11 17 2011 IDA 3Q11 Results.pdf

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▲ IDACORP reported Q3 EPS of $2.16 compared to last year’s $1.39. However, this
quarter included a $56.9 million tax benefit from final IRS approval of the company’s uniform capitalization method. Had this quarter been taxed on a similar basis as the
same period last year, with a 13% effective tax rate, EPS would have been $1.09. IDACORP’s effective tax rate has been in the low- to mid-teen levels for the last six
years for a myriad of reasons.
On an operational basis, deliveries were up across all customer classes and revenues were up for all but commercial customers. A refund to customers was mostly offset by higher
off-system sales, with the end results being flat revenues over the prior year. However, higher expenses, particularly operations and maintenance, contrived to drive operating
income lower over the prior year.
Settlement was reached on the Idaho general rate case filed this past June. If approved, rates would increase 4.1% on average as of January 1, 2012. A rate increase of 9.9% had
been requested in the original filing. A rate case in Oregon is proceeding and if it is approved, the utility would enact new rates in June 2012. Idaho comprises the majority of
the utility’s rate base.
Of particular interest is a management proposal to increase the payout ratio to 50%–60%, based on “sustainable earnings.” The company has maintained the dividend at the $1.20
level since 2004, when it was lowered from $1.70. If EPS were able to hang around the $3.00 level, this would imply a dividend of at least $1.80–$2.00, representing a yield of
about 4.7% on the current stock price which is in line with the rest of the industry.
We are raising our 2011 EPS estimate to $3.40 from $2.90 to take this quarter’s tax benefit into account. We are leaving our 2012 estimate of $3.00 unchanged. With a 12x multiple
on our 2012 estimate we arrive at a $36 price target and maintain our Hold rating. Though the potential of a higher dividend payout makes the stock more attractive to income-
oriented investors, that increase is largely priced in at current levels.
Risks: rate case uncertainty, rising interest rates, natural gas price volatility and poor hydrogeneration conditions.
Company Description: IDACORP provides electric service to retail customers in Idaho
and Oregon through its Idaho Power Company subsidiary, which comprises more than 95% of earnings. IDACORP also invests in housing and other real estate properties through its
other subsidiaries. The company was founded in 1915 and is based in Boise, Idaho.
11.17.2011
Jennifer Sireklove, CFA > [e-mail] > 206.664.8875

Q3 Results Boosted by Tax Settlement; Operating Income Lower; Maintaining Hold $40.68 | HOLD
•IDACORP reported Q3 EPS of $2.16, including a significant tax benefit. On a more normalized effective tax rate, EPS would have been $1.09. EPS were $1.39 in the year-ago quarter.
•Deliveries were up in the quarter, but revenues were flat and expenses were higher, driving operating income lower. A Idaho rate increase will go into effect in January, if approved.
•A potential dividend payout increase could raise the dividend from the current $1.20 level toward $2.00.
•We maintain our Hold rating and price target of $36 based on 12x our 2012 estimate of $3.00.
52 Week High $41.97
52 Week Low $33.88
P/E FY10A 13.8x
FY11E 10.4x
FY12E 13.6x
Target Price $36
Shares Out (Mil) 49.7
Market Cap (Mil) $2,022
Avg Daily Vol (Mil) 381.7
Dividend / Yield $1.20 / 2.9%
3- 5 yr EPS Growth 5%
Book Value per Share $33.30
Fiscal Year End Dec.

EPS ESTIMATES
FY10A $2.95
FY11E $3.90
FY12E $3.00

IDACORP, Inc. (IDA)

Additional required disclosures under NASD Rule 2711 are provided on the last page of this document. McAdams Wright Ragen > 925 Fourth Avenue, Suite 3900 Seattle, WA 98104 888.567.6297 > www.mwrinc.com Page 2 of 2

Required Disclosures:

Jennifer Sireklove, CFA > [e-mail] > 206.664.8875
• I, Jennifer Sireklove, CFA, hereby certify (1) that the views in this research note accurately reflect my personal views about any or all of the subject securities or issuers referred to in this note and (2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this note.
As of September 30, 2011

From To Date Price
Price Target $36 5/24/2010 $32.40
Coverage Initiation Hold 5/24/2010 $32.40

Ratings Change Focus List Change Target Price Change

The firm expects to receive and intends to seek compensation for investment banking services from the subject company in the next
three months.
Price targets are subject to change as new information becomes available, and reflect our current judgment regarding this
security. Note that there are risks that may impede the achievement of a predicted price target. Price targets are based on fundamental factors such as historical and projected earnings, cash flow, discounted cash flow, relative book value, peer group
evaluation, relative sector valuations, and expectations on general market and economic conditions. McAdams Wright Ragen employs a Ratings System (in effect since 6/12/2002), defined as follows.
Buy/Addition to InStock Recommended List: We expect the Stock to Outperform the Market. Hold/Addition to InStock Recommended List: We expect the Stock to be a Market Performer.
Sell/Removal from InStock Recommended List: We expect the Stock to Underperform the Market. Ratings System in effect between 2/7/2002 and 6/12/2002: Strong Buy, Buy, Hold, Underperform, Sell.
Ratings System in effect prior to 2/7/2002: Buy, Moderate Buy, Hold, Underperform, Sell.
Percentage of Rated Stocks Currently
Assigned this Rating
Percentage of Rated Stocks with this Rating with where MWR has provided investment banking
services within the previous 12 months.
Buy 62% 0%
Hold 28% 0%
Sell 10% 0%
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Other disclosures: This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this
date and are subject to change. The information has been obtained from sources we consider reliable, but we cannot guarantee the accuracy. Our firm, or its officers, research
personnel, other employees or customers may have long or short positions in the securities or options of the recommended issuers, may buy and sell the securities or options,
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