20080903IPC to ICIP 11-35.pdf

esIDA~POR~
An IDACORP Company
LISA D. NORDSTROM
Senior Counsel
September 2,2008
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-08-10
General Rate Case
Dear Ms. Jewell:
Enclosed for filing please find an original and three (3) copies of Idaho Power
Company's Response to the Second Production Request of The Industrial Customers of
Idaho Power.
In addition, also enclosed are four copies of a CD containing the Company's
response to production in which electronic/excel files were requested and also for ease of
production of the information.
Finally, also enclosed in a separate envelope are a document and CD (four copies)
containing confidential information being provided in response to production requests.
As you know, the confidential information can only be viewed by those parties who have
signed the Protective Agreement.
Upon receipt ofthis filing, I would appreciate it if you would return a stamped copy of
this letter for my file in the enclosed stamped, self-addressed envelope.
Very truly yours,~~¡(l1~
Lisa D. Nordstrom
Senior Counsel for Idaho Power Company
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Enclosures
P.O. Box 70 (B3707)
1221 W. Idaho St.
Boise, 10 B3702
BARTON L. KLINE, ISB #1526
LISA D. NORDSTROM, ISB #5733
DONOVAN E. WALKER, ISB #5921
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
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i"AHO PUBLIC, .
UTUtfTieSCOMMlSSlON
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF IDAHO POWER
COMPANY FOR AUTHORITY TO
INCREASE ITS RATES AND
CHARGES FOR ELECTRIC
SERVICE.
) CASE NO. IPC-E-08-10
)
) IDAHO POWER COMPANY'S
) RESPONSE TO THE SECOND
) PRODUCTION REQUEST OF THE
) INDUSTRIAL CUSTOMERS OF IDAHO
) POWER
COMES NOW, Idaho Power Company ("Idaho Power" or "the Company"), and in
response to the Second Production Request of the Industrial Customers of Idaho Power
Company dated August 4, 2008, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 1
REQUEST FOR PRODUCTION NO. 11: Ms. Miller on page 12 of her direct
testimony states in reference to the Hells Canyon Re-licensing project "no new capital
expenditures were assumed, although additional costs wil be incurred". Please provide
a detailed accounting of these "additional costs".
RESPONSE TO REQUEST FOR PRODUCTION NO. 11: Idaho Power is
requesting that $7.6 millon be included in base rates to fund the ongoing financing
costs associated with the Hells Canyon relicensing project. To ease Staff audit and
review and eliminate conjecture, the amount was computed on the actual Hells Canyon
relicensing project Construction Work in Progress ("CWIP") balanceas of December 31,
2007. As such, non-finance related capital costs ("additional costs") such as costs
associated with employee labor, studies, license and exhibit preparation, legal and
consulting fees, and relicensing related agreements, etc., were not projected for 2008
and 2009 and, thus, not included in the calculation of the estimated financing costs
being requested for recovery. However, for informational purposes, actual Hells
Canyon relicensing expenditures excluding financing costs were approximately $2.6
millon for the period January 2008 through July 2008, excluding financing costs
otherwise known as Allowance for Funds Used During Construction ("AFUDC"). See
attached work order summary.
This response to this Request was prepared by Catherine M. Miler, Director of
Strategic Analysis, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 2
REQUEST FOR PRODUCTION NO. 12: Ms. Smith on pages 12 through 13 of
her direct testimony discusses the inclusion of a portion of the plant held for future use
in the 2008 test year rate base based upon the amended Idaho Code Section 61-502A.
Please provide a detailed explanàtion of how the inclusion in the 2008 test year of each
specific facility identified in Exhibit 29, lines: 5, 10, 11, 13, 16, 17,21,22,24,26,27,
and 28 is "explicitly" in the public interest.
RESPONSE TO REQUEST FOR PRODUCTION NO. 12: Idaho Code § 61-
502A states:
Except upon its explicit finding that the public interest wil be
served thereby, the commission is hereby prohibited in any
order issued after the effective date of this act, from setting
rates for any utility that grants a return on construction work
in progress or property held for future use and which is not
currently used and useful in providing utility service.
The statute requires an "explicit" finding by the commission that the public
interest wil be served by setting rates that grant a return on propert held for future use.
This is somewhat different than the characterization given to "explicitly" in Request for
Production Nos. 12 and 13.
Nevertheless, how the Company's request with regard to the inclusion of
property held for future use (facilties identified in Exhibit No. 29, lines: 5, 10, 11, 13, 16,
17,21,22,24,26,27, and 28) serves the public interest is set forth in my testimony. As
described on pages 12-13 of the testimony, the Company identified parcels of land that
are anticipated to be used in their entirety for operating propert in the future. As stated
in my testimony:
Purchasing land for substations and other facilties prior to
the time the facilities are constructed benefits the Company
and ultimately the customer. With the increased growth in
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 3
Idaho Power's service territory, it has become increasingly
diffcult and expensive to compete with developers to acquire
strategically located properties. In addition to the financial
benefits, early acquisition of these properties reduces
opposition and assists local planners by identifying where
Idaho Power's infrastructure wil be located.
This response to this Request was prepared by Lori Smith, Vice President of
Corporate Planning and Chief Risk Offcer, Idaho Power Company, and John R. Gale,
Vice President of Regulatory Affairs, Idaho Power Company, in consultation with Barton
L. Kline, Lead Couns~l, Idaho Power Company, and Donovan E. Walker, Corporate
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 4
REQUEST FOR PRODUCTION NO. 13: On page 10 of her direct testimony Ms.
Miler states: "This proposal simply requests that the Commission allow customers to
pay financing costs on Hells Canyon re-licensing expenditures as they occur." Please
explain how requiring ratepayers to pay financing cost as they occur will "explicitly"
serve the public interest as the new law requires.
RESPONSE TO REQUEST FOR PRODUCTION NO. 13: Idaho Code § 61-
502A states:
Except upon its explicit finding that the public interest wil be
served thereby, the commission is hereby prohibited in any
order issued after the effective date of this act, from setting
rates for any utility that grants a return on construction work
in progress or property held for future use and which is not
currently used and useful in providing utility service.
The statute requires an "explicit" finding by the commission that the public
interest wil be served by setting rates that grant a return on construction work in
progress. This is somewhat different than the characterization given to "explicitly" in
Requestfor Production Nos. 12 and 13.
Nevertheless, how the Company's request with regard to the financing costs on
the Hells Canyon relicensing expenditures serves the public interest is set forth in the
testimony. As described on pages 5-6, the major legislative change with the most
recent revision to Idaho Code § 61-502A allows the Commission to grant a utility a
return on construction work in progress or property held for future use which is not
currently used and usefuL. The major difference initiated by this change in the statute
with regard to construction work in progress is that the utility may be allowed to collect
financing costs incurred during the construction period, -rather than afterwards, to
improve the utility's cash flow. Improved cash flow is extremely important during a
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 5
period of significant construction so that the utility can maintain its credit strength and its
ability to access external markets for funding construction activities. This is also
discussed by Company witness, Mr. Steven Keen, in his testimony.
Additionally, retail customers benefit from the use of CWIP in that rate impacts
through the smoothing of rate impacts related to large multi-year projects, which
otherwise create large, lumpy rate increases.
As stated on pages 10-11 of Catherine M. Miler's testimony:
From 1999 through 2007, the Company has incurred $95.6
milion of costs for the relicensing of Hells Canyon. Over
those eight years, the Company has been solely responsible
for acquiring funds to support relicensing activities and has
borne the financing costs of doing so as represented by
$27.9 millon of accumulated allowance for funds used
during construction ((UAFUDCIJ)) captured in Account 107.
Although AFUDC is recorded for income statement purposes
in accordance with GAAP, the Company does not receive
cash recovery until the asset becomes a part of rate base.
The ongoing growth of AFUDC, as demonstrated later in my
testimony, is a serious concern for the Company as it builds
to a significant portion of the expected future increase in rate
base. By collecting financing costs currently, customers wil,
in effect, pay those costs as they are incurred and reduce or
smpoth future rate impacts. For the Company, current cash
collection strengthens cash coverage ratios which help to
maintain credit strength through a period of significant
construction spending and facilitate funding for future
investment.
This response to this Request was prepared by Catherine M. Miller, Director of
Strategic Analysis, Idaho Power Company, and John R. Gale, Vice President of
Regulatory Affairs, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company, and Donovan E. Walker, Corporate Counsel, Idaho
Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 6
REQUEST FOR PRODUCTION NO. 14: Mr. Avera on page 14 of his direct
testimony refers to a "detailed disclosure of demand side management activities"
required as part of the FCA mechanism. Please provide this "detailed disclosure of
demand side management activities" along with all documents, reports, analysis, work
papers, or any other materials used in preparing this disclosure.
RESPONSE TO REQUEST FOR PRODUCTION NO. 14: Idaho Power reports
on all of its demand-side management ("DSM") activities in the Demand-Side Annual
Report which is filed with the Idaho Public Utilities Commission ("I PUC") by March 15 of
each year. Additionally, in the Demand-Side Management 2007 Annual Report which
was filed with the IPUC on March 14, 2007, the Company reported on its activities that
demonstrate an enhanced commitment to DSM, resulting from implementation the FCA
mechanism under the Regulatory Initiatives section pages 47-50. In its response to a
production request, issued by the Industrial Customers of Idaho Power ("ICIP") in Case
No. IPC-E-08-13, Idaho Power provided a copy of the Demand-Side Management 2007
Annual Report. This report is also available at:
http://ww.idahopower.com/aboutuslregulatoryinfolreportPdf.asp?id=44&. pdf.
In addition, please see Idaho Power's response to Production Request NO.9 in the First
Production Request of ICIP in reference to the documents, reports, analysis,
workpapers and/or other material used in preparing this report.
This response to this Request was prepared by Peter R. Pengily, Customer
Research and Analysis Leader, Idaho Power Company, in consultation with Barton L.
Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 7
REQUEST FOR PRODUCTION NO. 15: Mr. Avera on page 19 of his direct
testimony explains that volatile gas prices are a major source of rising costs and
uncertainty for utilities and are expected to remain highly volatile. Idaho Power's current
IRP plans for construction of additional gas turbine plants. Please provide an
explanation for Idaho Power's belief that despite high volatility in the gas market, new
gas turbine generation is the most cost effective new resource.
RESPONSE TO REQUEST FOR PRODUCTION NO. 15: Please see pages 24
and 25 of Idaho Power's 2008 IRP Update. The 2008 IRP Update is available at:
http://ww.idahopower.com/pdfs/energycenter/irp/2008/20081 RPUpdate.pdf
This response to this Request was prepared by Karl Bokenkamp, General
Manager Power Supply Operations and Planning, Idaho Power Company, in
consultation with Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 8
REQUEST FOR PRODUCTION NO. 16: Mr. Avera on page 19-20 of his direct
testimony refers to rising coal prices for utilties generally for the period 2004 through
2008. The coal report included in his workpapers details that Wyoming coal is rising far
slower than overall coal costs. Please provide a detailed comparison of Idaho Power's
actual coal costs paid compared with the coal costs for utilities generally for the period
of 2004 through 2008.
RESPONSE TO REQUEST FOR PRODUCTION NO. 16: Idaho Power's actual
coal costs for 2004 through July 2008 are confidential information and wil be provided
under separate cover to those parties that have executed the Protective Agreement.
The Energy Information Administration ("EIA") provides a summary of historical average
weekly spot prices for coal, by region. This summary covers August of 2005 through
August of 2008, it is available at:
http://ww.eia.doe.gov/cneaf/coal/page/coalnews/coalmar.html#Weekly.
Additional information on average coal prices for 2004 and 2005 is available in
EIA's Annual Coal Report 2005 (see Table 34, on page 66). This report is available at:
http://tonto.eia.doe.gov/FTPROOT/coal/05842005.pdf.
Information on average coal prices for 2005 and 2006 is available at:
http://ww.eia.doe.gov/cneaf/coal/page/acr/table34.html
This response to this Request was prepared by Karl Bokenkamp, General
Manager Power Supply Operations and Planning, Idaho Power Company, and Mark
Stokes, Manager Power Supply Planning, Idaho Power Company in consultation with
Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 9
REQUEST FOR PRODUCTION NO. 17: Mr. Avera on page 25-26 of his direct
testimony discusses the possible implications of future carbon output regulations.
Please provide a detailed comparison of Idaho Power's system wide carbon output
compared with other utilities of similar customer base.
RESPONSE TO REQUEST FOR PRODUCTION NO. 17: In May 2008, Ceres,
Natural Resources Defense Council, PSEG, and PG&E Corporation published
Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United
States. This report includes information on 2006 emissions of S02, NOx, C02, and
mercury from the 100 largest power producers in the US. CO2 emissions for a number
of other utilities of similar size are included in the report. The report can be downloaded
at: http://ww.ceres.org/NETCOMMUNITY/Document.Doc?id=333.
This response to this Request was prepared by Karl Bokenkamp, General
Manager Power Supply Operations and Planning, Idaho Power Company, in
consultation with Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER -10
REQUEST FOR PRODUCTION NO. 18: Mr. Avera, on page 51, lines 5 through
8 states "(c)onsidered along with S&P's corporate credit ratings, a comparison of these
Value Line indicators suggests that the investment risks associated with the Non-Utilty
Proxy Group are below those of the group of utilities and Idaho Power." Please
reconcile this statement with the following: (a) Fitch Ratings' statement "the Utilities,
Power, and Gas sector is less sensitive to a downturn in the housing or the economy
than most other sectors" ("U.S. Utilities, Power and Gas 2008 Outlook" Page 1, Para 6
(December 11, 2007)); (b) Moodys' statement "the fundamental outlook for the US
electric utility sector remains stable, reflecting lower cash flow volatility in comparison to
unregulated industries and the resilence of financial performance in periods of weaker
economic conditions" ("U.S. Electric Utility Sector" Pg 2, Para 1 (January 2008)); and (c)
Standard and Poor's analysis that the strong liquidity position and relatively consistent
cash flows of utilties "enabled the companies to deal with the fallout of the auction rate
securities and insured deals in a credit-neutral manner" ("U.S. Electric Utility Sector
Continues to Benefit from Strong Liquidity Amid Current Credit Crunch" Page 2, Para 1
(March 27, 2008)) all of which are referenæd by Mr. Avera and included in his work
papers.
RESPONSE TO REQUEST FOR PRODUCTION NO. 18: Dr. Avera's statement
at page 51, lines 5 through 8 was based on his review of objective measures of
investment risk for the companies in the alternative proxy groups, and for Idaho Power.
As Dr. Avera explained in detail in his testimony at pages 36-38, these published
indicators are widely referenced by investors and. consider a broad spectrum of risks,
including financial and business position, relative size, and exposure to company
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 11
specific factors. Meanwhile, the selected statements referenced in Request for
Production No. 18 relate to a narrower assessment of specific characteristics, and
would be incorporated in the rating agencies' ultimate assessment of overall investment
risks, which are reflected in the corporate credit ratings referenced by Dr. Avera.
This response to this Request was prepared by Dr. Avera, FINCAP, Inc., for
Idaho Power Company, in consultation with Lisa D. Nordstrom, Senior Counsel, Idaho
Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 12
REQUEST FOR PRODUCTION NO. 19: Mr. Avera states on page 52, lines 5
through 12, "required returns for utilities should be in line with those of non-utility firms
of comparable risk operating under the constraints of free competition." Please explain
why, in light of the above statement the non-utilty proxy group is composed of credit
ratings of "A+", safety rankings of "1", and strength ratings of "A+", while the utility proxy
group is composed of'''BBB'', "3", and "B+" as shown in Table 2 on page 51, lines 3 and
4 of his direct testimony.
RESPONSE TO REQUEST FOR PRODUCTION NO. 19: The economic and
regulatory standards underlying a fair rate of return on equity hold that the allowed
return reflect investors' expectations for other firms of comparable risk. Because
electric utilities such as Idaho Power must compete for capital, not just with other
utilities, but also with firms in the unregulated sector of the economy, Dr. Avera
evaluated cost of equity estimates for the Non-Utility Proxy Group. Any differences in
inVestment risk attributable to regulation should already be reflected in objective
measures, such as the credit ratings and Value Line risk indicators referenced by Dr.
Avera. Nevertheless, Dr. Avera explicitly selected a lower-risk group of non-utility firms
to address any concern that differences in regulation would lead investors to conclude
that non-utility firms with comparable risk measures would still be considered more
risky.
This response to this Request was prepared by Dr. Avera, FINCAP, Inc., for
Idaho Power Company, in consultation with Lisa D. Nordstrom, Senior Counsel, Idaho
Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 13
REQUEST FOR PRODUCITON NO 20: Mr. Avera states on page 73, lines 14
through 18 "(i)n evaluating the rate of return for Idaho Power, it is important to consider
investors' continued focus on the unsettled conditions in restructured wholesale energy
markets, the Company's ongoing exposure to these markets to meet a portion of its
energy supply". Please provide a detailed accounting of the "unsettled conditions" of
Idaho Power's power purchases from "restructured wholesale energy markets".
RESPONSE TO REQUEST FOR PRODUCTION NO. 20: Dr. Avera's testimony
at page 73, lines 14 through 18 was not based on a detailed study of specific, historical
purchases in wholesale power markets. Please refer to Dr. Avera's testimony at pages
18 through 23 for a detailed discussion of the factors underlying Dr. Avera's conclusion
that Idaho Power's ongoing exposure to wholesale energy markets is an important
consideration in evaluating investors' forward-looking risk perceptions and required
return.
This response to this Request was prepared by Dr. Avera, FINCAP, Inc., for
Idaho Power Company, in consultation with Lisa D. Nordstrom, Senior Counsel, Idaho
Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 14
REQUEST FOR PRODUCITON NO 21: Mr. Steven Keen on pages 10 through
14 of his direct testimony discusses the inadequacy of the PCA mechanism. Please
reconcile this discussion with Standard and Poor's finding in "Pacific Northwest
Hydrology and Its Impact on Investor-Owned Utilities' Credit Quality" (January 28, 2008)
that, of the five major northwest investor owned utilities, Idaho Power has the strongest
PCA mechanism.
RESPONSE TO REQUEST FOR PRODUCTION NO. 21: Mr. Keen's direct
testimony relating to the risks associated with hydro variability and its impacts on Idaho
Power Company align with the message presented by Standard and Poor's ("S&P")
referenced in this Request when the S&P document is reviewed in totality. While the
S&P finding in "Pacific Northwest Hydrology and Its Impact on Investor-Owned Utilities'
Credit Quality" (January 28, 2008) categorized the Idaho Power PCA mechanisms as
"strong," they also made the statement ". . . but not strong enough to overcome
significant exposure to the variable flows of the Snake River." The document also
states "Idaho Power has the greatest hydro exposure. . .." In terms of risks faced,
. Idaho Power is included with one other comparably sized company as facing "the most
substantial risks despite their PCA's and cost-update mechanisms." The current risks
and exposures Idaho Power faces simply are not being adequately mitigated by the
existing PCA mechanisms. The concluding paragraph in the section titled "Idaho Power
Co." is a summary of a few of the issues presented in Mr. Keen's direct testimony and
reconciles his statements to the conclusions drawn in the S&P document:
Despite having both a PCA and an update process, the
mechanisms have not been able to fully insulate the
company from the highly variable and generally low flow
conditions that have persisted on the Snake River for the
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER -15
greater part of the past decade. Idaho Power's financial
performance has been also hampered by a load growth
adjustment mechanism that has resulted in a cash loss on
new customers, and regulatory lag due to the use of a
historical test year for the non-fuel component of rates.
This response to this Request was prepared by Steven R. Keen, Vice President
and Treasurer, Idaho Power Company, in consultation with Lisa D. Nordstrom, Senior
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 16
REQUEST FOR PRODUCITON NO 22: Mr. Steven Keen on page 25, lines 2
through 8 of his direct testimony summarizes the concerns in the financial industry due
to Hells Canyon Re-Licensing. Please identify and provide the specific reports,
documents, analysis, or any other material including identifying the specific analyst or
company who produced these materials on which Mr. Keen relied upon to arrive at this
conclusion.
RESPONSE.TO REQUEST FOR PRODUCTION NO. 22: The issue of timely
regulatory recovery of capital expenditures for public utilties is a widely understood
concept and a general concern in the financial community that covers regulated public
utilities. In addition, much of the argument relating to relicensing exposure comes from
the understanding Mr. Keen has gained through a 25-year public utilty career working
with capital expenditures and seeing the issues and impacts of their corresponding
regulatory recovery. This process, coupled with the continued general concerns
expressed in the financial community regarding full and timely regulatory recovery for
costs, formed the foundation for his argument.
With that said, Mr. Keen has included some specific examples (in addition to his
workpapers filed with the Application) of references made by the financial community in
regard to this issue and the more general concept of growing capital expenditures
subject to future rate recovery. The size and specific implications of the hydro-
reliænsing costs have caused Mr. Keen to raise it specifically as an issue for discussion
in regard to Idaho Power.
On September 8, 1999, Fitch IBCA included the following comment in its release
regarding new commercial paper ratings for both IdaCorp and Idaho Power: "The
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 17
primary risk for IPC is the relicensing of hydroelectric facilities. The inability to relicense
hydro facilities and/or implementation of operating restrictions on new licenses could
increase operating costs and possibly require additional financing. Although recovery of
additional costs is expected, it is not certain." Time has not diminished this risk.
A May 23, 2005, Wachovia Capital Markets, LLC, research report stated: "The
relicensing of IPC's hydroelectric projects is a significant near-term and long-term issue,
in our view." The report discussed both the level of capital expenditures involved and
some of the impacts relicensing could have on plant operations.
A May 11, 2005, Moody's Investor Service Summary Opinion also included
specific hydroelectric relicensing concerns. A statement listed as a potential contributor
to a future ratings downgrade was "Significant increases in relicensing costs and/or
stringent operational constraints imposed as part of the license renewal process."
Additionally, under the heading "Credit Challenges," Moody's listed "Costs and potential
operational changes tied to hydroelectric relicensing process."
As recent as June 4, 2008, Moody's Investor Service continues to include hydro
plant relicensing as a potential item that could change Idaho Powets rating downward.
This response to this Request was prepared by Steven R. Keen, Vice President
and Treasurer, Idaho Power Company, in consultation with Lisa D. Nordstrom, Senior
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 18
REQUEST FOR PRODUCITON NO 23: Please provide any and all documents,
reports, analysis data, or an other item used to arrive at the $120 millon variation
between high water and low water power supply costs referenced by Mr. Keen on page
13, line 3 through 5 of his direct testimony.
RESPONSE TO REQUEST FOR PRODUCTION NO. 23: The attached
document was Exhibit 4 in Case No. IPC-E-95-25, the case from which the PCA was
established. The column titled "ANNUAL" provides the annual net power supply
expenses for each water year scenario. For the water condition 1934 and test year
1992 scenario, the annual power supply expenses were $92.3 milion. For the water
condition 1971 and test year 1992 scenario, the annual power supply expenses were
negative $22.9 millon, a variation of $115.2 millon. Mr. Keen rounded this number to
$120 milion.
This response to this Request was prepared by Gregory W. Said, Revenue
Requirement Manager, Idaho Power Company, and Steven R. Keen, Vice President
and Treasure, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER -19
REQUEST FOR PRODUCITON NO 24: Ms. Smith on page 5, lines 15 through
20 describes two methods used to adjust the 2007 actual data in creating the 2008 test
year, "three- or five-year compounded annual growth rates" applied to investments less
than $2 millon and certain O&M expenses and "known and measurable adjustments"
applied to investments of greater than $2 millon. Please provide a detailed explanation
of why a $2 million dollar threshold was chosen to differentiate these two methods.
RESPONSE TO REQUEST FOR PRODUCTION NO. 24: The $2 milion
threshold has been the Company standard of materiality for known and measurable
adjustments to plant in each of the Company's last three rate cases, IPC-E-03-13, IPC-
E-05-28, and IPC-E-07-08. Mr. Gale, Vice President of Regulatory Affairs, established
the standard.
This response to this Request was prepared by Lori Smith, Vice President of
Corporate Planning and Chief Risk Officer, Idaho Power Company, and Gregory W.
Said, Revenue Requirement Manager, Idaho Power Company, in consultation with
Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 20
REQUEST FOR PRODUCITON NO 25: Ms. Smith on page 24, lines 5-11
explains why a five year compounded growth rate is appropriate for test year operations
and maintenance expenses. On page 23, lines 15-17 Ms. Smith states that operations
and maintenance revenues were "updated using a three year compounded annual
growth rate". Please provide a detailed explanation of why different compound annual
growth rates were applied to O&M expenses and revenues.
RESPONSE TO REQUEST FOR PRODUCTION NO. 25: The Company
included in its 2008 test year a five-year Compounded Annual Growth Rate ("CAGR")
for operation and maintenance expenses. Idaho Power reviewed the impacts of using
different methodologies for operation and maintenance expense as well as the
methodology for other operating revenues. The three-year CAGR for operation and
maintenance expense was greater than the five-year CAGR and exceeded the
combined growth in the Consumer Price Index and the Comp~:my's customer growth for
that same period. These factors supported the acceptance of the five-year CAGR for
the operation and maintenance methodology selected for the 2008 test year. Please
, see the response to Production Request No. 27 for discussion on the methodology
applied to other operating revenues.
This response to this Request was prepared by Lori Smith, Vice President of
Corporate Planning and Chief Risk Offcer, Idaho Power Company, in consultation with
Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OFTHE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 21
REQUEST FOR PRODUCITON NO 26: Please explain, and provide a dollar
amount for, the term "compensation at-risk incentives" as used by Ms. Smith on page
23, line 21-22 for her direct testimony.
-RESPONSE TO REQUEST FOR PRODUCTION NO. 26: The normalized
incentive rate of 4 percent or $5,917,398 is shown in Exhibit No. 31 line 16-17 and is
included in the 2008 test year. This known and measurable adjustment has been the
Company standard adjustment to Operating Expenses for the last two general rate
cases, IPC-E-05-28 and IPC-E-07-08. The actual or "compensation at-risk inc~ntives"
referenced in Ms. Smith"s direct testimony were removed from the 2003-2007 actuals
prior to' calculating the five-year Compounded Annual Growth Rate methodology
because incentives above the normalized incentive rate are not requested for regulatory
recovery in the 2008 test year.
This response to this Request was prepared by Lori Smith, Vice President of
Corporate Planning and Chief Risk Officer, Idaho Power Company, in consultation with
Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 22
REQUEST FOR PRODUCITON NO 27: Ms. Smith on pages 24 through 25 of
her direct testimony explains the calculation of the five year compoünded growth rate
and offers arguments supporting its reasonableness. Please provide the same
information for the three year compounded growth rate Ms. Smith mentions on page 23,
lines 16 through 17.
RESPONSE TO REQUEST FOR PRODUCTION NO. 27: The Company's other
operations and maintenance in 2005, excluding pension, incentive, Energy Efficiency
Rider, and third-party transmission expense was $224.4 millon compared to the 2007
amount of $261.9 millon. The three-year growth Compounded Annual Growth Rate
("CAGR") in these expenses is 8.03 percent. In determining the three..year CAGR for
Other Operating Revenues, the Company analyzed the known and measurable items,
the 2007 actual items, and the items that were excluded from this range of accounts,
including Energy Efficiency Rider and the Provision for Rate Refund. For the remaining
items, the three-year CAGR was applied based on workshop guidance, subject matter
expert judgment, and reasonableness for the 2008 test year.
This response to this Request was prepared by Lori Smith, Vice President of
Corporate Planning and Chief Risk Offcer, Idaho Power Company, in consultation with
Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 23
REQUEST FOR PRODUCITON NO 28: Ms. Smith on pages 12 through 13 of
her direct testimony discusses the inclusion of a portion of the plant held for future use
in the 2008 test year rate base based upon the amended Idaho Code Section 61-502A,
Please provide a detailed explanation of how the inclusion in the 2008 test year of each
specific facility identified in Exhibit 29, page 21, lines: 5,10,11,13,16,17,21,22,24,
26, 27, and 28 is "explicitly" in the public interest.
RESPONSE TO REQUEST FOR PRODUCTION NO. 28: Please see response
to Request for Production No. 12.
This response to this Request was prepared by Lori Smith, Vice President of
Corporate Planning and Chief Risk Officer, Idaho Power Company, in consultation with
Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 24
REQUEST FOR PRODUCITON NO 29: Please provide a detailed accounting
for each dollar of the $132,506.69 of management expenses (which is the sum of the
total expenses minus the total exclusion for each executive as shown in Exhibit 30
pages 4-8) proposed to be included in the 2008 test year base rates.
RESPONSE TO REQUEST FOR PRODUCTION NO. 29: Please see the
attached CD which includes a detailed listing of management expenses. That portion of
management expenses that were removed, were removed prior to applying the five-
year compounded growth rate. The 2008 amount is an estimate based upon a five-year
compound annual growth rate as described in Exhibit No. 34. Under this methodology,
there are no 2008 accounting details to provide.
This response to this Request was prepared by Lori Smith, Vice President of
Corporate Planning and Chief Risk Offcer, Idaho Power Company, in consultation with
Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER ~ 25
REQUEST FOR PRODUCITON NO 30: Please explain how the "normalized
incentive" shown in Exhibit 31, page 2, line 19 is in accord with Order No. 29505,
section 5, pages 25 through 26.
RESPONSE TO REQUEST FOR PRODUCTION NO. 30: The Company
included in the 2008 test ýear the normalized incentive adjustment, consistent with the
2005 General Rate Case Order No. 30035. The following excerpt is from that Order:
The parties agreed to exclude incentive pay for senior
managers from the test year revenue requirement. The
parties also agreed that it is reasonable to include an
employee incentive component in this and future test years
'so long as such incentive component is based upon goals
that benefit customers and the amounts payable (to
employees) for achieving the goals are limited to reasonable
'target' or medium goals. (Stipulation) at 611 (e).'
This response to this Request was prepared by Lori Smith, Vice President of
Corporate Planning and Chief Risk Officer, Idaho Power Company, in consultation with
Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 26
REQUEST FOR PRODUCITON NO 31: On page 34 of Mr. Said's workpapers is
a document titled "Coal & Gas Prices". Please provide, in the same format, for the
Evander Andrews Power Plant both the Energy and Cost values separately for Danskin
CTI, Danskin CT2, and Danskin CT3. Please indicate the month and year when
Danskin CT1 is assumed to be producing power.
RESPONSE TO REQUEST FOR PRODUCTION NO. 31: Attached is a
breakdown of Energy and Cost values for Danskin CT1, Danskin CT2, and Danskin
CT3. Mr. Said's Exhibit No. 47 shows the year and month when Danskin CT1, Danskin
CT2, and Danskin CT3 are producing power. Danskin CT1 is the lowest cost unit;
therefore, whenever energy is shown on Exhibit No. 47 for Danskin, Danskin CT1 is
producing power.
This response to this Request was prepared by Scott Wright, Pricing Analyst,
Idaho Power Company, and Gregory W. Said, Revenue Requirement Manager, Idaho
Power Company, in consultation with Barton L. Kline, Lead Counsel, Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 27
REQUEST FOR PRODUCITON NO 32: Please provide the daily electricity
usage patterns for the top twenty five (25) by overall electricity consumption of schedule
19 customers for each of the four years of introductory time of use rates.
RESPONSE TO REQUEST FOR PRODUCTION NO. 32: In the past, a number
of large customers have advised the Company that they consider their electric usage
patterns to be valuable trade secrets. As a result, Idaho Power proposes to treat the
requested information as confidentiaL. Under separate cover, Idaho Power is providing
this response only to parties that have executed the Protective Agreement.
This response to this Request was prepared by Darlene Nemnich, Senior Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 28
REQUEST FOR PRODUCITON NO 33: In 2004 Idaho Power installed
Advanced Meter Reading ("AMR") technology in the Emmett Valley and McCall
operating areas. Please provide a detailed accounting of the cost per customer for the
installation of the AMR infrastructure.
RESPONSE TO REQUEST FOR PRODUCTION NO. 33: As noted in the Phase
One AMR Implementation Status Report dated August 31, 2007, the projected final
capital costs, including all vendor costs, contract costs, IPC labor and costs, loadings,
overheads, and AFUDC for each of the three major project components of the Phase
One AMR Project are as follows:
Installed Cost of Meters, Substation,.
$ 5,855,144
Softare, Servers, including labor
Installed Cost of Itron EE MDMS System $770,000
Softare & Servers including labor
Installed Cost of Nexus Energy $234,280
Softare including labor
Total Phase One Project Cost $ 6,859,424
Appròximately 23,500 customers were part of the Phase One implementation, which
results in an average cost of approximately $292 per installed meter point for the
project.
This response to this Request was prepared by Courtney Waites, Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 29
REQUEST FOR PRODUCITON NO 34: Please provide the daily usage patterns
in 2004, 2005, 2006 and 2007 for the participants in the AMR program in the Emmett
Valley and McCall operating areas separately.
RESPONSE TO REQUEST FOR PRODUCTION NO. 34: The Company did not
retain the daily usage patterns for all the participants in the AMR program in the Emmett
Valley and McCall operating areas during 2004, 2005, 2006, and 2007. However, the
aggregate daily usage patterns of our Emmet Valley customers participating in either
the Energy Watch (Schedule 4) or Time-of-Day (Schedule 5) programs can be found in
the Energy Watch and Time-of-Day Programs Annual Report filed with the Commission
for the years 2005, 2006, and 2007. These reports can be found on the Idaho Public
Utilities Commission website at the following address:
· 2005 Report:
http://ww.puc.state.id.us/internet/cases/summary/IPCE0502.html
· 2006 Report:
http://ww.puc.state.id.us/internet/cases/summary/IPCE0605.html
· 2007 Report:
http://ww.puc.state.id.us/internet/cases/summaryIlPCE0705.html
This response to this Request was prepared by Courtney Waites, Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 30
REQUEST FOR PRODUCITON NO 35: Idaho. Power stàtes in the AMR
Frequently Asked Questions that one of the primary objectives of the AMR program is to
evaluate "the ability to improve customer service through pricing and demand-side
management options". Please provide a detailed analysis of Idaho Power's evaluation
of the demand-side management options presented by the AMR program including the
impact to peak power demands addressed by the AMR program.
RESPONSE TO REQUEST FOR PRODUCTION NO. 35: For a detailed
analysis of Idaho Power's evaluation of the demand-side management options
presented by the AMR program including the impact to peak power demands addressed
by the AMR program, please refer to the Energy Watch and Time-of-Day Programs
Annual Report filed with the Commission for the years 2005, 2006, and 2007. These
reports can be found on the Idaho Public Utilities Commission website at the following
address:
. 2005 Report:
http://ww.puc.state.¡d.us/internetlcases/summary/IPCE0502.html
. 2006 Report:
http://ww.puc.state.id.us/internetlcases/summary/IPCE0605.html
. 2007 Report:
http://ww.puc.state.id.us/internetlcases/summaryIlPCE0705.html
This response to this Request was prepared by Courtney Waites, Pricing
Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 31
DATED at Boise, Idaho, this 2nd day of September 2008.
Lil~~LISA D. NORDšT ~
Attorney for Idaho Power Company
BARTON L. KLINE
Attorney for Idaho Power Company
DONOVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 32
CERTIFICATE OF SERVICE
I HEREBYCERTIFY that on this 2nd day of September 2008 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER
upon the following named parties by the method indicatèd below, and addressed to the
following:
Commission Staff
Weldon B. Stutzman
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Neil Price
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Industrial Customers of Idaho Power
Peter J. Richardson, Esq.
RICHARDSON & O'LEARY PLLC
515 North 2ih Street
P.O. Box 7218
Boise, Idaho 83702
Dr. Don Reading
Ben Johnson Associates
6070 Hil Road
Boise, Idaho 83703
Idaho Irrigation Pumpers
Association, Inc.
Randall C. Budge
Eric L. Olsen
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
P.O. Box 1391
201 East Center
Pocatello, Idaho 83204-1391
-l Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-X Email Weldon.stutzmanßYpuc.idaho.gov
-lHand Delivered
U.S. Mail
_ Overnight Mail
FAX
-X Email Neil.pricet§puc.idaho.gov
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
L Email peterCârichardsonandolearv.com
Hand Delivered
-LU.S. Mail
_ Overnight Mail
FAX
L Email dreadingßYmindspring.com.
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
L Email rcbCâracinelaw.net
eloCâracinelaw.net
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 33
Anthony Yankel
Yankel & Associates, Inc.
29814 Lake Road
Bay Village, Ohio 44140
Kroger Co. I Fred Meyer and Smiths
Michael L. Kurtz
Kurt J. Boehm
BOEHM, KURTZ & LOWRY
36 East Seventh Street, Suite 1510
Cincinnati, Ohio 45202
The Kroger Co.
Attn: Corporate Energy Manager (G09)
1014 Vine Street
Cincinnati, Ohio 45202
Kevin Higgins
Energy Strategies, LLC
Parkside Towers
215 South State Street, Suite 200
Salt Lake City, Utah 84111
Micron Technology
Conley Ward
Michael C. Creamer
GIVENS PURSLEY, LLP
601 West Bannock Street
P.O. Box 2720
Boise, Idaho 83701-2720
Dennis E. Peseau, Ph.D.
Utilty Resources, Inc.
1500 Libert Street SE, Suite 250
Salem, Oregon 97302
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
L Email tonyCâyankel.net
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
L Email mkurt~BKLlawfirm.com
kboehm(âBKLlawfrm.com
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
Email
Hand Delivered
-LU.S. Mail
_ Overnight Mail
FAX
-L Email khigginsCâenergystrat.com
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
i Email cew(âgivenspursley.com
mcc~givenspursley.com
Hand Delivered
-LU.S.Mail
_ Overnight Mail
FAX
-X Email dpeseau(âexcite.com
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 34
Oepartment of Energy
Lot R. Cooke
Arthur Perry Bruder
Office of the General Counsel
United States Department of Energy
1000 Independence Avenue SW
Washington, DC 20585
Routing Symbol GC-76
Hand Delivered
U.S. Mail
-l Overnight Mail
FAX
-. Email Lot.CookeCâhg.doe.gov
Arthur. BruderCâhg .doe.gov
Dwight Etheridge
Exeter Associates
5565 Sterrett Plaæ, Suite 310
Columbia, MD 21044
Hand Delivered
.l U.S. Mail
_ Overnight Mail
FAX
.l Email detheridgeaRexeterassociates.com
Community Action Partnership
Association Of Idaho
Brad M. Purdy
Attorney at Law
2019 North 1 ih Street
Boise, Idaho 83702
Hand Delivered
.l U.S. Mail
_ Overnight Mail
FAX
.l Email bmpurdWRhotmail.com
Snake River Allance
Ken Miller
Snake River Alliance
P.O. Box 1731
Boise, Idaho 83701
Hand Delivered
.l U.S. Mail
_ Overnight Mail
FAX
.l Email kmilerCâsnakeriverallanæ.org
$il~Lisa D. Nordstro
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND
PRODUCTION REQUEST OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 35
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-10
IDAHO POWER COMPANY
RESPONSE TO REQUEST NO. 11
SUMMARY OF HELLS CANYON RELICENSING CHARGES
BY PROJECT, EXCLUDING AFUDC
JANUARY 1 - JULY 31, 2008
27134878
27161534
27161764
27161796
27161822
27161916
27161976
27161987
27161989
27161994
27185311
27189772
27217944
27219547
27221254
27234291
27234342
27238462
27249542
27250365
27276190
27278220
27280828
RELlCBLP
RELlCHCP
RELlCOBP
HELLS CANYON RELICENSING OUTSIDE LEGAL FEES - CAPITAL
REL-HELLS CANYON COMPLEX - CAPITAL
REL-HCC OREGON REAUTHORIZATION - CAPITAL
REL - REC HCC RELICENSING PROCESS - CAP
WQ - ONGOING HELLS CANYON RELICENSING STUDIES - CAPITAL
HCC RELICENSING, FISH20041NSTREAM FLOW ASSESSMENT - CAPITAL
HCC RELICENSING, FISH2004 ANADROMOUS FISH BELOW - CAPITAL
HCC RELICENSING, FISH2004 REDBAND TROUT/BULL TROUT - CAPITAL
HCC RELICENSING FISH2004 FEASIBILITY OF REINTRO - CAPITAL
HCC RELICENSING FISH2004 RESIDENT FISH - CAPITAL
ENHANCED LAW ENFORCEMENT PER SETILEMENT FOR BAKER COUNTY
CC 856 - HCC RELICENSING
RIVER ENG.-HELLS CANYON CONTINUED STUDIES
HCC RELICENSING: LEWISTON STORAGE FACILITY LEASE - FISHERIES
TERR: HCC RELICENSING
HOMESTEAD ROAD WORK ASSOCIATED WITH RELICENSING
REC - BAKER COUNTY SETILEMENT AGREEMENT L1TIER & SAN PLAN
LEGAL DEPT. LABOR FOR RELICENSING: HELLS CANYON COMPLEX
RIVER ENG.-HELLS CANYON CONTINUED STUDIES
FALL CHINOOK POPULATION VIABILITY STUDY - RELICENSING
RIVER ENG.-HELLS CANYON CONTINUED STUDIES
REC - BAKER COUNTY SETILEMENT AGREEMENT (REPLACES 27161809)
REL - REC HCC FAREWELL BEND EROSION/SEDIMENT CONTROL - CAP
ROLLUP RELIC COST BROWNLEE
ROLLUP RELIC COST HELLS CANYON
ROLLUP RELIC COST OXBOW
2/3/2003
1/14/2004
1/14/2004
1/14/2004
1/21/2004
1/21/2004
1/21/2004
1/21/2004
1/21/2004
1/21/2004
1/18/2005
1/19/2005
12/28/2005
1/13/2006
2/3/2006
7/5/2006
7/5/2006
8/24/2006
1/11/2007
1/25/2007
1/7/2008
2/7/2008
3/26/2008
12/27/1999
12/27/1999
12/27/1999
333,414.72
73,231.91
80,133.41
12,336.04
257,422.23
363,980.45
84,428.02
205,848.51
3,871.09
20,494.02
41,866.80
15,768.28
(881.87)
4,275.00
68,318.41
81,049.67
20,925.93
119,062.52
(406.47)
46,507.83
412,501.55
2,534.16
16,485.44
167,999.95
112,353.92
54,526.82
2,598,048.34
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-10
IDAHO POWER COMPANY
RESPONSE TO REQUEST NO. 22
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Market Perform
May 23, 2005
Price
52 Wk.Rng.
$27.76
$33-25
Initiation of Coverage
Thomas Hamlin, CFA
[phone]thas.halin(gachovia.com
nann Conti CFA
(804) 868-1 140
dan.conti(gachovia.com
WACHOVIA CAPITAL MARKETS7 LLC
EQUITY RESEARCH DEPARTMENT
IDACORP, Inc. (lDA-NYSE)
IDA: Initiating Coverage Of IDACORP With A Market Perform Rating
Long-Term Value In Hydro Assets, Technology Investments
;;::~~s:. ,;;:~ ,r," )OO.L: ~:",:s' -~', iOO$if" ':':~' _ .:" CO 20,Õ6£ ,"': ~. IrF.'.' ZOO?' .200 .¡/.;¡;
,.K¥~1I(!i Ai-am;l!l", ,l.riQr:":.LÇurri:L:to,PrlI.'r .. ~.'. t.ureeni:. _f'.ritÍc. " _" .,:~ ~ .._~ "'.:. _::-2)L .~.'.
Ql (Mar.)SO.51 NC SO.55 A NC SO.53 NE S196.2 MM S206.4 MM
Q2 (June)0.34 NC 0.34 NE 0.35 NE 216.9 228.2
Q3 (Sep.)0.68 NC 0.50 NE 0.59 NE 252.5 265.8
Q4(Dc.)0.37 NC 0.32 NE 0.42 NE 202.4 212.6
FullFY SI.90 SI.0 NE SI.90 NE S868.1 MM S913.0 MM
FYOO 14.6x 16.3x 14.6x
FullCY SI.90 NC SI.70 NE SI.90 NE
CYÐE 14.6x 16.3x 14.6x
Source: Com . Jala an WCM. UC eslimo,. HA = Not Available, HC .. No Clun . NE = Na Estimate. HM = Not Mean; ful
ShasOul.: (MM)
Marel Cap.: (MM)
Avg. Daily Vol.:
S&P500;
Float: (MM)
Div.Nield:
LT Dcbt: (MM)
LT Dcbtfotal Cap.:
ROE:
3-5 Yr. Est Grt. Rate:
CY 2005 Est PIE-lo-Grt.:
Lat Reportng Datc:
SI.109.0
52.0%
7%
3%
5.4x
51512005
Bejöre Opn
42.4
1,1770
222.99
1,189.14
42.1
$1.2014.3%
Key Points
. IDACORP is a public utility holding company, fonned in 1998 and headquartered in Boise, Idaho.
lts pnncipal subsidiar is Idao Power Company, an integrte elecc utilty servng most of the
state ofldaho and a small portion of Oregon. Non.utility operations include investmnts in
affordable housing that generate ta credits, a developer of integrted fuel cel1 systems, and a
provider of telecommunications and Internet servces. Utility opertions accounted for 97% of
consolidated operating revenue and 90% of consolidate ne income in 2004.
. Electrcity Plus - The company's stated operng strtegy is called "Electrcity Plus," a back-to-
basics strtegy that emphaizes IDACORP's utilty operations as its core busines while retaining
the potential future value from its investments in electrcity-related technologies.
. Power Supply. IDA owns and operates 17 hydroelectrc power plants with a combined generating
capacity of 1,707 MW. All of these facilties are located along the Snake River, which crosses the
southem and western portons of the state. It also own 1,378 MW ofthennl generting capacity,principally coal-fired. .
. Initiating EPS Estmates ofSl.70 for 2005 and SI.90 for 2006 - Hydro conditions are below
nonnal for the sixth consutive year, estimated to be jusl35% of normaL. Higher pnces for fossil
fuels and for purchas power wil likely offset underlying service are sales growth in 2005.
. Initiating Coverage of IDA with Market Penorm Rating - In light of the EPS decline for 2005,
and that IDA shares ar traing at the high end of our valuation range, we expet the stock to tre
in line with ~Ite industr avérges.
Valuation Range: S25 to 527
Over the next 12 months, we believe that IDA shares warrt a valuation rage of 525-27 based on
our EPS estimate for 2006, our 3-5 year earnings growt rate estimate of 3%, and a nonnal PIE
multiple for mid-cap electrc utilities of 13- 1 4x. Risks to achieving our valuation range include a lack
of improvement in future stream flow conditions, adverse regulatory decisions, burdensome
conditions placed on hyro licese reewals, and higher purchased power prices.
fI Please see page 12 for rating definitions, important disclosures and required analyst
certfications.
Q WCM doe and _li to do business wiih companies covere in it reearc report. As a result invers should be aware tllat the linn may have a conßiet of interes that could affec
tbe objecvity of the reon omllnveton sbould censider th repenis oaly . slagl fa_tor in maktag tJr investment decioa.
II WACOVI SEURms
Page 1
Utilities
WACHOVIA CAPITAL MARKETS, LLC
EQUITY RESEARCH DEPARTMENT
(Investment Thesis
IDACORP reresents a relatively unique investment among utility companies. It is one of the
only investor-owned elecc utilties which, durg norml weather conditions, derives the
majority of its electrcity from hydroelectric plants. The serice ara of its pricipal subsidiar,
Idaho Power, is grwing faster than the national averge and require the company to invest in
new thennl generating capacity. Sales growth and rate bae growt should yield above-average
earnings growt. Furennore, as wholesale power market become increingly competitive and
the cost of fossil fuels continue to rise, the value of the company's hydroelectc plants, a
reewable, non-po1luting soure of power, should incrase. IDA shares are cuently trding at
the high end of our valuation rage and therfore ofTer no better than average relative attction, in
our view.
Company Description
IDACORP is a public utility holding company, formed in 1998 and headquarere in Boise, Idao.
Its principal subsidiar is Idaho Power Company, an integrte electrc utilty serving most of the
state of Idao and a small porton of Oregon. Non-utility opetions include investments in
affordable housing that generte ta credits, a developer of integrte fuel cell systems and a
provider of telecommunications and Internt serices.
Discussion
(,
IDACORP is a public utility holding company, formed in 1998 and headquarred in Boise, Idaho.
Its principal subsidiar is Idaho Power Company, an integrted electrc utility serving most of the
state of Idaho and a small portion of Oregon. Non-utility operations include investments in
affordable housing that generate ta credits, a developer of integrated fuel cell systems, and a
provider of telecommunications and Interet services. The company had ben involved in
electrcity and natul gas maeting, but wound down its operations in 2003. It continues to
manage its investments in seerl small independent hydroelectrc plants, but has discontinued its
project development opertion. Utility operations accounte for 97% of conslidated operating
revenues and 90% of consolidated net income in 200.
Management Strateg
The company's stated operating strtegy is called "Electrcity Plus," a back-to-basics strategy that
emphasizes lDACORP's utilty operations as its core business while retaining the potential futue
value from its investments in electrcity-related technologies.
Although this strategy was forma1ly announced in 2003, the compan had been winding down its
power marketing activities since the middle of 2002. This was atributed to changing liquidity
requirements brought On by the rating agencies, continue uncertnty in the regulatory and
political environmet, and a reducion in credit~worty counteiparies. In November 2002. IDA
announced that it was ending its interet in investing in the míd-stream natu gas market and
would shut down its natural ga trding operations, closing offces in Denver and Houston and
reducing its work forc in Boise. In August 2003, the company anounced th sale of its foiwar
book of electrcity tring contrcts, which closed a month later. Implementing this change in
strategy reulted in seeral charges to eaings in 2002 and 2003.
In 2004, the company moved foiwar with its strtegy, obtaining a base rate incrase for its Idaho
utilty business and sellng new shas of common stock through a public offering to improve its
balance sheet. Earings for the year were relatively fre frm costs related to the shutdown of
merchant power activities, with the exception of a $2 millon gain from the settlement of legal
disputes.
For 2005, IDACORP plans to mae significant investments to its utilty infrtrctue to ensure
adequate supplies of power and reliable service. Customer growth continues to exceed the
national average, an a sixth consetive year ofbelow-nonnal hydro conditions likely wil
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IDACORP, IDe.
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EQUIT RESEARCH DEPARTMENT
(require an increased reliance on ther power resources. Idaho Power plans to add 164
megawatt (MW of generatig capacity in mid-200S with the completion .of the gasfired Bennett
Mountain plant A request for rate relief related to ths investment was fied in Marh 2005. The
company also plans to fie another general rate case in Idaho in the falL.
Utilty Operations
Idaho Power Company is an electrc utility serving about 440,00 customers in a 24,00 squae
mile area in souther Idaho and easter Oregon, with an estimate population of 895,000. It is a
fully integrted electrc company, involved in the generation, purchase, trsmission, distrbution
and sale of electricity.
Servce Area
The company's service terrtory covers abut two-thirds of the state's population. A litte less
than one-balf of the sece ara population lives in and around the city of Boise, Idaho.
According to the U.S. Census Bureau, Idaho's population grwth during the 1990s was the fift
highes among the states, increasing nealy 29010. This compares to a 13% increase for the United
States. Population grwth bas continued at nearly twice the national average since the 2000
census. As of Febniar 2005, the state's unemployment rate was 4.1 % compard to a national rate
of 5.4%. Principal commerial and industal customers are involved in food procesing,
electrnics and general manufacturing, forest prouct production, beet sugar refining an the
skiing industr.
Regulation
\
Idaho Power is under the regulatory jurisdiction of the Idaho Public Utilties Commission (IPUC)
and the Oregon Public Utility Commission (OPUC) with regard to its retail rates and other
matters. About 96% of the company's generl business revenue is derived from Idaho customer.
Wholesale power activities, and other matters, are under the jurisdiction of the Federl Energ
Regulatory Commission (FERC). Importntly, the compay's licensed hydrlectrc projects are
subject to the provisions of the Federl Power Act, uner the jurisdiction of the FERC. In
addition, both Idaho an Oregon have their own hydroelectrc-license regulations.
Under nonnal strea flow conditions, Idaho Power is able to generate about 55% of its energy
requirements from its hydrolectric plants, which provide power at virtlly no marginal east The
balance of energy requirements come from the company's thenl plants or purchas from other
proucers. Beause stram flow conditions can var substantially frm yea to year, the
company's annual fuel costs likely wil also var substantially. The IPUC has a Power Cost
Adjustment (PCA) mechanism that provides for annual adjustments to the rate charged to Idao
retail customers. These adjustments ar based on forets of net power supply costs, which ar
fuel and purchas power net of off-SYitem sales, as well as the "tre-up" of the prior yea's
forecast. During the yea, 90% of the difference between the actual and forecasted costs is
defer with interest, and added or subtracted from the unecovere porton frm prior years to
calculate the tre-up component of the PCA.
In October 2003, Idaho Power fied for an increase in its base rates (a general rate cas) of 17.7%,
designed to increae annual revenue by $86 milion. The company's last genera rate case was
fied in 1994. The increase reflected a proposed retu on equity of I i .2%. Incorporated in the
fiing was a request tht a porton of the incree ($20 milion or 4.2%) be implemented within 30
days on an interm basis until the resolution of the general case. The IlUC denied.the request for
the interim rate increase.
In its reuttl testimony in the proeeding, the company modified its request to 14.5%, or $70
millon in revenue. The reuce amount reflected changes in tet-yea expenses, including the
resolution of a separ depreciation cae, lower payroll-related expenses and a change in the
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WACHOVIA CAPITAL MARKETS, liC
EQUITY RESEARCH DEPARTMENT
(method of recovering pension costs. In May 200, the IPUC issued its decision in th general rate
case, approving an average increa in base rates of 5.2%, designed to raise annual revenues by
$25.3 milion, a little over one-third of the modified request The conuission approved a return
on equity of 10.25% (reuest was I 1.2%) and an Idaho jurisdictional rate ba oU 1.52 billon,
about $30 milion below the company's fiing. Test-yea operating expenses used by the
commission to compute revenue requirements were about $27 milion below the level used in the
company's fiing.
The company fied a request with the IPUC for reconsideration of a number of expense items used
in the commission's computation of the allowed increase. In July, the IPUC grted the company
another $3 milion in additional annual revenue bas on computational errrs mae by the IPUC
staff relating to income ta expenses. In Septembe, th IPUC approved selement agreeents
related to the income ta and a number of other issues adding another $ I 2 milion to the rate
increase. As a result, the compay was able to sere a total rate increae ofS40 milion, or 57%
of the modified request.
Along with its order in the general rate case, the IPUC appved the full amount of the company's
request to recver $71 milion in its annual PCA filing.-:e commission also approved an
adjustment to the PCA mechanism tht would eliminate any over- or under-colJections of revenue
due to changes in customer consumption.
In September 2004, Idaho Power fied a generl rate case with the Oregon PUc, requesting a
17.5% increae in customer rates, designed to raise annual revenues by $4 millon. A decision
from the OPUC is expected in late July 2005.
As mentioned in the Business Strtegy section of this reprt the company has requested a 1.84%
increase in rates from the IPUC speifically to reflect the completion and commereial operation of
the 164 MW Bennett Mountain generating plant. Idaho Power has invested S58 milion in the gas-
fired peaking facility and related trasmission equipment. The request was fied on March 3, and
amended March 23, 2005. The rate increase would raise annual revenue by S9.4 milion based on
the cost of capital adopted in the last generl rate case. The propoed increae would ~o into
effect on June 1. The Staff of the IPUC has recommended that the company's fiing qualify for
specific consideration in a modified rate proceeding.
Power Supply - Overview
Idaho Power (IPC) is one of the nation's few investor-owned electrc utilties with a
predominantly hydroelectrc generating base. It owns and operates 17 hydroelectrc power plants
with a combined generaing capacity of 1,707 MW. All oftbese facilties ar located along the
Snae River, which cross the southern and western portions of the state. It also owns 1,378 MW
ofthenal generating capacity, consisting of paral intests in the coal-fired plants (I, i i 0
MW), two gas-fired plants (263 MW) and one diesel unit (5 MW).
The company's generting facilities ar interconnecte with those of other utilties in the region
through an integrate electrc trsmission system, which is operate on a coordinate.basis to
maximize its capability and reliability. Idah Power is a member of the Wester Electricity
Coordinating Council (WECC), the Western Systems Power Pool, the Northwest Power Pool and
the Nortwest Regional Transmission Association, all of which operate to optimize the use of the
system.
The company mee its loa reuirements using a combination of its own generting units,
mandated purchases from private develope and maket-drven purchases frm other utilities and
independent producers. The primary influences on electrc demand are weathr, customer growth
and economic conditions. The company experiences peak demand on its system in both the
sunuer an winter, largely driven by weather. Peak demad in 2004 was 2,843 MW in the
summer (June 24) and 2, i 96 MW in the winter (January 5). The all-time record pe demand of
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IDACORP, Inc.
WACHOVIA CAPITAL MARKETS, liC
EQUITY RESEARCH DEPARTMENT
2,963 MW was set in July 2002. Consistent with growt in customers and the ecnomy, the
compay estimates peak demand growt of 2.5% per yea over the next three yea.
Power Supply - Integrated Resource Plan
In August 200, the company filed its bi-annual Integrted Resource Plan (IRP) with the utility
commisions in Idao and Oregon. The IRP reviews the expected growth in energ demnd and
identifies resoures available to mee that demand over the next ten year. The report analyzes
potential supply-side and demand-side optons and identifies short-term and long-ten actions.
The goals of the IR proces are to balance cost, nsk and environmenta concerns and involve the
public in the resource planning pross. Significant external involvement is par of the process
before and after the initial fiing. The 2004 plan identifies the following additional energy
resources to meet demad grwt:
· 76-MW demad respse progras
. 48-MW ener effciency progr
. 35O-MW wind-powered genertion
· 100-MW geothennal-powere generation
· 48-MW combined heat and power (co-genertion) at customer facilities
· 88-MW simple-cycle natural gas-fired combusion turbine
· 62-MW combustion tuine, distrbuted generation or market purchases
. 500-MW coal-fired generation
The company has begu implementing some of the steps outlined in the plan. It has issue a
Request For Proposal (RFP) associated with an air conditioning cycling progr as well as an
RFP for 200 MW of wind-powered generation. It also plans to issue RFPs for the combustion
tubine, co-genration and geothenal-powere generation.
\.
Power Supply - Hydroelectric Plants
IPC's portfolio of hydroelectric power resources is a relatively unique featu of the company and
a key component of its long-ten value. It owns and operates 17 hydroelectrc plants, locte on
the Snake River, which cross the souther par of the state, then turns and flows nort until it
combines with the Columbia River in Washington. These projects operte under licenses issued
by the FERC, which last for 30-50 year.
The largest concentrtion ofhydroelectnc plants is locted along the IdaOrgon border. Thre
projects, referrd to as the Hell's Canyon Complex, comprise over two-thirds ofIPC's
hydroelectrc capacity with 1,167 MW. The most upstram (and largest) of the three facilties is
the Brownlee Dam and Reservoir, whose five generating units have 585.5 MW of generating
capacity. The remaining hydroelectric facilties ar located in the south-centr portion of the
state.
.l The relicensing of IPC' s hydrlectrc projects is a significant nea-tenn and long-tenn issue, in
our view. In August 2004, the company received new 30-yea licenses for five of its middle
Snake River projects, covering about 235 MW. An importt component of each of these licenses
is a settlement agrment between the company and the U.S. Fish and Wildlife Service regarding
five snail species that inhabit the middle Snake River, which are listed as threatened or endangered
under the Endangerd Species Act. The agrment provides for six yea of studies and analyses
of the impact of project operations on the listed species followed by joint development of a plan
for the remaining tenn of the licese. Conseration grups have fied chllenges to the new
licenses, some of which remain outstading.
A compnent of the new licenses (and likely a par of any futue license) is a requirement for IPC
to develop comprehensive plans for Prtection, Migration & Enhancement (PM&E) measures and
submit them to the FERC withn six months after receiving a new licese. fPC is require to
consult with external agencies, both governental and non-govermental, in developing these
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WACHOVIA CAPITAl MARKETS, LLC
EQUITY RESEARCH DEPARTMENT
(\plans. The company owns and finances the operation of anadromous fish hatcheries and related
facilities to mitigate the effects of its hydroelectric da on fish populations. At yea-end 200,
(PC had invested $ I I millon in such facilties and incurs $3 millon in annua operating costs.
The estimated cost to implement new PM&E measur ar estimated to be $ I 0 millon in capital
and $2 milion in operting expenses.
The licenses for two plants (22 MW combined capacity) expired in 2004. The projects are to
operate under annual licenses until the term of a new long-term license can be reached. (PC
anticipates a new multiyear license wil be issued in 2005
The July 2005 expirtion of the licenses for its Hell's Canyon Complex is a major issue for the
company, in our view. The application for a new license was fied with the FERC in July 2003. It
includes the continuation of existig PM&E meaures, as well as new measures, estimated to cost
$ i 06 milion in the first five year of a new license and $2 i 8 millon over the reaining 25 year.
Additional measures to adress water quality issues may add anther $62 milion to the tota cost.
Varous government agencies, environmental groups, Native American Indian Tribes and other
private interests have fied comments and suggested PM&E measures, which could add to these
costs if adopted. As of year-end 2004, $66 milion of relicensing costs for the Hell's Canyon
Complex relicensing had been capitalized as construction work in progress.
Because of its low cost, the company seeks to maximize the value of its hydroelectrc reources.
Under norml strm flow conditions, the hydroelectrc plants account for 55% ofIPC's annual
electric supply, or about 9.2 millon megawatt-hours. The amount of electrcity that can be
prouced from these plants depends on a number of factors, primarly snow pack in the mountains
upstream from its facilties, reservoir storage and stram flow conditions.
(
Below-norml stream flow conditions in 2004 limited hydroelectrc production to 6.04 milion
megawatt-hours, equivalent to just 45% of total system generation for the year. It was the fift
consecutive year of below-norml strm flow conditions. The prouction in 2004 was 1.8%
below the 6. i 5 millon megawatt-hour (47%) produced in 2003.
The outlook for stram flow conditions in 2005 ar for another below-averge yea. The United
States Weather Service Nortwest River Forecast Center (RC) estimates that water flows into the
Brownlee Reservoir wil be 2.3 milion acre-feet from April through July, which is only 36% of
normal and below the 3.2 milion acre-feet in 2004. Snow pack accumulation was only 6Q1o of
average as of early March. Storage in selecte federal reservoirs upstram from Brownlee was
only 60% of average.
Thermal Plants
Idaho Power relies on its therml plants for 45-55% of its annual energ requirements. Therml
generating capacity of 1,378 MW is 8)% coal-fired steam and 19% gas-fired combustion tuines
(including the Benett Mountain plant scheduled for June 2005). Thennl generation in 2004 was
7.3 milion megawatt-hour, equivalent to 55% of total system generation.
Coal-fired generting capacity of 1,1 10 MW comes from parial interests in three plants. This
ownership strcture enables the company to derive the economies of scale inherent in larger
generating plants while spreading its operating risk over multiple plant sites. fPC owns a one-
third interest (770.5 MW) in the Jim Bridger plant, a four-unit facility located in western
Wyoming. The rest of the plant is owned by PacifiCorp, a subsidiar of Scottish Power. The
plant consumes over i ,000 tons of coal per hour. Fuel for the plant come frm a dedicated mine
and delivered via conveyor belt, rail and trck. IPC owns a 50% interest (283.5 MW) in the
Valmy plant located in nortem Nevad The plant is oprate by its co-owner, Sierr Pacific
Power. The third source is a 10% interest (56 MW) in the Boardman coal plant in norther
Oregon, operated by its 65% owner, Portland Generl Electrc.
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IDACORP, Inc.
WACHOVIA CAPITAL MARKETS, LLC
EQUITY RESEARCH DEPARTMENT
Non-Regulated Oprations
IDA's non-regulated operations consist of:
. IDACORP Financial Services - A holder of affordable housing and other real estate
investments
. IdaTech - A developer of integrated fuel cell systems
. IDACOMM - A provider of telecommunications services and commercial and
residential Internet servces
lDACORP Financial Servces
IDACORP Financial Service (lFS) invests primarily in affordable housing developments. At
year-end 200, the grss amount ofIFS's portfolio exceeded $165 milion. These investments
reduce income taes thugh ta credits and accelerated ta depreciation. Over 90% oflFS's
investments have been made thugh syndicaed trsactions in order to limit geogrphica and
opetiona risk. The underlying investments include over 700 individual properties in 49 states,
Puerto Rico and the U.S. Virgin Islands, all but th of which are administered thugh
syndtcated fuds.
For 2004, 2003 and 2002, th investments produced ta credits of $22 milion, $20 milion and
$21 milion, respectively. IFS contributed $0.35 per shar in 2004, $0.27 per shar in 2003 and
$0.23 per share in 200. In 200, the company recognized a $5 millon gain on the sale of one of
its investments.
IdaTech
..
I,.
IdaTech is a global fuel cell provider focused on the commercialization of fuel processr
technology and integrte proton exchange membrae (PEM) fuel cell systems. It was originally
founded in 199 as Norwest Power Systems, LLC to develop and bring fuel cell technology to
market. IDACORP purchased a majority interest in IdaTech in 1999. Current products uner
development include:
. Complete systems, such as ElectrGen, its five kilowatt electrcal emergency back-
up power fuel cell unit that is targeted to relace valve regulated lead acid battries
in applications such as cellular communications towers and portble power systems.
. On-board reforming capabilty, which provides auxilar power to high-end
consumer applications such as marne and rereational vehicles and premium power
for speial milta operations.
. Components such as multi-fuel fuel processrs, fuel cell stack technology and
automate ful cell systems, which taget longer-term commercial applications in
vehicular auxilar power units and Combined Heat and Power units.
The company has also integrte its multi-fuel processors with a number ofPEM ful cell stacks
into one to ten kilowatt for sttionar and portble electrc power genertion. IdaTech's systems
are being field-teted and evaluated with Eurea utilties, the Prpane Education and Reearch
Council, the U.S. Ary Communications Electronics Commd and other customers in North
America, Eurpe and Asia.
IdaTech's rech and development progra is focused on the adaptation of its fuel processor
technology to opete on all commercially importnt fuels, as well as the developmet of fully
integrted fuel cell systems. In 2004, it spent about $5 milion for reseach and development of
fuel ceil technology. The company pures patent protection of its technology in North America.
Europe, South America, Asia and Austria. In 200, it reeived its firs thee Japanese patets
and its fi Eurpea patent. It has 35 U.S. patets lasting 20 year (expiration dates ar 2016 to
2025) and ha abut i 50 pending domestic and foreign patent applications. These patents should
help IdaTech commerialize its technology and provide the potential for its licensing in the futue.
7
Pagel
Utilties
WACHOVIA CAPITAL MARKETS, LLC
EQUITY RESEARCH DEPARTMENT
(With the substantial increae in the cost of fossil fuels, there has been a renewed interest in new
energy technologies suc as fuel cells. Investments in these technologies fell out of favor in the
United States aftr the collapse of the merchant power sector and the drop in power prices and
widespread commercial development stalled. However, Eurpean investors continued to support
their development and severl products are close to commercial development. Although IdaTech
does not make a current contrbution to lDACORP's operating earings, we believe it has the
potential to add to shareholder value.
IDACOMM
lDACOMM provides a wide rage of integrted commWlicaton serices to business and
residential customers in 22 markets in eight western states, Virginia and New York. In August
2004, lDACORP acquired Velocitus, a Boise-based Il\ternet service provider founded in 1992.
Ownership ofVelocitus was trnsferred to IDACOMM in 2004 and the two merged in Januar
2005. IDACOMM's fiber optic networks provide high-spee connectivity in Boise, Idaho, as wen
as networks acquired in JWle 200 in Las Vegas and Reno, Nevada. its Interet serices unit
enables high-speed voice, Inteet and data communications, including video conferncing, voice-
over Internet protool, ofT-site trining, gigabit Ethernet service, viral private l\etworks, firewalls
and web hosting. The Interet services unit had 20,000 customers at yea-end 2004.
Broadband-over-poerline (BPL) is a developing tehnology that transport data over medium-
voltage and low-voltage power lines directly to the end-user's computer. lDACOMM is currently
conducting equipment trals and evaluating the potential commerial deployment of BPL in Boise.
(
Like IdaTech, IDACOMM does not make a contrbution to IDACORP's operating earings, but it
has the potetial to ad to shaeholder value in the futue. The growth charcteristics of both the
Idaho and Nevada aras where its fiber optic networks are located may, at some future date, be of
value to a larger telecom operator looking to expand.
Capital SpendIng
lDACORP's capital spending requirements ar primarily for its utilty operations. 0f$200
milion in propert, plant and equipment additions in 2004, $ i 90 milion (95%) were for Idaho
Power Company. The company estimates utility construction expenditure of $202 millon for
200S and $470 milion total for the following two years. In addition to utility spending, the
company anticipates additional investmnts of$82 millon over the three year in IFS.
The prolonged period of below-average hydro conditions has increed the usage of the therml
plants, requiring the upgrae and replacement of some of the equipment at the plants. Other
spending increaes are related to connecting new customers, adding new peaing caacity and
relicesing the hydrlectrc plants. As mentioned previously, th 2004 Integrted Resurce Plan
includes $79 millon of constrction costs for a 160 MW combustion tuine peaking plat for
opetion in 2007.
Environmental-related spending is estimated at $18 milion for 2005 and $40 mìlion total for the
following two year. Constrction spending wil likely rie after this peoå if Idaho Power
proceeds with plans to constrct a 500 MW coal-fired plant to be opertional in 201 i, at an
estimated cost of $532 milion.
Credit Profie
IDACORP curntly carres a corprate crdit rating ofBBB+/Baal from Stadar & Poor's and
Mooy's, repectively. The senior unsecured debt at the parnt company car a BBB/Baa
rating from the two agencies as well as a BBB rating from Fitch. The senior secured debt of the
utilty is rated A-/A3/A-.
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IDACORP, Inc:.
WACHOVI CAPITAL MARKETS, LLC
EQUITY RESEARCH DEPARTMENT
In Januar 2005, Fitch announced that it had lowered its ratings to the abve-mentioned levels
beause of increased eaings volatilty and debt burden relative to cash flows, primaly due to
the effec of ongoing drought conditions in southern Idaho and the lower than expected rate
increase approved by the Idaho PUC in 2004. The outlook for its ratings was stble.
Earnings and Dividends
In 2004, IDACORP reported earings of $ i .90 per share, a 56% increase over the $ 1.22 per share
eared in 2003. The increae was attbutable to higher eaings from utility operations. higher
ta benefits and a gain on an asset sale at IFS in 200. Earings for 2003 included the impact of
exiting the energy trding business as weIl as asset impairent charges.
Earings at Idao Power were $1.71 per share, an 18% increase over the prior year's $1.44 per
shar. The following items were significant factors in the improvement:
. +$ I 2 millon - Revers of 2002 charge due to settlement of the irrgation lost
revenue case
. + 2 millon - Interest related to the above settlement
· + 7 milion - Settlement with lPUC over calculation of IPC's income taxes
. + 10 millon - Reduction in unrecovere power costs
. + is millon - Lower income ta expense due to reveral of a 2002 regulatory
Iiabil ty charge
. .. 35 millon - Higher payroll costs and wrte-off of disallowed costs in general rate
cas
(..
IFS contrbuted $0.35 per share compared to $0.27 per share for 2003. These results included a
$2 milion (SO.05 per share) gain on the sale ofIFS's investment in the EI Cortez Hotel in San
Diego.
Earings from Ida-West wer SO.08 per share in 2004, compared to a net loss ofSO.13 per share in
2003. The company recorded a $3.5 millon gain in 2004 on the purchas of debt from a 50%-
owned consolidated joint ventue. Results for 2003 also included the write-off of an investment in
a. power project and the recordng of a reserve on a note reeivable. .
lDACORP Energy earned $0.06 pe shar in 200, primaily from gains on settlements oflegal
disputes. In 2003, the company had a net loss ofSO.25 per shar due to losss on legal settlements
and the costs of winding down its business, parally offset by a gain on the sale of its forward
book of electrcity trding contrcts.
With the exit frm the merchant energ businesses complete, we look for earings from Idao
Power an IFS to comprise IDACORP's earnings for 2005 and 200. Ou projections are detailed
in the table attched to this rert.
As mentioned preiously, the compay exts 2005 to be the sixth consecutive year of below-
average hydr conditions. Higher prces for coal, natral gas and purhased power wil also likely
be negative influences on earings. Ofsetting these factors likely wil be the full-year's impact of
the general rate increase received in 200, higher PCA revenues, and the benefits of normal
weather and an improving economy.
Our EPS estimates ar $1.70 for 2005 and $ 1.90 for 2006.
In September 2003. IDACORP's anual dividend wa reduced to $ 1.20 per share frm $ i .86. The
action was taen to help the company strengten its fiancial condition and improve its abilty to
fud the grwing capita spending reuirents of the utilty. We look for the compay to
maintain the dividend at its current level over the next few year. The $ i .20 dividend represents a
67% payout of our 2005 EPS estimate, which is compable with other integrted electrc utilities.
9
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Utilties
WACHOVIA CAPITAL MAKETS, lLC
EQUITY RESEARCH DEPARTMENT
("\
Risks
The following factors could have a significant impact on the operations and fmancial results of
lDACORP.
Redueed hydro conditions - As mentioned above, because of its significant reliance on
hydroelectrc generation, the company's eaings are directly influenced by winter weather and its
impact on streamflows into the Snake River. During low water years, the company increases its
use of more expensive power from its thennal plants and puhases from other produce. The
company is unable to recover the full cost of this power through the Power Cost Adjustmnt
mechanism. The region is in its sixth consecutive year of below nonnal hydro conditions.
State regulatory commission actions - The company's ability to eam an adequate return on its
investmnt in utilty assets is depedent on the reeipt of timely and adequate rate increaes. This
is particularly tre when the utility's capital spending reuirements rise. As mentioned above,
Idaho Power has reently completed a new combustion turbine at Bennett Mountain. Capita
spending likely will contiue to rise to meet environmental regulations, improve reliabilty and
renew the licenses for its hydro plants.
Conditions imposed on hydro license renewals - Th company is in the process of renewing its
licenses for its Hells Canyon Complex, the largest of its hydroelectrc facilties. These licenses.
expire in July 2005. IPC's application identifies protection, mitigation and enhancement meaures
(PM&E) that would require an investment of $386 millon. Proposals for PM&E measures by
other parties to the proceedings could reuire as much as an estimated $2.5 billon of new
investment over the 50-year life of the license.
i.
Litigation - IDACORP Energy's involvement. in western power markets durg the 200Q-2oo2
time period has mae the compay a par to a number of fedral investigations and lawsuits.
Many of these proeeings have been concluded or dismissed but remain under appeal by various
paries. Two Securities sharholder lawsuits have ben filed against IDACORP.
Environmental regulations - As the owner of severa thennl electrc generating plants the
company is subject to changing stadards regading air and water quality. These changes oftn
reuire the installation of new emission contrl equipment. The issue of carbn dioxide emissions
(greenhous gasses) and their impact on global climate conditions has become increasingly public
and could result in new regulations that could significantly impact electric power proucers.
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h
Utilties
WACHOVIA CAPITAL MARKETS, LLC
EQUITY RESEARCH DEPARTMENT
(Required Disclosures
1tW, Inc (l J.. Pr PeOiI IEI
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Di
an.I aiPi ($ i _Ca TatPi($ I V,11.5lo Vi"'..
Bi0W st våØ'ia li pi
Ra Ca Ke1 CU2 MI F93 Uu
Sc WrCa Mi u.es in8idi
9JKe. Pa S: Q:
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A fl LW· Pr01., ai.e
SR &Eto I' Ræto I' ES
AdditiolUllnformøton AVliilable Upon Request
I certfy that:
I) All view expressed in this researh report accrately reflec my persnal views abt any and all of the subject securities or issuers discused and
2) No pan of my compensation was, is, or wil be, directy or indre, relate to the specific reommendations or views expressed by me in this
research report
Wachovia Capital Marets, LLC or its affliates managed or comanged a public offering of securties for IDACORP, Inc. within the pas 12 months.
Wachovia Capita Marets, LLC or its affliate intends to seek or expe to reeive competion for investent banking servce in the next three
months from IDACORP, Inc.
Wachovia Capital Markets, LLC or its affliate reeived compensation for investment baking servces frm IDACORP, Inc. in the past 12 months.
IDACORP, In. cuntly is, or during the 12-mont perod preeding the date of distbuton of the researh reprt was, a client of Wacha via Capita
Marets. LLC Wachovia Capital Marets, LLC provided investment baning services to IDACORP. Inc.
IDACORP, Inc. eurrently is, or during the 12-month period preceng the date of distrbution of the researh reprt was a client ofWachovia Capita
Markets LLC. Wachovia Capital Makets LLC provide nonsecurties services to IDACORP, Inc.
Wachovia Capital Marets, LLC reeived compensation for products or servces other than investment bankng services from IDACORP, Inc. in the
past i 2 month.
Risks to achieving our valuation rage include a lack of improvement in future st flow coditions, adverse regulatory decisions, burdensome
11
Page 12
IDACORP, Inc.
WACHOVIA CAPITAL MARKETS, LLC
EQUlTY RESEARCH DEPARTMENT
("conditions placed on hyro license renewals, and higher purhased power prices.
Wachovi Capital Markets, LLC does not compensate its reseah analysts based on specific investment banking trsactions. WCM's reseach
analysts receive compesation that is based upon and impacted by the overall profitability and revenue of the finn, which includes, but is not limited to
investment bang revenue.
1 = Outpenorm: The stock appears attctively valued, and we believe the stock's total return wil excee that of the market over the next 12 months.
BUY
2 = Market Peñorm: The stock appeas approriately valued and we believe the stock's total retu wil be in line with the market over the next 12
months. HOLD
3 = Underpeñorm: The stock appes overvlued, and we believe the stock's totl return wil be below th market over the next 12 months. SELL
As of: May 23, 2005
42% of companies covered by Wachovia Equity Resech are
rated Outperform.
52% of companies covered by Wachovia Equity Reseach are
rated Maet Perorm.
6% of companies covered by Wachovia Equity Research ar
rated Underperform.
Wachovia has provided investment banking services for 36% of its
Outperform-rated companies.
Wachovia has provide investment baing servces for 34% of its Market
Perform-rated companies.
Wachovia has provided investment baning services for 38% of its
Undetperfonn-rate companies.
Important Disclosure For International Clients
The securities and related financial instrments describe herein may not be eligible for sale in all jurisdictions or to certin categories of
investors. For cerin non-U.S. institutional reader (including reders in the EEA), this report is distrbuted by Wachovia Securities
International Limited~ For the purpses of Section 21 of the U.K. Financial Servces and Markets Act 2000, this report has ben
approved by Wachovia Securities International Limited. This reearch is not intended for, and should not be relied on by, private
customers. Pleae consult your Financial Advisor or the Wachovia Securities offce in your area for additional infonntion. U.S.
residents are directed to wachovia.com for investment and related services.(
13
Page 13
. .
Utilties
WACHOVIA CAPITAL MARKETS, LLC
EQUITY RESEARCH DEPARTMENT
(Additional Disclosures
Wachovia Securities is the trde nam for the corporate, investment banking, capital markets and securities reseah businesses of
Wachovia Corporation and its subsidiares, including Wachovia Capital Markets, LLC ("WCM") and Wachovia Securties Interntional
Limited. Wachovia Securities is also the trde name for the retail brokerage businesses ofWCM's affliates, Wachovia Securties, LLC,
Wachovia Securties Financial Network, LLC, Wexford Clearng, LLC, and First Cleang, LLC.
Wachovia Capita Market, LLC, is a U.S. broker-dealer registered with the U.S. Securties and Exchage Commission and a member of
the New York Stok Exchange, the National Association of Securities Dealers, Inc., and the Securties Investor Protection Corp.
Waehovia Securties International Limited is a U.K. incorprated investment finn authrized and reguated by the Financial Services
Authorty.
This reort is for your infonnation only and is not an offer to sell, or a solicitation of an offer to buy, the securties or instrments naed
or desribed in this reprt Intereted paries are advised to contact the entity with which they deal, or the entity that provided this report
to them, if they desire fuer information. The information in this repo has ben obtained or derived from sources believed by
Wachovia Capital Marets, LLC, to be reliable, but Wachovia Capital Markets LLC, does not represet that this infonntion is accurate
or complete. Any opinions or estimates contained in this report represent the judgemt ofWachovia Capital Markets, LLC, at this time,
and are subject to change without notice. Wachovia Capital Makets, LLC, and its affliates may from time to time provide advice with
respec to, acuire, hold, or sell a position in, the securities or instrments named or desribed in this report. For the purpses of the U.K.
Financial Service Authorty's roles, this report constitutes impartial investment research. Each ofWachovia Capital Marets, LLC, and
Wachovia Securties International Limited is a separate legal entity and distinct from affliated banks. Copyright ~ 2005 Waehovia
Capital Markets, LLC.
I SEaJRI: NOT FDIC-INSURDlOTBAN~UARIM Y LOSE VALUE
li....
14
Page 14
~
(,r f)Global Credit Resarch
Summary Opinion
11 May 2005
Moo's Investor Seric
Summary Opinion: Idaho Powr Company
Idaho Power Company
Opinion
Credit Stngts
Creit Strgts for Idaho Power Company (IPC) are:
- Parenls common equity infuion suppo capital proram
- Parenls 35% lower divdend since September 2003 allo IPC to relain more cash
- Supp proided by the power cot adjustment mechanism (PCA)
- Low procton cots under nol hydro conditions
- Ongoing cost control efors
()(
Credit Challenge
Credit Challenges for IPC are:
- Ovrcing lower than requested rate Increase approed against a backrop of customer growth. additional caaci needs. and plans
to exp,d the T&D sytem
- Costs and potential operational changes tied to hydrolectc plant relicensing prcess
- Copng with effect of drought and unfavrable weather
- Obtining supve reglatory oucomes in expect fure flUngs for rate increases
Rating Rationale
IPC's A3 seior secre raing reflect financial and operting challenges as it seeks relicensing of hydro plant and increases capit
expnditres to add capacity in 2005. Th A3 rating also takes into accont that IPC's utilit rates remain below natinal averages, that it has
a generally lo business risk prole, and that it is pursuing sttegies to control operating expenses and conservtively finance utli
investmnts.
Under nonnal hydro conditions IPC's proucton costs are among the lowes of any in the U.S., refectng a lar hydrolecric capacity
base an share ownrship of reasobly ecomic col-fi plnts. Also, evdence of some supporte treant from the Idaho Public
Ulilites Cossion (IPUC) is apparnt from the PCA in Idaho. which ITnimizes negatie effec on earnings and cash fl when net poersupply cost exceed forca levels in existing rates.
The IPUC's recoideratin of the $25.3MM rate increase approvd in May 200 was resoed in September 2004 thugh settements
that brgh the total rate incre amount approed to rohly $4OMM. Becaus the appove rate incrase was sliD onl a li more than
half of management's updated request, we expect that IPC will continu to coider delay of nonessentia capi expnditurs and look for
wa to fu lighten it O&M expense budget
Desite higher earnings in part due to the benets of colder winter weather copare to 2003, fPC's contriution to IDACORP's
consoldated earnings and cash flow in 2004 wee still adverely affected by lingering drouht codits. An added future challenge lies in
overcoming the lowr thn requested rate incrase apprved in 200, as well as obtaining suppo in subsent rate prceins. IPC's
latest rate ca was file in early 2005 and incles a reest fo recoery of and return on a new generati plant which was tested, ready
for operatin, and prsionall accpted on Marc 31. 20. Meanwhile. IPC has previously issued long-term debt to reduce it overaD cot
of capit. This activity and a late 200 comon equit infusion by IDACORP has reduc IPC's reliance on shor-term debt and helpe
maintain sond Utlit capiliztion rati. Morer. IPC rent amended it bank credit facilit to lengthen the tenn to expiration and
obtained les retrctve term and conditions.
Rating Outook
IPC's stble rating outloo reflect a conue focus on regulatedelect utlit opertions. which have a relatively low buness rik
profile and wit the help of a PCA mechanism tend to be a slable sourc of earnngs and cash flow. The ouook also assumes that IPC can
adequately cop with ils remaining challeges, including throh pruent management of it large capital proram such that stae regulator
Page 32
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y
(
are fikely to be supporte of IPC's fuure requests for revery of and return on those investmnts.
What Could Change the Rating. UP
Near term challenges related to a large capital proram make an upgrae unlikel in that time frame. However, IPC's outlook or rating
could imprve over the intermediate ter thug a cobinati of drought abatemnt, regulator supprt in fure rate proin, and
reduce capitl spendng that fosters positie fr cash flow to be used for significant debt reductio.
What Could Change the Rating. DOWN
Continued delay in return to more noal hydro coditions. Signifca incrases in relicesing cost andor stringnt operatinat
constrints impse as par of the license reneal pross. Lack of IPUC suppo in fure rate proceings. Any unexpected change that
coprmises the peA meanism. Any shif by IDACORP to pursue significnt, debt-finance inveent in more nsky non-regulated
busineses that increse demand on IPC cash flow.
e Coyñht 2002 by Moo's Investors Seivce. 99 Churc Stree, New York, NY 10007. All ngtsreserved.
Copght 2005, Mooy's Investor Servic, Inc. andr its licnso includin Mos Asranc Company, Inc. (togther. 'MooDY'S"). All
rights reserved.
Page 33
Business Wire: Fitch mCA Assigns New Ratings To IDACORP Inc., Idaho Power Page 1 of 1
PO~!EREO BYBNET.oom
FindAcles ;, Business Wire ;, Sept 8. 1999 ;, Arcle;, Print friendly
Fitch IBCA Assigns New Ratigs To IDACORP Inc., Idaho Power
NEWYORK--(BUSINESS WlRE)--Sept. 8, 1999--
Fitch IBCA assigns its' F1 ' rating to IDACORP, Inc. 's commercial paper program and rates the senior unsecured debt and trust preferred stock
contained in a $300 milion shelf registration 'A-' and 'BBB+', respectvely. New ratings were also assigned to Idaho Power Co,'s (I PC) first
mortgage bonds and secured medium term notes 'A+', senior unsecured debt 'A', and preferred stock 'A'. IDACORP is a holding company whose
principal subsidiaiy, IPC, represents over 90% of consolidated revenues, earnings and assets. Other subsidiaries are primariy involved in energy-
related business including energy trading and marketing, independent power development and operation, and investments in affordable housing.
The IDACORP ratings are primarily based on the financial and operating strengt of IPC. The company's low cost hydro operations, sales growth,
and a power cost adjustment mechanism provide a stable source of cash flow. While the nonregulated businesses account for less than 10% of
earings today, management plans to grow these activities, particularly trading and marketing and independent power development, to 25% of
earnings by 2003. Going forward, how management implements its growth strategy will have a material affect on its financial condition. To date,
these businesses have been conservatively managed. IDACORP has limited the risk normally associated with marketing and trding by restricting
its activities to physical trades within the Western Systems Coordinating Council with adequate risk management policies. In addition, most of the
nonregulated activities are in energy-related businesses and the investments are discretionaiy.
IPC derives its financial and operating strength from its largely hydro based generating system. IPC's generating capacity is approximately 55%
hydro with the remainder consisting oflow cost coal-fired generation. This provides the company with among the lowest cost and priced electricity
of all investor-owned utilties in the countiy. Additionally, IPC has a power cost adjustment mechanism for its Idaho servce terrtoiy
(approximately 90% of revenues) which adjusts for increased fuel and purchased power costs in low water years.
IPC's financial measures are weak within its rating categoiy, but have been improving and are expected to continue this upward trend due to
above-normal streamflows exected in 1999, better than average sales growth, and cost cutting measures. Moreover, moderately lower financial
ratios are acceptable given the lower operating risk associated with hydro-based systems. Despite projections of continued sales growth, although
at a somewhat reduced pace, no new generation is planned through 2003. As a result, projected capital expenditures are moderate and should be
largely funded with internally generated funds.
The primaiy risk for IPC is the relicensing of hydroelectric facilties. The inabilty to relicense hydro facilities and/or implementation of operating
restrictions on new licenses could increase operating costs and possibly require additional financing. Although recoveiy of additional costs is
expected, it is not certain. Licenses have already exired and are renewed on a year-by-year basis on four plants totaling approximately 10.7% of
total hydro production. Licenses for over 85% of hydro producton expire by the year 2005.
COPYRGHT 1999 Business Wire
COPYGHT 2008 Gale, Cengage Learning
http://findarcles.com/p/aricles/mLmOEIN/is_1999 _SepC 8/ai_55696673/print?tag=arody;col 1 8113/2008
;¡õ!
Global Credit Research
Credit Opinion
4JUN 2008Mos~~
(Credit Opinion: Idaho Power Company
Idaho Power Company
Boise, Idaho, United States
ãJ~~.~..~w, _.",.~.;_'", ."1#.. '-~~..~;~e
Category
Outlook
Issuer Rating
First Mortgage Bonds
Senior Secured
Sr Unsee Bank Credit Facilty
Senior Unsecured Shelf
Commercial Paper
Parent: IDACORP, Inc.
Outlook
Issuer Rating
Sr Unsee Bank Credit Facilit
Senior Unsecured MTN
Commercial Paper
Moody's Rating
Negative
Baa1
A3
A3
Baa1
(P)Baa1
P-2
Negative
Baa2
Baa2
Baa2
P-2
lliDk;:'5 ',:', ..',,.'.,,'.l';;.:.~l'IIJ_.~.
/
\",
Analyst
Kevin G. Rose/New York
Willam L. HesS/New York
~~,I'.....'-
ßlIYÆ.l!lslu;at~f. . ....
Phone
212.553.0389
212.553.3837
.'j','...~~ttlfll~~il~"'l.lf.l:.'w.~'~ :~- Y:F
(1)Idaho Power Company
LTM 1Q 08 2007 2006 2005
(CFO Pre-W/C + Interest) I Interest Expense 2.3 2.4 3.3 3.4
(CFO Pre-W/C) I Debt 7%7%13%13%
(CFO Pre-W/C - Dividends) I Debt 3%3%8%8%
(CFO Pre-W/C - Dividends) I Capex 13%14%41%42%
Debt I Book Capitalization 46%45%42%41%
EBITA Margin %18%19%20%17%
(1) All ratios calculated in accordance with the Global Regulated Electric Utilties Rating Methodology usingMoody's standard adjustments
Note: For definitions of Moody's most common ratio terms please see the accompanying User's Guide.-~II~~~~
Company Profile
(
Idaho Power Company (IPG) is a vertically integrated regulated investor-owned utilty and the principal wholly-
owned subsidiary of IDACORP, Inc. (IDA), a holding company which also serves as parent for other modest-sized
non-utilty businesses. As an all-electric utilit, fPC provides retail electric service to approximately 483,000
residential, irrigation, commercial and industrial customers within a 24,OOO-square mile service area encompassing
souhweste~n Idaho and eastern Oregon. The company operates a system with 4,747 miles of transmission lines
and 26,394 miles of distribution lines. IPC relies heavily on hydro-electric power for its generating needs, normally
generating nearly half of the electricit it sells from 17 hydro-electric developments on the Snake River and its
tributaries. IPC also serves a portion of its electric load from three coal-fired power plants in Wyoming, Nevada,
and Oregon and from the natural gas-fired Bennett Mountain Power Plant, Danskin 1 Power Plant, and Evander
Andrews Power Complex in Mountain Home, Idaho. IPC is the parent of Idaho Energy Resources Co., a joint
venture partner in Bridger Coal Company, which supplies coal to the Jim Bridger generating plant owned in part by
IPC. The utility also buys electricity from the regional wholesale market to meet its customers' needs for electricity.
r.. On a stand-arone basis, IPC represents the substantial majority of IDACORP's consolidated revenues, net income,
and assets. IPC's customers have been weighted toward the residential class, with about 46.1 % of 2007 general
business revenues derived from sales to residential customers, which are typically more predictable and stable
sources of revenue. We do not expect this to change materially in the foreseeable future. The remainder of IPC's2007 revenues were derived from electricity sales to commercial customers (25.4%), industrial customers (15.2%),
and irrigation customers (13.3%).
IPC's retail rates are subject to the regulatory jurisdiction of the Idaho Public Utilties Commission (IPUC) and the
Oregon Public Utility Commission (OPUC) as it relates to rates charged to its retail customers and various
financing activity. Wholesale activities and interstate activities are subject to the jurisdiction of the Federal Energy
Regulatory Commission (FERC).
Recent Events
Effective June 3, 2008, Moody's affrmed the ratings of IDACORP, Inc. (Baa2 Issuer Rating and Prime-2 short term
debt rating) and its regulated utilty subsidiary, Idaho Power Company (IPC; Baa1 senior unsecured and Prime-2
short-term debt rating). At the same time, Moody's changed the rating outlook to negative from stable for both
companies. See Press Release of June 3, 2008 for additional commentary.
Rating Rationale
Key factors affecting IPC's Baa1 senior unsecured debt rating include a relatively low business risk profile and low
cost structure relative to national peers within a usually generally supportive regulatory environment combined with
an increasing level of capital expenditures to add generation capacity, transmission infrastructure, and address
other asset maintenance to ensure meeting service safety and reliability standards. The company's recent financial
metrics, including its coverage of interest and debt by cash flow from operations exclusive of working capital
changes (CFO Pre-W/C), have been pressured to a level we often see for a regulated electric utilty in the Ba
rating category. These recent metrics are the result of unfavorable hydro conditions and the adverse effects the
recent increase to the load growth adjustment rate (LGAR) has had on net power supply cost recovery under the
power cost adjustment (PCA) mechanism. With respect to the latter concern, we note that the LGAR subtracts the
cost of serving additional Idaho retail load from the net power supply costs that IPC is allowed to include in its
annual PCA filng. We address the LGAR in more detail below; however, as IPC continues to diversify its resource
portolio and works with the IPUC to adjust or replace the current LGAR, as called for as part of the settlement of
the utilty's last general rate case, we are concerned about whether recent revenue increases approved by the
IPUC and the OPUC, when combined with the likely implementation of further general rate increases associated
with future rate filngs, wil be suffcient to allow IPC's cash flow coverage metrics to revert back to levels more
consistent with the current rating over the next 12 to 18 months. Meanwhile, IPC's Integrated Resource Plan (IRP),
and its access to sufficient liquidity are considered in line with the Baa rating category. IPC's ratings also take into
account that IPC's retail rates remain below national averages, and that it is pursuing strategies to control
operating expenses and conservatively finance its investments.
The most important drivers of IPC's current ratings and outlook are as follows:
DETERIORATION IN HYDRO CONDITIONS RAISES OPERATING CHALLENGES AND PRESSURES
MARGINS
During 2007, there was a retum to the drought conditions that have persisted in Idaho in all but one of the last
seven years. The one exception was in 2006, when there was a brief normalization of water levels. Inflows into the
company's largest storage reservoir, the Brownlee Reservoir, were only 2.8 milion acre feet (maf) during the
critical April through July 2007 runoff period, which was about 44% of average. Although hydro conditions are
somewhat better to date in 2008, they stil remain below normaL. The current expectations for runoff during the
critical April through July period in 2008 of about 4.8 maf is still only about 76% of average. Based on this data,
IPC is currently expecting to generate between 6.0 and 8.0 milion megawatt hours (MWh) from its hydroelectric
facilties during 2008, compared to 6.2 milion MWh in 2007. The water conditions in the Snake River Basin this
year have enabled IPC's hydro-electric generation to contribute about 46% of total system generation during the
first quarter, compared to about 51 % for the same period in 2007. When IPC experiences poor hydro-electric
generating conditions, it results in a heavier dependence on typically more expensive thermal generation and
purchased power, and reduces wholesale sales while increasing operations and maintenance expenses and
pressuring margins.
i
'"It remains to be seen whether the drought conditions that have persisted for six out of the last seven years in the
U.S. Pacific northwest region may be viewed as an anomaly or as part of a larger more permanent or semi-
permanent climate shift that signals the need for reduced reliance upon hydro-electric generation for a company
such as fPC that has relied fairly extensively upon hydro as the primary component of its generation portolio.
Moody's ratings and negative outlook for IPC take into account these increased operating challenges.
PARTIAL OFFSETS FROM POWER COST ADJUSTMENT (PCA) MECHANISM
Our ratings also take into consideration the long-standing existence of a PCA mechanism in Idaho and the
generally supportive outcomes in annual filngs made before the IPUC. Under the terms of the PCA, IPC annually
adjusts its rates charged to Idaho retail customers for 90% of the difference (with interest) between the actual and
forecasted costs of fuel and purchased power less off-system sales, and the true-up of the prior year's forecast.
We generally view the existence of PCA mechanisms to be beneficial to a utilty's overall credit profile because
such a mechanism can help minimize the negative effects on earnings and cash flow when net power supply costs
unexpectedly exceed forecast levels in existing rates. This is especially so when the cash recovery period is
relatively short. We note that IPC's 2008-2009 PCA filng initially requested an increase of $87.2 milion to the PCAcomponent of customers' rates. Subsequent to this request, the IPUC issued a ruling that required IPC to offset the
PCA request with $16.4 milion of proceeds from an earlier sale of sulfur dioxide emission allowances. As a result,
it was expected that IPC's PCA rate increase, to be effective June 1, 2008, would be $70.7 milion (10.4%) for the
2008-2009 period. In a final PCA decision rendered May 30, 2008, the IPUC made positive adjustments that
brought the approved level of the PCA rate increase effective June 1,2008 to $73.3 milion (10.7%).
IPC HAS BEEN ACTIVE IN FILING GENERAL RATE CASES
On the heels of the 3.2% general rate case settlement increase to IPC's Idaho retail base rates implemented on
June 1, 2006, which we generally viewed as a particularly encouraging sign of a more transparent working
relationship between the IPUC and IPC, the utilty fied another general rate case on June 8, 2007. In the June
2007 filng, IPC sought a 10.35% rate increase ($63.9 milion annually), to address recovery of and return on
investments and to also compensate for higher operating costs. IPC also requested that the IPUC reduce the
LGAR to $29.16 per MWh from $29.41 per MWh. As described in public filngs, the significance of the LGAR is that
it adjusts IPC's net power supply costs that it includes in the annual PCAfilngs for differences between actual loadand the load used in calculating existing base rates. During periods of modest load growth and/or when there is
little difference between assumed and actual load, the LGAR is a less matenal issue; however, in recent periods,
IPC's loads have grown considerably in excess of the assumed load in setting base rates. During such periods, the
marginal energy cost of serving new Idaho retail customers are subtracted from the PCA filngs. In effect, IPC must
wait until its next general rate case to adjust the assumed load growth. From a credit perspective, Moody's
concerns increase when the IPUC increases the LGAR and/or there is a significant mismatch between the
assumed and actual load growth because of the potential negative effects on IPC's earnings and cash flow under
those circumstances.
(
As the June 2007 case proceeded, the parties settled in January 2008 on an average annual 5.2% rate increase
(about $32.1 milion) and agreed to pursue good faith efforts to develop a mechanism to adjust or replace thecurrent LGAR. Importantly, the general rate case settlement gave IPC an opportunit to reset the load growth
assumption used in the rate process. Meanwhile, the settlement provided for use of the IPUC staff recommended
LGAR of $62.79 per MWh, which would only be applied to half of the load growth in Idaho during each month
within the April 2008 - March 2009 PCA year. Another important aspect of the settlement called for good faith
discussion among the parties aimed at establishing acceptable terms for use of a forecast test year in future
general rate cases which, if implemented, would address concerns about regulatory lag and be viewed as a credit
poitive. The settlement was ultimately approved by the IPUC in the form presented to them and new rates thatwere silent as to the allowed rate of return became effective March 1, 2008. (See below for further background on
future general rate case plans).
OTHER REGULATORY INITIATIVES
Aside from the recently concluded PCA filing and other general rate case activity in Idaho, IPC recently wrapped
up a senes of other proçeedings in Idaho and Oregon in May 2008, which collectively wil provide an additional
$18.4 millon of revenue under rates that took effect June 1, 2008 and should contribute to a rebound in financial
results. First, the IPUC approved IPC's request for a 1.4% rate increase ($9 million) to address recovery of the
Danskin 1 natural gas fired plant that began commercial operation earlier this year. The IPUC also approved IPC's
requested increase in its Energy Efficiency Rider to 2.5% from 1.5%. This 1 % increase translates into about a $7
milion annual increase in revenue that will be collected from its Idaho customers to cover the costs of various
energy efficiency programs. Furthermore, IPC wil make its first rate adjustment under the decoupling program in
Idaho aimed at de-linking revenues from volume. The net effects of the (PUC approval of this filing results in a $2.4
milion rate reduction. Lastly, the OPUC approved a $4.8 millon rate increase (15.7%), representing the first rate
adjustment under the recently implemented power cost adjustment mechanism in Oregon. Approval of the rate
change is, however, subject to refund. We understand that the OPUC staff requested additional time to further
review data since this was the initial proceeding under this mechanism and the relative amount was quite large.
Nevertheless, there was a desire to implement a rate adjustment effective June 1, 2008.
SIGNIFICANTLY HIGHER UTILITY CAPITAL EXPENDITURES REQUIRE EXERNAL FUNDING
IPC faces significantly higher capital expenditure needs over the next few years for additions and upgrades to
existing generation, transmission, and distribution infrastructure, primarily to meet customer and demand growth.
IPC expects to continue financing its large utilty construction program and other capital requirements (excluding
new base load plant and large transmission projects), which are estimated at $900 millon over the three-year
period spanning 2008-2010, with internally generated funds and externally financed capital. Its internally generated
cash after dividends is only expected to provide slightly more than half of its $270-$290 milion estimated 2008
capital requirements. In the face of external financing needs, it is anticipated that IPC wil seek to maintain
capitalization ratios close to the level of March 31, 2008, through periodic additional common equity infusions from
- its parent company.
As originally articulated in IDA's 2006 Integrated Resource Plan (IRP) regulatory filing, IPC is looking to reduce its
reliance on hydro, while also making investments into new transmission assets to help meet load growth and
improve its operating performancelreliabilty. To that end, ¡PC signed a memorandum of understanding with
PacifiCorp on May 18, 2007, under which the companies wil pursue the possible development of new high voltage
transmission lines from Wyoming across southern Idaho, with target completion set between 2012 and 2014.
Another growing component of the IRP is the exploration of potential investments into geothermal power, as.
evidenced by IPC's negotiations with U.S. Geothermal Inc. IPC named U.S. Geothermal as the successful bidder
for 45 MWof geothermal power from the future development of U.S. Geothermal's Raft River geothermal power
plant in southeastern Idaho and the initial phase of U.S. Geothermal's Neal Hot Springs project located in
southeast Oregon.
A notable shift in the 2006 IRP relates to a decision in April 2008 to not pursue a conventional pulverized coal-fired
plant to meet a targeted capacity need in 2013, given concerns about escalating construction costs, ability to
obtain requisite permits, and lingering uncertainty related to greenhouse gas laws and regulations. Instead, IPC
has issued requests for proposals (RFP) for 250 to 600 megawatts of dispatchable, physically delivered or unit
contingent energy to be acquired under power purchase contracts or tollng agreements. We understand that IPC
wil use a self-build proposal for a combined cycle natural gas combustion turbine as the benchmark to compare
proposals against. Proposals are due by October 17, 2008. Meanwhile, IPC plans to officially provide an update on
the status of its 2006 IRP to the IPUC and the OPUC in J!me 2008 and then file a new IRP in June 2009.
Given the magnitude of some of the aforementioned investment considerations, it is possible that IPC's capital
budget over 2008 - 2010 could be substantially higher than the $900 miliòn figure cited above. To the extent that
IPC moves ahead with investments into renewable and thermal energy resources, as well as transmission line
expansion, that provide greater diversification of electric power sources both as to type of generation and
geographic locale, Moody's would generally view those investments as a positive for IPC's credit profile, presuming
the investments are financed in a conservative manner and receive supportive treatment by the utilty's regulators.
CONTINUING NEED FOR FURTHER GENERAL RATE CASE INCREASES AT IPC
(
Given the forecasted capital expenditure program, in order to maintain a credit metrics profie commensurate with
its current rating, it is essential that the utilty receive favorable rate case increases from the Idaho and Oregon
regulatory authorities in its regulatory filngs. IPC's management remains focused on this objective, as evidenced
by its notice of intent to file with the IPUC a general rate case on or after June 1, 2008. In addition to the level of
rate increase that IPC might seek, key points to foctls on in the prospective case wil be whether the IPUC. fully
embraces the forecast test year concept that evolved from work shop discussions with the IPUC staff and other
interested parties earlier this year and accepts the concept of including construction work in progress, particularly
as it relates to hydro plant re-Iicensing and other utilit investments, as part of the utilty rate base.
Separately, we would view any progress toward reducing or eliminating the cost sharing approach under the PCA
so that IPC recovers 100% of any power cost under recoveries and development of a mechanism to adjust or
replace the current LGAR as credit positive steps (See above for more background on the LGAR solution as it was
incorporated into IPC's general rate case settement approved February 28, 2008).
RENEWED FOCUS ON CORE UTILITY OPERATIONS EMPHASIZES DESIRABILITY OF LOW BUSINESS RISK
Regulatory support is all the more important as the conclusion of divestitures of non-eore unregulated businesses
previously owned by IDA has left IPC as the principal source of cash flows, with lesser contributions from
independent power production at Ida-West Energy and affordable housing investments through IDACORP
Financial Services. This renewed focus on core electnc utility operations is in line with the overall corporatestrategy of a decreased reliance on cash flows from riskier non-utilty businesses and has placed greater emphasis
on the importance of having a low business risk profile.
Moody's views this back-to-basics focus as being beneficial to IPC, as it helps to ensure that no extraneous capital
expenditure demands wil detract from the large utilty capital program set forth in the IRP. Any deviation from this
strategy, such as a foray by the parent company into unregulated corporate acquisitions, would likely necessitate a
higher level of scrutiny as to whether IPC's fairly ambitious capital expenditure program wil continue to be rolled
out without undue hindrance. We also believe that ¡PC will continue to benefit from IDA's renewed focus on a back-
to-basics core energy-related strategy centered on its regulated utilty business, insofar as management stil may
decide to further support IPC's capital program and bolster capitalization and cash flow coverage of debt metrics
by periodic issuances of additional common equity.
( RECENT PRESSURE ON CASH FLOW METRICS\
IPC's CFO Pre-W/C for the 12-months ended March 31, 2008 provided coverage of interest and debt by 2.3x and
6.8%, respectively, reflecting a continuation of weakness evidenced during fiscal 2007 and a marked decline from
the 3.3x and 13%, respectively, achieved for fiscal 2006. The decline since the start of 2007 reflects PCA rate
differences, less favorable hydro electric operating conditions, and the reduced sales of excess sulfur dioxide
emission allowances. Although our prospective view takes into account that key credit metncs, including CFO Pre
W/C to debt and interest, may rebound over the next 18 months as the full benefits of recently approved rate
increases materialize, the improvement may not be sufficient to re-establish the metrics at levels consistent with
what we typically observe for vertically integrated utilties at the Baa1 senior unsecured rating leveL. Although the
sale of sulfur dioxide emission allowances had positive effects (to varying degrees) on earnings and cash flow in
2005 - 2007, we do not factor in similar effects on a prospective basis.
As noted above, IPC's metrics for the 12-months ended March 31, 2008 are pressured relative to the current Baa1
rating and we expect that the company's financial performance will remain subject to the vagaries of water flow
conditions. As a result, the adequacy and timeliness of rate relief afforded to IPC by the IPUC in likely future PCA
and general rate case proceedings becomes increasingly more important, particularly in light of the higher than
histoncal utilty capital expenditures planned for the near term. Our ratings and negative outlook are intended to
convey the relative importance that regulatory supportiveness plays in fPC's fuure credit profile. A key
consideration in order for IPC to stabilize its rating outlook and maintain its Baa1 senior unsecured rating wil be
the extent to which the IPUC is supportive in any future regulatory filings by IPC (Le. whether they provide
supportive rate base treatment of planned utility capital spending and relatively timely recovery of net power supply
costs).
After considering Moody's standard adjustments, IPC has been able to maintain its overall debt leverage ratio at
45.6% as of March 31, 2008, which is slightly above the three-year average of 42.6% spanning the period of 2005
to 2007. The calculation of this ratio includes deferred income taxes as part of capitalization. The adjusted debt
ratio currently leaves IPC comfortably positioned relative to the range we typically observe for Baa-rated regulated
electric utilities. Given the recent slight increase in IPC's debt ratio stemming from higher than historical capital
spending, we see the possibilty that prospective debt leverage could stil creep slightly higher.
Liquidity
(
On balance, IPC has generally maintained sufficient liquidity, including cash on hand plus its unused capacity
under its revolving bank credit facility. In 2007, management negotiated an increase in the amount of IPC's
revolver, in order to better cover the prospective liquidity needs of the company as it undertakes a large capital
program while drought conditions have resurfaced to pressure cash flow. More recntly, IPC also arranged for a
$170 milion term loan credit agreement as of April 1, 2008, and loans under the agreement are due March 31,
2009. IPC used loans drawn under this facilty for a mandatory purchase of $166.1 millon of pollution control
revenue refunding bonds on April 3, 2008. The company took this voluntary step to effect an interest expense
savings through conversion of the bonds from an auction interest rate mode to a weekly interest rate mode.
Although IPC is the current holder of the bonds, it expects to remarket the bonds to investors before the March 31,
2009 term loan due date.
The IPC revolving bank credit facility is a $300 milion five-year credit agreement, which is principally used to
backstop commercial paper. The facilty terminates on April 25, 2012. Similar to the amended IDA bank facility,
IPC has the right to request an increase in the aggregate principal amount of the IPC facilty, in its case to $450
millon, and to request one-year extensions of the then existing termination date. At March 31, 2008, there were no
borrowings under IPC's facilty but $186 millon of commercial paper was outstanding. As of May 7,2008, IPC had
$201 milion of commercial paper outstanding. It is worth noting that IPC currently has full availabilty under a $350
millon secured medium-term note program, Series H, which it recently put in place. This program provides
flexibilty for IPC to term out its short-term debt as management has typically done when balances reach levels
noted as of May 7,2008.
Importantly, the IPC bank facilty contains less restrictive terms and conditions than historical agreements, as it
does not require a representation and warranty that no matenal adverse change has occurred as a prerequisite to
any funding beyond the initial closing date and there are no rating triggers in the agreements that would cause
default, acceleration, or puts. The only financial covenant in the facilty limits the debt to total capitalization ratio as
defined to 65%. At March 31, 2008, the leverage ratio for IPC was 54%. The terms and conditions of the term loan
credit agreement essentially mirror the bank revolver.
Beyond the existing commercial paper and term loan balances noted above, IPC has a modest sinking fund
payment due within the next year of $1.06 milion. Its next scheduled matunty of long term debt is $81 milion due
December 2009. As noted above, IPC is facing a significant capital program. When capital spending is taken into
account along with other expected calls on cash over the next four quarters, we note that IPC will need to acces
the debt markets and receive equity infusions from its parent to fund its expected negative free cash flow in order
to maintain its targeted 50/50 debtequity mix.
("-
Moody's takes a certain amount of comfort from the relative size of IPC's average outstanding commercial paper
balances over the past 12-month period to its credit facilty limit amount. For the 12-month period ended March 31,
2008, IPC's commercial paper balances averaged around $116 milion, with the $186 millon peak balance
occurring in March 2008 because of capital expenditures, tax deposits paid to IDA, and reduced operating cash
flows. The average balances outstanding were about $34 milion during the comparable trailing 12-month penod
ended March 31, 2007. We anticipate that IPC's commercial paper balance wil range between $70 milion and
. $240 milion over the next four quarters. The peak amount wil likely be dependent upon the timing of IPC's next
long-term debt issuance to term out its commercial paper, consistent with managements ongoing" practice.
Rating Outlook
(,
IPC's negative rating outlook reflects Moody's concerns about weakness evidenced in the utilty's key credit
metrics in recent periods, due to the adverse effects that poor hydro conditions and the load growth adjustment
rate (LGAR) have had on IPC's earnings and cash flow. Moreover, fPC faces a higher than historical average
capital program over the next several years, which will require external financing to fund the expected negative
free cash flow. Although recently implemented rate increases during 2008 collectively amount to approximately an
additional $120 milion of revenue on an annualized basis, these amounts may not be entirely sufficient to restore
key credit metrics to levels commensurate with the current ratings.
What Could Change the Rating - Up
The negative outlook due to near term challenges related to a large capital program and the vagaries of operating
a large hydroelectric system make an upgrade unlikely in the near term; however, IPC's outlook could be stabilzed
over the near to medium term through a combination of a return to normalized hydro conditions, stronger
regulatory support in future rate proceedings, and improvement in CFO Pre-W/C to interest and debt near 3.5x and
15%, respectively, on a sustainable basis.
What Could Change the Rating - Down
Lower than anticipated earnings and cash flow, perhaps due to the potential continuation of drought conditions
over the longer term or unanticipated lack of regulatory support in future PCA and/or general rate case
proceedings, such that CFO Pre W/C to interest and adjusted debt stayed below 3.0xand 13%, respectively, for
an extended period of time, could result in a negative rating action. Additionally, negative pressure could stem from
one or more of the following: significant increases in hydro plant re-Iicensing costs andlor stringent operational
constraints imposed as part of the license renewal pmcess; any unexpected change that compromises the PCA
mechanism (i.e., inadequate cost recovery due to the effects of the LGAR as described above); any shift by
IDACORP to pursue significant, debt-financed investment in more risky non-regulated businesses that increases
demand on IPC cash flow and increases IPC's debt level such that its adjusted debt/adjusted capitalization ratio is
inflated to well above 50% on a sustainable basis.
f"'ãi'i~~~,~m'~~.~.~~,.1i"4~~~'!'l~r~~:'~I~~'~_~£li'iii~~i~~"¡R'í~"\!~gy.Yùr-~~~~~~~$t~l''1l~~~~D1f..~'t~~~~~~;~~im~&?l~:"a;'i¿IL~~'_~i~,:"r'iul\:k~:lw¡Jf~""""Jt~~~~,-~'t;.,,(iiV¡¡
(
Idaho Power Company
Select Key Ratios for Global Regulated Electric
Utilities
CFO pre-W/C to Interest (x) (1 J ;:6 -:2.5 -:2
CFO pre-W/C to Debt (%) (1);:30 ;:22 22-30 13-25 5-13 -:13 -:5
CFO pre-W/C - Dividends to Debt (%) (1 J ;:25 ;:20 13-25 8-20 3-10 -:10 -:3
Total Debt to Book Capitalization (%)-:40 -:50 40-60 50-70 60-75 ;:60 ;:70
(1 J CFO pre-W/C, which is also referred to as FFO in the Global Regulated Electric Utilties Rating Methodology, is
equal to net cash flow from operations less net changes in working capital items
(Ç Copyright 2008, Moody's Investors Service, Inc. and/or its licensors including Moody's Assurance Company, Inc.
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(
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-10
IDAHO POWER COMPANY
RESPONSE TO REQUEST NO. 23
RUNOFF ANNUAL
1929 351624 45997.3
1930 27084 75756.4 SLOPE -0.009573 8588.8 Y -INTERCEPT
1931 2230384 89188.7 STDERROR 0.000873 5324.8 STD ERROR OF Y-ESTIMATE
1932 469625 56879.8 R-8aUARED 0.66363 17402.7 STD ERROR OF COEFACIENT
1933 4066711 5696.6 F-8TATISTIC 120.2 61.0 DEGREES OF FREEDOM
1934 226455 92273.8 .
1935 3058523 82600.7
1936 4954n9 59875.0
1937 3017243 56767.4
1938 7011227 14380.9
1939 334023 57586.8
194 4207402 48962.2
1941 3802149 50958.5
1942 4767155 21756.2
194 9358636 6595.7
194 3353514 42121.2
1945 5107271 -757.2
1946 6864244 13597.1
1947 5135414 2n49.7
194 57017~3 28632.9
1949 5284 32089.2
1950 666556 -384.0
1951 6887276 14251.3
1952 106479 206.9
1953 626612 13278.4
1954 537598 43348.4
195 3653217 2938.2
1956 7679159 16748.2
1957 814296 14n6.0
1958 7347314 26239.6
1959 399166 41789.6
196 4196707 58617.5
1961 28955 72008.3
1962 48973 29917.3
196 4901628 37901.4
196 6173170 -681.9
196 888791 1469.0
196 3074734 6766.3
1967 530582 148.4
196 31780 25508.1
196 6818n 31370.8
1970 640735 -61.6
1971 11081246 -22861.2
1972 8051198 6185.7
1973 3795546 16011.1
1974 9837349 -4201.1 198 1244n10 -1583.0
1975 88988 -21607.5 198 54768 1044.1
1976 n42733"25230.2 1986 863097 2387.5
19n 2014612 80.5 1987 2635314 81817.1
1978 591454 12141.5 198 2439910 8227.8
1979 36225 4048.7 198 415244 47165.7
198 618045 9049.7 199 2852995 87805.2
1981 3879786 3549.8 1991 2616598 62881.4
1982 962960 -4788.8
1983 10537111 -9233.1
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-10
IDAHO POWER COMPANY
RESPONSE TO REQUEST NO. 31