COC IDA050908.pdf

Institutional Equity Research

IDACORP, INC.
May 9, 2008 IDA – NYSE

Rating:
NEUTRAL

Price: (5/9/08) $30.82

Price Targets:
12-18 month: $34 ↓
5-year: $41

Industry:
Utilities

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

Bryan H. Nicholls
Research Associate
406.791.7240
[e-mail]

Company Description:
Boise, ID -- IDACORP, Inc. is the holding
company for the Idaho Power Company, an
electric public utility that serves an
approximate 24,000 square mile area in
Southern Idaho and Eastern Oregon. Non-
regulated subsidiaries include an affordable
housing project finance company and an
operator of small hydroelectric generation
projects.

FY (Dec) 2007A 2008E Y-O-Y
Growth 2009E Y-O-Y
Growth
Revenue ($M) $879.4 $981.6 12% $1,127.5 15%
Previous - $963.3 $1,022.7
Price/Revenue ratio 1.6x 1.4x 1.3x
EPS Revised $1.86 $2.00 7% $2.29 15%
Previous - $2.13 NC
Price/EPS ratio 16.6x 15.4x 13.5x
EBITDA ($M) $293.0 $324.4 11% $354.9 9%
EV/EBITDA ratio 9.5x 8.6x 7.9x

Quarterly Data:EPS EPS Revenue Revenue EBITDA
Previous ($M) Previous ($M)
3/31/08A $0.48 $0.60 $213.4 $213.8 $80.0
6/30/08E $0.49 $0.48 $250.7 $267.4 $79.6
9/30/08E $0.62 $0.66 $282.7 $269.8 $88.0
12/31/08E $0.41 $0.38 $234.7 $212.3 $76.8
Valuation Data Trading Data
Long-term growth rate (E) 5% Shares outstanding (M) 45.2
Total Debt/Cap (3/31/08) 53.7% Market Capitalization ($M) $1,394
Cash per share (3/31/08) $0.16 52-week range $28.74 - $36.72
Book value per share (3/31/08) $26.91 Average daily volume (3 mos.) (K) 417
Dividend (yield) $1.20 (3.9%) Float 97%
Return on Equity (T-T-M) 7% Index Membership S&P 400 MidCap

Trimming Target Price on Lowered Hydro Generation Outlook.
• IDACORP reported 1Q'08 EPS of $0.48 versus $0.56 a year earlier and our
forecast of $0.60. Idaho Power produced EPS of $0.47 versus $0.53 and
IDACORP Financial Services earned $0.02 versus $0.04.
• Electric revenues rise 3.3%. Utility revenues positively benefited from cooler
weather (12% colder than a year ago), customer growth (+1.8%), and a general
rate increase (+5.2%), which went into effect on March 1, 2008. Higher retail
revenues supported $0.45 of tax-effected EPS growth. However, lower hydro
electric production negatively impacted EPS by $0.44, as production from the
company's dams totaled only 46% of total system generation, versus the sub par
51% a year ago, due to a late thaw and lingering effects of drought. Reduced
hydro generation meant net power supply costs rose sharply as the utility 1)
turned to higher cost power resources, 2) had less power to sell off system, and 3)
experienced an increase in Load Growth Adjustment costs until base rates were
reset on March 1st. Higher interest expense and difficulties with underground
longwall coal mining operations each subtracted $0.04 per share.
• Below normal hydro year likely. Management lowered its 2008 forecast for
hydro generation to about 82% of normal to reflect low valley precipitation for
the first four months of 2008. Given this reduced forecast and the first quarter’s
earnings miss, we are reducing our 2008 EPS estimate to $2.00 from $2.13. Our
2009 EPS forecast of $2.29 is being maintained, reflecting prospective rate relief.
• We are lowering our 12-18 month target price by a point to $34, or 14.8x our
2009 EPS estimate. At the current price, we are maintaining a NEUTRAL rating.
Please refer to pages 6-7 of this report for detailed disclosure and certification information.
D.A. Davidson & Co.
Price Chart
Source: Thomson One
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D.A. Davidson & Co.
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Prospective Rate Relief Initiatives

Danskin 1 Power Plant Application
In March, Idaho Power filed with state regulators a request to increase customer rates by
1.39%, or $9 million in additional revenues in order to recover $60 million in the construction
costs associated with the new natural gas power plant located near Mountain Home, ID. The
170-MW addition to the Danskin Generating Unit is primarily used as a peaking facility and
began commercial operation on March 11, 2008. New retail rates associated with the Danskin
facility have been requested to become effective June 1st. We believe there is a reasonable
chance that this request will be accepted as filed.

* * * * *

Idaho General Rate Case
In February, 2008 state regulators approved a settlement agreement associated with Idaho
Power’s June 2007 rate request. The order approves a general electric rate increase of
$32.1 million, or 5.2%, effective March 1, 2008. The agreement did not identify a rate base,
equity ratio, or an allowed ROE. Idaho Power had originally filed its rate case requesting an
increase of approximately $64 million, or 10.35%, and a return on equity of 11.5%. The
currently authorized rate of return remains at 8.1%.

* * * * *

Idaho Power Cost Adjustment Mechanism
Due primarily to a string of 100 degree temperature days last summer and expected below-
average run off this spring Idaho Power filed its 2008/2009 Power Cost Adjustment (PCA) in
April 2008 requesting recovery of approximately $87 million in power supply and fuel
expenses incurred from April 15, 2007 through April 15, 2008. However, subsequent to its
PCA filing, state regulators ordered that $16 million of proceeds plus interest from the sale of
SO2 credits in 2007 be used to reduce the impact of the PCA filing from $87 million to
approximately $71 million. Including the clean air emissions credits, electric bills are
expected to increase approximately 8.15% on average for all customer classes effective June
1, 2008. Undoubtedly, a PCA adjustment will go into on June 1st, but it is yet to be seen if the
IPUC will approve the company’s one-year proposal to flow through to customers 100% of
the deviation in power supply costs for the prospective year.

* * * * *

Oregon Power Cost Adjustment Mechanism
In April 2008, state regulators in Oregon approved a stipulation agreement regarding Idaho
Power’s August 2007 filing for a purchased cost adjustment mechanism (PCAM) in the state
of Oregon. If approved, the first implementation of PCAM, which is similar to the Idaho
PCA, would result in a $4.8 million, or 15.69% increase in Oregon revenues and become
effective on June 1, 2008.

* * * * *
On Notice
Idaho Power’s regulatory strategy is to make frequent and timely filings in an effort to
mitigate regulatory lag in recovering its above average construction investment. In late
March, Idaho Power notified Idaho state regulators of its intentions to file a general rate case
on or after June 1, 2008. Once filed, we would expect that the case would request new rates
to become effective on or around February 1, 2009. As good faith discussions with the IPUC
Staff and intervenors have taken place subsequent to the last rate case settlement regarding
using an estimated test year, apparently without further discussions, we believe that a 2008
test year will be used in the likely upcoming filing.

D.A. Davidson & Co.
IDACORP, Inc. Balance Sheet
$ thousands -- Fiscal year ends 12/31
2003 2004 2005 2006 2007 3/31/2008
ASSETS:
Electric Plant:
In service (at original cost)$3,220,228 $3,324,816 $3,477,067 $3,583,694 $3,796,339 $3,870,414
Accumulated provision for depreciation (1,239,604)(1,316,125)(1,364,640)(1,406,210)(1,468,832)(1,461,953)
In service - net 1,980,624 2,008,691 2,112,427 2,177,484 2,327,507 2,408,461
Construction work in progress 96,091 152,427 149,814 210,094 257,590 206,114
Held for future use 2,438 2,636 2,906 2,810 3,366 6,455
Other property, net of accum. Depreciation 9,166 45,708 29,294 28,692 28,089 27,939
Property, plant and equipment - net 2,088,319 2,209,462 2,294,441 2,419,080 2,616,552 2,648,969
Investments And Other Property 204,474 223,061 191,593 202,825 201,085 205,452
Current Assets:
Cash and cash equivalents 75,159 23,403 52,356 9,892 7,966 7,404
Receivables:
Customer 93,599 92,258 94,469 62,131 69,160 72,173
Gas operations
Allowance for uncollectible accounts (43,210)(43,108)(33,078)(7,168)(7,505)(7,426)
Notes
Employee notes receivable 3,347 3,523 2,951 2,569 2,128 2,171
Other 8,209 8,806 21,377 11,855 10,957 7,517
Total Receivables
Energy marketing assets 4,176 9,203 23,859 12,069 0 0
Derivative assets
Taxes receivable
Accrued unbilled revenues 30,869 33,832 38,905 31,365 36,314 31,742
Materials and supplies (at avg. cost)21,351 28,008 30,451 39,079 43,270 48,450
Fuel stock (at average cost)6,228 6,539 11,739 15,174 17,268 15,930
Prepayments 27,779 30,035 17,876 9,308 9,371 7,749
Regulatory assets associated with taxes 4,382 23,407 23,922 28,035 25,672 24,897
Regulatory assets -- derivatives 6,269 5,510 3,064 0 0 0
Refundable income tax deposit 44,903 46,083 46,257
Other current assets 0 2,956 3,993 6,023 7,050
Assets held for sale 0 0 6,673 3,326 0 0
Total current assets 238,158 221,416 297,520 266,531 266,707 263,914
Total other assets 575,157 580,233 580,572 556,694 568,964 591,129
TOTAL ASSETS $3,106,108 $3,234,172 $3,364,126 $3,445,130 $3,653,308 $3,709,464
CAPITALIZATION AND LIABILITIES:
Common stock equity
Total common stock equity 864,281 1,008,286 1,025,251 1,124,183 1,207,315 1,217,487
Preferred stock 52,366
Long-term debt 945,834 979,549 1,023,545 928,648 1,156,880 1,155,290
Total capitalization 1,862,481 1,987,835 2,048,796 2,052,831 2,364,195 2,372,777
Current Liabilities:
Long-term debt due within one year 67,923 78,603 16,307 95,125 11,456 11,328
Notes payable 93,650 36,270 60,100 129,000 186,445 243,509
Accounts payable 60,916 79,156 80,324 86,440 85,116 58,536
Energy marketing liabilities 4,317 9,420 24,093 13,532 0 0
Derivative liabilities 0 0 0 0 0 0
Taxes accured 45,601 46,318 72,652 47,402 8,492 2,994
Interest accrued 13,741 14,426 14,616 12,657 18,913 27,976
Deferred income taxes
Uncertain tax positions 26,764 27,187
Other 25,557 21,265 19,577 23,572 38,129 42,392
Liabilities held for sale 0 0 5,916 2,606 0 0
Total current liabilities 311,705 285,458 293,585 410,334 375,315 413,922

Other Liabilities:
Total other liabilities 931,922 960,879 1,021,745 981,965 913,798 922,765
TOTAL CAPITALIZATION AND
LIABILITIES $3,106,108 $3,234,172 $3,364,126 $3,445,130 $3,653,308 $3,709,464
Shares Outstanding (000's)38,207 42,217 42,632 43,834 45,063 45,236
Book Value per Share $22.62 $23.88 $24.05 $25.65 $26.79 $26.91
% of Total Capitalization
Long-Term Debt 50.8%49.3%50.0%45.2%48.9%48.7%
Preferred 2.8%0.0%0.0%0.0%0.0%0.0%
Common 46.4%50.7%50.0%54.8%51.1%51.3%
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D.A. Davidson & Co.
IDACORP, Inc. Consolidated Statements of Income
$ thousands -- Fiscal year ends 12/31 2006 1Q07 2Q07 3Q07 4Q07 2007 1Q08 2Q08E 3Q08E 4Q08E 2008E 2009E
REVENUES:
Electric Utility:
General business $636,375 $137,251 $162,212 $211,873 $156,966 $668,303 $167,313 $177,753 $225,653 $184,543 $755,262 $845,238
Off system sales 260,717 57,839 37,177 34,843 25,089 154,948 33,363 59,092 43,140 36,233 171,828 225,758
Other revenues 23,381 10,839 13,137 13,800 14,374 52,150 12,120 13,000 13,000 13,000 51,120 53,000
Total Electric Utility Revenues 920,473 205,929 212,526 260,516 196,429 875,401 212,796 249,844 281,793 233,777 978,210 1,123,996
Diversified Operations:
Other 5,818 783 1,246 947 1,017 3,993 644 900 900 900 3,344 3,500
Total Revenues 926,291 206,712 213,772 261,463 197,446 879,393 213,440 250,744 282,693 234,677 981,554 1,127,496
EXPENSES:
Electric Utility:
Purchased power 283,440 50,817 80,467 110,108 48,091 289,484 45,299 69,696 108,435 66,243 289,673 313,309
Fuel expense 115,018 30,913 27,520 43,291 32,598 134,322 37,237 29,981 46,496 38,573 152,287 157,359
Power cost adjustment (29,526)(21,536)(42,172)(43,749)(13,674)(121,131)(17,744)(5,500)(37,500)(20,000)(80,744)(4,500)
Total Power Supply 368,932 60,194 65,815 109,650 67,015 302,675 64,792 94,177 117,431 84,816 361,216 466,168
Impairment of assets
Other Operations and Maintenance 264,810 67,827 78,888 69,154 70,639 286,510 68,927 73,704 76,084 74,575 293,290 303,479
Demand-side management 2,115 2,548 4,307 4,518 13,487 3,364 4,500 4,500 4,500 16,864 18,000
Gain on sale of emission allowances (8,257)(882) (1,872)(2,754)0 0
Depreciation 99,824 25,290 25,613 25,967 26,203 103,072 25,750 26,500 27,000 27,500 106,750 111,500
Taxes other than income taxes 18,661 4,918 4,636 4,714 3,366 17,634 4,803 5,996 5,072 3,740 19,612 22,480
Total Electric Utility Expenses 743,970 160,344 176,618 211,920 171,741 720,624 167,636 204,878 230,087 195,131 797,732 921,627
Other:12,617 2,588 582 1,613 1,910 6,692 1,048 1,800 1,600 1,700 6,148 6,500
Total Operating Expenses 756,587 162,932 177,200 213,533 173,651 727,316 168,684 206,678 231,687 196,831 803,880 928,127
OPERATING INCOME
Electric Utility 176,503 45,585 35,908 48,596 24,688 154,777 45,160 44,967 51,706 38,645 180,478 202,369
Other Diversified Operations (6,799)(1,805)664 (666)(893)(2,699)(404)(900)(700)(800)(2,804)(3,000)
Equity in Earnings of Partnerships
Operating Income 169,704 43,780 36,572 47,930 23,795 152,078 44,756 44,067 51,006 37,845 177,674 199,369
TOTAL OTHER INCOME:18,195 5,389 3,862 4,616 6,657 20,524 4,417 4,000 5,000 6,500 19,917 21,000
Earnings of Uncons. Eq-method Inv.(2,913)(1,326) (1,551) (380) (1,567)(4,824)(4,036) (1,200) (1,200) (1,200)(7,636) (3,300)
TOTAL OTHER EXPENSES:8,559 3,212 1,571 2,055 1,597 8,434 365 2,000 2,000 2,000 6,365 8,200
INTEREST EXPENSE AND OTHER:
Interest on long-term debt 56,402 13,548 13,896 15,862 16,655 59,961 16,876 16,100 16,200 16,300 65,476 66,000
Other interest 4,573 1,604 1,514 763 (502)3,380 596 1,000 1,000 1,000 3,596 4,200
Net interest charges 60,975 15,152 15,410 16,625 16,153 63,341 17,472 17,100 17,200 17,300 69,072 70,200
Dividends on preferred stock 0 0 0 0 0 0 0 0 0 0 0 0
Total interest expense and other 60,975 15,152 15,410 16,625 16,153 63,341 17,472 17,100 17,200 17,300 69,072 70,200
INCOME BEFORE INCOME TAXES: 115,452 29,479 21,902 33,486 11,135 96,003 27,300 27,767 35,606 23,845 114,518 138,669
INCOME TAXES:15,377 4,898 3,437 4,555 840 13,731 5,584 5,692 7,299 4,888 23,464 30,507
Income from Continuing Operations 100,075 24,581 18,465 28,931 10,295 82,272 21,716 22,074 28,306 18,957 91,054 108,162
Losses from Disc. Ops. (net of tax)7,328 67 0 0 0 67 0 0 0 0 0
Net Income Available for Common 107,403 24,648 18,465 28,931 10,295 82,339 21,716 22,074 28,306 18,957 91,054 108,162
Earnings per share from cont. ops.$2.34 $0.56 $0.42 $0.65 $0.23 $1.86 $0.48 $0.49 $0.62 $0.41 $2.00 $2.29
Losses from Discontinued Operations $0.17 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
EPS $2.51 $0.56 $0.42 $0.65 $0.23 $1.86 $0.48 $0.49 $0.62 $0.41 $2.00 $2.29
Dividends paid per share of common stock $1.20 $0.300 $0.300 $0.300 $0.300 $1.20 $0.300 $0.300 $0.300 $0.300 $1.20 $1.20
Avg. common shares outstanding (000)42,874 43,820 43,884 44,543 44,918 44,291 45,004 45,404 45,804 46,204 45,604 47,204
Net income
Idaho Power Company 93,929 23,331 16,164 24,108 12,976 76,579 21,271 21,134 27,663 17,970 88,038 103,613
IDACORP Energy 5 (55) (21) 2 (97) (171) (12)
Ida-West 2,564 205 836 993 189 2,223 55
IDACORP Financial 9,509 1,862 1,759 1,752 1,739 7,112 801 Holding Company (5,932)(763)(273)2,076 (4,511)(3,471)(399)
Income from Continuing Operations 100,075 24,580 18,465 28,931 10,296 82,272 21,716
IDACOMM, IdaTech, other 7,328 67 0 0 0 67 0
Total Net Income 107,403 24,648 18,465 28,931 10,295 82,339 21,716 22,074 28,306 18,957 91,054 108,162
Segment breakdown of EPS
Idaho Power Company $2.19 $0.53 $0.37 $0.54 $0.29 $1.73 $0.47 $0.47 $0.60 $0.39 $1.93 $2.20
IDACORP Energy $0.00 (0.00) (0.00) 0.00 0.00 ($0.00)(0.00)
Ida-West Energy $0.06 0.00 0.02 0.02 0.00 $0.05 0.00
IDACORP Financial $0.22 0.04 0.04 0.04 0.04 $0.16 0.02
Holding Company ($0.14)(0.02)(0.01)0.05 (0.10)($0.08)(0.01)
EPS from Continuing Operations $2.34 $0.56 $0.42 $0.65 $0.23 $1.86 $0.48 $0.49 $0.62 $0.41 $2.00 $2.29
IdaTech
IDACOMM
(Losses) from Discontinued Operations $0.17 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Reported EPS $2.51 $0.56 $0.42 $0.65 $0.23 $1.86 $0.48 $0.49 $0.62 $0.41 $2.00 $2.29
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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.
6
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 and Bryan H. Nicholls, the research analysts 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.
We, James L. Bellessa, Jr., CFA and Bryan H. Nicholls, attest that (i) all the views expressed in this research report accurately reflect
our personal views about the common stock of the subject company, and (ii) no part of our 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 3/31/08) 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 83% 17% 0%
Distribution of Combined Ratings 48% 48% 4%
Distribution of companies from whom D.A. Davidson & Co. has received compensation for investment banking services in last 12 mos.
Institutional Coverage 4% 4% 0%
Private Client Coverage 0% 0% 0%
Distribution of Combined Investment Banking 4% 4% 0%

D.A. Davidson & Co. 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.
7
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
advice of their individual investment advisor for an explanation of this report’s contents, and should always seek such advisor’s advice
before making any investment decisions. Further information and elaboration will be furnished upon request.