COC IDA research note 10-28-08.pdf

Please refer to pages 2-3 of this report for detailed disclosure and certification information.
RESEARCH NOTE
Institutional Equity Research

IDACORP, INC.
October 29, 2008 IDA – NYSE

Rating:
BUY

Price: (10/28/08) $25.22

Price Targets:
12-18 month: $31
5-year: $37

Industry:
Utilities

James L. Bellessa, Jr., CFA
406.791.7230
[e-mail]

3Q’08 Earnings Preview: Rate Relief and PCA Mechanism Change
Should Boost EPS.

• IDACORP, Inc. is scheduled to report 3Q’08 earnings on Thursday, November
6th, before the market opens. A conference call with management will be held on
the same day at 4:30 PM EDT/1:30 PM PDT.
• We are looking for 3Q’08 EPS of $0.89 versus $0.65 per share in the same
quarter a year ago, with the consensus of four analysts at $0.83 per share. Our
full-year estimate for 2008 EPS is $2.12, a 14% year-over-year increase over
2007 earnings of $1.86, with the consensus among four analysts at $2.01 per
share. We are the high on the Street for both quarterly and full-year estimates.
• Change in PCA mechanism should boost results. A change in the power cost
adjustment (PCA) mechanism implemented on June 1, 2008 is expected to boost
3Q’08 earnings by $0.22. The change in the mechanism is intended to smooth
out power costs over the year, rather than follow the seasonal pattern that had
been used previously. Therefore, the 3Q’08 boost more than offsets the $0.12 hit
in 2Q’08 caused by the PCA mechanism revision. Note that on an annualized
basis, the PCA mechanism change was not expected to change results. Also, a
settlement agreement has been reached that would further alter several aspects of
the PCA, including the monthly distribution of forecasted annual net power
supply based on the shape of normalized monthly sales rather than the simplistic
use of a distribution of 1/12 of the annual forecasted expense per month (see our
Research Note of October 20, 2008).
• Hydro generation expected to be flat to up year-over-year. The utility’s
strong second half should be helped by the aforementioned PCA change and
better hydro conditions than were seen last year. Given first half 2008
hydroelectric generation of 3.7 million MWh and the company’s guidance that
2008 total hydro generation is expected to be in the range of 6.5-7.5 million
MWh, second half hydro generation should be roughly 2.8-3.8 million MWh,
compared with 2.8 million MWh in 2H’07.
• Rate relief and gain likely to help quarter. Results were likely lifted by an
annualized 5%, or $32 million, general rate increase in Idaho that became
effective March 1, 2008. The quarterly comparison should be held back by the
fact 3Q’08 temperatures, as measured by cooling-degree days, were 16% below
3Q’07, albeit 31% above normal, and results in 3Q’07 were bolstered in the order
of $0.03 per share by gains on the sale of emissions allowances. Although we
cannot fully predict what gains the utility may realize from the sale of emission
allowances, we do not expect the impact of any 3Q’08 sales reached the same
level as 3Q’07.
• We currently rate the shares BUY, with a target price of $31, or approximately
13.7x our 2009 EPS estimate of $2.27. While management plans approximately
$900 million of capital expenditures over the 2008-2010 timeframe and has
$629 million remaining on two shelf registration statements, we do not believe
there are any immediate financings in front of the utility, other than the
company’s periodic share offerings under a sales agency agreement.
D.A. Davidson & Co.
Two Centerpointe Drive, Suite 400 • Lake Oswego, Oregon 97035 • [phone] • [phone] • www.dadavidson.com
Copyright D.A. Davidson & Co., 2008. All rights reserved.
2
Required Disclosures
D.A. Davidson & Co. expects to receive, or intends to seek, compensation for investment banking services from this company in the
next three months.
D.A. Davidson & Co. is a full service investment firm that provides both brokerage and investment banking services. James L.
Bellessa, Jr., CFA, the research analyst principally responsible for the preparation of this report, will receive compensation that is
based upon (among other factors) D.A. Davidson & Co.’s investment banking revenue. However, D.A. Davidson & Co.’s analysts are
not directly compensated for involvement in specific investment banking transactions.
I, James L. Bellessa, Jr., CFA, attest that (i) all the views expressed in this research report accurately reflect my personal views about
the common stock of the subject company, and (ii) no part of my compensation was, is, or will be, directly or indirectly, related to the
specific recommendations or views expressed in this report.

Ratings Information

D.A. Davidson & Co. Ratings Buy Neutral Underperform
Risk adjusted return potential Over 15% total return
expected on a risk adjusted
basis over next 12-18 months
>0-15% return potential
on a risk adjusted basis
over next 12-18 months
Likely to remain flat or lose
value on a risk adjusted basis
over next 12-18 months
Distribution of Ratings (as of 9/30/08) Buy Hold Sell
Corresponding Institutional Research Ratings Buy Neutral Underperform
and Distribution 44% 52% 4%
Corresponding Private Client Research Ratings Outperform Market Perform Underperform
and Distribution 81% 19% 0%
Distribution of Combined Ratings 47% 49% 4%
Distribution of companies from whom D.A. Davidson & Co. has received compensation for investment banking services in last 12 mos.
Institutional Coverage 4% 6% 0%
Private Client Coverage 0% 0% 0%
Distribution of Combined Investment Banking 4% 5% 0%

D.A. Davidson & Co.’s Institutional Research Rating Scale (maintained since 7/9/02): Buy, Neutral, Underperform
D.A. Davidson & Co.
Two Centerpointe Drive, Suite 400 • Lake Oswego, Oregon 97035 • [phone] • [phone] • www.dadavidson.com
Copyright D.A. Davidson & Co., 2008. All rights reserved.
3
Target prices are our Institutional Research Department’s evaluation of price potential over the next 12-18 months and 5 years, based
upon our assessment of future earnings and cash flow, comparable company valuations, growth prospects and other financial criteria.
Certain risks may impede achievement of these price targets including, but not limited to, broader market and macroeconomic
fluctuations and unforeseen changes in the subject company’s fundamentals or business trends.

Other Disclosures

Information contained herein has been obtained by sources we consider reliable, but is not guaranteed and we are not soliciting any
action based upon it. Any opinions expressed are based on our interpretation of data available to us at the time of the original
publication of the report. These opinions are subject to change at any time without notice. Investors must bear in mind that inherent
in investments are the risks of fluctuating prices and the uncertainties of dividends, rates of return and yield. Investors should also
remember that past performance is not necessarily an indicator of future performance and D.A. Davidson & Co. makes no guarantee,
express or implied, as to future performance. Investors should note this report was prepared by D.A. Davidson & Co.’s Institutional
Research Department for distribution to D.A. Davidson & Co.’s institutional investor clients and assumes a certain level of investment
sophistication on the part of the recipient. Readers, who are not institutional investors or other market professionals, should seek the
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