activities | 66,933 | 45,715 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Expenditures for property, plant and equipment | (172,604 | ) | (159,145 | ) | |||
Other | (5,637 | ) | 128 | ||||
Net cash used in investing activities | (178,241 | ) | (159,017 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Borrowings under revolving credit agreements | 349,800 | 488,000 | |||||
Borrowings under term loan credit agreements | — | 110,000 | |||||
Repayments of revolving credit agreements | (222,400 | ) | (464,700 | ) | |||
Issuance of common stock | 1,246 | 2,906 | |||||
Dividends on common and restricted stock | (25,220 | ) | (22,453 | ) | |||
Refundable deposits from generators for transmission network upgrades | 143 | 4,967 | |||||
Repayment of refundable deposits from generators for transmission network upgrades | (9,178 | ) | (22,155 | ) | |||
Other | (1,710 | ) | (3,568 | ) | |||
Net cash provided by financing activities | 92,681 | 92,997 | |||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (18,627 | ) | (20,305 | ) | |||
CASH AND CASH EQUIVALENTS — Beginning of period | 27,741 | 34,275 | |||||
CASH AND CASH EQUIVALENTS — End of period | $ | 9,114 | $ | 13,970 |
Three months ended | |||||||
March 31, | |||||||
(in thousands) | 2015 | 2014 | |||||
Supplementary cash flows information: | |||||||
Interest paid (net of interest capitalized) | $ | 61,633 | $ | 68,070 | |||
Income taxes paid — net | 19,817 | 16,101 | |||||
Supplementary non-cash investing and financing activities: | |||||||
Additions to property, plant and equipment and other long-lived assets (a) | $ | 71,219 | $ | 96,186 | |||
Allowance for equity funds used during construction | 7,549 | 5,012 |
(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 March 31, 2015 or 2014, respectively, but have been or will be included as a cash outflow from investing activities for expenditures for property, plant and equipment when paid. |
(in thousands) | Total | |||
Balance as of December 31, 2014 | $ | (56,103 | ) | |
Net refund of 2013 revenue deferrals and accruals, including accrued interest | 8,789 | |||
Net revenue accrual for the three months ended March 31, 2015 | 4,202 | |||
Net accrued interest payable for the three months ended March 31, 2015 | (507 | ) | ||
Balance as of March 31, 2015 | $ | (43,619 | ) |
(in thousands) | Total | |||
Current assets | $ | 7,183 | ||
Non-current assets | 19,897 | |||
Current liabilities | (38,523 | ) | ||
Non-current liabilities | (32,176 | ) | ||
Balance as of March 31, 2015 | $ | (43,619 | ) |
Interest Rate Swaps | Notional Amount | Fixed Rate | Original Term | Effective Date | |||||||
(Amounts in millions) | |||||||||||
August 2014 swap | $ | 25.0 | 3.217 | % | 10 years | September 2016 | |||||
October 2014 swap | 25.0 | 3.075 | % | 10 years | September 2016 | ||||||
January 2015 swap | 25.0 | 2.301 | % | 10 years | September 2016 | ||||||
Total | $ | 75.0 |
(amounts in millions) | Total Available Capacity | Outstanding Balance (a) | Unused Capacity | Weighted Average Interest Rate on Outstanding Balance | Commitment Fee Rate (b) | ||||||||||||
ITC Holdings | $ | 400.0 | $ | 125.1 | $ | 274.9 | 1.4% | (c) | 0.175 | % | |||||||
ITCTransmission | 100.0 | 32.8 | 67.2 | 1.1% | (d) | 0.10 | % | ||||||||||
METC | 100.0 | 3.7 | 96.3 | 1.1% | (d) | 0.10 | % | ||||||||||
ITC Midwest | 250.0 | 216.4 | 33.6 | 1.1% | (d) | 0.10 | % | ||||||||||
ITC Great Plains | 150.0 | 62.2 | 87.8 | 1.1% | (d) | 0.10 | % | ||||||||||
Total | $ | 1,000.0 | $ | 440.2 | $ | 559.8 |
(a) | Included within long-term debt. |
(b) | Calculation based on the average daily unused commitments, subject to adjustment based on the borrower’s credit rating. |
(c) | Loan bears interest at a rate equal to LIBOR plus an applicable margin of 1.25% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1.00% above the one month LIBOR, plus an applicable margin of 0.25%, subject to adjustments based on ITC Holdings’ credit rating. |
(d) | Loans bear interest at a rate equal to LIBOR plus an applicable margin of 1.00% or at a base rate, which is defined as the higher of the prime rate, 0.50% above the federal funds rate or 1% above the one month LIBOR, subject to adjustments based on the borrower’s credit rating. |
Accumulated | ||||||||||||||||||
Other | Total | |||||||||||||||||
Common Stock | Retained | Comprehensive | Stockholders’ | |||||||||||||||
(in thousands, except share and per share data) | Shares | Amount | Earnings | Income (Loss) | Equity | |||||||||||||
BALANCE, DECEMBER 31, 2014 | 155,140,967 | $ | 923,191 | $ | 741,550 | $ | 4,816 | $ | 1,669,557 | |||||||||
Net income | — | — | 67,132 | — | 67,132 | |||||||||||||
Repurchase and retirement of common stock | (11,917 | ) | (476 | ) | — | — | (476 | ) | ||||||||||
Dividends declared on common stock ($0.1625 per share) | — | — | (25,220 | ) | — | (25,220 | ) | |||||||||||
Stock option exercises | 37,495 | 665 | — | — | 665 | |||||||||||||
Shares issued under the Employee Stock Purchase Plan | 17,267 | 581 | — | — | 581 | |||||||||||||
Issuance of restricted stock | 27,776 | — | — | — | — | |||||||||||||
Forfeiture of restricted stock | (13,772 | ) | — | — | — | — | ||||||||||||
Share-based compensation, net of forfeitures | — | 3,853 | — | — | 3,853 | |||||||||||||
Other comprehensive loss, net of tax | — | — | — | (621 | ) | (621 | ) | |||||||||||
BALANCE, MARCH 31, 2015 | 155,197,816 | $ | 927,814 | $ | 783,462 | $ | 4,195 | $ | 1,715,471 |
Accumulated | ||||||||||||||||||
Other | Total | |||||||||||||||||
Common Stock | Retained | Comprehensive | Stockholders’ | |||||||||||||||
(in thousands, except share and per share data) | Shares | Amount | Earnings | Income | Equity | |||||||||||||
BALANCE, DECEMBER 31, 2013 | 157,500,795 | $ | 1,014,435 | $ | 592,970 | $ | 6,327 | $ | 1,613,732 | |||||||||
Net income | — | — | 69,136 | — | 69,136 | |||||||||||||
Repurchase and retirement of common stock | (9,126 | ) | (312 | ) | — | — | (312 | ) | ||||||||||
Dividends declared on common stock ($0.1425 per share) | — | — | (22,453 | ) | — | (22,453 | ) | |||||||||||
Stock option exercises | 126,769 | 2,384 | — | — | 2,384 | |||||||||||||
Shares issued under the Employee Stock Purchase Plan | 18,150 | 522 | — | — | 522 | |||||||||||||
Issuance of restricted stock | 13,286 | — | — | — | — | |||||||||||||
Forfeiture of restricted stock | (18,020 | ) | — | — | — | — | ||||||||||||
Share-based compensation, net of forfeitures | — | 4,026 | — | — | 4,026 | |||||||||||||
Other comprehensive income, net of tax | — | — | — | 156 | 156 | |||||||||||||
BALANCE, MARCH 31, 2014 | 157,631,854 | $ | 1,021,055 | $ | 639,653 | $ | 6,483 | $ | 1,667,191 |
Three months ended | |||||||
March 31, | |||||||
(in thousands) | 2015 | 2014 | |||||
Balance at the beginning of period | $ | 4,816 | $ | 6,327 | |||
Derivative instruments | |||||||
Reclassification of net loss relating to interest rate cash flow hedges from AOCI to interest expense — net (net of tax of $75 and $76 for the three months ended March 31, 2015 and 2014, respectively) | 136 | 106 | |||||
Net unrealized loss on interest rate swaps relating to interest rate cash flow hedges (net of tax of $614 for the three months ended March 31, 2015) | (863 | ) | — | ||||
Derivative instruments, net of tax | (727 | ) | 106 | ||||
Available-for-sale securities | |||||||
Unrealized net gain on available-for-sale securities (net of tax of $76 and $36 for the three months ended March 31, 2015 and 2014, respectively) | 106 | 50 | |||||
Available-for-sale securities, net of tax | 106 | 50 | |||||
Total other comprehensive (loss) income, net of tax | (621 | ) | 156 | ||||
Balance at the end of period | $ | 4,195 | $ | 6,483 |
Three months ended | |||||||
March 31, | |||||||
(in thousands, except share, per share data and percentages) | 2015 | 2014 | |||||
Numerator: | |||||||
Net income | $ | 67,132 | $ | 69,136 | |||
Less: dividends declared and paid — common and restricted shares | (25,220 | ) | (22,453 | ) | |||
Undistributed earnings | 41,912 | 46,683 | |||||
Percentage allocated to common shares (a) | 99.2 | % | 99.1 | % | |||
Undistributed earnings — common shares | 41,577 | 46,263 | |||||
Add: dividends declared and paid — common shares | 25,024 | 22,262 | |||||
Numerator for basic and diluted earnings per common share | $ | 66,601 | $ | 68,525 | |||
Denominator: | |||||||
Basic earnings per common share — weighted average common shares outstanding | 153,970,515 | 156,189,874 | |||||
Incremental shares for stock options and employee stock purchase plan — weighted average assumed conversion | 1,444,202 | 1,505,205 | |||||
Diluted earnings per common share — adjusted weighted average shares and assumed conversion | 155,414,717 | 157,695,079 | |||||
Per common share net income: | |||||||
Basic | $ | 0.43 | $ | 0.44 | |||
Diluted | $ | 0.43 | $ | 0.43 | |||
(a) | Weighted average common shares outstanding | 153,970,515 | 156,189,874 | |||
Weighted average restricted shares (participating securities) | 1,209,468 | 1,361,045 | ||||
Total | 155,179,983 | 157,550,919 | ||||
Percentage allocated to common shares | 99.2 | % | 99.1 | % |
2015 | 2014 | ||||
Outstanding stock options and ESPP shares (as of March 31) | 4,553,938 | 5,020,845 | |||
Anti-dilutive stock options and ESPP shares (for the three months ended March 31) | 542,312 | 765,710 |
Three months ended | |||||||
March 31, | |||||||
(in thousands) | 2015 | 2014 | |||||
Service cost | $ | 1,624 | $ | 1,266 | |||
Interest cost | 924 | 901 | |||||
Expected return on plan assets | (960 | ) | (885 | ) | |||
Amortization of prior service credit | (10 | ) | (10 | ) | |||
Amortization of unrecognized loss | 1,061 | 386 | |||||
Net pension cost | $ | 2,639 | $ | 1,658 |
Three months ended | |||||||
March 31, | |||||||
(in thousands) | 2015 | 2014 | |||||
Service cost | $ | 2,122 | $ | 1,461 | |||
Interest cost | 619 | 498 | |||||
Expected return on plan assets | (463 | ) | (340 | ) | |||
Amortization of unrecognized loss | 125 | — | |||||
Net postretirement cost | $ | 2,403 | $ | 1,619 |
Fair Value Measurements at Reporting Date Using | |||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | ||||||||
Financial assets measured on a recurring basis: | |||||||||||
Cash and cash equivalents — cash equivalents | $ | 49 | $ | — | $ | — | |||||
Mutual funds — fixed income securities | 26,394 | — | — | ||||||||
Mutual funds — equity securities | 802 | — | — | ||||||||
Interest rate swap derivative | — | 111 | — | ||||||||
Financial liabilities measured on a recurring basis: | |||||||||||
Interest rate swap derivatives | — | (3,523 | ) | — | |||||||
Total | $ | 27,245 | $ | (3,412 | ) | $ | — |
Fair Value Measurements at Reporting Date Using | |||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | ||||||||
Financial assets measured on a recurring basis: | |||||||||||
Cash and cash equivalents — cash equivalents | $ | 5,452 | $ | — | $ | — | |||||
Mutual funds — fixed income securities | 26,715 | — | — | ||||||||
Mutual funds — equity securities | 667 | — | — | ||||||||
Financial liabilities measured on a recurring basis: | |||||||||||
Interest rate swap derivatives | — | (1,934 | ) | — | |||||||
Total | $ | 32,834 | $ | (1,934 | ) | $ | — |
Three months ended | |||||||
OPERATING REVENUES: | March 31, | ||||||
(in thousands) | 2015 | 2014 | |||||
Regulated Operating Subsidiaries | $ | 272,450 | $ | 258,693 | |||
ITC Holdings and other | 177 | 92 | |||||
Intercompany eliminations | (140 | ) | (182 | ) | |||
Total Operating Revenues | $ | 272,487 | $ | 258,603 |
Three months ended | |||||||
INCOME BEFORE INCOME TAXES: | March 31, | ||||||
(in thousands) | 2015 | 2014 | |||||
Regulated Operating Subsidiaries | $ | 148,818 | $ | 141,592 | |||
ITC Holdings and other | (41,226 | ) | (29,620 | ) | |||
Total Income Before Income Taxes | $ | 107,592 | $ | 111,972 |
Three months ended | |||||||
NET INCOME: | March 31, | ||||||
(in thousands) | 2015 | 2014 | |||||
Regulated Operating Subsidiaries | $ | 91,439 | $ | 86,553 | |||
ITC Holdings and other | 67,132 | 69,136 | |||||
Intercompany eliminations | (91,439 | ) | (86,553 | ) | |||
Total Net Income | $ | 67,132 | $ | 69,136 |
TOTAL ASSETS: | March 31, | December 31, | |||||
(in thousands) | 2015 | 2014 | |||||
Regulated Operating Subsidiaries | $ | 7,017,521 | $ | 6,867,411 | |||
ITC Holdings and other | 4,034,365 | 3,944,318 | |||||
Reconciliations / Intercompany eliminations (a) | (3,928,224 | ) | (3,837,640 | ) | |||
Total Assets | $ | 7,123,662 | $ | 6,974,089 |
(a) | Reconciliation of total assets results primarily from differences in the netting of deferred tax assets and liabilities at our Regulated Operating Subsidiaries as compared to the classification in our condensed consolidated statements of financial position. |
• | Certain elements of our Regulated Operating Subsidiaries’ formula rates can be and have been 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. |
• | Our actual capital investment may be lower than planned, which would cause a lower than expected rate base and therefore our revenues and earnings compared to our current expectations. 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. In addition, we expect to incur expenses related to the pursuit of development opportunities which may be higher than forecasted. |
• | The regulations to which we are subject may limit our ability to raise capital and/or pursue acquisitions, development opportunities or other transactions or may subject us to liabilities. |
• | Changes in energy laws, regulations or policies could impact our business, financial condition, results of operations and cash flows. |
• | If amounts billed for transmission service for our Regulated Operating Subsidiaries’ transmission systems are lower than expected, or our actual revenue requirements are higher than expected, the timing of collection of our revenues would be delayed. |
• | Each of our MISO Regulated Operating Subsidiaries depends on its primary customer for a substantial portion of its revenues, and any material failure by those primary customers to make payments for transmission services could have a material adverse effect on our business, financial condition, results of operations and cash flows. |
• | A significant amount of the land on which our assets are located is subject to easements, mineral rights and other similar encumbrances. As a result, we must comply with the provisions of various easements, mineral rights and other similar encumbrances, which may adversely impact their ability to complete construction projects in a timely manner. |
• | We contract with third parties to provide services for certain aspects of our business. If any of these agreements are terminated, we may face a shortage of labor or replacement contractors to provide the services formerly provided by these third parties. |
• | Hazards associated with high-voltage electricity transmission may result in suspension of our operations or the imposition of civil or criminal penalties. |
• | We are subject to environmental regulations and to laws that can give rise to substantial liabilities from environmental contamination. |
• | We are subject to various regulatory requirements, including reliability standards; contract filing requirements; reporting, recordkeeping and accounting requirements; and transaction approval requirements. Violations of these requirements, whether intentional or unintentional, may result in penalties that, under some circumstances, could have a material adverse effect on our business, financial condition, results of operations and cash flows. |
• | Acts of war, terrorist attacks, cyber attacks, natural disasters, severe weather and other catastrophic events may have a material adverse effect on our business, financial condition, results of operations and cash flows. |
• | ITC Holdings is a holding company with no operations, and unless we receive dividends or other payments from our subsidiaries, we may be unable to pay dividends and fulfill our other cash obligations. |
• | We have a considerable amount of debt and our reliance on debt financing may limit our ability to fulfill our debt obligations and/or to obtain additional financing. |
• | Certain provisions in our debt instruments limit our financial and operating flexibility. |
• | Adverse changes in our credit ratings may negatively affect us. |
• | 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. |
• | Our capital investment of $167.6 million at our Regulated Operating Subsidiaries for the three months ended March 31, 2015, resulting primarily from our focus on improving system reliability, increasing system capacity and upgrading the transmission network to support new generating resources; |
• | Debt issuance as described in Note 5 to the condensed consolidated financial statements and borrowings under our revolving and term loan credit agreements in 2015 and 2014 to fund capital investment at our Regulated Operating Subsidiaries and for general corporate purposes, resulting in higher interest expense; |
• | Debt maturing within one year of $175.0 million as of March 31, 2015 and the potentially higher interest rates associated with the additional financing required to repay this debt; and |
• | Recognition of an estimated contingent liability for the potential refunds relating to the rate of return on equity (“ROE”) and capital structure complaints as described in Note 10 to the condensed consolidated financial statements, which resulted in a total estimated pre-tax reduction of revenue and interest of $7.9 million and an estimated after-tax reduction to net income of $4.8 million for the three months ended March 31, 2015. |
Actual Capital | Forecasted Capital | |||||||||
Long-term Capital | Investment for the | Investment for the | ||||||||
(in millions) | Investment Program | three months ended | year ending | |||||||
Source of Investment | 2014-2018 | March 31, 2015 (a) | December 31, 2015 | |||||||
ITCTransmission | $ | 647 | $ | 36.8 | $170 — 200 | |||||
METC | 546 | 30.0 | 150 — 170 | |||||||
ITC Midwest (b) | 1,991 | 95.0 | 380 — 405 | |||||||
ITC Great Plains | 194 | 5.8 | 10 — 25 | |||||||
Development and other (c) | 1,122 | 1.1 | 0 — 10 | |||||||
Total | $ | 4,500 | $ | 168.7 | $710 — 810 |
(a) | Capital investment amounts differ from cash expenditures for property, plant and equipment included in our condensed 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) | ITC Midwest’s investment program includes the 2011 MISO MVPs as discussed above under “Capital Project Updates and Other Recent Developments”. |
(c) | Refer to “Item 1 Business — Development of Business — Development Projects” in our Form 10-K for the year ended December 31, 2014 for discussion on our development projects. |
Three months ended | Percentage | |||||||||||||
March 31, | Increase | increase | ||||||||||||
(in thousands) | 2015 | 2014 | (decrease) | (decrease) | ||||||||||
OPERATING REVENUES | $ | 272,487 | $ | 258,603 | $ | 13,884 | 5.4 | % | ||||||
OPERATING EXPENSES | ||||||||||||||
Operation and maintenance | 25,562 | 24,861 | 701 | 2.8 | % | |||||||||
General and administrative | 40,894 | 27,962 | 12,932 | 46.2 | % | |||||||||
Depreciation and amortization | 34,435 | 31,378 | 3,057 | 9.7 | % | |||||||||
Taxes other than income taxes | 22,380 | 21,193 | 1,187 | 5.6 | % | |||||||||
Other operating (income) and expenses — net | (236 | ) | (232 | ) | (4 | ) | 1.7 | % | ||||||
Total operating expenses | 123,035 | 105,162 | 17,873 | 17.0 | % | |||||||||
OPERATING INCOME | 149,452 | 153,441 | (3,989 | ) | (2.6 | )% | ||||||||
OTHER EXPENSES (INCOME) | ||||||||||||||
Interest expense | 48,474 | 45,309 | 3,165 | 7.0 | % | |||||||||
Allowance for equity funds used during construction | (7,549 | ) | (5,012 | ) | (2,537 | ) | 50.6 | % | ||||||
Other income | (253 | ) | (161 | ) | (92 | ) | 57.1 | % | ||||||
Other expense | 1,188 | 1,333 | (145 | ) | (10.9 | )% | ||||||||
Total other expenses (income) | 41,860 | 41,469 | 391 | 0.9 | % | |||||||||
INCOME BEFORE INCOME TAXES | 107,592 | 111,972 | (4,380 | ) | (3.9 | )% | ||||||||
INCOME TAX PROVISION | 40,460 | 42,836 | (2,376 | ) | (5.5 | )% | ||||||||
NET INCOME | $ | 67,132 | $ | 69,136 | $ | (2,004 | ) | (2.9 | )% |
Percentage | ||||||||||||||||||||
2015 | 2014 | Increase | increase | |||||||||||||||||
(in thousands) | Amount | Percentage | Amount | Percentage | (decrease) | (decrease) | ||||||||||||||
Network revenues | $ | 196,976 | 72.3 | % | $ | 188,776 | 73.0 | % | $ | 8,200 | 4.3 | % | ||||||||
Regional cost sharing revenues | 74,550 | 27.4 | % | 59,319 | 22.9 | % | 15,231 | 25.7 | % | |||||||||||
Point-to-point | 4,214 | 1.5 | % | 5,685 | 2.2 | % | (1,471 | ) | (25.9 | )% | ||||||||||
Scheduling, control and dispatch | 3,215 | 1.2 | % | 3,162 | 1.2 | % | 53 | 1.7 | % | |||||||||||
Other | 1,075 | 0.4 | % | 1,661 | 0.7 | % | (586 | ) | (35.3 | )% | ||||||||||
Recognition of contingent liability for return on equity complaint | (7,543 | ) | (2.8 | )% | — | — | % | (7,543 | ) | n/a | ||||||||||
Total | $ | 272,487 | 100.0 | % | $ | 258,603 | 100.0 | % | $ | 13,884 | 5.4 | % |
• | Fund capital expenditures at our Regulated Operating Subsidiaries. Our plans with regard to property, plant and equipment investments are described in detail above under “— Capital Investment and Operating Results Trends.” |
• | Fund business development expenses and related capital expenditures. We are pursuing development activities for transmission projects which 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, including principal repayments and periodic interest payments. We expect our interest payments to increase each year as a result of additional debt we expect to incur to fund our capital expenditures and for general corporate purposes. |
• | Fund any potential share repurchases available under the Board of Directors authorized share repurchase program as described in Note 6 to the condensed consolidated financial statements. |
• | Fund contributions to our retirement benefit plans, as described in Note 8 to the condensed consolidated financial statements. We expect to make an estimated additional contribution of approximately $22.8 million to these plans in 2015. The impact of the growth in the number of participants in our retirement benefit plans and changes in the requirements of the Pension Protection Act may require contributions to our retirement benefit plans to be higher than we have experienced in the past. |
Issuer | Issuance | Standard and Poor’s Ratings Services (a) | Moody’s Investor Service, Inc. (b) | |||
ITC Holdings | Senior Unsecured Notes | BBB+ | Baa2 | |||
ITCTransmission | First Mortgage Bonds | A | A1 | |||
METC | Senior Secured Notes | A | A1 | |||
ITC Midwest | First Mortgage Bonds | A | A1 | |||
ITC Great Plains | First Mortgage Bonds | A | A1 |
(a) | On December 6, 2013, Standard and Poor’s Ratings Services (“Standard and Poor’s”) upgraded the senior unsecured credit rating of ITC Holdings and reaffirmed the secured credit ratings of ITCTransmission, METC and ITC Midwest. On October 7, 2014, Standard and Poor’s issued a secured credit rating for ITC Great Plains. All of the ratings have a stable outlook. |
(b) | On April 15, 2015, Moody’s Investor Service, Inc. reaffirmed the credit ratings for ITC Holdings and the Regulated Operating Subsidiaries. All of the ratings have a stable outlook. |
• | Amounts borrowed under our unsecured, unguaranteed revolving credit agreements; and |
• | The issuance of $225.0 million of 3.83% First Mortgage Bonds, Series G, due 2055 by ITC Midwest. |
Period | Total Number of Shares Purchased (a) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (b) | |||||||||||
January 2015 | 3,823 | $ | 42.26 | — | $ | 120.0 | |||||||||
February 2015 | 6,651 | 39.21 | — | 120.0 | |||||||||||
March 2015 | 1,443 | 37.42 | — | 120.0 | |||||||||||
Total | 11,917 | $ | 39.97 | — |
(a) | Shares acquired were delivered to us by employees as payment of tax withholding obligations due to us upon the vesting of restricted stock. |
(b) | In April 2014, the Board of Directors authorized and ITC Holdings announced a share repurchase program for up to $250.0 million, which expires in December 2015. |
Exhibit No. | Description of Document | ||
3.2 | Fifth Amended and Restated Bylaws of Registrant dated as of February 24, 2015 (filed with Registrant’s 2014 Form 10-K) | ||
4.43 | Eighth Supplemental Indenture, dated as of March 18, 2015, 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 April 7, 2015) | ||
10.140 | Summary of Annual Incentive Plan (2015) | ||
10.141 | Form of Restricted Stock Award Agreement (5 year vesting) (February 2015) | ||
10.142 | Amendment and Restatement of the Distribution - Transmission Interconnection Agreement by and between Michigan Electric Transmission Company, LLC and Consumers Energy Company, effective January 1, 2015 | ||
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 2002 | ||
31.2 | 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 2002 | ||
32 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | ||
101.DEF | XBRL Taxonomy Extension Definition Database | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
ITC HOLDINGS CORP. | |||
By: | /s/ Joseph L. Welch | ||
Joseph L. Welch | |||
President and Chief Executive Officer (duly authorized officer) | |||
By: | /s/ Rejji P. Hayes | ||
Rejji P. Hayes | |||
Senior Vice President, Chief Financial Officer and Treasurer (principal financial and accounting officer) |
Category | Goal | Weight |
Safety & Compliance 10% weight/20% Maximum Potential Payout | Safety as measured by lost time | 2.5%-5% |
Safety as measured by recordable incidents | 5% | |
Infrastructure protection as measured by cyber security performance | 5% | |
Infrastructure protection as measured by physical security performance | 5% | |
System Performance 30% Weight/60% Maximum Potential Payout | ITCTransmission outage frequency | 5% |
METC outage frequency | 5% | |
ITC Midwest outage frequency | 5% | |
ITC Midwest outage restoration | 5% | |
ITCTransmission Field Operation and Maintenance Plan | 5% | |
METC Field Operation and Maintenance Plan | 5% | |
ITC Midwest Field Operation and Maintenance Plan | 5% | |
ITCTransmission, METC, ITC Midwest, and ITC Great Plains Capital Project Plan on a Combined Basis | 15%-25% | |
Financial 60% Weight/120% Maximum Potential Payout | Non-field Operation and Maintenance Expense | 10% |
Net Income (1) | 5%-10% | |
Total Shareholder Return (TSR) (2) | 20%-100% | |
Total | 200% |
(1) | Net Income is defined as net income at ITC Holdings Corp.’s four operating subsidiaries, which are International Transmission Company, Michigan Electric Transmission Company, LLC, ITC Midwest LLC and ITC Great Plains, LLC; excluding certain items, including, without limitation, changes in accounting standards or tax laws, potential impacts associated with the MISO ROE complaint or potential asset impairments associated with certain assets and the effects of any changes in tax depreciation elections. |
(2) | TSR is compared to the Dow Jones Utility Average Index companies. TSR must be positive for the year and must exceed the 50 th percentile of the Dow Jones Utility Average Companies before there will be any payout for meeting this goal, as illustrated below: |
Total Return to Shareholders Relative to Each of the Dow Jones Utility Average Companies | Performance Factor |
1st to 50th percentile | 1.0 |
51st to 60th percentile | 1.2 |
61st to 70th percentile | 1.4 |
71st to 80th percentile | 1.6 |
81st to 90th percentile | 1.8 |
91st to 100th percentile | 2.0 |
1. | Grant of the Restricted Stock. Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Agreement, the Company hereby grants to the Employee ___________shares of Common Stock (hereinafter called the “Restricted Stock”). The Restricted Stock shall vest and become nonforfeitable in accordance with Section 2 hereof. In the event of any conflict between the Plan and this Agreement, the terms of the Plan shall control, it being understood that variations in this Agreement from terms set forth in the Plan shall not be considered to be in conflict if the Plan permits such variations. |
2. | Vesting and Forfeiture. |
3. | Certificates. |
1.2 | Agreement means this Interconnection Agreement between Local Distribution Company and Transmission Provider, including all attachments hereto, as the same may be amended, supplemented, or modified in accordance with its terms |
1.10 | Distribution System Control Area shall mean a Control Area whose load and generation, and other bulk power supply points are integrated by the Transmission System. |
1.12 | Distribution Transformer shall mean an electrical transformer which, generally, has its secondary low-side windings rated at Nominal Voltage of less than 138 kV. |
1.13 | Due Diligence shall mean the exercise of good faith efforts to perform a required act on a timely basis and in accordance with Good Utility Practice using the necessary technical and personnel resources. |
1.14 | ECAR is an acronym, which stands for the East Central Area Reliability coordination agreement. This is the Agreement under which Transmission Providers, who are signatories of the agreement, establish regional coordination practices and guides to govern the electric coordinated operation and reliability of the East Central Region of North America. |
1.15 | Effective Date shall mean the closing date as defined in the Membership Interests Purchase Agreement between the Parties. |
1.16 | Eligible Customer shall have the same meaning as that term is defined under the Transmission Provider’s OATT on file with the FERC. |
1.17 | Emergency means a condition or situation that in the reasonable good faith determination of the affected Party in accordance with Good Utility Practice contributes to an existing or imminent physical threat of danger to life or a significant threat to health, property or the environment. |
1.18 | Extended Outage shall mean an Unplanned Outage, in which facilities are automatically removed from service (typically by relay-action operating circuit breakers), with a duration of more than two (2) minutes. |
1.19 | FERC shall mean the Federal Energy Regulatory Commission or its successor federal agency. |
1.21 | Forced Outage shall mean an Unplanned Outage, in which facilities are removed from service by operator intervention and not automatically such as by relay-action operating circuit breakers. |
1.22 | Good Utility Practice shall mean any of the practices, methods and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Good Utility Practice |
1.23 | Governmental Authority shall mean any foreign, federal, state, local or other governmental regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature, rulemaking board, tribunal, arbitrating body, or other governmental authority; provided such entity possesses valid jurisdictional authority to regulate the Parties and the terms and conditions of this Agreement. |
1.25 | Interconnection Equipment shall mean all the equipment that is necessary for the interconnection of the Distribution System to the Transmission System which is located at the substations listed in Exhibit 1 hereto as it may be revised from time to time. |
1.26 | Interconnection Point(s) shall mean the point(s) at which the Distribution System is connected to the Transmission System, as set forth in Exhibit 1 hereto as it may be revised from time to time. |
1.27 | Interconnection Service shall mean the services provided by the Transmission Provider |
1.28 | Interconnection Standards shall be those standards provided by the Transmission Provider to the Local Distribution Company to establish and maintain interconnection operation in compliance with standards of NERC, ECAR, applicable state or federal regulations or by mutual agreement of the Parties. |
1.29 | Interest Rate shall mean an annual percentage rate of interest equal to the lesser of (a) the prime rate published by the Wall Street Journal (which represents the base rate on corporate loans posted by at least 75% of the nation’s banks) on the date due, plus 2%, or (b) the highest rate permitted by law. |
1.30 | Jointly Owned Assets shall mean those assets in which the Transmission Provider and Local Distribution Company have undivided ownership interests. Due to the nature of substation designs, many of the supporting substation assets (e.g., station batteries, fence, control houses, ground |
1.31 | Knowledge shall mean actual knowledge of the corporate officers or managers of the specified Person charged with responsibility for the particular function as of the Effective Date of this Agreement, or, with respect to any certificate delivered pursuant to the Agreement, the date of delivery of the certificate. |
1.32 | Least-Cost shall mean the lowest Transmission System and Distribution System facility costs, over the life of the facility, to accommodate an improvement need while adequately providing for reliability, operating, and maintenance requirements. |
1.33 | Local Distribution Company shall mean Consumers Energy Company and its successors and assigns. |
1.34 | Local Distribution Company Provided Services shall mean those services provided by the Local Distribution Company for the Transmission Provider by mutual agreement or contract. |
1.35 | Local Distribution Company’s Representative shall be that person(s) identified as the point of contact for day-to-day operations of the Distribution System, identified in Section 2.3. |
1.36 | Momentary Outage shall mean a Distribution or Transmission System (in whole or in part) interruption in service with a duration of two (2) minutes or less. |
1.37 | Momentary Outage Event shall mean one or more Momentary Outages within any 60-minute period that are attributable to the same root cause. |
1.38 | NERC shall mean the North American Electric Reliability Council or its successor. |
1.39 | Network Security shall mean the ability of the Transmission System to withstand sudden disturbances such as unforeseen conditions, electric short circuits or unanticipated loss of system elements consistent with reliability principles used to design, plan, operate, and assess the actual or projected reliability of an electric system that are established by any Governmental Authority, NERC or ECAR and which are implemented by Transmission Provider or required of Transmission Provider in compliance with Security Coordinator directives. |
1.40 | Network Security Condition shall mean a condition or situation in which, in the reasonable good faith determination of Transmission Provider, Network Security is not satisfied or is threatened. |
1.41 | Nominal Voltage shall mean an accepted standard voltage level offered by the Transmission Provider, at various points on the Transmission System, including but not limited to 120 kV, 138 kV and 345 kV. |
1.43 | Open Access Transmission Tariff or OATT shall mean the Open Access Transmission Tariff of the Transmission Provider on file with the FERC. |
1.44 | Operating Committee means the committee established pursuant to Section 6.4.3 of the Operating Agreement dated April 1, 2001, as amended and restated, between Local Distribution Company and Transmission Provider. |
1.45 | Party or Parties shall have the meaning set forth in the introductory paragraph of this Agreement. |
1.46 | Person shall mean any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, or governmental entity or any department or agency thereof. |
1.47 | Planned Outage shall mean action by (i) Local Distribution Company or Transmission Provider to take its equipment, facilities or systems out of service, partially or completely, to perform work on specific components that is scheduled in advance and has a predetermined start date and duration pursuant to the procedures set forth in Sections 3.10.1, 3.10.2, and 3.10.4. Planned Outage shall not include the construction of new facilities or system elements, the modification of existing facilities or system elements addressed in Article 9, which includes, but is not limited to, activities associated with the construction of third party facilities or with the modifications required to accommodate third party facilities. |
1.48 | Planning Committee means the committee established pursuant to Section 6.4.3 of the Operating Agreement dated April 1, 2001, as amended and restated, between Local Distribution Company and Transmission Provider. |
1.49 | Protective Relay is a device which detects abnormal power system conditions and, in response, initiates automatic control action |
1.50 | Protective Relay System is a group of Protective Relays and associated sensing devices and communications equipment that detects system abnormalities and performs automatic control action to mitigate or reduce adverse effects of such abnormalities. |
1.51 | Qualified Personnel shall mean individuals trained for their positions in accordance with Good Utility Practice. |
1.53 | Regulated Substance means any contaminant, hazardous waste, hazardous substance, hazardous constituent, or toxic substance, as defined in the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 USC 9601 et seq, Resource Conservation and Recovery Act (RCRA), 42 USC 6901 et seq, Toxic Substances Control Act (TSCA), 15 USC 2601 et seq, The Michigan Natural Resources and Environmental Protection Act (MCLA 324.101 et seq); or any other similar statutes now or hereafter in effect. |
1.54 | Release shall mean, spill, leak, discharge, dispose of, pump, pour, emit, empty, inject, leach, dump, or allow to escape into or through the environment. |
1.55 | Revenue Quality Metering System shall mean a system which includes current and voltage instrument transformers, secondary wiring, test switches, meter transducer(s), meter and loss compensation as set forth in Article 5. |
1.56 | RTU - Remote Terminal Units shall mean a device connected by a communication system to one or more master computers with appropriate software placed at various locations to collect data and perform remote control. It may also perform intelligent autonomous control of electrical systems and report the results back to the master computer(s). |
1.57 | Security Coordinator shall mean a NERC-approved entity that provides the security assessment and emergency operations coordination for one or more Control Areas or transmission providers and which has operational authority under NERC standards over the Transmission Provider. |
1.58 | Steady-State Voltage shall mean the value of a voltage after all transients have decayed to a negligible value. The root-mean-square value in the steady-state does not vary with time. |
1.59 | Supervisory Control and Data Acquisition (SCADA) shall mean a system that provides data acquisition, supervisory control and alarm display and control from remote field locations to control centers. |
1.60 | Transmission Provider shall mean the Michigan Electric Transmission Company, LLC and its successors and assigns. |
1.61 | Transmission Provider’s Representative(s) shall be that person(s) identified as |
1.62 | Transmission System shall mean all the facilities of the Transmission Provider that perform a "Transmission" function, as defined in Section 1.1 of the Easement Agreement between the Parties, dated April 29, 2002, as modified by Section 3.4 of this Agreement. |
1.63 | Transmission System Operations Center(s) shall mean the electric Transmission System control center(s) that is/are responsible for monitoring and controlling the Transmission System in real time. |
1.64 | Unplanned Outage shall mean action by Local Distribution Company or Transmission Provider to take its equipment, facilities or systems out of service, partially or completely, due to an unanticipated failure, when such removal from service was not scheduled in accordance with Sections 3.10.1, 3.10.2, and 3.10.4. Such removal from service may be automatic such as by relay-action operating circuit breakers or by operator intervention. Momentary interruptions are excluded from the definition of Unplanned Outages. Unplanned Outages include Forced Outages as well as Extended Outages. |
2.2 | The Interconnection Points between the Transmission System and Distribution System are listed in Exhibit 1. It shall be the Transmission Provider’s responsibility to annually prepare an addendum to this exhibit that shows all new or modified interconnections. The original Exhibit 1 and all addendums shall be retained for future reference. |
2.4.1 | The Interconnection Point(s) shall be established and maintained in accordance with Good Utility Practice and the applicable NERC, Federal, State, OATT and ECAR standards and policies for Transmission Provider service to Local Distribution Company. |
2.4.2 | Reactive Power. Transmission Provider and Local Distribution Company recognize and agree that they have a mutual responsibility for maintaining voltage at the Interconnection Points. Transmission Provider is responsible for maintaining Transmission System voltage as listed in Sections 8.1, 8.2 and 8.3 and reasonably compensating for reactive power losses resulting from transmission service. The Local Distribution Company is responsible for controlling Distribution System voltage and compensating for Distribution |
(a) | The Planning Committee shall within 12 months of the Effective Date of this Agreement develop appropriate timeframes and procedures for accomplishing such conveyances. |
(b) | At least 12 months (or as close as feasible to 12 months) before implementing system modifications which would result in such a conveyance, the Party planning to do such modifications shall notify the other Party of such plans. The other Party, if it wishes, shall then have 2 months within which to propose an alternative modification which is consistent with Good Utility Practice, which would reduce or eliminate the need for conveyances, and which would cost the Party seeking to do the modifications no more than the originally proposed modification. If such an alternative is provided in a timely manner, the |
(c) | Possible impediments to timely conveying the property in question (e.g. difficulty in getting release from the conveyor’s indenture) shall be referred to the Administrative |
3.6(a) | Without limiting the generality of Section 3.5, Local Distribution Company shall own, operate and maintain its Distribution System in a manner in accordance with Good Utility Practice to prevent degradation of voltage or services of the Transmission System. The Local Distribution Company shall be responsible for the costs to repair or replace the Distribution System and Local Distribution Company’s Interconnection Equipment. |
3.6(b) | Without limiting the generality of Section 3.5, Transmission Provider shall own, operate and maintain its Transmission System in a manner in accordance with Good Utility Practice to prevent degradation of voltage or services of Local Distribution Company’s Distribution System. The Transmission Provider shall be responsible for the costs to repair or replace the Transmission System and Transmission Provider’s Interconnection Equipment. |
3.6(c) | Without limiting the generality of Section 3.5, Local Distribution Company or Transmission Provider, as appropriate pursuant to Section 3.3 hereof, shall operate and maintain Jointly Owned Assets in a manner in accordance with Good Utility Practice to prevent degradation of voltage or services to either Party. |
3.7(a) | Except during an Emergency, Local Distribution Company shall not, without prior Transmission Provider authorization, operate any Transmission Provider circuit, including transformer, line or bus elements. |
3.7(c) | In an Emergency, joint facilities shall be operated by the Party able to first respond with Qualified Personnel. |
3.9(a) | If Transmission Provider reasonably determines that (i) any of Local Distribution Company’s Interconnection Equipment fails to perform in a manner in accordance with Good Utility Practice or this Agreement, or (ii) Local Distribution Company has failed to perform proper testing or |
3.9(b) | If Local Distribution Company reasonably determines that (i) any of Transmission Provider’s Interconnection Equipment fails to perform in a manner in accordance with Good Utility Practice or this Agreement, or (ii) Transmission Provider has failed to perform |
4.4.1 | Values shall be inputted to a RTU or comparable communication device for communication with the Party having Control Area responsibility. |
4.4.2 | Transducers may utilize the voltage transformers and current transformer secondary circuits also utilized by the revenue metering equipment for a particular interconnection. In such case, the performance criteria listed in Exhibit 4 of the Agreement, Metering Specifications, for the voltage transformers and the current |
4.4.3 | Transducers shall have maximum 0.3% inaccuracy. Transducers shall be field calibrated as necessary but at least once every ten (10) years and documentation shall be retained showing the calibration results until next calibration. |
4.5 | To the extent new RTUs and associated communications equipment is to be installed, the Local Distribution Company shall install or facilitate installation of the RTU and associated communications equipment as soon as practicable, provided that installation shall be accomplished within a time period of no more than 270 days following notice by Transmission Provider or prior to commissioning of any new Interconnection Points. |
5.2.2 | Meters shall measure, at a minimum, megawatt hours and megavar hours and have bi-directional capability, where applicable. All measured values shall have individual outputs where applicable and a minimum 35-day interval data recording capability for each measured value. |
5.2.4 | Transmission Provider shall maintain records that demonstrate compliance with all meter tests and maintenance conducted in accordance with Good Utility Practice for the life of the Interconnection Point. Local Distribution Company shall have reasonable access to the records. |
5.2.7 | Transmission Provider’s Metering equipment shall be tested by Transmission Provider at its own expense not less than once every year, unless an extension of the testing cycle is agreed upon by the Parties. The accuracy of such metering equipment shall be maintained by Transmission Provider in accordance with applicable regulatory standards. At the request of either Party, special tests shall be made. If any special meter test discloses the metering device to be registering within acceptable limits of accuracy as specified herein, then the Party requesting such special meter test shall bear the expense thereof. Otherwise, the expense of such test shall be borne by the owner. Representatives of either Party shall be afforded opportunity to be present at all routine or special tests and upon occasions when any readings for purposes of settlements hereunder are taken from meters not producing an automatic record. |
5.2.10 In substations where an RTU or other remote data collecting and | telecommunication device is present, meters shall have form C, 3-wire outputs with programmable values determined by the Transmission Provider for bi-directional MWHs and MVARs. |
5.2.11 | In the event an interconnection meter needs replacement or repair, a representative from Local Distribution Company shall be given a reasonable opportunity to be present during such repair or replacement. |
6.4 | The owner (Transmission Provider or Local Distribution Company) of the line will provide the relay communication channel necessary for line protection at its expense. Owner will participate with other Party to test communication schemes upon request without charge. |
6.7(a) | As Transmission Provider’s system protection requirements change, Transmission Provider will upgrade its Protective Relaying System in accordance with Good Utility Practice. If these upgrades affect the serviceability and acceptability of the Protective Relaying Systems on the Interconnection Equipment which may be installed, owned, and operated by Local Distribution Company, the Local Distribution Company must upgrade its Protective Relay Systems at its expense (unless such modifications are required in association with the addition of generation to the system in which case Section 9.8 shall apply) as necessary to bring them into compatibility with that installed by Transmission Provider. Transmission Provider shall give Local Distribution Company notice of such upgrade as soon as practicable prior to the anticipated date of such upgrade. Any |
6.7(b) | As Local Distribution Company’s system protection requirements change, Local Distribution Company will upgrade its Protective Relaying System in accordance with Good Utility Practice. If these upgrades affect the serviceability and acceptability of the Protective Relaying Systems on the Interconnection Equipment which may be installed, owned, and operated by Transmission Provider, Transmission Provider must upgrade its Protective Relaying Systems at its expense (unless such modifications are required in association with the addition of generation to the system in which case Section 9.8 shall apply) as necessary to bring them into compatibility with that installed by Local Distribution Company. Local Distribution Company shall give Transmission Provider notice of such upgrade as soon as practicable prior to the anticipated date of such |
(i) | deliver on a reliable basis the projected capacity and energy needs of all loads served by the Local Distribution Company’s Distribution System and dependent upon the Transmission Provider’s facilities for delivery of such energy to the Distribution System; |
(ii) | provide needed support to the Local Distribution Company where a transmission addition is the Least-Cost electric solution to an improvement need, including but not limited to, the reliability needs of the Local Distribution Company; and |
(iii) | deliver energy from both existing and new generating facilities connected to and dependent upon Transmission Provider’s transmission of such energy |
(i) | coordination between short-term and long-term distribution and transmission planning; |
(ii) | developing and sharing computer simulation models needed to support Transmission Provider and Local Distribution Company planning activities; |
(iii) | coordination of permitting (including local and state approvals) and siting; |
(iv) | engineering and scheduling of new projects; |
(v) | construction and inspection standards; |
(vi) | information-sharing and priority-setting; and |
(vii) | health and safety issues. |
(i) | implement the methods and procedures developed pursuant to Section 7.2; |
(ii) | review planning studies and reports regarding projects needed or proposed for the area in the next five (5) years, or as determined by the Planning Committee; |
(iii) | recommend additional studies or evaluation of plans; |
(iv) | follow Least-Cost planning principles in recommending specific projects; |
(v) | at least once every year, prepare a planning report which shall include in priority order a list of projects proposed by either Party for the next year, the estimated costs of such projects, and the timetable for such projects, including the in-service date; and |
(vi) | review proposed programmatic changes to the electric system, including protective system upgrades |
(i) | A description of any changes to the Local Distribution Company’s Distribution System that may be needed to accommodate Transmission Provider’s plans set forth in Section 7.8(i) will be requested by the Transmission Provider. |
(ii) | Projected voltage levels under Normal System Conditions and Transmission Provider’s FERC 715 Planning criteria conditions at anticipated annual peak load and 80% of anticipated annual peak load for each Interconnection Point with planned additions for the next five (5) years, or as determined by the Planning Committee. |
(a) | no later than December 1 of each year, the most recent actual summer and winter demands in megawatts (MW) and megavars (Mvar) for all Interconnection Points connected to the Transmission System at the time of the Transmission Provider’s most recent seasonal system peaks (Transmission Provider must provide the Local Distribution Company the day and hour of such peak no later than September 1); and |
(b) | no later than February 1 of each year: |
(i) | annual peak demand forecasts in MW for each Local Distribution Company Interconnection Point to the Transmission System for the next five (5) years, or as determined by the Planning Committee, together with corresponding projected power factors; and |
(ii) | planned facility (new Interconnection Points) connections to the Transmission System for the next five (5) years, or as determined by the Planning Committee. |
(i) | A minimum Steady-State Voltage of 0.97 Per Unit (PU) at all Interconnection Points with Local Distribution Company with all influential Transmission Provider facilities in service (no contingency conditions); |
(ii) | A minimum Steady-State Voltage of 0.92 PU at all Interconnection Points with the Local Distribution Company influenced by one or more Transmission Provider facilities out of service (contingency conditions); |
(iii) | A maximum Steady-State Voltage of 1.05 PU at all Interconnection Points with the Local Distribution Company during all operating conditions; |
(iv) | An adequate Transmission System that shall not load Local Distribution Company facilities above normal ratings during peak load conditions with all influential Transmission Provider facilities in service (no contingency conditions); |
(v) | An adequate Transmission System that shall not load Local Distribution Company facilities above emergency ratings during peak load conditions with one or more influential Transmission Provider facilities out of service (contingency conditions); |
(vi) | On a three-year rolling average, experience no more than 0.357 Momentary Outage Events per 138 kV line protective zone (system average) and 0.743 Momentary Outage Events per 345 kV line protective zone (system average) per year. As used in this Article 8 the term “year” shall mean calendar year; and the term “line protective zone” is illustrated and defined as follows: Any given electrical fault on a transmission line will trip specific circuit breakers in a normally functioning system. All of the possible line fault locations that will trip these specific circuit breakers constitute the same line protective zone. Physically, a line protective zone consists of the conductors located between the current transformers that provide sensing to trip the circuit breakers for a line fault; |
(i) | Experience no more than three (3) Momentary Outage Events on any given 138 kV line protective zone and two (2) Momentary Outage Events on any given 345 kV line protective zone per year; |
(ii) | On a three-year rolling average, experience no more than 0.21 Unplanned Outages per 138 kV line protective zone (system average) and 0.18 Unplanned Outages per 345 kV line protective zone (system average) per year; |
(iii) | Experience no more than four (4) Unplanned Outages on any given 138 kV line protective zone and three (3) Unplanned Outages on any given 345 kV line protective zone per year; |
(iv) | Should the Transmission Provider fail to meet any of the requirements of Section 8.1(vi) or 8.1(viii) by more than 10% two years in a row, the Transmission Provider shall pay, as liquidated damages and not as a penalty, to the Local Distribution Company, an amount equal to one half of one percent (0.5%) of the annual revenue paid by the Local Distribution Company under the applicable transmission tariff; such liquidated damages amount shall be based upon the revenue received in the second year of such failure. Such liquidated damages amount shall be increased by one half of a percent (0.5%) for each additional 10% by which the Transmission Provider fails to meet the any of the given outage targets, up to a maximum of 4.0% of the annual revenue. Outage events affecting 15% or more of transmission line protective zones within a 24- |
17.2 | EXCEPT AS SET FORTH IN SECTION 8.3, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, EXEMPLARY, PUNITITIVE OR CONSEQUENTIAL DAMAGES SUCH AS, BUT NOT LIMITED TO, LOST PROFITS, REVENUE OR GOOD WILL, INTEREST, LOSS BY REASON OF SHUTDOWN OR NON-OPERATION OF EQUIPMENT OR MACHINERY, INCREASED EXPENSE OF OPERATION OF EQUIPMENT OR MACHINERY, COST OF PURCHASED OR REPLACEMENT POWER OR SERVICES OR CLAIMS BY CUSTOMERS, WHETHER SUCH LOSS IS BASED ON CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE. |
(a) | Workers’ Compensation Insurance in accordance with all applicable State, Federal, and Maritime Law. |
(b) | Employer’s Liability insurance in the amount of $1,000,000 per accident. |
(c) | Commercial General Liability or Excess Liability Insurance in the amount of $25,000,000 per occurrence. |
(d) | Automobile Liability Insurance for all owned, non-owned, and hired vehicles in the amount of $5,000,000 each accident. |
18.2 | A Party may, at its option, [A] be an approved self-insurer by the State of Michigan for the insurances required in 1.(a) and (d); and [B] maintain such deductibles and/or retentions under the insurance required in 1.(b) and (c) as is maintained by other similarly situated companies engaged in a similar business. The Parties agree that all amounts of self-insurance, retentions and/or deductibles are the responsibility of, and shall be borne by, the Party whom makes such an election. |
18.3 | Within fifteen (15) days of the Effective Date and thereafter when requested, in writing, but not more than once every 12 months, during the term of this Agreement (including any extensions) each Party shall provide to the other Party properly executed and |
(a) | Name of insurance company, policy number and expiration date. |
(b) | The coverage maintained and the limits on each, including the amount of deductibles or retentions, which shall be for the account of the Party maintaining such policy. |
(c) | The insurance company shall endeavor to provide thirty (30) days prior written notice of cancellation to the certificate holder. |
(d) | Standard of Care: Each Party shall use at least the same standard of care to protect Confidential Information it receives as that it uses to protect its own Confidential Information from unauthorized disclosure, publication or dissemination. |
(a) | The failure to pay any amount when due; |
(b) | The failure to comply with any material term or condition of this Agreement, including but not limited to any material Breach of a representation, warranty or covenant made in this Agreement; |
(c) | A Party’s abandonment of its work or the facilities contemplated in this Agreement; |
(d) | If a Party: (1) becomes insolvent; (2) files a voluntary petition in bankruptcy under any provision of any federal or state bankruptcy law or shall consent to the filing of any bankruptcy or reorganization petition against it under any similar law; (3) makes a general assignment for the benefit of its creditors; or (4) consents to the appointment of a receiver, trustee or liquidator; |
(e) | Failure of either Party to provide information or data to the other Party as required under this Agreement, provided the Party entitled to the information or data under this Agreement requires such information or data to satisfy its obligations under this Agreement. |
(a) | In the event of a material change in law or regulation that adversely affects, or may reasonably be expected to adversely affect, either Party’s performance under this Agreement, including but not limited to the following: |
(i) | this Agreement is not accepted for filing by the FERC without material modification or condition; |
(ii) | NERC or ECAR prevents, in whole or in part, either Party from performing any provision of this Agreement in accordance with its terms; or |
(iii) | The FERC, the United States Congress, any state, or any federal or state regulatory agency or commission implements any change in any law, regulation, rule or practice which |
(b) | If the Parties are unable to reach agreement on any such amendments, then the Parties shall continue to perform under this Agreement to the maximum extent possible, taking all reasonable steps to mitigate any adverse effect on each other resulting from the Event. If the Parties are unable to reach agreement on any such amendments, Transmission Provider shall have the right to make a unilateral filing with FERC to modify this Agreement pursuant to Section 205 of the Federal Power Act and Local Distribution Company shall have the right to make a unilateral filing with FERC to modify this Agreement pursuant to Section 206 of the Federal Power Act. Each Party shall have the right to protest any such filing by the other Party and to participate fully in any proceeding before FERC. |
26.1 | This Agreement shall constitute the entire Agreement between the Parties hereto relating to the subject matter hereof. In all other respects, special contracts or superseding rate schedules shall govern Transmission Provider’s transmission service to Local Distribution Company. |
26.2 | No failure or delay on the part of Transmission Provider or Local Distribution Company in exercising any of its rights under this Agreement, no partial exercise by either Party of any of its rights under this Agreement, and no course of dealing between the Parties shall constitute a waiver of the rights of either Party under this Agreement. Any waiver shall be effective only by a written instrument signed by the Party granting such waiver, and such shall not operate as a waiver of, or estoppel with respect to, any subsequent failure to comply therewith. |
EXHIBIT 1 - Interconnection | 37 | Blackman | |
38 | Blackstone | ||
39 | Blinton | ||
40 | Blue Water | ||
Points (Substations) Addendum 8, Final 10/02/14 | 41 | Bluegrass | |
Substation | 42 | Boardman | |
1 | Abbe | 43 | Boxboard |
2 | Acme (04/10) | 44 | Bricker |
3 | Alcona | 45 | Brickyard |
4 | Alder Creek | 46 | Briggs & Stratton |
5 | Alger | 47 | Broadmoor |
6 | Algoma | 48 | Bronco |
7 | Alma | 49 | Broughwell |
8 | Almeda | 50 | Buck Creek |
9 | Alpena | 51 | Bullock |
10 | Alpine | 52 | Busch Road (02/08) |
11 | Amber | 53 | Calhoun |
12 | American Bumper | 54 | Camelot Lake |
13 | Arthur (06/06) | 55 | Campbell 138 |
14 | Aubil Lake | 56 | Canal |
15 | Backus | 57 | Cannon |
16 | Bagley | 58 | Carpenter Rd (08/06) |
17 | Bangor | 59 | Carter |
18 | Baraga (12/07) | 60 | Cedar Springs |
19 | Bard Road | 61 | Cement City |
20 | Barnum Creek | 62 | Chase |
21 | Barry | 63 | Cheesman |
22 | Bass Creek | 64 | Chicago |
23 | Batavia | 65 | Churchill |
24 | Bay Road | 66 | Clare |
25 | Bayberry | 67 | Claremont |
26 | Beals Road | 68 | Clearwater |
27 | Becker | 69 | Cleveland |
28 | Beebe | 70 | Club |
29 | Beecher | 71 | Cobb |
30 | Bell Road | 72 | Cochran |
31 | Bennington | 73 | Cole Creek |
32 | Beveridge | 74 | Colony Farm |
33 | Bilmar | 75 | Convis |
34 | Bingham | 76 | Cork Street |
35 | Birchwood (06/12) | 77 | Cornell |
36 | Black River | 78 | Cottage Grove |
79 Covert | 121 Grand Blanc BOC |
80 Cowan Lake | 122 Gratiot |
81 Crahen (10/07) | 123 Gray Road (04/10) |
82 Croton | 124 Greenwood |
83 David | 125 Grey Iron |
84 Dean Road | 126 Grodi Road |
85 Deja | 127 Grout |
86 Delaney | 128 Hackett |
87 Delhi | 129 Hagadorn |
88 Denso Jackson | 130 Hager Park |
89 Derby | 131 Halsey |
90 Discovery Way (04/11) | 132 Haring |
91 Dorr Corners | 133 Harvard Lake (06/09) |
92 Dort | 134 Hazelwood |
93 Dow Corning | 135 Hemphill |
94 Dowling | 136 Hendershot |
95 Drake Road | 137 Higgins |
96 Duffield Rd | 138 Hillman Cogen |
97 Dupont | 139 Hodenpyl |
98 Duquite | 140 Holland Road |
99 Dutton | 141 Hotchkiss |
100 East Paris | 142 HSC |
101 East Tawas | 143 Hubbard Lake (12/07) |
102 Easton | 144 Hubbardston Road (06/10) |
103 Edenville | 145 Hudsonville |
104 Ellis | 146 Hughes Road |
105 Emmet | 147 Hull Street |
106 Englishville | 148 Iosco |
107 Eureka | 149 Island Road |
108 Farr Road | 150 Jamestown |
109 Felch Road | 151 Karn 138 |
110 Filer City | 152 Kentwood |
111 Fillmore | 153 Keystone |
112 Fort Custer | 154 Kinderhook (05/07) |
113 Forty Fourth Street | 155 Kipp Road |
114 Foundry | 156 Kraft |
115 Four Mile | 157 Lafayette |
116 Gaines (05/06) | 158 Laundra (05/07) |
117 Gallagher | 159 Lawndale |
118 Gaylord | 160 Layton |
119 Geddes (04/08) | 161 Leoni |
120 Gleaner | 162 Letts Road |
163 Lewiston | 205 Plymouth Street |
164 Lindbergh | 206 Plywood |
165 Livingston Peaker | 207 Port Calcite |
166 Lovejoy | 208 Port Sheldon |
167 Ludington | 209 Porter |
168 Manlius | 210 Portsmouth |
169 Marquette | 211 Price Road (09/07) |
170 McGulpin | 212 Progress Street |
171 MCV | 213 Race Street |
172 Meadowbrooke | 214 Raisin |
173 Mecosta | 215 Ransom |
174 Michigan | 216 Ratigan (12/12) |
175 Michigan Power (MPLP) | 217 Regal (01/13) |
176 Milham | 218 Renaissance |
177 Mio | 219 Rice Creek |
178 Monitor | 220 Riggsville |
179 Moore Road | 221 Rivertown |
180 Morrow | 222 Riverview |
181 Mullins | 223 Rockport/Presque Isle |
182 Neff Road | 224 Roedel Road |
183 Nineteen Mile Road | 225 Rogue River (06/07) |
184 North Belding | 226 Saginaw River |
185 North Corunna | 227 Samaria |
186 Northern Fibre | 228 Sanderson |
187 Nugent Sand | 229 Savidge |
188 Oakland | 230 Scott Lake |
189 Oceana | 231 Seamless East/Seamless |
190 Orr Road (03/09) | 232 Simpson (08/12) |
191 Packard | 233 Sonoma (05/06) |
192 Palisades | 234 Spaulding |
193 Parkville (08/12) | 235 Spruce Road |
194 Parr Road | 236 Stacey |
195 Parshallville | 237 Stamping Plant |
196 Pasadena | 238 Sternberg Road (05/11) |
197 Pavilion | 239 Steelcase |
198 Pearline (06/11) | 240 Stonegate |
199 Pettis Road | 241 Stover |
200 Pigeon River/Rondo | 242 Stronach |
201 Pingree (10/08) | 243 Summerton |
202 Piston Ring | 244 Thetford 138 |
203 Plaster Creek | 245 Tihart |
204 Plum (07/10) | 246 Tinsman |
247 Tippy | 264 Wackerly |
248 Titus Lake | 265 Warner |
249 Trillium (06/07) | 266 Warren |
250 Trowbridge | 267 Washtenaw |
251 Tuscola Bay | 268 Wayland |
252 Twelfth Street | 269 Weadock |
253 Twilight | 270 Wealthy Street |
254 Twining | 271 West Fenton (05/07) |
255 Upjohn | 272 Wexford |
256 Van Atta | 273 White Lake |
257 Van Buren (06/08) | 274 White Road |
258 Vanderbilt | 275 Whiting |
259 Vernon | 276 Whittemore |
260 Verona | 277 Willard |
261 Vevay | 278 Withey Lake (05/06) |
262 Viking Lincoln | 279 Zeeland |
263 Vrooman |
CUSTOMER | SUBSTATION | PAYMENT PER DISRUPTION EVENT | |
INTERRUPTION | VOLTAGE SAG | ||
GM | BUICK STEWART | $150,000 | NOT APPLICABLE |
MALLEABLE | $150,000 | NOT APPLICABLE | |
FLORENCE ST. | $150,000 | NOT APPLICABLE | |
GRAND BLANC BOC | $100,000 | NOT APPLICABLE | |
GREY IRON | $150,000 | NOT APPLICABLE | |
STAMPING PLANT | $100,000 | NOT APPLICABLE | |
DELPHI | HOLLAND RD. | $150,000 | NOT APPLICABLE |
NO PAYMENTS FOR VOLTAGE SAGS. CUMULATIVE ANNUAL PAYMENT IS CAPPED AT $3,000,000. INITIAL TERM OF GM AND DELPHI CONTRACTS EXPIRE IN 2005. CONTRACTS MAY BE EXTENDED TO 2010 BY MUTUAL AGREEMENT. | EVENT # | |||
DOW CORNING | CARTER | ($15,000) | ($15,000) | no events |
$15,000 | 0 | 1st /yr | ||
$15,000 | $15,000 | 2nd/yr | ||
$55,000 | NOT APPLICABLE | 3rd/yr | ||
DOW CORNING | DOW CORNING | ($25,000) | ($25,000) | no events |
$25,000 | 0 | 1st /yr | ||
$35,000 | $25,000 | 2nd/yr | ||
$105,000 | NOT APPLICABLE | 3rd/yr | ||
HEMLOCK | HSC | ($40,000) | ($20,000) | no events |
SEMICONDUCTOR | $40,000 | 0 | 1st /yr | |
$60,000 | $20,000 | 2nd/yr | ||
$150,000 | NOT APPLICABLE | 3rd/yr | ||
HEMLOCK | SILICON | NOT APPLICABLE | ($15,000) | no events |
SEMICONDUCTOR | NOT APPLICABLE | 0 | 1st /yr | |
NOT APPLICABLE | 0 | 2nd/yr |
1. | Meters shall meet or exceed the latest version of ANSI C12.16 (Standard for Solid State Electricity Meters) specifications for solid state metering. |
2. | Current transformers used for metering shall meet or exceed an accuracy class of 0.3%. Secondary connected burdens shall not exceed rated burden of any current transformer. Current transformers shall comply with most current applicable ANSI Standards including C57.13 (IEEE Standard Requirements for Instrument Transformers) and C12.11 (Instrument Transformers for Revenue Metering 10 kV BIL through 350 kV BIL). Meter installations shall comply with manufacturer’s accuracy and burden class information on the nameplate of each device. |
3. | Voltage transformers used for metering shall meet or exceed an accuracy class of 0.3%. Secondary connected burdens shall not exceed rated burden of any voltage transformer. Voltage transformers shall comply with most current applicable ANSI Standards including C57.13 (IEEE Standard Requirements for Instrument Transformers), and C12.11 (Instrument Transformers for Revenue Metering 10 kV BIL through 350 kV BIL). Meter installations shall comply with manufacturer’s accuracy and burden class information on the nameplate of each device. |
4. | PT secondary circuits shall have a disconnect switch installed which provides a visible air gap for worker safety, and which allows for attachment of a protective safety tag. |
Consumers Energy (CE) | Michigan Electric Transmission Company (METC) |
Beals Road | Beals Road |
Bingham | Black River |
Black River | Bullock |
Cobb | Claremont |
Dort | Cobb |
Felch Road | Cornell |
Hemphill | Croton |
McGulpin | Lawndale |
Mecosta | Marquette |
Milham | McGulpin |
Moore Road | Milham |
Oakland | Morrow |
Spaulding | North Belding |
Tippy Hydro | Saginaw River |
Verona | Stonach |
Wealthy | Tihart |
Wealthy | |
Whiting |
Substation Name | Distribution | Transmission | Generation Owned by Local Distribution Company | Third-Party Assets | Last Revision Date | |
Alma | 66.67 | 33.33 | 10/24/2003 | |||
Bard Road | 41.67 | 58.33 | 6/10/2010 | |||
Batavia | 50.00 | 50.00 | 10/2/2014 | |||
Beals Road | 84.62 | 15.38 | 6/10/2010 | |||
Beecher | 82.50 | 17.50 | 11/28/2011 | |||
Bingham | 90.91 | 9.09 | 11/28/2011 | |||
Black River1 | 66.67 | 25.93 | 7.40 | 11/28/2011 | ||
Blackstone | 70.83 | 29.17 | 11/28/2011 | |||
Bullock | 76.00 | 24.00 | 11/20/2008 |
Claremont | 68.00 | 32.00 | 5/1/2002 | |||
Cobb Plant | 47.22 | 25.00 | 27.78 | 5/1/2002 | ||
Cornell | 66.67 | 33.33 | 11/28/2011 | |||
Croton | 54.54 | 31.82 | 13.64 | 6/10/2010 | ||
Delhi | 52.38 | 47.62 | 10/2/2014 | |||
Dort2 | 68.18 | 31.82 | 11/28/2011 | |||
Emmet | 92.31 | 7.69 | 5/1/2002 | |||
Eureka | 88.89 | 11.11 | 6/10/2010 | |||
Felch Road | 83.33 | 16.67 | 3/31/2006 | |||
Four Mile | 73.33 | 26.67 | 3/16/2006 | |||
Gaylord | 44.44 | 44.44 | 11.12 | 11/20/2008 | ||
Halsey | 76.92 | 23.08 | 10/24/2003 | |||
Hemphill | 64.29 | 35.71 | 11/28/2011 | |||
HSC | 33.33 | 66.67 | 11/28/2011 | |||
Iosco | 83.33 | 16.67 | 5/30/2007 |
Lawndale | 70.59 | 29.41 | 11/28/12 | ||
Marquette | 62.50 | 37.50 | 11/28/12 | ||
McGulpin1 | 55.56 | 44.44 | 11/28/11 | ||
Mecosta | 86.67 | 13.33 | 11/28/11 | ||
Milham | 70.59 | 29.41 | 11/28/12 | ||
Moore Road3 | 64.65 | 10.00 | 25.35 | 08/07/07 | |
Morrow1 | 63.33 | 30.00 | 6.67 | 11/28/12 | |
North Belding | 66.67 | 33.33 | 10/24/03 | ||
Oakland | 87.50 | 12.50 | 10/24/03 | ||
Ransom | 88.89 | 11.11 | 01/05/05 | ||
Rice Creek | 92.86 | 7.14 | 10/24/03 |
Riggsville | 75.00 | 25.00 | 11/20/08 | ||
Riverview | 93.75 | 6.25 | 10/24/03 | ||
Saginaw River | 11.11 | 88.89 | 10/02/14 | ||
Spaulding | 53.33 | 46.67 | 10/02/14 | ||
Stover | 85.71 | 14.29 | 11.20/08 | ||
Stronach2 | 66.67 | 33.33 | 05/24/04 | ||
Tihart | 66.67 | 33.33 | 11/28/12 | ||
Tippy | 33.33 | 66.67 | 11/13/02 | ||
Twining | 76.92 | 23.08 | 05/01/02 | ||
Verona | 60.87 | 39.13 | 03/31/06 | ||
Weadock | 35.14 | 24.32 | 40.54 | 03/16/06 | |
Wealthy Street | 86.11 | 13.89 | 03/16/06 | ||
Wexford | 92.86 | 7.14 | 11/28/11 | ||
White Lake | 81.25 | 18.75 | 10/24/03 | ||
Whiting | 31.58 | 31.58 | 36.84 | 08/07/07 |
1. | I have reviewed this report on Form 10-Q for the quarterly period ended March 31, 2015 of ITC Holdings Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Joseph L. Welch |
Joseph L. Welch President and Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q for the quarterly period ended March 31, 2015 of ITC Holdings Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Rejji P. Hayes |
Rejji P. Hayes Senior Vice President, Chief Financial Officer and Treasurer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
/s/ Joseph L. Welch |
Joseph L. Welch President and Chief Executive Officer |
/s/ Rejji P. Hayes |
Rejji P. Hayes Senior Vice President, Chief Financial Officer and Treasurer |
RETIREMENT BENEFITS AND ASSETS HELD IN TRUST Schedule of Net Defined Benefit Cost Components (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2015
|
Mar. 31, 2014
|
|
Defined Benefit Plans | ||
Defined Benefit Plan Disclosure | ||
Service cost | $ 1,624 | $ 1,266 |
Interest cost | 924 | 901 |
Expected return on plan assets | (960) | (885) |
Amortization of prior service credit | (10) | (10) |
Amortization of unrecognized loss | 1,061 | 386 |
Net cost | 2,639 | 1,658 |
Other Postretirement Benefits Plan | ||
Defined Benefit Plan Disclosure | ||
Service cost | 2,122 | 1,461 |
Interest cost | 619 | 498 |
Expected return on plan assets | (463) | (340) |
Amortization of unrecognized loss | 125 | 0 |
Net cost | $ 2,403 | $ 1,619 |
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