20161005171101

Filed Date: 10/06/2016

State Corporation Commission
of Kansas

THE STATE CORPORATION COMMISSION

OF THE STATE OF KANSAS
Before Commissioners:

Jay Scott Emler, Chairman

Shari Feist Albrecht
Pat Apple

In the Matter of the Joint Application of

ITC Great Plains, LLC, and its Parent
Company, ITC Holdings Corp., Together
With Fortis Inc., FortisUS Inc., ITC
Investment Holdings Inc. and
Element Acquisition Sub Inc., for an
Order Approving the Acquisition by
Fortis Inc. of the Majority of All Classes
of the Stock ofITC Holdings Corp.,
and its Subsidiary Companies, Including
ITC Great Plains, LLC.

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Docket No. 16- ITCE-512-ACQ

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NOTICE O:F PROPOSED ORDER

ITC Great Plains, LLC ("ITC Great Plains"), on behalf of itself and its parent company
ITC Holdings Corp. (''ITC Holdings"), together with Fortis Inc. and its subsidiaries, including
FortisUS fuc. ("FmtisUS''), ITC Investment Holdings Inc. ("ITC Investment") and Element
Acquisition Sub Inc. ("Element," and along with Fortis Inc. FortisUS, and ITC Investment,
"Fortis"), (collectively, Fortis, ITC Great Plains and ITC Holdings are referred to herein as
"Joint Applicants"), hereby submits the attached proposed Order Granting the Joint Application
with Conditions and Approving the Transaction ("Proposed Order") and states as follows:
1.

On September 2, 2016, Staff filed a Report and Recommendation in this docket

and attached as Exhibit A - Conditions for Kansas Corporation Commission Approval of

Transaction ("Merger Conditions). 1

On September 28, 2016, Staff filed a corrected version of Staff's Report and
Recommendation.

54912818.l

2.

On September 29, 2016, a settlement hearing was held at the Commission and

Joint Applicants, Staff and Sunflower/Mid-Kansas all affirmatively agreed with the Merger
Conditions and are recorrunending the Conunission Approve the Transaction subject to the
Merger Conditions.

3.

On September 29, 2016, during the settlement hearing, the prehearing officer

advised the parties that if all are in agreement to submit a proposed order for consideration by the
Commission.
4.

The parties have collaborated, and Joint Applicants hereby submit the parties'

proposed Order Granting the Joint Application with Conditions and Approving the Transaction
as attached hereto as Exhibit A

A "Word" version of this document has been separately

transmitted to the Prehearing Officer via email. Both Staff and Sunflower/Mid-Kansas have
authorized the Joint Applicants to file the Proposed Order.
Respectfully submitted,

Tim_ y . McKee (#7135)

Tril)lett, Woolf & Garretson, LLC

2959 North Rock Road, Suite 300
Wichita, KS 67226
Telephone: (316) 630-8100
Facsimile: (316) 630-8101
temckee@twgfinn.com

ATIORNEYS FOR FORTIS TNC. AND FORTIS US INC.

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54912818. I

Frank A. Caro, Jr. (#11678)

Andrew 0. Schulte (#24412)
Polsinelli PC
900 W. 4gth Place, S"ijfte 900
Kansas City, MO 64112
Telephone: (816) 572~4754
Facsimile: (816) 817-6496 Fax
fcaro@polsinelli.com
aschulte@polsinelli.com
ATTORNEYS FOR ITC HOLDINGS CORP. AND ITC
GREAT PLAINS, LLC

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54912818.1

VERIFICATION

STATE OF MISSOURI

COUNTY OF JACKSON

) SS.

I, Frank A. Caro, Jr., being duly sworn, on oath state that I am counsel for ITC Holdings
Corp. and ITC Great Plains, LLC, that I have read the foregoing pleading and know the contents
thereof, and that the facts set forth therein are true and correct to the best of my knowledge and
belief.

The foregoing was subscribed and sworn to before me this October _2., 2016.

~twL~ ~ ci.:YP

Notary Public
My Commission Expires:

ANDREA J. CHILTON

Notary Public Notary Sea

STATE OF MISSOURI
Jackson County
My Commission Expires: Nov 14. l017
Commission# 13404320

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54912818. l

CERTIFICATE OF SERVICE
The undersigned hereby certifies that a tiue and correct copy of the above and foregoing
pleading has been faxed, hand-delivered, electronically mailed, and/or mailed, First Class,
postage prepaid, this October 5, 2016, to:

PAUL FITZPATRICK. DIRECTOR,

REGULATORY AND COMPLIANCE
FORTIS INC.
FORTIS PLACE SUITE 1100
5 SPRINGDALE STREET
ST.JOHN'S, NL AlB 3T2
pfitzpatrick@fortisinc.com
CHRIS WINLAND, MANAGER,
REGULATORY STRATEGY
ITC GREAT PLAINS, LLC
204 NORTH ROBINSON A VE
SUITE 2500
OKLAHOMA CITY, OK 73102
CWINLAND@ITCTRANSCO.COM
STEPHEN J. VIDETO, PRACTICE
GROUP LEADER & SENIOR
COUNSEL-REGULATORY &
LEGISLATIVE
ITC HOLDINGS CORP
27175 ENERGY WAY
NOVI, MI 48377-3639
svideto@itctransco.com
BRIAN G. FEDOTIN, DEPUTY
GENERAL COUNSEL
KANSAS CORPORATION
COMMISSION
1500 SW ARROWHEAD RD
TOPEKA, KS 66604-4027
b.fodotin@kcc.ks.gov
ANDREW FRENCH, SENIOR
LITIGATION COUNSEL
KANSAS CORPORATION
COMMISSION
1500 SW ARROWHEAD RD
TOPEKA, KS 66604-4027
g!Jt~11ch@k_cc.k.,KQY.

5
54912818.1

AMBER SMITH, CHIEF LITIGATION

COUNSEL
KANSAS CORPORATION
COMMISSION
1500 SW ARROWHEAD RD
TOPEKA, KS 66604-4027
a.smith@kcc.ks.gov
ANNE E. CALLENBACH, ATTORNEY
POLSINELLI PC
900 W 48TH PLACE STE 900
KANSAS CITY, MO 64112
acallenbach@J?olsinelli.com
FRANK A. CARO, ATIORNEY
POLSINELLI PC
900 W 48TH PLACE STE 900
KANSAS CITY, MO 64112
fcaro@polsinelli.com
RENEE BRAUN, CORPORATE
PARALEGAL, SUPERVISOR
SUNFLOWER ELECTRIC POWER
CORPORATION
301 W. l3TH
PO BOX 1020 (67601-1020)
HAYS, KS 67601
RBRAUN@SUNFLOWER.NET
JAMES BRUNGARDT, REGULATOR
Y AFFAIRS ADMINISTRATOR
SUNFLOWER ELECTRIC POWER
CORPORATION
301W.13TH
PO BOX 1020 (67601-1020)
HAYS, KS 67601
JBRUNGARDT@SUNFLOWER.NET
AL TAMIMI, VICE PRESIDENT,
TRANSMISSION PLANNING AND
POLICY
SUNFLOWER ELECTRIC POWER
CORPORATION
301W.13TH
PO BOX 1020 (67601-1020)
HAYS, KS 67601
atamimi@sunflower.net
TIMOTHY E. MCKEE, ATTORNEY
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54912818.l

TRIPLETI, WOOLF & GARRETSON,

LLC
2959 N ROCK RD STE 300
WICIIlTA, KS 67226
TEMCKEE@TWGFlRM.COM

MARK D. CALCARA, ATTORNEY

WATKINS CALCARA CI-ITD.
1321 MAIN ST STE 300
PO DRAWER 1110
GREAT BEND, KS 67530
MCALCARA@WCRF.COM
TAYLORP.CALCARA,ATTORNEY
WATI<JNS CALCARA CHTD.
1321 MAIN ST STE 300
PO DRAWER 1110
GREAT BEND, KS 67530
TCALCARA@WCRF.COM

./

Frank A. Caro, Jr.

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5491:2818.1

ATTACHMENT A
PROPOSED ORDER
THE STATE CORPORATION COMMISSION
OF THE STATE OF KANSAS

Before Commissioners:

Jay Scott Emler, Chairman

Shari Feist Albrecht
Pat Apple

In the Matter of the Joint Application of

ITC Great Plains, LLC, and its Parent
Company, ITC Holdings Corp., Together
With Fortis Inc., FortisUS Inc., ITC
Investment Holdings Inc. and
Element Acquisition Sub Inc., for an
Order Approving the Acquisition by
Fortis Inc. of the Majority of All Classes
of the Stock ofITC Holdings Corp.,
and its Subsidiary Companies, Including
ITC Great Plains, LLC.

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Docket No. 16- ITCE-512-ACQ

ORDER GRANTING THE JOINT APPLICATION WITH CONDITIONS

AND APPROVING THE TRANSACTION

This matter comes before the State Corporation Commission of the State of Kansas
("Commission") for consideration and decision. Having examined the files, the Commission
finds:
1.

On May 10, 2016, ITC Great Plains, LLC ("ITC Great Plains"), on behalf of itself

and its parent company ITC Holdings Corp. ("ITC Holdings"), together with Fortis Inc. and its
subsidiaries, including FortisUS Inc. ("FortisUS"), ITC Investment Holdings Inc. ("ITC
Investment"), and Element Acquisition Sub Inc. ("Element," and along with Fortis Inc.,
FortisUS, and ITC Investment, "Fortis") (collectively, Fortis, ITC Great Plains and ITC Holdings
are referred to herein as "Joint Applicants") filed a Joint Application and supporting testimony 1

The May 10, 2016 testimony of Linda H. Blair was inadvertently filed as an incomplete
version. Joint Applicants filed an errata and full copy of Ms. Blair's testimony on May 18, 2016.

ATTACHMENT A
PROPOSED ORDER

pursuant to K.S.A. 66-101, 66-104, 66-131, 66-136, and 66-1401 et seq., requesting
Commission approval of the acquisition by Fortis ofITC Holdings (the "Transaction").
2.

On June 7, 2016, the Commission issued an Order Designating Prehearing

Officer; and Protective and Discovery Order. On June 8, 2016, the Prehearing Officer filed a
Procedural Schedule. The Procedural Schedule included two alternative tracks. Track I involved
a Report and Recommendation from Commission Staff ("Staff'), if it determined that it did not
have any material opposition to the Joint Application. Track II involved Staff and intervenor
testimony and an evidentiary hearing scheduled for December, 2016. The parties proceeded
down Track I.
3.

On June 20, 2016, Sunflower Electric Power Corporation ("Sunflower") and Mid-

Kansas Electric Company, LLC ("Mid-Kansas"), filed a Petition to Intervene, which was granted
by the Commission on August 2, 2016.
4.

On August 9, 2016, the Commission issued its Order on Merger Standards,

reaffirming the merger standards originally articulated by the Commission in 1991. 2 The Order
on Merger Standards required that any deviation from the standards be clearly identified in the
application and justified in supporting testimony. 3 The order permitted Joint Applicants to file
any needed modifications to the Joint Application and supporting testimony within 21 days from
the date of the order.
5.

On August 22, 2016, the Joint Applicants filed a Notice of Clarification Regarding

Merger Standards, which recognized that the list of merger standards provided in the Joint
Application did not include certain clarifying language in item (c) of the merger standards. The
Order on Merger Standards, Aug. 9, 2016, if 5 (citing Order, Consolidated Docket Nos.
172,745-U and 174,155-U, Nov. 14, 1991, pp. 35-36).
2

Id. at if 7.
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ATTACHMENT A
PROPOSED ORDER

clarifying language is "whether the proposed transaction will likely create labor dislocations that
may be particularly harmful to local communities, or the state generally, and whether measures
can be taken to mitigate the harm." Joint Applicants stated that they specifically addressed this
additional language in the supporting testimony filed with the Joint Application.

The Joint

Applicants re-affirmed that the Transaction will not result in job reductions at ITC Great Plains
or otherwise create labor dislocations.
6.

On September 2, 2016, Staff filed its Report and Recommendation. The Report

and Recommendation concludes that Fortis possesses the financial, managerial, and technical
experience to provide sufficient and efficient service in the State of Kansas. 4 The Report and
Recommendation includes certain conditions for approval of the Transaction, which are set forth
in Exhibit A to the Report and Recommendation ("Merger Conditions").

The Report and

Recommendation explains how the Transaction, subject to the Merger Conditions, satisfies the
Commission's merger standards. Staff's Report and Recommendation indicates that the Joint
Applicants and Sunflower/Mid-Kansas support the imposition of the Merger Conditions as a
prerequisite to Commission approval of the Transaction. Accordingly, Staff recommends that the
Commission approve the Transaction subject to the Merger Conditions.
7.

On September 8, 2016, Joint Applicants filed a Response in Support of Staff's

Recommendation to Approve the Transaction Subject to the Merger Conditions ("Response in

Support"). Joint Applicants confirmed their agreement with the Merger Conditions and asked
the Commission to approve the Transaction subject to the Merger Conditions.

Report and Recommendation at 6-8 (citing Docket No. 11-GBEE-624-COC, Order

Approving Stipulation & Agreement and Granting Certificate, December 7, 2011, ~ 63).
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ATTACHMENT A
PROPOSED ORDER

8.

On September 28, 2016, Staff filed a corrected version of its Report and

Recommendation in order to correct discrepancies between certain descriptions of the Merger

Conditions in the body of the Report and the Merger Conditions as set forth in Exhibit A. The
corrected version did not make any changes to Exhibit A, which is the controlling list of
conditions. Exhibit A is attached hereto and made a part hereof by reference.
9.

On September 29, 2016, the Commission held an evidentiary hearing, in which

Joint Applicants, Staff and Sunflower/Mid-Kansas participated.

The Commission heard

testimony from Barry V. Perry, President and Chief Executive Officer of Fortis Inc.; Linda H.
Blair, Executive Vice President and Chief Business Unit Officer for ITC Holdings; Adam H.
Gatewood, Managing Financial Analyst for Staff; and Justin T. Grady, Chief of Accounting and
Financial Analysis for Staff. Mr. Perry sponsored the pre-filed testimony of Karl W. Smith,
Executive Vice President, Chief Financial Officer of Fortis Inc. All of the testimony supported
approval of the Transaction subject to the Merger Conditions.
10.

As evidenced by the Joint Application, Joint Applicants' Notice of Clarification

Regarding Merger Standards, Staff's Report and Recommendation, Joint Applicants' Response in
Support, and the testimony provided at the September 29, 2016 evidentiary hearing, (1) As a
result of the transaction, ITC Great Plains will continue to possesses the necessary financial,
managerial, and technical experience to provide sufficient and efficient service in the State of
Kansas; (2) the Transaction, subject to the Merger Conditions, satisfies the merger standards; and
(3) approval of the Transaction, subject to the Merger Conditions, will promote the public
interest. Accordingly, the Commission hereby approves the Transaction subject to the Merger
Conditions, as discussed below.

ATTACHMENT A
PROPOSED ORDER

FORTIS' PLAN OF OPERATION

11.

ITC Holdings is a publicly traded holding company incorporated under the laws

of Michigan, with its principal office in Novi, Michigan. ITC Holdings owns and operates
International Transmission Company d/b/a ITCTransmission, Michigan Electric Transmission
Company, LLC, ITC Midwest LLC, and ITC Great Plains (collectively, the "ITC Operating
Companies").

Each of the ITC Operating Companies is an independent, stand-alone

transmission company engaged exclusively in the development, ownership, and operation of

electrical transmission facilities.

Functional control of the ITC Operating Companies'

transmission systems is held by a Regional Transmission Organization ("RTO"); namely, the

Southwest Power Pool, Inc. ("SPP") or Midcontinent Independent System Operator, Inc.
("MISO"), depending upon the location of the assets. SPP and MISO independently administer
the ITC Operating Companies' respective systems in accordance with the SPP or MISO Open
Access Transmission Tariff ("OATT"), as approved by the Federal Energy Regulatory
Commission ("FERC"). Thus, the rates for the provision of transmission service provided by the
ITC Operating Companies, including ITC Great Plains, are exclusively rate regulated by FERC.
12.

Fortis Inc. is a publicly traded holding company existing under the laws of

Newfoundland and Labrador, Canada, with its principal offices in St. John's, Newfoundland and
Labrador. It has total assets of approximately C$29 billion (US$ 23.2 billion) and had fiscal
2015 revenues totaling approximately C$6.7 billion (US$ 5.4 billion). 5 Its regulated holdings
include electric distribution utilities in five Canadian provinces, New York, Arizona, two
Caribbean countries, and Belize, as well as natural gas utilities in British Columbia, Canada,
5

US$ amounts are converted at a USD/CAD exchange rate of 1.25, the Bank of Canada's
closing rate on April 29, 2016.

ATTACHMENT A
PROPOSED ORDER

Arizona, and New York.

Staff's Report and Recommendation noted that "there is ample

evidence that Fortis is knowledgeable of the public utility industry as demonstrated through its
years of experience of profitably and effectively operating public utility businesses in the United
States and Canada. " 6
13.

As stated in the Joint Application, Fortis' long-term business objective is to own

and operate well-run regulated electric and natural gas utilities, while always providing a
framework for the provision of safe and reliable service to customers. Mr. Perry testified that
Fortis' business philosophy is that effective management of regulated electric and natural gas
utilities requires local management and decision-making. 7 Under Fortis' ownership, the ITC
Operating Companies, including ITC Great Plains, will continue as stand-alone transmissiononly companies and will retain their focus on transmission investment and operations.
14.

Fortis plans to retain the management of ITC Holdings and ITC Great Plains and,

pursuant to Merger Condition No. 4, has committed to retain aggregate current employment
levels at ITC Great Plains in Kansas for three years from the closing of the Transaction. 8 Staff
stated that the fact that ITC Great Plains personnel will continue to manage, operate, and
maintain the ITC Great Plains transmission assets after the acquisition is crucial to its assessment
that Fortis has the requisite financial, managerial, and technical qualifications. 9 Pursuant to
Merger Condition No. 5, Fortis has also committed to maintain current aggregate levels of
charitable contributions and community support in the communities in Kansas provided by ITC

Report and Recommendation at p. 7.

See B. Perry Direct Testimony at pp. 11-12.
8
Id at pp.3, 16-18; Staffs Report and Recommendation, Exhibit A, Merger Condition
7

No.4.
9

Staffs Report and Recommendation, p. 7.

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ATTACHMENT A
PROPOSED ORDER

Great Plains and ITC Holdings for three years and thereafter Fortis will not attempt to restrict or
control the discretion of the management of ITC Great Plains and ITC Holdings over such
programs.

10

Merger Condition No. 6 requires Fortis to maintain ITC Great Plains' headquarters

in Topeka, Kansas, for five years from the closing of the Transaction. For an additional five
years thereafter, Fortis has committed to keeping the ITC Great Plains headquarters within the
State of Kansas and to notify the Commission prior to any relocation outside of Topeka,
Kansas.II
15.

The Joint Application stated that while Fortis' utility subsidiaries are operated and

financed on a standalone basis, Fortis will provide ITC Great Plains with the financial support of
its much larger organization. The Joint Application also stated that ITC Great Plains will benefit
from the support and broad experience of Fortis in accessing capital and assisting ITC Great
Plains to efficiently and cost effectively finance, develop, and own transmission projects. As set
forth in Merger Condition No. 11, Fortis has committed to provide equity capital injections as
needed for maintaining the financial integrity of ITC Great Plains such that ITC Great Plains is
capable of maintaining an investment-grade credit rating. 12 Staff stated that this condition is
necessary to ensure that the "financial qualifications" requirement will be met. I3
16.

The Transaction includes a minority equity investor, Finn Investment Pte. Ltd. or

another direct or indirect and wholly-owned subsidiary of GIC (Ventures) Pte. Ltd. ("GIC

10

Staffs Report and Recommendation, Exhibit A, Merger Condition No. 5.

tI Staffs Report and Recommendation, Exhibit A, Merger Condition No. 6.

12
13

Id., Merger Condition No. 11.

Id. at p. 8.
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ATTACHMENT A
PROPOSED ORDER
Ventures"). 14

The Joint Application states that Finn will be an indirect, non-controlling

shareholder at the ITC holding company level and will not have any authority to manage or
control the day-to-day operations of the ITC operating companies, including ITC Great Plains.
ITC Great Plains will continue to be overseen by the ITC board of directors, which will be made
up of a majority of independent directors. Mr. Smith testified that the governance philosophy of
Fortis is not impacted by the minority equity investor's involvement. 15

TRANSA TION AND TRANSITJON COSTS

17.

ITC Holdings is currently a widely held, publicly traded corporation listed on the

New York Stock Exchange ("NYSE"). Upon completion of the Transaction, ITC Holdings will
be a private company with 100% of its stock held by ITC Investment, a direct subsidiary of
Fortis US created to effect the Transaction. Fortis US will hold 80.1 % of the common equity of
ITC Investment, and Finn will hold 19.9% of the common equity of ITC Investment. The
Transaction is being effected through the merger of Element Acquisition, a wholly-owned
indirect subsidiary of ITC Investment, and ITC Holdings, with ITC Holdings continuing as the
surviving corporation.
18.

The Transaction is valued at approximately $11. 3 billion. The financing of the

Transaction is structured to preserve Fortis Inc. 's investment-grade credit rating.

The

consideration for the Transaction is the exchange of Fortis Inc. shares and cash for the common
shares of ITC Holdings, representing total consideration of approximately US$6.9 billion, plus
the assumption of approximately US$4.4 billion in consolidated ITC Holdings debt. Fortis will
14

For ease of reference, "Finn" is used herein to refer to Finn Investment Pte. Ltd. or
such other GIC Ventures subsidiary.
15
See K. Smith Direct Testimony at pp. 10-11.
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ATTACHMENT A
PROPOSED ORDER

indirectly purchase the outstanding common shares of ITC Holdings for US$22.57 in cash and
stock consideration of 0.7520 of a Fortis Inc. common share (the "Fortis Stock Consideration")
per ITC Holdings common share.
US$3.2 billion.

The Fortis Stock Consideration represents approximately

The approximately US$3.7 billion cash portion of the Transaction will be

financed through the investment by Finn in ITC Holdings (through ITC Investment) for
approximately US$1.2 billion, and the issuance of approximately US$2 billion of Fortis Inc.
long-term debt.

The remaining US$500 million cash consideration will be met with a

combination of one or more offerings of equity securities, equity-linked securities, preference

shares, and/or hybrid securities to be completed by Fortis Inc. on or before closing of the
Transaction. Fortis has secured approximately US$3.7 billion in committed bridge financing to
cover the cash portion of the Transaction consideration, which it is not currently planning to
draw on to complete the Transaction. The Fortis Stock Consideration will be satisfied through
the issuance of up to 117 million Fortis Inc. common shares to the ITC Holdings' common
shareholders upon closing of the Transaction, representing approximately US$3.2 billion.
19.

Of the US$6.9 billion combined cash and stock consideration being paid to ITC

Holdings shareholders, approximately US$5.7 will be provided by Fortis Inc. Approximately

US$2.5 billion will be paid through FortisUS subscribing for approximately US$1.7 billion of
shares of ITC Investment and approximately US$0.8 billion of notes of ITC Investment.
Fortis US will also subscribe to additional shares of ITC Investment in connection with the Fortis
Stock Consideration to be provided to ITC Holdings shareholders under the Transaction. The
Fortis Stock Consideration of approximately US$3.2 billion will be paid through ITC Investment
to Element, which will direct such payment to ITC Holdings' shareholders on behalf of Element.

ATTACHMENT A
PROPOSED ORDER

20.

Of the US$6.9 billion combined cash and stock consideration being paid to ITC

Holdings shareholders, approximately US$1.2 billion will come from Finn. Finn will subscribe
for approximately US$1.0 billion of shares ofITC Investment, representing 19.9 percent of all of
the shares of ITC Investment, and approximately US$0.2 billion of ITC Investment notes, for an
aggregate consideration of approximately US$1.2 billion.
21.

Consistent with commitments made in FERC Docket No. EC16-110, and as

memorialized in Merger Condition No. 7, neither ITC Great Plains nor any other ITC or Fortisaffiliated entity will, at any time, seek to recover any acquisition premium, goodwill, or
transaction costs associated with consummating the Transaction (including transition costs)
through FERC or any other federal or state regulatory proceeding. 16

While the precise

magnitude of the acquisition premium is not identified in the record, Staff reports that the current
value ofITC Holdings' rate base is $5 .6 billion compared to the purchase price of $11.3 billion. 17
22.

In connection with the Transaction, Fortis Inc. has become a registrant of the

Securities and Exchange Commission ("SEC") and will cross-list its common shares on the
NYSE prior to the closing of the Transaction. Fortis Inc. will also continue to have its shares
listed on the Toronto Stock Exchange ("TSX").

Upon completion of the Transaction,

approximately 27 percent of Fortis Inc. 's outstanding common shares will be held by the former
ITC Holdings shareholders. The combination of Fortis and ITC Holdings will result in a widely
held, publicly traded utility holding company trading on the TSX and NYSE, with an estimated
pro forma market capitalization as of the end of 2016 of approximately US$13 .2 billion.

MERGER STANDARDS
16

See Staffs Report and Recommendation, Exhibit A, Merger Condition No. 7.

17

Staffs Report and Recommendation, p. 12.

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ATTACHMENT A
PROPOSED ORDER

23.

In 1991, consistent with its broad authority to supervise and regulate the public

utilities operating within the state of Kansas, and its statutory charge to promote the public
interest, in consolidated Docket Nos. 172,745-U and 174-155-U, the Commission adopted a list
of factors to weigh and consider in determining whether a transaction promotes the public
interest. In 1999, the Commission reaffirmed the merger standards in Docket No. 97-WSRE676-MER.

The Commission has acknowledged that while the standards provide a helpful

framework for its analysis of the public interest, some factors may be less relevant than others in
certain proceedings.
24.

In the present case, Staff's Report and Recommendation noted that the

Commission's limited role in regulating ITC Great Plains warrants a more limited application of
the merger standards than would be the case in reviewing a transaction involving utilities that are
subject to the full economic regulation of the Commission. Similarly, the Joint Application
stated that not all of the merger standards are applicable to this Transaction. Nevertheless, to the
extent possible, the Joint Applicants and Staff addressed each factor under the merger standards.
Staff's Report and Recommendation concludes that, with the imposition of the Merger
Conditions, "Staff is confident that the proposed transaction provides a net benefit to the public
and will, therefore, promote the public interest." 18 As discussed further below, the Commission
agrees that the Transaction satisfies the merger standards, will provide a net benefit to the public,
and will promote the public interest.

(a)

The effect of the transaction on consumers, including:

(i)

18

The effect of the proposed transaction on the financial condition of the

newly created entity as compared to the financial condition of the
stand-alone entities if the transaction did not occur.

Staffs Report and Recommendation, p. 9.

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ATTACHMENT A
PROPOSED ORDER

25.

Staff stated that it does not believe that the Transaction will jeopardize the

financial condition of ITC Holdings, ITC Great Plains, or Fortis. 19 The Joint Application also
stated that the financial condition of ITC Great Plains will not be altered as a result of the
Transaction.

20

Additionally, as part of a much larger and more diversified Fortis organization

with investment-grade credit ratings, the ITC Operating Companies will continue to have access
to capital on favorable terms, will benefit from mitigation of ITC's single-line-of-business risk
profile, and will benefit from financial and other forms of support from the Fortis group of
companies. 21
26.

Merger Condition Nos. 8, 11, and 12 also provide assurance that ITC Great Plains

will maintain its strong financial condition after consummation of the Transaction. Condition
No. 8 requires ITC Great Plains to maintain both standalone credit facilities and senior long-term
debt instruments and to not make loans under its financing arrangements to Fortis or its affiliates
or guarantee any debt of Fortis or its affiliates for five years from the effective date of the closing
of the Transaction. If, at any time thereafter, Fortis or ITC Great Plains wishes to change this
important financial condition, it must state its intent to do so in a filing with the Commission.
Condition No. 11 requires a commitment from Fortis that it will provide equity capital injections
as needed for maintaining the financial integrity of ITC Great Plains such that ITC Great Plains
is capable of maintaining an investment-grade credit rating. Finally, Condition No. 12 requires
ITC Great Plains to notify the Commission within five (5) business days if, in the future, it or
Fortis suffers a downgrade of credit quality to below investment-grade and to take the steps
19

Id. at p. 11.

20

Joint Application, p. 18; see also, B. Perry Direct Testimony at pp. 18-19; L. Blair
Direct Testimony at p. 8.
21

See B. Perry Direct Testimony at pp. 18-19; L. Blair Direct Testimony at p. 8.

12

ATTACHMENT A
PROPOSED ORDER

necessary to restore that investment-grade rating or state why that is not necessary in order to
continue to provide efficient and sufficient service.
27.

Based on the foregoing, and subject to Merger Condition Nos. 8, 11, and 12, the

Commission finds that the Transaction satisfies item (a)(i) of the merger standards.

(ii)

28.

Reasonableness of the purchase price, including whether the purchase

price was reasonable in light of the savings that can be demonstrated
from the merger and whether the purchase price is within a
reasonable range.

The consideration that Fortis is paying for each ITC Holdings common share is

US$22.57 in cash + 0.7520 of a Fortis common share. This represents an approximate 33%
premium compared to the US$ 33.75 ITC Holdings pre-bid unaffected stock price as of market
close on November 27, 2015, immediately before ITC Holdings publicly announced that it was
undertaking a review of its strategic alternatives. 22
29.

In its Report and Recommendation, Staff questions whether this merger standard

1s applicable, given that ITC Great Plains' transmission rates are not jurisdictional to this
Commission and the fact that Fortis has committed to not seek recovery of the acquisition
premium through rates. 23 Staff states that the purchase price, while not outside the realm of
premiums observed in recent high profile transactions, is not supported by any anticipated
savings or operational synergies. 24 Instead, Staff suggests that the acquisition premium reflects
certain FERC ratemaking decisions. Ultimately, because the Joint Applicants are not requesting

22

This premium is calculated as of February 8, 2016, the day immediately preceding the
public announcement of the Transaction. See L. Blair Direct Testimony at p. 8.
23

Staffs Report and Recommendation, p. 12

24

Id. at pp. 12-13.

13

ATTACHMENT A
PROPOSED ORDER

to recover the acquisition premium from Kansas ratepayers, Staff does not recommend denial of
the transaction based on this merger standard.
30.

As noted above, Joint Applicants have committed to hold customers harmless

from transaction and acquisition costs (including acquisition premium costs) and will not, at any
time, seek to recover such costs in the ITC Operating Companies' cost-based rates, including
ITC Great Plains' rates. 25 This commitment is also memorialized in Merger Condition Nos. 1, 2,
and 7.

Given these commitments and the Commission's lack of rate regulation over ITC

Holdings and ITC Great Plains, the Commission finds that the Transaction satisfies item (a)(ii) of
the merger standards.
(iii)
31.

Whether ratepayer benefits resulting from the transaction can be

quantified.

ITC Great Plains does not have retail ratepayers. Instead, ITC Great Plains only

has wholesale customers and FERC retains exclusive jurisdiction over the rates ITC Great Plains
may charge for use of its transmission system by approving the terms and conditions set forth in
ITC Great Plains' SPP formula rate tariff. The Joint Application stated that ratepayers will
benefit from the Transaction through Fortis' strong support of ITC Great Plains' commitment to
the delivery of safe, reliable, and efficient transmission services and further investment in
upgrading and expanding transmission infrastructure across ITC Great Plains' operating
territory. 26

25

See Applicant's Reply to Motions for Adoption of Merger Conditions and Applicants'
Motion for Leave to Answer and Answer to Protests at pp. 5-6, FERC Docket No. EC16-110,
June 17, 2016.
26
Joint Application, p. 19; see also L. Blair Direct Testimony at p. 9.

14

ATTACHMENT A
PROPOSED ORDER

32.

Staff reports that it is unable to state at this time that there will be any benefits to

the transmission ratepayers associated with the Transaction. 27 However, Staff notes that the Joint
Applicants have made all of the appropriate hold-harmless commitments at FERC.

These

commitments are further memorialized in Merger Condition Nos. 1, 2, 7, and 9. Given these
commitments and the Commission's lack of rate regulation over ITC Holdings and ITC Great
Plains, the Commission finds that the Transaction satisfies item (a)(iii) of the merger standards.

(iv)
33.

Whether there are operational synergies that justify payment of a

premium in excess of book value.

As discussed above, the Joint Applicants have committed not to seek recovery of

the acquisition premium from ratepayers and the Commission does not have rate regulation over
ITC Holdings and ITC Great Plains. Further, as stated in the Joint Application and in Staff's
Report and Recommendation, the Transaction is not premised on the achievement of operational
synergies. 28 As such, the existence of operational synergies that justify payment of a premium in
excess of book value is not central to the question of whether the Transaction is in the public
Nevertheless, based on the commitment not to seek recovery of the acquisition

interest.

premium from ratepayers, and the Commission's lack of rate regulation over ITC Holdings and
ITC Great Plains, the Commission finds that the Transaction satisfies item (a)(iv) of the merger
standards, to the extent it applies.

(v)
34.

The effect of the proposed transaction on the existing competition.

As noted in the Joint Application, ITC Great Plains operates within the State of

Kansas pursuant to a limited, transmission rights only certificate, and operates only within

27

Staff's Report and Recommendation, p. 14.

28

Joint Application, pp. 19-20; Staff's Report and Recommendation, p.14.

15

ATTACHMENT A
PROPOSED ORDER

specified geographic areas authorized by the Commission.

29

Fortis currently has no operations

in Kansas, SPP, or MISO, and Fortis does not own any electric or natural gas transmission lines
parallel to or competing with ITC Great Plains.

Furthermore, SPP will continue to have

functional control over the transmission assets of ITC Great Plains, and ITC Great Plains will
continue to provide transmission service pursuant to the terms and conditions under SPP's
FERC-approved OATT. FERC has also found that the Transaction will not have an adverse
effect on competition. 30 Accordingly, the Commission finds that the Transaction satisfies item
(a)(v) of the merger standards.

(b)

The effect of the transaction on the environment.

35.

Joint Applicants and Staff agree that there will be no effect on the environment as

a result of the Transaction because there will be no change to ITC Great Plains' operations and
ITC Great Plains is and will remain subject to the regulatory oversight of the Kansas Department
of Health and Environment regarding all applicable environmental standards and regulations. 31
Accordingly, the Commission finds that the Transaction satisfies item (b) of the merger
standards.

(c)

Whether the proposed transaction will be beneficial on an overall basis to

state and local economies and to communities in the area served by the
resulting public utility operations in the state. Whether the proposed
transaction will likely create labor dislocations that may be particularly
harmful to local communities, or the state generally, and whether measures
can be taken to mitigate the harm.

36.

The Joint Application states that ITC Great Plains has always been actively

engaged in the communities in which it operates and that Fortis will continue to support these
29

Joint Application, p. 20; see also L. Blair Direct Testimony at pp. 9-10.

Fortis Inc., et al., 156 FERC ~ 61,219, Sept. 23, 2016.

31

Joint Application, p. 20; Staffs Report and Recommendation, p. 15; see also, L. Blair
Direct Testimony at p. 11.
16

ATTACHMENT A
PROPOSED ORDER
efforts. 32 Moreover, ITC Great Plains anticipates its operations will be bolstered by Fortis' track
record of committing capital to its utilities and being able to draw on Fortis' stability, experience
and market diversity to its advantage. 33 Staff recommends Merger Condition Nos. 4, 5 and 6 in
order to memorialize and strengthen the Joint Applicants' commitments. Merger Condition Nos.
4 and 5 ensure that ITC Great Plains' employment levels and community support in Kansas stay
the same for at least three years. Additionally, Condition No. 6 requires that ITC Great Plains
commit to keep its regional headquarters in the City of Topeka for five years and within the State
of Kansas for ten years. With these commitments, the Commission finds that the Transaction
satisfies item (c) of the merger standards.

(d)

Whether the proposed transaction will preserve the jurisdiction of the KCC
and the capacity of the KCC to effectively regulate and audit public utility
regulations in the state.

37.

The Joint Applicants and Staff agree that the Commission will retain its current

jurisdiction over ITC Great Plains. 34 Moreover, Staff stated that the Merger Conditions may
even provide the Commission with an enhanced level of oversight and regulation of ITC Great
Plains. Accordingly, the Commission finds that the Transaction satisfies item (d) of the merger
standards.

(e)

The effect of the transaction on affected public utility shareholders.

38.

In exchange for each ITC common share, ITC shareholders will receive US$22.57

in cash and 0.7520 of a Fortis common share. After consummation, the common shares of Fortis
will be listed on both the TSX and NYSE, and ITC shareholders will hold approximately 27% of

32

Joint Application, pp. 20-21.

33

See B. Perry Direct Testimony at p. 20; L. Blair Direct Testimony at pp. 10-11.

34

Joint Application, p. 21; Staff's Report and Recommendation, p. 16.

17

ATTACHMENT A
PROPOSED ORDER
the issued and outstanding common shares of Fortis. 35

The Commission finds that the

Transaction will benefit the ITC Holdings' shareholders and that the Transaction satisfies item
(e) of the merger standards.
(t)

Whether the transaction maximizes the use of Kansas energy resources.

39.

The Joint Applicants and Staff agree that, following the Transaction, ITC Great

Plains is well positioned to undertake further investment in transmission infrastructure to support

grid reliability and new and existing energy sources in Kansas.

36

Accordingly, the Commission

finds that the Transaction satisfies item (f) of the merger standards.

{g)

Whether the transaction will reduce the possibility of economic waste.

40.

Joint Applicants and Staff agree that the Transaction will reduce the possibility of

economic waste by allowing ITC Holdings to exist as part of a larger holding company structure
and thereby avoiding the duplication of some administrative and general expenses that are
typically incurred related to a standalone public company. 37 Accordingly, the Commission finds
that the Transaction satisfies item (g) of the merger standards.

{h)

What impact, if any, the transaction has on the public safety.

41.

Joint Applicants stated that the upstream change in ownership will not affect ITC

Great Plains' operations and that ITC Great Plains will continue to comply with all applicable
safety rules, regulations, and Orders of the Commission. 38

Further, Staff notes that Merger

Condition No. 10 requires ITC Great Plains, for a period of five years after the close of the
35

Joint Application, p. 21; B. Perry Direct Testimony at p. 21.

36

Joint Application, p. 21; Staffs Report and Recommendation, p. 17; see also, B. Perry
Direct Testimony at p. 21; L. Blair Direct Testimony at p. 12.
37

Joint Application, p. 22; Staffs Report and Recommendation, p. 18; see also, B. Perry
Direct Testimony at p. 22.
38

Joint Application, p. 22; L. Blair Direct Testimony at p. 12.

18

ATTACHMENT A
PROPOSED ORDER

Transaction, to notify the Commission in advance of any substantial changes to its primary
operating and maintenance contracts which may substantially affect the safety and reliability of
its transmission assets. Accordingly, the Commission finds that the Transaction will not impact
public safety and that it satisfies item (h) of the merger standards.

CONCLUSION

42.

The Commission finds that the proposed Transaction, as conditioned, satisfies the

Commission's merger standards and promotes the public interest. The Commission grants the
Joint Application and approves the proposed Transaction, subject to the Merger Conditions
contained in Exhibit A, which is attached hereto and made a part hereof by reference.
Additionally, because many of the Merger Conditions refer to the closing date of the Transaction,
the Commission directs the Joint Applicants to provide notice of consummation to the
Commission within 10 days of the closing of the Transaction.
THEREFORE, THE COMMISSION ORDERS:

A.

The Transaction between Fortis and ITC Holdings is approved.

B.

Joint Applicants must abide by the Merger Conditions contained in Exhibit A,

attached hereto.
C.

Joint Applicants must provide notice of consummation to the Commission within

10 days of the closing of the Transaction.

D.

The parties have 15 days from the date of electronic service of this Order to

petition for reconsideration. 39

39

K.S.A. 66-118b; K.S.A. 77-529(a)(l).

19

ATTACHMENT A

PROPOSED ORDER
E.

The Commission retains jurisdiction over the subject matter and the parties for the

purpose of entering such further orders as it deems necessary.

BY THE COMMISSION IT IS SO ORDERED.
Emler, Chairman; Albrecht, Commissioner; Apple, Commissioner.
Date: - - - - -- - -

Amy L. Green
Secretary to the Commission

20

ATTACHMENT A
PROPOSED ORDER

CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the attached Order has
been served to the following parties by means of Electronic Service on - -- - -- -

PAUL FITZPATRICK, DIRECTOR,

REGULATORY AND COMPLIANCE
FORTIS INC.
FORTIS PLACE SUITE 1100
5 SPRINGDALE STREET
ST.JOHN'S, NL AIB 3T2
pfitzpatrick@fortisinc.com
CHRIS WINLAND, MANAGER,
REGULATORY STRATEGY
ITC GREAT PLAINS, LLC
204 NORTH ROBINSON A VE
SUITE 2500
OKLAHOMA CITY, OK 73102
C WTN LAN D@ ITCTRANSCO.COM
STEPHEN J. VIDETO, PRACTICE
GROUP LEADER & SENIOR
COUNSEL-REGULATORY &
LEGISLATIVE
ITC HOLDINGS CORP
27175 ENERGY WAY
NOVI, MI 48377-3639
svi deto@itctransco.com
BRIAN G. FEDOTIN, DEPUTY
GENERAL COUNSEL
KANSAS CORPORATION
COMMISSION
1500 SW ARROWHEAD RD
TOPEKA, KS 66604-4027
b.fedotin@kcc.ks.gov
ANDREW FRENCH, SENIOR
LITIGATION COUNSEL
KANSAS CORPORATION
COMMISSION
1500 SW ARROWHEAD RD
TOPEKA, KS 66604-4027
a. french@kcc.ks.gov

21

ATTACHMENT A
PROPOSED ORDER

AMBER SMITH, CHIEF LITIGATION

COUNSEL
KANSAS CORPORATION
COMMISSION
1500 SW ARROWHEAD RD
TOPEKA, KS 66604-4027
a.smith@kcc.ks.gov
ANNE E. CALLENBACH, ATTORNEY
POLSINELLI PC
900 W 48TH PLACE STE 900
KANSAS CITY, MO 64112
acallenbach@polsinelli.com
FRANK A.CARO,ATTORNEY
POLSINELLI PC
900 W 48TH PLACE STE 900
KANSAS CITY, MO 64112
fcaro@polsinelli.com
RENEE BRAUN, CORPORATE
PARALEGAL, SUPERVISOR
SUNFLOWER ELECTRIC POWER
CORPORATION
301 W. 13TH
PO BOX 1020 (67601-1020)
HAYS, KS 67601
RBRAUN@SUNFLOWER.NET
JAMES BRUNGARDT, REGULA TOR
Y AFFAIRS ADMINISTRATOR
SUNFLOWER ELECTRIC POWER
CORPORATION
301 W. 13TH
PO BOX 1020 (67601-1020)
HAYS, KS 67601
JBRUNGARDT@SUNFLOWER.NET
AL TAMIMI, VICE PRESIDENT,
TRANSMISSION PLANNING AND
POLICY
SUNFLOWER ELECTRIC POWER
CORPORATION
301W.13TH
PO BOX 1020 (67601-1020)
HAYS, KS 67601

22

ATTACHMENT A
PROPOSED ORDER

atamimi@sunflower.net
TIMOTHY E. MCKEE, ATTORNEY
TRIPLETT, WOOLF & GARRETSON,
LLC
2959 N ROCK RD STE 300
WICHITA, KS 67226
TEMCKEE@TWGFIRM.COM
MARK D. CALCARA, ATTORNEY
WATKINS CALCARA CHTD.
1321 MAIN ST STE 300
PO DRAWER 1110
GREAT BEND, KS 67530
MCALCARA@WCRF.COM
TAYLORP.CALCARA,ATTORNEY
WATKINS CALCARA CHTD.
1321 MAIN ST STE 300
PO DRAWER 1110
GREAT BEND, KS 67530
TCALCARA@WCRF.COM

23

EXHIBIT A

KCC DOCKET NO. 16-ITCE-512-ACQ

CONDITIONS FOR KANSAS CORPORATION COMMISSION
APPROVAL OF TRANSACTION
Staff recommends that the Commission's approval of the Transaction in this instant docket
be subject to the following conditions.

1. Neither the Joint Applicants nor any of their affiliates shall recover from customers
directly or indirectly, any costs incurred associated with this Transaction in this or
any future rate proceeding.
2. Neither (a) the greater of either goodwill or acquisition premium nor (b) any of the debt
financing associated with funding this Transaction will be recorded on the books of
any direct or indirect subsidiary of ITC Holdings, including ITC Great Plains, nor on
the books of ITC Holdings in a manner that would negatively affect the financial
condition of any direct or indirect subsidiary of ITC Holdings, including ITC Great
Plains.
Additionally, any transaction or transition costs associated with the
Transaction, along with any related amortization or expense, will be recorded below
the line, taken to mean that these costs will be recovered from shareholders and are
not recoverable through the rates of any direct or indirect subsidiary of ITC Holdings,
including ITC Great Plains.
3. The Joint Applicants shall file the final accounting entries for the Transaction, showing the
actual dollar values of all involved accounts, as a compliance filing in either Docket
No. 16-ITCE-512-ACQ, or a compliance Docket established at the time of a final
Order in this proceeding, within sixty (60) days of the effective date of the closing of
the Transaction. If the Transaction closing has not occurred within six months of the
Final Order in this proceeding, the Joint Applicants shall file a status report at six
month intervals until the journal entries are filed with the Commission.
4. For three (3) years from the effective date of the closing of the Transaction, no voluntary
workforce reductions, employee restructuring, or job elimination programs will be
implemented by ITC Great Plains in Kansas. This condition shall be taken to mean
that the aggregate level of employment by ITC Great Plains in Kansas shall not be
reduced by ITC Great Plains from the level in effect before the effective date of the
Transaction.
5. For three (3) years from the effective date of the closing of the Transaction, ITC Great
Plains will provide charitable contributions and community support in the
communities in Kansas at a level comparable in the aggregate to the levels currently
provided by the ITC Holdings and ITC Great Plains. Thereafter, Fortis Inc. will not
restrict or in any way attempt to limit or control the discretion of the management of
ITC Great Plains and ITC Holdings over such programs.
6. For five (5) years from the effective date of the closing of the Transaction, ITC Great
Plains will maintain its headquarters in Topeka, Kansas. For an additional five (5)
years thereafter, ITC Great Plains will keep its headquarters in Kansas, and will
notify the Commission prior to any relocation outside of Topeka, Kansas.
7. Consistent with the Joint Applicants' hold harmless commitment made in FERG Docket
No. EC16-110, neither ITC Great Plains nor any other ITC or Fortis-affiliated entity
will, at any time, seek to recover any acquisition premium, goodwill, or transaction
costs associated with consummating the Transaction (including transition costs),
through FERC or any other federal or state regulatory proceeding.

EXHIBIT A
8. It is Fortis' policy that a subsidiary operating utility company such as ITC Great Plains will
maintain both standalone credit facilities and senior long-term debt instruments and
will not be made responsible for any debt or other obligations of its parent or affiliate
companies, and this policy is consistent with applicable federal law and FERC
regulations. Fortis has no plans to change that policy, and will not seek to change its
policy for five (5) years from the effective date of the closing of the Transaction and
during such time ITC Great Plains will continue to maintain both standalone credit
facilities and senior long-term debt instruments, and will not make loans under its
financing arrangements to Fortis or its affiliates or guarantee any debt of Fortis or its
affiliates. If at any time thereafter Fortis or ITC Great Plains wishes to change this
important financial condition, it must state its intent to do so in a filing with the
Kansas Corporation Commission.
9. Neither Joint Applicants nor any of their affiliates will at any time attempt to circumvent
any condition contained herein or any commitment made in this docket or FERC
Docket No. EC16-110 through any action at FERC or another state or federal
regulatory body or state or federal court.
10. For five (5) years following the effective date of the closing of the Transaction, in the
event that ITC Great Plains makes any substantial change in its primary operating
and maintenance contracts which may have a substantial effect on the safety and
reliability of its Transmission assets in the state of Kansas, including but not limited
to a substantial change in its operation and maintenance contracts currently in effect
for its Kansas transmission assets, ITC Great Plains shall make a filing with the
Commission 30 days in advance of the changed contract (in either Docket No. 16ITCE-512-ACQ or a compliance Docket established as a result of the final
Commission Order in this proceeding). This filing shall include a description of the
change, the rationale for the change (including the business or economic rationale
for the change), whether the change is expected to impact service quality, safety, or
reliability o~ ITC Great Plains' transmission operations in the State and all
appropriate support for each of the above claims. For greater certainty, no such
filings will be required where ITC Great Plains (and/or its primary contractor)
routinely updates maintenance and operations practices in the normal course of
business, as it currently does, to fully comply with all applicable standards for safety
and security as they are issued by NERC or other regulatory bodies. Nothing herein
shall restrict the right of ITC Great Plains to designate information as confidential
under the applicable provisions of K.S.A. 66-1220a and K.A.R. 82-1-221a.
11. The Commission should explicitly state that Fortis has committed to provide equity
capital injections as needed for maintaining the financial integrity of ITC Great Plains
such that ITC Great Plains is capable of maintaining an investment-grade credit
rating.
12. In the event that ITC Great Plains, Fortis, or any Fortis affiliate from which ITC Great
Plains receives financing (including equity capital) should have its corporate credit
rating downgraded as determined by Standard and Poor's (S&P) or Moody's to
below BBB- or Baa3, respectively, ITC Great Plains commits to file the following:
1. Notice with the Commission within five (5) business days of the downgrade;
2. A Pleading with the Commission within 60-days which shall include the following:
a. A plan identifying all reasonable steps, taking into account the costs,
benefits, and expected outcomes of such actions, that will be taken to restore and
maintain a S&P BBB- or Moody's Baa3 or above credit rating for ITC Great Plains,
Fortis, or the financing affiliate. If ITC Great Plains' plan does not involve taking the

EXHIBIT A

13.

steps to restore and maintain a S&P BBB- or Moody's Baa3 or above credit rating,
for ITC Great Plains, Fortis, or any financing affiliate, then ITC Great Plains shall
comprehensively state why it believes the steps necessary to produce that result are
not reasonable or necessary in order for it to continue to provide efficient and
sufficient service in Kansas. Thereafter, until ITC Great Plains, Fortis, and/or the
financing affiliate have regained a corporate credit rating of BBB- or Baa3 or above,
ITC Great Plains shall file a status report with the Commission every 60-days
detailing the steps it is taking to restore its investment grade credit rating, and
support that its ability to provide efficient and sufficient service has not been
detrimentally affected by a corporate credit rating below investment grade.
For three (3) years from the effective date of the closing of the Transaction, ITC Great
Plains will make an annual filing in Docket No. 16-ITCE-512-ACQ or a compliance
Docket that is established as a result of the final Commission Order in this
proceeding. This filing shall include a report as to compliance with the conditions
imposed by the Commission Order approving the Transaction.