COC IDA research note 08-06-09.pdf

Please refer to pages 3-4 of this report for detailed disclosure and certification information.

RESEARCH NOTE
Institutional Equity Research

IDACORP, INC.
August 6, 2009 IDA – NYSE

Rating:
NEUTRAL

Price: (8/6/09): $27.96

Price Targets:
12-18 month: $25.50
5-year: $35

Industry:
Utilities

James L. Bellessa, Jr., CFA
406.791.7230
[e-mail]

First Glance 2Q’09 Report: Regulatory Changes Boost Quarter.

• IDACORP, Inc. reported 2Q’09 EPS of $0.58, compared to $0.39 a year earlier
and our forecast of $0.45. Our estimate matched the consensus of five analysts.
• Strong utility results aided by regulatory decisions. Idaho Power Company
(IPC) contributed earnings of $0.56 per share versus $0.39 a year ago. The
benefits of rate relief since the year-ago period and improved hydro conditions
were largely offset by decreased demand due to mild weather and recessionary
pressures. IPC retail volumes were down 8% due primarily to weather
conditions, including a very moist spring, as well as economic conditions.
Quarterly precipitation levels were more than double what they were in the year-
ago period, resulting in a 19% decrease in demand from irrigation customers.
• Power cost deferrals give significant boost. One boost to utility earnings
(+$0.08 per share) that we did not anticipate was the deferral of $6.4 million
(pretax) of excess power supply costs (this adjustment was allowed as part of a
stipulation approved by the Oregon Public Utility Commission in May 2009).
• Nonrecurring items lower tax rate. IDACORP’s tax rate declined to 15.8% in
2Q’09 from 28.3% a year ago, due to the settlement of a 2006 IRS examination,
bonus depreciation provisions under the American Recovery and Reinvestment
Act of 2009, and other regulatory flow-through tax adjustments at IPC.
• We will have additional comments following the conference call with
management scheduled for Thursday, August 6th, at 4:30 PM EDT/1:30 PM PDT.
D.A. Davidson & Co.
2
IDACORP, Inc.
Actual and Projected Operating Results
($ in thousands) -- Fiscal year ends 12/31 2Q'08A 2Q'09E 2Q'09A $ Chg % Chg
Operating Revenues:
Electric Utility:
General Business $188,748 $203,347 $198,215 $9,467 5%
Off System Sales 25,641 37,903 26,667 1,026 4%
Other Revenues 14,556 12,200 17,636 3,080 21%
Total Electric Utility Revenues $228,945 $253,450 $242,518 $13,573 6%
Other 1,281 650 1,116 (165) -13%
Total Operating Revenues $230,226 $254,100 $243,634 $13,408 6%
Operating Expenses:
Electric Utility:
Purchased Power $50,089 $61,261 $25,091 ($24,998) -50%
Fuel Expense 28,681 34,216 24,475 (4,206) -15%
Power Cost Adjustment (829) 0 26,762 27,591 NM
Total Power Supply Expense $77,941 $95,477 $76,328 ($1,613) -2%
Other Operations And Maintenance 75,617 76,035 76,429 812 1%
Demand-Side Management 3,928 5,800 8,673 4,745 121%
Gain On Sale Of Emission Allowances (346) (172) (60) 286 -83%
Depreciation 26,617 24,500 26,832 215 1%
Taxes Other Than Income Taxes 4,800 5,069 5,088 288 6%
Total Electric Utility Expenses $188,557 $206,709 $193,290 $4,733 3%
Other Expense 1,140 1,200 872 (268) -24%
Total Operating Expenses $189,697 $207,909 $194,162 $4,465 2%
Operating Income (Loss):
Electric Utility $40,388 $46,741 $49,228 $8,840 22%
Other 141 (550) 244 103 73%
Total Operating Income $40,529 $46,191 $49,472 $8,943 22%
Other Income 4,302 2,950 4,058 (244) -6%
Earnings of Unconsolidated Equity-Method Investments (3,278) (1,000) (2,620) 658 -20%
Interest Expense:
Interest On Long-Term Debt $15,744 $18,200 $18,282 $2,538 16%
Other Interest 1,313 1,300 (117) (1,430) NM
Total Interest Expense $17,057 $19,500 $18,165 $1,108 6%
Income Before Income Taxes 24,496 28,641 32,745 8,249 34%
Income Tax Expense 6,941 7,447 5,175 (1,766) -25%
Tax Rate 28.3% 26.0% 15.8% -12.5% -44%
Net Income $17,555 $21,195 $27,570 $10,015 57%
Adjustment for Loss Attributable to Noncontrolling Interests (40) 50 (95) (55) 138%
Net Income Attributable to IDACORP, Inc. $17,515 $21,245 $27,475 $9,960 57%
Weighted Average Shares (Diluted) 45,096 47,276 46,977 1,881 4%
Total Earnings Per Share (Diluted) $0.39 $0.45 $0.58 $0.20 51%
Dividends Paid Per Share Of Common Stock $0.30 $0.30 $0.30 $0.00 0%
Net Income By Segment:
Idaho Power Company $17,728 $20,800 $26,326 $8,598 48%
Other (Including Discontinued Operations) (173) 395 1,149 1,322 NM
Total Net Income $17,555 $21,195 $27,475 $9,920 57%
EPS by Segment:
Idaho Power Company $0.39 $0.44 $0.56 $0.17 43%
Other (Including Discontinued Operations) (0.00) 0.01 0.02 0.03 NM
Total EPS $0.39 $0.45 $0.58 $0.20 50%
James L. Bellessa, Jr., CFA
D.A. Davidson & Co. Source: Company reports and D.A. Davidson & Co. estimates
D.A. Davidson & Co.
Two Centerpointe Drive, Suite 400 • Lake Oswego, Oregon 97035 • [phone] • [phone] • www.dadavidson.com
Copyright D.A. Davidson & Co., 2009. All rights reserved.
3
Required Disclosures
D.A. Davidson & Co. expects to receive, or intends to seek, compensation for investment banking services from this company in the
next three months.
D.A. Davidson & Co. is a full service investment firm that provides both brokerage and investment banking services. James L.
Bellessa, Jr., CFA, the research analyst principally responsible for the preparation of this report, will receive compensation that is
based upon (among other factors) D.A. Davidson & Co.’s investment banking revenue. However, D.A. Davidson & Co.’s analysts are
not directly compensated for involvement in specific investment banking transactions.
I, James L. Bellessa, Jr., CFA, attest that (i) all the views expressed in this research report accurately reflect my personal views about
the common stock of the subject company, and (ii) no part of my compensation was, is, or will be, directly or indirectly, related to the
specific recommendations or views expressed in this report.

Ratings Information

D.A. Davidson & Co. Ratings Buy Neutral Underperform
Risk adjusted return potential Over 15% total return
expected on a risk adjusted
basis over next 12-18 months
>0-15% return potential
on a risk adjusted basis
over next 12-18 months
Likely to remain flat or lose
value on a risk adjusted basis
over next 12-18 months
Distribution of Ratings (as of 6/30/09) Buy Hold Sell
Corresponding Institutional Research Ratings Buy Neutral Underperform
and Distribution 46% 46% 8%
Corresponding Private Client Research Ratings Outperform Market Perform Underperform
and Distribution 91% 4% 4%
Distribution of Combined Ratings 51% 41% 8%
Distribution of companies from whom D.A. Davidson & Co. has received compensation for investment banking services in last 12 mos.
Institutional Coverage 2% 5% 6%
Private Client Coverage 0% 0% 0%
Distribution of Combined Investment Banking 2% 5% 6%

D.A. Davidson & Co.’s Institutional Research Rating Scale (maintained since 7/9/02): Buy, Neutral, Underperform
D.A. Davidson & Co.
Two Centerpointe Drive, Suite 400 • Lake Oswego, Oregon 97035 • [phone] • [phone] • www.dadavidson.com
Copyright D.A. Davidson & Co., 2009. All rights reserved.
4
Target prices are our Institutional Research Department’s evaluation of price potential over the next 12-18 months and 5 years, based
upon our assessment of future earnings and cash flow, comparable company valuations, growth prospects and other financial criteria.
Certain risks may impede achievement of these price targets including, but not limited to, broader market and macroeconomic
fluctuations and unforeseen changes in the subject company’s fundamentals or business trends.

Other Disclosures

Information contained herein has been obtained by sources we consider reliable, but is not guaranteed and we are not soliciting any
action based upon it. Any opinions expressed are based on our interpretation of data available to us at the time of the original
publication of the report. These opinions are subject to change at any time without notice. Investors must bear in mind that inherent
in investments are the risks of fluctuating prices and the uncertainties of dividends, rates of return and yield. Investors should also
remember that past performance is not necessarily an indicator of future performance and D.A. Davidson & Co. makes no guarantee,
express or implied, as to future performance. Investors should note this report was prepared by D.A. Davidson & Co.’s Institutional
Research Department for distribution to D.A. Davidson & Co.’s institutional investor clients and assumes a certain level of investment
sophistication on the part of the recipient. Readers, who are not institutional investors or other market professionals, should seek the
advice of their individual investment advisor for an explanation of this report’s contents, and should always seek such advisor’s advice
before making any investment decisions. Further information and elaboration will be furnished upon request.