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Home My WebLink About2011 IDAUCAPTaxBenefitApprovedReite_091611.pdfEquity Research Flash Comment September 16, 2011 IDANYSEOutperform (1) Regulated Electric Utilities IDA: UCAP Tax Benefit ApprovedReiterate Outperform Neil Kalton, CFA, Senior Analyst (314) 9555239 IDACORP, Inc. Price as of 9/15/2011: $37.85 Sector Rating: Regulated Electric Utilities, Market Weight This morning IDACORP announced that on 9/13 the company received a letter from the IRS indicating that the Joint Committee on Taxation has the approved uniform capitalization (UCAP) method settlement. As a result, IDA will recognize a $57mm benefit for prior periods and approximately $3mm annually going forward. Though this is not unexpected, we view the news positively as approval in 2011 allows the company to preserve its ADITC balance and could provide some flexibility in Idaho Power's pending base rate case. For example, on the second quarter conference call, management indicated that earnings above a 10.5% ROE, which are subject to 50/50 sharing with customers under the 200911 rate settlement, could be used as a tool in the company's pending Idaho rate case. Bottom line, we think approval of the UCAP better positions IDA to reach a constructive settlement agreement. The company plans to provide updated 2011 earnings guidance in conjunction with 3Q earnings. On the first quarter conference call, management indicated that UCAP approval could result in presharing EPS of approximately $3.153.25 per share, which compares to current guidance of $2.802.95. We estimate that 50/50 sharing above the 10.5% ROE could add an incremental $0.200.30 in 2011. As the $57mm benefit is onetime in nature and the ongoing UCAP benefit of roughly $3mm annually will likely be truedup in the rate case process, we are maintaining our 2012E and 2013E EPS of $3.05 and $3.10, respectively. We reiterate our Outperform rating. FY 11 EPS: $2.87 FY 12 EPS: $3.05 Shares Out.: 49.6 MM Market Cap.: $1,877.36 MM DISCLOSURE APPENDIX Required Disclosures 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. Wells Fargo Securities, LLC maintains a market in the common stock of IDACORP, Inc. Wells Fargo Securities, LLC or its affiliates managed or comanaged a public offering of securities for IDACORP, Inc. within the past 12 months. 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. Wells Fargo Securities, LLC or its affiliates received compensation for investment banking services from IDACORP, Inc. in the past 12 months. IDACORP, Inc. currently is, or during the 12month 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. IDACORP, Inc. currently is, or during the 12month 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 securitiesrelated services to IDACORP, Inc. Wells Fargo Securities, LLC received compensation for products or services other than investment banking services from IDACORP, Inc. in the past 12 months. 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 inline 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: September 16, 2011 50% 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 Outperformrated companies. 47% of companies covered by Wells Fargo Securities, LLC Equity Research are rated Market Perform. Wells Fargo Securities, LLC has provided investment banking services for 51% of its Market Performrated 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 39% of its Underperformrated companies. Important Information for NonU.S. Recipients EEA The securities and related financial instruments described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited (“WFSIL”). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Services Authority. For the purposes of Section 21 of the UK Financial Services and Markets Act 2000 (“the Act”), the content of this report has been approved by WFSIL a regulated person under the Act. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive 2007. The FSA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, nor will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. Australia Wells Fargo Securities, LLC is exempt from the requirements to hold an Australian financial services license in respect of the financial services it provides to wholesale clients in Australia. Wells Fargo Securities, LLC is regulated under U.S. laws which differ from Australian laws. Any offer or documentation provided to Australian recipients by Wells Fargo Securities, LLC in the course of providing the financial services will be prepared in accordance with the laws of the United States and not Australian laws. Hong Kong This report is issued and distributed in Hong Kong by Wells Fargo Securities Asia Limited ("WFSAL"), a Hong Kong incorporated investment firm licensed and regulated by the Securities and Futures Commission to carry on types 1, 4, 6 and 9 regulated activities (as defined in the Securities and Futures Ordinance, "the SFO"). This report is not intended for, and should not be relied on by, any person other than professional investors (as defined in the SFO). Any securities and related financial instruments described herein are not intended for sale, nor will be sold, to any person other than professional investors (as defined in the SFO). Japan This report is distributed in Japan by Wells Fargo Securities (Japan) Co., Ltd, registered with the Kanto Local Finance Bureau to conduct broking and dealing of type 1 and type 2 financial instruments and agency or intermediary service for entry into investment advisory or discretionary investment contracts. This report is intended for distribution only to professional investors (Tokutei Toushika) and is not intended for, and should not be relied upon by, ordinary customers (Ippan Toushika). The ratings stated on the document are not provided by rating agencies registered with the Financial Services Agency of Japan (JFSA) but by group companies of JFSAregistered rating agencies. These group companies may include Moody's Investors Services Inc, Standard & Poor's Rating Services and/or Fitch Ratings. Any decisions to invest in securities or transactions should be made after reviewing policies and methodologies used for assigning credit ratings and assumptions, significance and limitations of the credit ratings stated on the respective rating agencies' websites. About Wells Fargo Securities, LLC Wells Fargo Securities, LLC is a U.S. brokerdealer registered with the U.S. Securities and Exchange Commission and a member of the New York Stock Exchange, the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. This report is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described in this report. Interested parties are advised to contact the entity with which they deal, or the entity that provided this report to them, if they desire further information. The information in this report has been obtained or derived from sources believed by Wells Fargo Securities, LLC, to be reliable, but Wells Fargo Securities, LLC, does not represent that this information is accurate or complete. Any opinions or estimates contained in this report represent the judgment of Wells Fargo Securities, LLC, at this time, and are subject to change without notice. For the purposes of the U.K. Financial Services Authority's rules, this report constitutes impartial investment research. Each of Wells Fargo Securities, LLC, and Wells Fargo Securities International Limited is a separate legal entity and distinct from affiliated banks. Copyright © 2011 Wells Fargo Securities, LLC. SECURITIES NOT FDICINSURED/NOT BANKGUARANTEED/MAY LOSE VALUE Please see Disclosure Appendix 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. Equity Research Flash Comment September 16, 2011 IDANYSEOutperform (1) Regulated Electric Utilities IDA: UCAP Tax Benefit ApprovedReiterate Outperform Neil Kalton, CFA, Senior Analyst (314) 9555239 IDACORP, Inc. Price as of 9/15/2011: $37.85 Sector Rating: Regulated Electric Utilities, Market Weight This morning IDACORP announced that on 9/13 the company received a letter from the IRS indicating that the Joint Committee on Taxation has the approveduniform capitalization (UCAP) method settlement. As a result, IDA will recognize a $57mm benefit for prior periods and approximately $3mm annually goingforward. Though this is not unexpected, we view the news positively as approval in 2011 allows the company to preserve its ADITC balance and could providesome flexibility in Idaho Power's pending base rate case. For example, on the second quarter conference call, management indicated that earnings above a 10.5%ROE, which are subject to 50/50 sharing with customers under the 200911 rate settlement, could be used as a tool in the company's pending Idaho rate case. Bottom line, we think approval of the UCAP better positions IDA to reach a constructive settlement agreement. The company plans to provide updated 2011 earnings guidance in conjunction with 3Q earnings. On the first quarter conference call, management indicated thatUCAP approval could result in presharing EPS of approximately $3.153.25 per share, which compares to current guidance of $2.802.95. We estimate that50/50 sharing above the 10.5% ROE could add an incremental $0.200.30 in 2011. As the $57mm benefit is onetime in nature and the ongoing UCAP benefit ofroughly $3mm annually will likely be truedup in the rate case process, we are maintaining our 2012E and 2013E EPS of $3.05 and $3.10, respectively. Wereiterate our Outperform rating. FY 11 EPS: $2.87 FY 12 EPS: $3.05 Shares Out.: 49.6 MM Market Cap.: $1,877.36 MM DISCLOSURE APPENDIX Required Disclosures 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. Wells Fargo Securities, LLC maintains a market in the common stock of IDACORP, Inc. Wells Fargo Securities, LLC or its affiliates managed or comanaged a public offering of securities for IDACORP, Inc. within the past 12 months. 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. Wells Fargo Securities, LLC or its affiliates received compensation for investment banking services from IDACORP, Inc. in the past 12 months. IDACORP, Inc. currently is, or during the 12month 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. IDACORP, Inc. currently is, or during the 12month 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 securitiesrelated services to IDACORP, Inc. Wells Fargo Securities, LLC received compensation for products or services other than investment banking services from IDACORP, Inc. in the past 12 months. 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 inline 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: September 16, 2011 50% 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 Outperformrated companies. 47% of companies covered by Wells Fargo Securities, LLC Equity Research are rated Market Perform. Wells Fargo Securities, LLC has provided investment banking services for 51% of its Market Performrated 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 39% of its Underperformrated companies. Important Information for NonU.S. Recipients EEA The securities and related financial instruments described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited (“WFSIL”). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Services Authority. For the purposes of Section 21 of the UK Financial Services and Markets Act 2000 (“the Act”), the content of this report has been approved by WFSIL a regulated person under the Act. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive 2007. The FSA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, nor will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. Australia Wells Fargo Securities, LLC is exempt from the requirements to hold an Australian financial services license in respect of the financial services it provides to wholesale clients in Australia. Wells Fargo Securities, LLC is regulated under U.S. laws which differ from Australian laws. Any offer or documentation provided to Australian recipients by Wells Fargo Securities, LLC in the course of providing the financial services will be prepared in accordance with the laws of the United States and not Australian laws. Hong Kong This report is issued and distributed in Hong Kong by Wells Fargo Securities Asia Limited ("WFSAL"), a Hong Kong incorporated investment firm licensed and regulated by the Securities and Futures Commission to carry on types 1, 4, 6 and 9 regulated activities (as defined in the Securities and Futures Ordinance, "the SFO"). This report is not intended for, and should not be relied on by, any person other than professional investors (as defined in the SFO). Any securities and related financial instruments described herein are not intended for sale, nor will be sold, to any person other than professional investors (as defined in the SFO). Japan This report is distributed in Japan by Wells Fargo Securities (Japan) Co., Ltd, registered with the Kanto Local Finance Bureau to conduct broking and dealing of type 1 and type 2 financial instruments and agency or intermediary service for entry into investment advisory or discretionary investment contracts. This report is intended for distribution only to professional investors (Tokutei Toushika) and is not intended for, and should not be relied upon by, ordinary customers (Ippan Toushika). The ratings stated on the document are not provided by rating agencies registered with the Financial Services Agency of Japan (JFSA) but by group companies of JFSAregistered rating agencies. These group companies may include Moody's Investors Services Inc, Standard & Poor's Rating Services and/or Fitch Ratings. Any decisions to invest in securities or transactions should be made after reviewing policies and methodologies used for assigning credit ratings and assumptions, significance and limitations of the credit ratings stated on the respective rating agencies' websites. About Wells Fargo Securities, LLC Wells Fargo Securities, LLC is a U.S. brokerdealer registered with the U.S. Securities and Exchange Commission and a member of the New York Stock Exchange, the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. This report is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described in this report. Interested parties are advised to contact the entity with which they deal, or the entity that provided this report to them, if they desire further information. The information in this report has been obtained or derived from sources believed by Wells Fargo Securities, LLC, to be reliable, but Wells Fargo Securities, LLC, does not represent that this information is accurate or complete. Any opinions or estimates contained in this report represent the judgment of Wells Fargo Securities, LLC, at this time, and are subject to change without notice. For the purposes of the U.K. Financial Services Authority's rules, this report constitutes impartial investment research. Each of Wells Fargo Securities, LLC, and Wells Fargo Securities International Limited is a separate legal entity and distinct from affiliated banks. Copyright © 2011 Wells Fargo Securities, LLC. SECURITIES NOT FDICINSURED/NOT BANKGUARANTEED/MAY LOSE VALUE Please see Disclosure Appendix 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. Equity Research Flash Comment September 16, 2011 IDANYSEOutperform (1) Regulated Electric Utilities IDA: UCAP Tax Benefit ApprovedReiterate Outperform Neil Kalton, CFA, Senior Analyst (314) 9555239 IDACORP, Inc. Price as of 9/15/2011: $37.85 Sector Rating: Regulated Electric Utilities, Market Weight This morning IDACORP announced that on 9/13 the company received a letter from the IRS indicating that the Joint Committee on Taxation has the approveduniform capitalization (UCAP) method settlement. As a result, IDA will recognize a $57mm benefit for prior periods and approximately $3mm annually goingforward. Though this is not unexpected, we view the news positively as approval in 2011 allows the company to preserve its ADITC balance and could providesome flexibility in Idaho Power's pending base rate case. For example, on the second quarter conference call, management indicated that earnings above a 10.5%ROE, which are subject to 50/50 sharing with customers under the 200911 rate settlement, could be used as a tool in the company's pending Idaho rate case. Bottom line, we think approval of the UCAP better positions IDA to reach a constructive settlement agreement. The company plans to provide updated 2011 earnings guidance in conjunction with 3Q earnings. On the first quarter conference call, management indicated thatUCAP approval could result in presharing EPS of approximately $3.153.25 per share, which compares to current guidance of $2.802.95. We estimate that50/50 sharing above the 10.5% ROE could add an incremental $0.200.30 in 2011. As the $57mm benefit is onetime in nature and the ongoing UCAP benefit ofroughly $3mm annually will likely be truedup in the rate case process, we are maintaining our 2012E and 2013E EPS of $3.05 and $3.10, respectively. Wereiterate our Outperform rating. FY 11 EPS: $2.87 FY 12 EPS: $3.05 Shares Out.: 49.6 MM Market Cap.: $1,877.36 MM DISCLOSURE APPENDIX Required Disclosures 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. Wells Fargo Securities, LLC maintains a market in the common stock of IDACORP, Inc. Wells Fargo Securities, LLC or its affiliates managed or comanaged a public offering of securities for IDACORP, Inc. within the past 12 months. 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. Wells Fargo Securities, LLC or its affiliates received compensation for investment banking services from IDACORP, Inc. in the past 12 months. IDACORP, Inc. currently is, or during the 12month 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. IDACORP, Inc. currently is, or during the 12month 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 securitiesrelated services to IDACORP, Inc. Wells Fargo Securities, LLC received compensation for products or services other than investment banking services from IDACORP, Inc. in the past 12 months. 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 inline 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: September 16, 2011 50% 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 Outperformrated companies. 47% of companies covered by Wells Fargo Securities, LLC Equity Research are rated Market Perform. Wells Fargo Securities, LLC has provided investment banking services for 51% of its Market Performrated 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 39% of its Underperformrated companies. Important Information for NonU.S. Recipients EEA The securities and related financial instruments described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited (“WFSIL”). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Services Authority. For the purposes of Section 21 of the UK Financial Services and Markets Act 2000 (“the Act”), the content of this report has been approved by WFSIL a regulated person under the Act. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive 2007. The FSA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, nor will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. Australia Wells Fargo Securities, LLC is exempt from the requirements to hold an Australian financial services license in respect of the financial services it provides to wholesale clients in Australia. Wells Fargo Securities, LLC is regulated under U.S. laws which differ from Australian laws. Any offer or documentation provided to Australian recipients by Wells Fargo Securities, LLC in the course of providing the financial services will be prepared in accordance with the laws of the United States and not Australian laws. Hong Kong This report is issued and distributed in Hong Kong by Wells Fargo Securities Asia Limited ("WFSAL"), a Hong Kong incorporated investment firm licensed and regulated by the Securities and Futures Commission to carry on types 1, 4, 6 and 9 regulated activities (as defined in the Securities and Futures Ordinance, "the SFO"). This report is not intended for, and should not be relied on by, any person other than professional investors (as defined in the SFO). Any securities and related financial instruments described herein are not intended for sale, nor will be sold, to any person other than professional investors (as defined in the SFO). Japan This report is distributed in Japan by Wells Fargo Securities (Japan) Co., Ltd, registered with the Kanto Local Finance Bureau to conduct broking and dealing of type 1 and type 2 financial instruments and agency or intermediary service for entry into investment advisory or discretionary investment contracts. This report is intended for distribution only to professional investors (Tokutei Toushika) and is not intended for, and should not be relied upon by, ordinary customers (Ippan Toushika). The ratings stated on the document are not provided by rating agencies registered with the Financial Services Agency of Japan (JFSA) but by group companies of JFSAregistered rating agencies. These group companies may include Moody's Investors Services Inc, Standard & Poor's Rating Services and/or Fitch Ratings. Any decisions to invest in securities or transactions should be made after reviewing policies and methodologies used for assigning credit ratings and assumptions, significance and limitations of the credit ratings stated on the respective rating agencies' websites. About Wells Fargo Securities, LLC Wells Fargo Securities, LLC is a U.S. brokerdealer registered with the U.S. Securities and Exchange Commission and a member of the New York Stock Exchange, the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. This report is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described in this report. Interested parties are advised to contact the entity with which they deal, or the entity that provided this report to them, if they desire further information. The information in this report has been obtained or derived from sources believed by Wells Fargo Securities, LLC, to be reliable, but Wells Fargo Securities, LLC, does not represent that this information is accurate or complete. Any opinions or estimates contained in this report represent the judgment of Wells Fargo Securities, LLC, at this time, and are subject to change without notice. For the purposes of the U.K. Financial Services Authority's rules, this report constitutes impartial investment research. Each of Wells Fargo Securities, LLC, and Wells Fargo Securities International Limited is a separate legal entity and distinct from affiliated banks. Copyright © 2011 Wells Fargo Securities, LLC. SECURITIES NOT FDICINSURED/NOT BANKGUARANTEED/MAY LOSE VALUE Please see Disclosure Appendix 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. Equity Research Flash Comment September 16, 2011 IDANYSEOutperform (1) Regulated Electric Utilities IDA: UCAP Tax Benefit ApprovedReiterate Outperform Neil Kalton, CFA, Senior Analyst (314) 9555239 IDACORP, Inc. Price as of 9/15/2011: $37.85 Sector Rating: Regulated Electric Utilities, Market Weight This morning IDACORP announced that on 9/13 the company received a letter from the IRS indicating that the Joint Committee on Taxation has the approveduniform capitalization (UCAP) method settlement. As a result, IDA will recognize a $57mm benefit for prior periods and approximately $3mm annually goingforward. Though this is not unexpected, we view the news positively as approval in 2011 allows the company to preserve its ADITC balance and could providesome flexibility in Idaho Power's pending base rate case. For example, on the second quarter conference call, management indicated that earnings above a 10.5%ROE, which are subject to 50/50 sharing with customers under the 200911 rate settlement, could be used as a tool in the company's pending Idaho rate case. Bottom line, we think approval of the UCAP better positions IDA to reach a constructive settlement agreement. The company plans to provide updated 2011 earnings guidance in conjunction with 3Q earnings. On the first quarter conference call, management indicated thatUCAP approval could result in presharing EPS of approximately $3.153.25 per share, which compares to current guidance of $2.802.95. We estimate that50/50 sharing above the 10.5% ROE could add an incremental $0.200.30 in 2011. As the $57mm benefit is onetime in nature and the ongoing UCAP benefit ofroughly $3mm annually will likely be truedup in the rate case process, we are maintaining our 2012E and 2013E EPS of $3.05 and $3.10, respectively. Wereiterate our Outperform rating. FY 11 EPS: $2.87 FY 12 EPS: $3.05 Shares Out.: 49.6 MM Market Cap.: $1,877.36 MM DISCLOSURE APPENDIX Required Disclosures 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 researchreport. Wells Fargo Securities, LLC maintains a market in the common stock of IDACORP, Inc. Wells Fargo Securities, LLC or its affiliates managed or comanaged a public offering of securities for IDACORP, Inc. within the past 12 months. Wells Fargo Securities, LLC or its affiliates intends to seek or expects to receive compensation for investment banking services in the next three months fromIDACORP, Inc. Wells Fargo Securities, LLC or its affiliates received compensation for investment banking services from IDACORP, Inc. in the past 12 months. IDACORP, Inc. currently is, or during the 12month 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. IDACORP, Inc. currently is, or during the 12month 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 securitiesrelated services to IDACORP, Inc. Wells Fargo Securities, LLC received compensation for products or services other than investment banking services from IDACORP, Inc. in the past 12 months. 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 researchanalysts receive compensation that is based upon and impacted by the overall profitability and revenue of the firm, which includes, but is not limited toinvestment 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 inline 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 significantvolatility. All IPO stocks are automatically rated volatile within the first 24 months of trading. As of: September 16, 2011 50% of companies covered by Wells Fargo Securities, LLC EquityResearch are rated Outperform. Wells Fargo Securities, LLC has provided investment banking services for 46% of itsOutperformrated companies. 47% of companies covered by Wells Fargo Securities, LLC EquityResearch are rated Market Perform. Wells Fargo Securities, LLC has provided investment banking services for 51% of itsMarket Performrated companies. 3% of companies covered by Wells Fargo Securities, LLC EquityResearch are rated Underperform. Wells Fargo Securities, LLC has provided investment banking services for 39% of itsUnderperformrated companies. Important Information for NonU.S. Recipients EEA The securities and related financial instruments described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Forrecipients in the EEA, this report is distributed by Wells Fargo Securities International Limited (“WFSIL”). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Services Authority. For the purposes of Section 21 of the UK Financial Services and Markets Act 2000 (“the Act”), the content of this report has been approved by WFSIL a regulated person under the Act. 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