COC Ladenburg-Jan-8-2010.pdf

Power and Utilities Sector
Company Update

January 8, 2010
NEUTRAL

IIDDAACCOORRPP ((IIDDAA))
IRP Highlights Long-Term Growth Profile – Reiterating NEUTRAL Rating
Highlights
• We reiterate our NEUTRAL rating on IDA shares. Our price target of
$33 per share is based on a 2010/2011/2012 P/E of 12.7x/12.2x/11.3x
EPS of $2.61/$2.72/$2.93. Our 2009 EPS is $2.45 per share.
• We note accelerating earnings growth driven by IDA’s ability to earn a
minimum 9.5% ROE in ID and incremental rate base additions through
2012. We view IDA as a developing growth story with attractive regulated
growth projects needed for reliability and manageable regulatory risk
supported by the ID rate stipulation pending IPUC approval later this
month, as well as, the IRP filed which includes generation needs (Langley
Gulch CCGT) and two transmission projects (Boardman to Hemingway,
Gateway West). Our near-term estimates are supported by the
announced electric rate settlement agreement filed with the IPUC which
enhances IDA’s ability to earn at least an ROE of 9.5% through 2011, total
company rate base of $2.4b, as well as, IDACORP Financial and Ida-West
Energy contributions. Our preliminary 2012 estimates include partial year
contribution of the previously approved Langley Gulch generating station.
• On January 5, 2010, IDA filed its Integrated Resource Plan (IRP) with
IPUC and OPUC which outlines its 20-year resource plan (2010-2029). According to the study, system load growth will average 0.7% per year,
peak-hour load growth will average 1.5% per year and residential
customer growth will average 1.7% per year over the 20-year planning
period. Energy efficiency and demand-side management are also
included in the forecasts. The preferred portfolio (2010-2019) includes:
150 MW of wind capacity (2012 RFP to be completed shortly), 300 MW
Langley Gulch CCGT (pre-approved and COD July 2012), 20 MW of
geothermal capacity (2012), 49 MW Shoshone Falls upgrade (2015), the
500 kV/300-mile $600m Boardman to Hemingway transmission line
(2015), and 20 MW of geothermal capacity (2016).
• The near-term action plan includes: Langley Gulch construction begins
(2010), wind projects on-line (RFP) and Langley Gulch on-line (2012),
Boardman to Hemingway line construction begins and Shoshone upgrade
begins (2013), Shoshone upgrade on-line and Boardman to Hemingway
line completed (2015).
• As outlined in the company’s IRP, we see continued earnings as the
company pursues various system projects. Importantly, the Boardman to
Hemingway Line (COD 2015) is needed for reliability and is complimentary
to the Gateway West Line (230-500 kV, $500-$600m cost, COD TBD),
which is designed to support new generation sources including wind and
other renewables. IDA will likely seek a partner for its proposed Boardman
to Hemingway line. Gateway West is in the early stage of development.
COMPANY & MARKET DATA
Price $32.23
Price Target, Excl Dividends (YE10)$33.00
Rating NEUTRAL
52 - Week Range $20.91-$32.83
Mkt. Capitalization (mill)$1,536
Enterprise Value (mill)$2,483
FD Shares Outstanding (mill)48
Avg. Daily Trading Vol. (000)215
Book Value per Share (3Q09A)$28.97
Dividend (FY10E) / Yield $1.20 3.7%
FY2008A FY2009E FY2010E
Revenue (mill)$992 $1,057 $1,093
1Q EPS $0.48 $0.40
2Q EPS $0.35 $0.58
3Q EPS $1.14 $1.16
4Q EPS $0.26 $0.31E
EPS $2.22 $2.45 $2.61
Prior EPS
Consensus EPS $2.39 $2.51
P/E 14.5x 13.2x 12.3x
EV/EBITDA 8.0x 7.8x 7.8x
P/FCF -39.8x -39.8x -12.6x
ESTIMATES
Volume in Millions
0.0
1.0
2.0
3.0
$20
$25
$30
$35
$40
Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09
50-day average
200-day average
Chart data: Bloomberg Brian J. Russo, CFA
646-432-6312
[e-mail]
James Berry
212-409-2685
[e-mail]
Disclosures and Analyst Certifications can be found in Appendix A.
NEW YORK, NY MELVILLE, NY PRINCETON, NJ LOS ANGELES, CA MIAMI, FL LINCOLNSHIRE, IL BOCA RATON, FL

520 Madison Avenue y New York, New York 10022 y Telephone: [phone] 800-LAD-THAL

Member: NYSE, NYSE Amex, FINRA, all other principal exchanges and SIPC
Brian Russo 646.432.6312 IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. Page - 2 -

APPENDIX A: IMPORTANT RESEARCH DISCLOSURES

ANALYST CERTIFICATION
I, Brian Russo, attest that the views expressed in this research report accurately reflect my personal views about the subject security
and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or
views expressed in this research report.
The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon
various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.

COMPANY BACKGROUND
Headquartered in Boise, Idaho, IDACORP, Inc., (IDA) is a holding company formed in 1998 that is primarily engaged in the
generation, transmission, distribution, sale and purchase of energy. IDA serves over 466,000 retail customers across its 24,000sq
mile service territory in both Idaho and Oregon, and owns approximately 3,267MW of generating capacity. IDA’s principal operating
subsidiary is Idaho Power Company (IPC). The company’s unregulated utilities include IDACORP Financial (IFS) that invests in
affordable housing and real estate and Ida-West Energy Company (Ida-West) that operates small hydroelectric generation projects.
VALUATION METHODOLOGY
We value equities utilizing a multi-faceted approach which includes; sum-of-the-parts, net asset value, discounted cash flow, leading
P/E, EV/EBITDA.
RISKS
On top of normal economic and market risk factors that impact most all equities, Idacorp (IDA) is uniquely at risk to:
Because of IPC’s predominantly hydroelectric generating base and heavy reliance on hydroelectric generation, which can be
adversely affected by weather, reduced hydroelectric generation can reduce revenues and increase costs.
Continuing declines in stream flows and over-appropriation of water in Idaho may reduce hydroelectric generation and revenues and
increase costs.
Load growth in IPC’s service territory due to customer growth and demand for energy exposes it to greater market and operational risk
as increased reliance on purchased power to meet load requirements could increase costs and reduce earnings and cash flows.
IPC’s reliance on coal and natural gas to fuel its generating facilities exposes it to risk of increased market prices, which could
increase costs and reduced earnings.
Changes in temperature and precipitation can reduce power sales and revenues.
Climate change could affect customer demand and hydroelectric generation and lead to restrictions on generation resources.
If Idaho Public Utility Commission (IPUC), the Oregon Public Utility Commission (OPUC) or the Federal Energy Regulatory
Commission (FERC) grant less rate recovery in rate case filings than IPC needs to cover the costs of providing services, financial
results could be adversely impacted and economic expansion may be limited.
Conditions that may be imposed in connection with hydroelectric license renewals may require large capital expenditures and reduce
earnings and cash flows.
The cost of complying with environmental regulations related to air quality, water quality, natural resources and health and safety can
increase capital expenditures and operating costs and reduce earnings and cash flows.
IDACORP and its subsidiaries are subject to costs and other effects of legal and regulatory proceedings, settlements, investigations
and claims, including those that have arisen out of the western energy situation.
IPC’s business is subject to substantial governmental regulation and may be adversely affected by increased costs resulting from, or
liability under, existing or future regulations or requirements.
Increased capital expenditures can significantly affect liquidity.
As a holding company, IDACORP does not have its own operating income and must rely on the upstream cash flows from its
subsidiaries to pay dividends and make debt payments.
A downgrade in IDA’s credit ratings could negatively affect the company’s ability to access capital and increase their cost of
borrowing.
Adverse results of income tax audits could reduce earnings and cash flows.
Employee workforce factors, including the loss or retirement of key personnel, availability of qualified personnel and an aging
workforce, could increase costs and reduce earnings.
Brian Russo 646.432.6312 IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. Page - 3 -

STOCK RATING DEFINITIONS
Buy: The stock’s return is expected to exceed 15% over the next twelve months.
Neutral: The stock’s return is expected to be plus or minus 15% over the next twelve months.
Sell: The stock’s return is expected to be negative 15% or more over the next twelve months.

Investment Ratings are determined by the ranges described above at the time of initiation of coverage, a change in risk, or a change
in target price. At other times, the expected returns may fall outside of these ranges because of price movement and/or volatility. Such
interim deviations from specified ranges will be permitted but will become subject to review.

RATINGS DISPERSION AND BANKING RELATIONSHIPS (as of 01/01/10)
Buy 65% (21% are banking clients)
Neutral 33% (5% are banking clients)
Sell 2% (0% are banking clients)

INVESTMENT RATING AND PRICE TARGET HISTORY

Brian Russo 646.432.6312 IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. Page - 4 -
COMPANY SPECIFIC DISCLOSURES:
Ladenburg Thalmann & Co. Inc. does not make a market in subject company. Ladenburg Thalmann & Co. Inc. has neither had an
investment banking relationship with, nor received investment banking fees from the subject company in the past 12 months. Neither
the Analyst, nor members of the Analyst’s household own any securities issued by the subject Company.

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