COC Wachovia-2-19-09.pdf

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A publication of
WACHOVIA CAPITAL MARKETS, LLC

Equity Research
IDACORP, Inc.
IDA: What's The Fuss? 09 Outlook Remains Strong
Modestly Raising EPS Estimates

• Comments on Share Price Weakness. On 2/19 shares declined nearly 5%,
materially underperforming the Regulated Electrics, which were flat. We think the
underperformance reflected a headline miss on 08 ($2.17A vs. $2.22 consensus)
and a cautionary comment about the “disappointing” rate case outcome. We think
the weakness was overdone because (1) there were some one-time-type items that
hurt 08 by about $0.05 – netting those out, EPS were essentially in-line and (2) yes,
the $21mm approved rate increase vs. the $67mm request was disappointing; but it
appears that IDA will be able to mitigate the impact through cost controls.
• EPS Outlook. We have increased our 09E EPS to $2.45 from $2.40, which is well
above consensus of $2.24. It is difficult to envision 09 EPS being essentially flat
vs. 08 given the positive drivers of a base rate increase, lower O&M, improvements
to the load growth adjustment rate (LGAR), recognition of some AMI investment
in rates, and an improved hydro outlook (not to mention a more favorable power
supply sharing mechanism). We have also increased our 10E and 11E EPS to
$2.50 and $2.70 from $2.45 and $2.65. Our estimates reflect a mid-year 2010 rate
increase in Idaho; mgmt is currently evaluating the timing of a new rate filing.
• Financing Needs. IDA’s financial position remains strong and external financing
needs are less than 2008 (IDA issued $120mm of long-term debt and $51mm of
common stock, $42mm of which was via the continuous equity program (CEP), in
08). IDA targets a capital structure of common equity in the upper 40% range and
intends to finance its capital program through internally generated funds and
external debt and equity. We think equity needs in 09 can be met through IDA’s
CEP, under which 2.6mm shares are available. After 09, equity financing needs
will largely depend upon the timing of major transmission expansion projects and
potential new baseload generation.
• Transmission Drives Long-Term Growth. IDA is pursuing two major
transmission projects that could drive 5% EPS growth through '15. The Boardman-
Hemingway project is a 500-kV line from SW Idaho to Oregon with construction
scheduled for 2011-13; and the Gateway West line, which includes two 500-kV
lines from SW Idaho across Wyoming, is to be built in the 2012-14 time period.
Planning and initial siting activities are underway. Given the vulnerability of large
transmission projects to siting delays along with a lower demand outlook, we
assume the projects are put into service a year after these projections..

Valuation Range: $26 to $27
We value IDA under P/E multiple (apply a 10.5x multiple to our 10E EPS of $2.50)
and dividend discount analysis, which indicate a 12-18 month valuation range of $26-
27 per share. Risks to our valuation analysis include project delays or cancellations
and consistently below average hydroelectric conditions.

Investment Thesis:
We are attracted to Idaho's service territory and strong rate base growth potential, and
are encouraged by recent regulatory improvements. Our neutral rating reflects
lingering regulatory concerns.

Market Perform
Sector: Regulated Electric Utilities, Market
Weight
February 19, 2009
Earnings Estimates Revised Up

2008A 2009E 2010E
EPS Curr. Prior Curr. Prior
Q1 (Mar.) $0.48 $0.65 NC NE
Q2 (June) 0.39 0.53 0.50 NE
Q3 (Sep.) 1.14 0.94 0.93 NE
Q4 (Dec.) 0.16 0.33 0.32 NE
FY $2.17 $2.45 2.40 $2.50
CY $2.17 $2.45 $2.50
FY P/E 11.2x 10.0x 9.8x
Rev.(MM) $956.1 $947.8 $993.3
Source: Company Data, Wachovia Capital Markets, LLC estimates, and Reuters NA = Not Available, NC = No Change, NE = No Estimate, NM = Not Meaningful

Ticker IDA
Price (02/19/2009) $24.39
52-Week Range: $21-34
Shares Outstanding: (MM) 45.6
Market Cap.: (MM) $1,112.2
S&P 500: 778.94
Dividend/Yield: $1.20/4.9%
LT Debt: (MM) $1,183.5
LT Debt/Total Cap.: 43.5%
ROE: 9.0%
3-5 Yr. Est. Growth Rate: 5.0%
CY 2009 Est. P/E-to-Growth: 2.0x
Last Reporting Date: 02/19/2009
Before Open
Source: Company Data, Wachovia Capital Markets, LLC estimates, and Reuters

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

WACHOVIA CAPITAL MARKETS, LLC
Utilities EQUITY RESEARCH DEPARTMENT

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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.

Required Disclosures

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IDACORP, Inc. (IDA) 3-yr. Price PerformanceIDACORP, Inc. (IDA) 3-yr. Price Performance
Date
Date Publication Price ($) Rating Code Val. Rng. Low Val. Rng. High Close Price ($)
2/14/2006 Brothwell 2/14/2006 NA 2 28.00 30.00 31.86
z 5/12/2006 NA 2 30.00 32.00 33.50
z 8/10/2006 NA 2 35.00 38.00 36.93
z 1/19/2007 NA 2 34.00 37.00 37.22
dz 2/16/2007 NA 3 31.00 33.00 35.60
z 5/10/2007 NA 3 30.00 33.00 32.84
z 6/11/2007 NA 3 30.00 32.00 31.78
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

Source: Wachovia Capital Markets, 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

WACHOVIA CAPITAL MARKETS, LLC
IDACORP, Inc. EQUITY RESEARCH DEPARTMENT

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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 Wachovia Capital Markets, LLC or its affiliates managed or comanaged a public offering of securities for IDACORP, Inc. within the past 12
months.
ƒ Wachovia Capital Markets, 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 Wachovia Capital Markets, 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 Wachovia
Capital Markets, LLC. Wachovia Capital Markets, LLC provided investment banking services to IDACORP, Inc.

Risks to our valuation analysis include project delays or cancellations and consistently below average hydroelectric conditions.

Wachovia Capital Markets, LLC does not compensate its research analysts based on specific investment banking transactions. WCM’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: February 19, 2009
40% of companies covered by Wachovia Capital Markets, LLC
Equity Research are rated Outperform.
Wachovia Capital Markets, LLC has provided investment banking services
for 39% of its Equity Research Outperform-rated companies.
56% of companies covered by Wachovia Capital Markets, LLC
Equity Research are rated Market Perform.
Wachovia Capital Markets, LLC has provided investment banking services
for 28% of its Equity Research Market Perform-rated companies.
4% of companies covered by Wachovia Capital Markets, LLC
Equity Research are rated Underperform.
Wachovia Capital Markets, LLC has provided investment banking services
for 33% of its Equity Research Underperform-rated companies.

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WACHOVIA CAPITAL MARKETS, LLC
Utilities EQUITY RESEARCH DEPARTMENT

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