2011 IDA 080411.pdf

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

u ust 4, 2011

Equit Research
IDACORP, Inc.
IDA: Idaho Rate Proceeding In Focus in H2
EPS Outlook Intact--Reiterate Outperform Rating

• Summary. IDA affirmed 2011 EPS guidance and provided updates on key
issues, including UCAP (still waiting for congressional approval), Langley Gulch
(on time and on budget) and recently filed rate cases in Idaho and Oregon. We
are maintaining our 2011E-13E EPS of $2.87, $3.05 and $3.10, respectively. We
reiterate out Outperform rating and are lowering our valuation range $41-42 per
share from $43-44 per share based on a lower group multiple.
• EPS Outlook. IDA affirmed 2011 EPS guidance of $2.80-2.95 and revised
expected ADITC amortizations to $13.5MM from $15MM. While Idaho Power’s
2011 operation & maintenance expense outlook increased by $10MM, the change
is earnings neutral as the increase relates to recoverable pension costs. No
change to our 2011E-13E EPS.
• UCAP Update. IDA continues to await approval of the uniform capitalization
(UCAP) tax settlement from the U.S. Congress Joint Committee on Taxation.
Approval would result in the one-time recognition of $60MM of benefits and $4-
6MM of annual tax benefits, which would eventually be reflected in Idaho
Power’s retail rates.
• Rate Case Comments. If the UCAP settlement is approved, management
indicated that earnings above a 10.5% ROE, which are subject to 50/50 sharing
with customers under the 2009-11 rate settlement, could be used as a tool in the
company’s pending Idaho rate case. The proposed schedule includes settlement conferences on 8/31 and 9/8 and Staff/Intervener testimony on 10/7.
• Reiterate Outperform. We are attracted to long-term growth trends in IDA’s
service territory, the company’s healthy balance sheet, and favorable regulatory
trends in Idaho. In addition, we consider valuation to be reasonable as shares
trade at discounts of 11%/3% to the Small-Cap Regulated Electrics and 6%/4% to
the All-Cap Regulated Electrics on 2012E/13E EPS, respectively.

Valuation Range: $41.00 to $42.00 from $43.00 to $44.00
We value IDA under P/E multiple (apply a 13.5-14X multiple to our 12E EPS of
$3.05) and dividend discount analyses. Risks to our valuation include project
delays/cancellations, negative regulatory developments and consistently below
average hydro conditions.

Investment Thesis:
We rate shares Outperform. We are attracted to IDA's increasingly constructive
regulatory environment, attractive service territory and strong rate base growth
potential.

Outperform

Sector: Regulated Electric Utilities
Market Weight

Valuation Range Change

2010A 2011E 2012E
EPS Curr. Prior Curr. Prior
Q1 (Mar.) $0.34 $0.60 NC NE
Q2 (June) 0.82 0.42 0.55 NE
Q3 (Sep.) 1.39 1.33 1.28 NE
Q4 (Dec.) 0.41 0.50 0.44 NE
FY $2.95 $2.87 NC $3.05 NC
CY $2.95 $2.87 $3.05
FY P/E 12.4x 12.7x 12.0x
Rev.(MM)$1,036 $1,070 $1,151
Source: Company Data, Wells Fargo Securities, LLC estimates, and Reuters NA = Not Available, NC = No Change, NE = No Estimate, NM = Not Meaningful V = Volatile, = Company is on the Priority Stock List

Ticker IDA
Price (08/04/2011) $36.47
52-Week Range: $34-41
Shares Outstanding: (MM) 49.6
Market Cap.: (MM) $1,808.9
S&P 500: 1,200.07
Avg. Daily Vol.: 204,033
Dividend/Yield: $1.20/3.3%
LT Debt: (MM) $1,487.4
LT Debt/Total Cap.: 47.6%
ROE: 10.0%
3-5 Yr. Est. Growth Rate: 4.0%
CY 2011 Est. P/E-to-Growth: 3.2x
Last Reporting Date: 08/04/2011
Before Open
Source: Company Data, Wells Fargo Securities, LLC estimates, and Reuters

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

WELLS FARGO SECURITIES, LLC
Utilities EQUITY RESEARCH DEPARTMENT

2

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

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

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WELLS FARGO SECURITIES, LLC
Utilities EQUITY RESEARCH DEPARTMENT

4

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%
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q
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47

4
8

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%
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%
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D
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8
9

2

6

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5
So
u
r
c
e
:

W
e
l
l
s

F
a
r
g
o

S
e
c
u
r
i
t
i
e
s
,

L
L
C

e
s
t
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a
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s

a
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d

c
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m
p
a
n
y

f
i
l
i
n
g
s

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

5

Required Disclosures

$18.00
$20.00
$22.00
$24.00
$26.00
$28.00
$30.00
$32.00
$34.00
$36.00
$38.00
$40.00
$42.00
$44.00
$46.00
7/3
0
/
0
8
8/2
7
/
0
8
9/2
4
/
0
8
10
/
2
2
/
0
8
11
/
1
9
/
0
8
12
/
1
7
/
0
8
1/1
4
/
0
9
2/1
1
/
0
9
3/1
1
/
0
9
4/8
/
0
9
5/6
/
0
9
6/3
/
0
9
7/1
/
0
9
7/2
9
/
0
9
8/2
6
/
0
9
9/2
3
/
0
9
10
/
2
1
/
0
9
11
/
1
8
/
0
9
12
/
1
6
/
0
9
1/1
3
/
1
0
2/1
0
/
1
0
3/1
0
/
1
0
4/7
/
1
0
5/5
/
1
0
6/2
/
1
0
6/3
0
/
1
0
7/2
8
/
1
0
8/2
5
/
1
0
9/2
2
/
1
0
10
/
2
0
/
1
0
11
/
1
7
/
1
0
12
/
1
5
/
1
0
1/1
2
/
1
1
2/9
/
1
1
3/9
/
1
1
4/6
/
1
1
5/4
/
1
1
6/1
/
1
1
6/2
9
/
1
1
7/2
7
/
1
1
Se
c
u
r
i
t
y

P
r
i
c
e

IDACORP, Inc. (IDA) 3-yr. Price PerformanceIDACORP, Inc. (IDA) 3-yr. Price Performance
Date
Date Publication Price ($) Rating Code Val. Rng. Low Val. Rng. High Close Price ($)
7/30/2008 Kalton
7/30/2008 NA 2 31.00 33.00 29.95
z 12/18/2008 29.19 2 30.00 32.00 29.24
z 2/19/2009 24.39 2 26.00 27.00 24.39
z 8/6/2009 27.79 2 27.00 29.00 27.79
z 9/10/2009 28.37 2 29.00 30.00 28.37
z 11/10/2009 29.52 2 30.00 31.00 29.52
z 12/14/2009 31.18 2 32.00 33.00 31.54
z 2/25/2010 33.94 2 35.00 36.00 33.89
z 8/6/2010 35.75 2 36.00 37.00 36.05
z 10/29/2010 37.00 2 38.00 39.00 36.80
cz 11/15/2010 36.34 1 40.00 41.00 36.52
z 2/9/2011 38.22 1 41.00 42.00 38.05
z 5/5/2011 38.91 1 42.00 43.00 38.91
z 7/19/2011 39.83 1 43.00 44.00 39.84

Source: Wells Fargo Securities, LLC estimates and Reuters data

Symbol Key Rating Code Key
d Rating Downgrade ‹ Initiation, Resumption, Drop or Suspend 1 Outperform/Buy SR Suspended
c Rating Upgrade „ Analyst Change 2 Market Perform/Hold NR Not Rated
z Valuation Range Change ˆ Split Adjustment 3 Underperform/Sell NE No Estimate
Additional Information Available Upon Request

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

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

6

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

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

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

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

As of: August 4, 2011
47% of companies covered by Wells Fargo Securities, LLC Equity Research are rated Outperform. Wells Fargo Securities, LLC has provided investment banking services for 46% of its Equity Research Outperform-rated
companies.
50% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Market Perform.
Wells Fargo Securities, LLC has provided investment banking
services for 49% of its Equity Research Market Perform-rated
companies.
3% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Underperform.
Wells Fargo Securities, LLC has provided investment banking
services for 44% of its Equity Research Underperform-rated
companies.

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

7

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