COC IDA080610.pdf

Please see page 5 for rating definitions, important disclosures
and required analyst certifications
Wells Fargo Securities, LLC does and seeks to do business with companies
covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of the
report and investors should consider this report as only a single factor in
making their investment decision.

u ust 6, 2010

Equit Research
IDACORP, Inc.
IDA: Raising 2010 Estimates Following Tax-Driven Strong Q2
Preservation Of ADITCs Encouraging

• Summary. We are increasing our 2010E EPS to $2.80 from $2.72 and
maintaining our 2011-12E EPS of $2.95 and $3.00, respectively. We believe
there may be upside potential to our estimates related to potential tax benefits,
subsequent lower equity needs and/or another favorable rate settlement.
Reiterating Market Perform rating and raising valuation to $36-37 from $35-36.
• EPS Outlook. IDA affirmed 2010 EPS guidance of $2.65-2.80 and no longer
anticipates a need to amortize ADITCs as Idaho Power (IPC) is on track to earn a
9.5-10.5% ROE largely do to favorable tax items. Following an evaluation of tax
accounting for repair-related expenditures, IPC recorded a $25.2MM ($0.50 per
share) net tax benefit for the years 1999-2009. We are increasing our 2010E
EPS to $2.80 from $2.72 to reflect a higher assumed earned ROE in light of
management comments and the tax benefits realized in Q2. We are including
the irregular tax items in our ongoing EPS do to the nature of IDA’s rate plan,
which is based on achieving a certain ROE (via whatever means necessary) in
lieu of real rate relief. Our 2011E and 2012E EPS remain at $2.95 and $3.00.
• Upside? IDA is currently in discussions with the IRS on IPC’s uniform
capitalization method. Potential net income and cash benefits could exceed the
$35MM of gross repair-related benefits. The examination will wrap up in Q3,
but timing of the potential recognition of benefits is unknown. More importantly
than the one-time EPS benefit, in our view, is the cash impact which would
lessen equity needs (we calculate EPS upside potential of at least $0.05 per share
in 2012). We believe there is additional upside potential to our 2012E EPS
should IDA reach a settlement agreement similar to the current 2009-11 plan.
• Comments on Tax Benefits. While we recognize that the tax items are low
quality earnings, which could create regulatory risk going into the next rate
proceeding, we view them favorably as (1) they preserve IDA’s ADITC balance,
which makes reaching another constructive rate settlement more likely, in our
view and (2) they benefit cash flow. ADITC amortizations impact IPC’s earnings
and book value, but are non-cash benefits. The repair related tax items and
potential uniform capitalization settlement, on the other hand, are cash items,
which can reduce external equity needs.
• Reiterate Market Perform. We are attracted to longer-term growth trends
in IDA’s service territory and increasingly constructive regulatory environment.
Our Market Perform rating reflects modest concerns with IDA’s underlying
earnings and related regulatory risk and valuation considerations.

Valuation Range: $36.00 to $37.00 from $35.00 to $36.00
We value IDA under P/E multiple analysis (apply an 12.0-12.5X multiple to our 12E
EPS of $3.00). Risks to our valuation include project delays/cancellations, negative
regulatory developments and consistently below average hydro conditions.

Investment Thesis:
We are attracted to IDA's increasingly constructive regulatory environment,
attractive service territory and strong rate base growth potential. Our Market
Perform rating largely reflects valuation considerations.

Market Perform

Sector: Regulated Electric Utilities
Market Weight

Earnings Estimates Revised Up

2009A 2010E 2011E
EPS Curr. Prior Curr. Prior
Q1 (Mar.) $0.40 $0.34 NC NE
Q2 (June) 0.58 0.82 0.60 NE
Q3 (Sep.) 1.16 1.22 1.28 NE
Q4 (Dec.) 0.49 0.42 0.50 NE
FY $2.64 $2.80 2.72 $2.95 NC
CY $2.64 $2.80 $2.95
FY P/E 13.5x 12.8x 12.1x
Rev.(MM)$1,050 $1,065 $1,098
Source: Company Data, Wells Fargo Securities, LLC estimates, and Reuters NA = Not Available, NC = No Change, NE = No Estimate, NM = Not Meaningful V = Volatile, = Company is on the Priority Stock List

Ticker IDA
Price (08/06/2010) $35.75
52-Week Range: $26-37
Shares Outstanding: (MM) 48.0
Market Cap.: (MM) $1,716.0
S&P 500: 1,122.95
Avg. Daily Vol.: 226,209
Dividend/Yield: $1.20/3.4%
LT Debt: (MM) $1,288.8
LT Debt/Total Cap.: 44.9%
ROE: 10.0%
3-5 Yr. Est. Growth Rate: 4.0%
CY 2010 Est. P/E-to-Growth: 3.2x
Last Reporting Date: 08/05/2010
Before Open
Source: Company Data, Wells Fargo Securities, LLC estimates, and Reuters

Neil Kalton, CFA, Senior Analyst
[phone] / [e-mail]
Sarah Akers, CFA, Associate Analyst
[phone] / [e-mail]
Jonathan Reeder, Associate Analyst
[phone] /
[e-mail]

WELLS FARGO SECURITIES, LLC
Utilities EQUITY RESEARCH DEPARTMENT

2

Company Description:
IDACORP (IDA) is the holding company for Idaho Power Company (IPC), a regulated electric utility serving
more than 485,000 customers in southern Idaho, including Boise and surrounding areas, and eastern Oregon.
In addition, IDACORP Financial Services (IFS), a non-utility business, invests in affordable housing tax
credits.

WELLS FARGO SECURITIES, LLC
IDACORP, Inc. EQUITY RESEARCH DEPARTMENT

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WELLS FARGO SECURITIES, LLC
IDACORP, Inc. EQUITY RESEARCH DEPARTMENT

5

Required Disclosures

$18.00
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$24.00
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IDACORP, Inc. (IDA) 3-yr. Price PerformanceIDACORP, Inc. (IDA) 3-yr. Price Performance
Date
Date Publication Price ($) Rating Code Val. Rng. Low Val. Rng. High Close Price ($)
7/31/2007 Brothwell
7/31/2007 NA 3 30.00 32.00 30.96
z 8/9/2007 NA 3 32.00 34.00 34.77
c 8/30/2007 32.29 2 32.00 34.00 32.52
z 11/1/2007 34.89 2 33.00 35.00 33.70
„ 11/14/2007 Kalton
z 11/14/2007 33.79 2 34.00 35.00 33.85
z 2/15/2008 32.04 2 31.00 33.00 31.46
z 12/18/2008 29.19 2 30.00 32.00 29.24
z 2/19/2009 24.39 2 26.00 27.00 24.39
z 8/6/2009 27.79 2 27.00 29.00 27.79
z 9/10/2009 28.37 2 29.00 30.00 28.37
z 11/10/2009 29.52 2 30.00 31.00 29.52
z 12/14/2009 31.18 2 32.00 33.00 31.54
z 2/25/2010 33.94 2 35.00 36.00 33.89 Source: Wells Fargo Securities, LLC estimates and Reuters data Symbol Key Rating Code Key d Rating Downgrade ‹ Initiation, Resumption, Drop or Suspend 1 Outperform/Buy SR Suspended c Rating Upgrade „ Analyst Change 2 Market Perform/Hold NR Not Rated
z Valuation Range Change ˆ Split Adjustment 3 Underperform/Sell NE No Estimate

Additional Information Available Upon Request

I certify that:
1) All views expressed in this research report accurately reflect my personal views about any and all of the subject securities or
issuers discussed; and
2) No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed
by me in this research report.

ƒ Wells Fargo Securities, LLC or its affiliates managed or comanaged a public offering of securities for IDACORP, Inc. within the
past 12 months.
ƒ Wells Fargo Securities, LLC or its affiliates intends to seek or expects to receive compensation for investment banking services in
the next three months from IDACORP, Inc.
ƒ Wells Fargo Securities, LLC or its affiliates received compensation for investment banking services from IDACORP, Inc. in the
past 12 months.
ƒ IDACORP, Inc. currently is, or during the 12-month period preceding the date of distribution of the research report was, a client
of Wells Fargo Securities, LLC. Wells Fargo Securities, LLC provided investment banking services to IDACORP, Inc.
ƒ IDACORP, Inc. currently is, or during the 12-month period preceding the date of distribution of the research report was, a client
of Wells Fargo Securities, LLC. Wells Fargo Securities, LLC provided noninvestment banking securities-related services to
IDACORP, Inc.
WELLS FARGO SECURITIES, LLC
Utilities EQUITY RESEARCH DEPARTMENT

6

ƒ Wells Fargo Securities, LLC received compensation for products or services other than investment banking services from
IDACORP, Inc. in the past 12 months.
ƒ Wells Fargo Securities, LLC or its affiliates may have a significant financial interest in IDACORP, Inc.

IDA: Risks to our valuation include project delays/cancellations, negative regulatory developments and consistently below average
hydro conditions.

Wells Fargo Securities, LLC does not compensate its research analysts based on specific investment banking transactions.
Wells Fargo Securities, LLC’s research analysts receive compensation that is based upon and impacted by the overall profitability
and revenue of the firm, which includes, but is not limited to investment banking revenue.

STOCK RATING
1=Outperform: The stock appears attractively valued, and we believe the stock's total return will exceed that of the market over the
next 12 months. BUY
2=Market Perform: The stock appears appropriately valued, and we believe the stock's total return will be in line with the market
over the next 12 months. HOLD
3=Underperform: The stock appears overvalued, and we believe the stock's total return will be below the market over the next 12
months. SELL
SECTOR RATING
O=Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months.
M=Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months.
U=Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months.
VOLATILITY RATING
V = A stock is defined as volatile if the stock price has fluctuated by +/-20% or greater in at least 8 of the past 24 months or if the
analyst expects significant volatility. All IPO stocks are automatically rated volatile within the first 24 months of trading.

As of: August 6, 2010
48% of companies covered by Wells Fargo Securities, LLC Equity Research are rated Outperform. Wells Fargo Securities, LLC has provided investment banking services for 41% of its Equity Research Outperform-rated
companies.
49% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Market Perform.
Wells Fargo Securities, LLC has provided investment banking
services for 45% of its Equity Research Market Perform-rated
companies.
3% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Underperform.
Wells Fargo Securities, LLC has provided investment banking
services for 38% of its Equity Research Underperform-rated
companies.

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WELLS FARGO SECURITIES, LLC
IDACORP, Inc. EQUITY RESEARCH DEPARTMENT

7

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Wells Fargo Securities, LLC.

SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE