COC IDA102810.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.

October 29, 2010

Equit Research
IDACORP, Inc.
IDA: Raising 10E EPS & Valuation Range

• Summary. IDA increased 2010 EPS guidance to $2.75-2.90 from $2.65-2.80
based on YTD results, including estimated tax benefits from the repair-related
method recorded in the second the third quarters. We are increasing our 10E
EPS to $2.85 from $2.80 and maintaining our 11E and 12E EPS of $2.95 and
$3.00. We reiterate our Market Perform rating and increase our valuation range
to $38-39 from $36-37.
• Uniform Capitalization Comments. Idaho Power reached an agreement
with the IRS on the uniform capitalization method change in 3Q10. As a result,
IDA recorded a $65.3mm tax benefit, which was offset by a $65.3mm uncertain
tax position (reserve). While the company is confident in its position, it is
electing not to reflect the change in its financial reporting until the method
receives approval from the U.S. Congress Joint Committee on Taxation, which
could occur in 2010 but is more likely a 2011 event.
• EPS Outlook. We are increasing our 10E EPS to $2.85 from $2.80 and
maintaining our 11E and 12E EPS of $2.95 and $3.00. Our estimates do not
assume recognition of tax benefits related to the uniform capitalization method.
Should IDA reverse the $63.5mm tax position in 2011, we would expect a
material increase in our 11E EPS. There may also be upside to our 12E EPS
should cash benefits mitigate part of our assumed $75mm equity issuance in
mid-2012. As IDA has issued $38mm of common stock through 3Q10, we no
longer assume an equity issuance in 2011.
• Looking Ahead… IDA’s current rate plan expires at year-end 2011 and we
expect the company will file a general rate case in mid-2011. As IDA has not had
to amortize accumulated deferred investment tax credits (ADITC) to reach the
floor 9.5% ROE, as provided in the 2009-2011 rate settlement, there may be an
opportunity to incorporate the ADITC balance into the next rate plan. We view
this opportunity favorably as it reduces the risk heading into the next rate case,
in our view.
• Reiterate Market Perform. We have been impressed with IDA’s
management of the regulatory affairs, including reform to key policies over the
past 12-18 months, such as the power cost adjustment mechanism, and the
favorable 2009-2011 rate settlement. In addition, we are attracted to long-term
growth trends in the Idaho service territory. Our neutral rating reflects valuation
considerations and uncertainty going into the next rate cycle.

Valuation Range: $38.00 to $39.00 from $36.00 to $37.00
We value IDA under P/E multiple analysis (apply an 13X multiple to our 12E EPS of
$3.00). Risks to our valuation include project delays/cancellations, negative
regulatory developments and consistently below average hydro conditions.

Investment Thesis:
We are attracted to IDA's increasingly constructive regulatory environment,
attractive service territory and strong rate base growth potential. Our Market
Perform rating largely reflects valuation considerations.

Market Perform

Sector: Regulated Electric Utilities
Market Weight

Earnings Reported

2009A 2010E 2011E
EPS Curr. Prior Curr. Prior
Q1 (Mar.) $0.40 $0.34 NC NE
Q2 (June) 0.58 0.82 A NC NE
Q3 (Sep.) 1.16 1.39 1.22 NE
Q4 (Dec.) 0.49 0.30 0.42 NE
FY $2.64 $2.85 2.80 $2.95 NC
CY $2.64 $2.85 $2.95
FY P/E 14.0x 13.0x 12.5x
Rev.(MM)$1,050 $1,065 $1,098
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 (10/28/2010) $37.00
52-Week Range: $27-38
Shares Outstanding: (MM) 48.0
Market Cap.: (MM) $1,776.0
S&P 500: 1,183.78
Avg. Daily Vol.: 234,847
Dividend/Yield: $1.20/3.2%
LT Debt: (MM) $1,288.8
LT Debt/Total Cap.: 44.9%
ROE: 10.0%
3-5 Yr. Est. Growth Rate: 4.0%
CY 2010 Est. P/E-to-Growth: 3.3x
Last Reporting Date: 10/28/2010
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
IDACORP, Inc. EQUITY RESEARCH DEPARTMENT

5

Required Disclosures

$18.00
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IDACORP, Inc. (IDA) 3-yr. Price PerformanceIDACORP, Inc. (IDA) 3-yr. Price Performance
Date
Date Publication Price ($) Rating Code Val. Rng. Low Val. Rng. High Close Price ($)
10/23/2007 Brothwell 10/23/2007 NA 2 32.00 34.00 33.03
z 11/1/2007 34.89 2 33.00 35.00 33.70
„ 11/14/2007 Kalton
z 11/14/2007 33.79 2 34.00 35.00 33.85
z 2/15/2008 32.04 2 31.00 33.00 31.46
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 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 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.
WELLS FARGO SECURITIES, LLC
Utilities EQUITY RESEARCH DEPARTMENT

6

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.
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: October 29, 2010
45% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Outperform.
Wells Fargo Securities, LLC has provided investment banking
services for 43% of its Equity Research Outperform-rated
companies.
52% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Market Perform.
Wells Fargo Securities, LLC has provided investment banking
services for 47% 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 40% 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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Wells Fargo Securities, LLC.

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