COC IDANote022009.pdf

Disclosures and Analyst Certifications can be found in Appendix A.
NEW YORK, NY, HOUSTON, TX MELVILLE, NY, PRINCETON, NJ LOS ANGELES, CA MIAMI, FL LINCOLNSHIRE, IL BOCA RATON, FL

520 Madison Avenue y New York, New York 10022 y Telephone: [phone] 800-LAD-THAL

Member New York Stock Exchange, NYSE Amex, FINRA, and SIPC

IIDDAACCOORRPP ((IIDDAA))
4Q08 and 2008 Results – Raising to BUY from NEUTRAL based on Valuation
and Favorable 2009 Outlook
Highlights
• We are raising our rating to BUY from NEUTRAL on IDA shares. Our
price target of $28 per share is based on a 2009/2010 P/E of 11.2x/10.7x
EPS of $2.50/$2.63.
• We view the steep decline in stock price yesterday (-4.84%) as an over-
reaction. When adjusting for one-time and non-cash items we calculate
4Q08 EPS of $0.26 per share, slightly better than our expectations of
$0.24 per share. Also, with operating cash flow improvement, the current
continuous equity program and recovery of deferred fuel costs, we believe
cash flow is solid which helps mitigate the need for any large external
equity needs in 2009. Recent adjustments to the PCA in terms of sharing
(95/5 versus 90/10) and new forecasting methodology greatly reduces
earnings volatility to hydro conditions. Further, the company’s 2009
financial guidance exceeded our expectations.
• Therefore, we see yesterday’s weakness as a buying opportunity and with
15% upside to our price target objective we raise our rating to BUY from
NEUTRAL.
• On February 19, 2009, IDA reported 4Q08 and Full Year 2008 financial
results. 4Q08 net income totaled $7.4m or $0.16 per share compared to a
net income of $10.3m or $0.23 per share in 4Q07. Full Year 2008 net
income totaled $98.4m or $2.17 per share compared with $82.3m or $1.86
per share in 2007. We calculate adjusted 4Q08 EPS of $0.26 and
adjusted 2008 EPS of $2.27, in-line with our estimates.
• We have adjusted our 2009 EPS upward to $2.50 p/s from $2.30 p/s.
Drivers include: lower projected O&M expense, lower depreciation
expense, rate relief, minimal earnings variability from hydro conditions,
partially offset by lower non-regulated earnings, higher tax rate, higher
share count. We have also adjusted our 2010 EPS upward to $2.63 p/s to
reflect continued cost controls and the increasing likelihood of a general
rate case filing in 2H09 with new rates effective early 2010, thereby,
alleviating the previously assumed regulatory lag.

COMPANY & MARKET DATA
Price $24.39
Price Target, Excl Dividends (YE09) $28.00
52 - Week Range $21.88-$34.81
Mkt. Capitalization (mill) $1,111
Enterprise Value (mill) $2,501
FD Shares Outstanding (mill) 46
Avg. Daily Trading Vol. (000) 549
Book Value per Share (4Q08A) $28.43
Dividend (FY09E) / Yield $1.20 4.9%
FY2007A FY2008A FY2009E
Revenue (mill) $879 $992 $1,059
1Q EPS $0.56 $0.48
2Q EPS $0.42 $0.39
3Q EPS $0.62 $1.14
4Q EPS $0.23 $0.26
EPS $1.86 $2.27 $2.50
Prior EPS $2.30
Consensus EPS $2.22 $2.27
P/E 13.1x 10.7x 9.8x
EV/EBITDA 9.8x 8.2x 7.7x
P/FCF -50.2x -50.2x -46.0x
ESTIMATES
Volume in Millions
0.0
1.0
2.0
3.0
$20
$25
$30
$35
$40
Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08
50-day average
200-day average
Chart data: Bloomberg
Brian J. Russo, CFA 646-432-6312 [e-mail]
James Berry
212-409-2685
[e-mail]

Power and Utilities Sector
Company Update

February 20, 2009
BUY
IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. Page - 2 -
Investment Conclusion
Raising to BUY from NEUTRAL based on Valuation
We are raising our rating to BUY from NEUTRAL on IDA shares. Our price
target of $28 per share is based on a 2009/2010 P/E of 11.2x/10.7x EPS of
$2.50/$2.63.
We attribute the sell-off in IDA shares following the company’s earnings release
due to a “perceived” quarterly earnings miss, heightened concerns for potential
external financing needs for its large capital expenditure program and potential
exposure to below normal hydro conditions and general weakness is small-cap
regulated utilities. We view the sell-off as over-done.
When adjusting for one-time and non-cash items we calculate 4Q08 EPS of
$0.26 per share, in line with our expectations. Also, with operating cash flow
improvement, the current continuous equity program and recovery of deferred
fuel costs, we believe cash flow is solid which helps mitigate the need for any
large external equity needs in 2009. Recent adjustments to the PCA in terms of
sharing (95/5 versus 90/10) and new forecasting methodology greatly reduces
earnings volatility to hydro conditions. Further, the company’s 2009 financial
guidance exceeded our expectations. We also note various transmission and
generation project proposals are sources of significant longer-term earnings
power.
Therefore, we view the steep decline in stock price yesterday (-4.84%) as a
buying opportunity and with 15% upside to our price target objective we raise our
rating to BUY from NEUTRAL.
4Q08 and 2008 Financial Results
On February 19, 2009, IDA reported 4Q08 and Full Year 2008 financial results.
4Q08 net income totaled $7.4m or $0.16 per share compared to a net income of
$10.3m or $0.23 per share in 4Q07. Full Year 2008 net income totaled $98.4m
or $2.17 per share compared with $82.3m or $1.86 per share in 2007. Idaho
Power Company reported 4Q08 and Full Year 2008 net income of $7.7m and
$94.1m compared to $13.0m in 4Q07 and $76.6m in 2007. IDACORP Financial
Services (IFS) contributed $3.7m less in 2008 than in 2007 (-$0.08 p/s).
Increased annual results were primarily attributable to a $34.6m increase in
operating income at Idaho Power Company due to general business revenue
increases resulting from 2008 rate increases, and favorable hydroelectric
generating conditions in 2008 (6.9m MWh) versus 2007 conditions (6.2m MWh).
Other factors affecting IDA net income include: decreased net power supply
costs, decreased PCA expenses, increased operating and maintenance
expenses, and increased interest expense due to higher long-term debt
balances.
4Q08 results were negatively impacted by reduced operating income at IPC, a
$4.8m decrease in other revenue due to a FERC decision to increase Open
Access Transmission Tariff (OATT) refunds to its transmission customers,
increased net power supply costs of $6.0m, $3.0m decrease in PCA expense,
increased O&M expense of $2.5m and an impairment charge of $4.1m or $0.09
per share related to the decline in market value of equity securities.
In 2008, IPC capital expenditures totaled $244m, and the Company expects
utility capital expenditures to be approximately $780-$800m in 2009-2011.
IDACORP (IDA)

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2009 Guidance Assumptions
The initiated 2009 operating/financial assumptions including: maintenance
expense of $280-$290m (versus $294m in 2008 and below our estimate), Idaho
Power capex of $220-$230m, hydro generation of 6.5-8.5m MWh, non-regulated
subsidiary earnings of $0.0-$3.0m (versus $4.3m in 2008), Idaho Power effective
tax rate of 31-35%, and consolidated tax rate of 24-28%. 2009-2011 capital
expenditures total $780-$800m (excluding potential baseload resource) with the
bulk of spending to occur in 2010-2011. Near-term capital expenditures to be
funded with operating cash flow, continuous equity program and debt financing.
Revised Cash and Earnings Expectations
We have adjusted our 2009 EPS upward to $2.50 p/s from $2.30 p/s. Our
assumptions include: lower projected O&M expense, lower depreciation
expense, rate relief, minimal earnings variability from hydro conditions, partially
offset by lower non-regulated earnings, higher tax rate.
We have also adjusted our 2010 EPS upward to $2.63 p/s from $2.15 p/s to
reflect continued cost controls and the increasing likelihood of a general rate
case filing in mid-2009 with new rates effective early 2010, thereby, alleviating
the previously assumed regulatory lag.
Primary Risks
The primary risks of an investment in IDA shares include (but are not limited to);
pending regulatory issues, under-recovery of volatile supply costs including
power, fuel and natural gas, regulatory allowance of the recovery of power costs,
operating costs and capital investments, uncertain stream flow and weather
conditions, legislation/regulation changes, generation plant availability
(unplanned outages), access to capital markets, litigation, pension requirements,
changes in wholesale energy prices, execution risk, hydro relicensing, changes
in regional economy, increased employee related costs. See Appendix A for
additional risk factors.

IDACORP (IDA)

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APPENDIX A: IMPORTANT RESEARCH DISCLOSURES

ANALYST CERTIFICATION
I, Brian Russo, attest that the views expressed in this research report accurately reflect my personal views about the subject security
and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or
views expressed in this research report.
The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon
various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.

COMPANY BACKGROUND
Headquartered in Boise, Idaho, IDACORP, Inc., (IDA) is a holding company formed in 1998 that is primarily engaged in the
generation, transmission, distribution, sale and purchase of energy. IDA serves over 466,000 retail customers across its 24,000sq
mile service territory in both Idaho and Oregon, and owns approximately 3,267MW of generating capacity. IDA’s principal operating
subsidiary is Idaho Power Company (IPC). The company’s unregulated utilities include IDACORP Financial (IFS) that invests in
affordable housing and real estate and Ida-West Energy Company (Ida-West) that operates small hydroelectric generation projects.
VALUATION METHODOLOGY
We value equities utilizing a multi-faceted approach which includes; sum-of-the-parts, net asset value, discounted cash flow, leading
P/E, EV/EBITDA.
RISKS
On top of normal economic and market risk factors that impact most all equities, Idacorp (IDA) is uniquely at risk to:
Because of IPC’s predominantly hydroelectric generating base and heavy reliance on hydroelectric generation, which can be
adversely affected by weather, reduced hydroelectric generation can reduce revenues and increase costs.
Continuing declines in stream flows and over-appropriation of water in Idaho may reduce hydroelectric generation and revenues and
increase costs.
Load growth in IPC’s service territory due to customer growth and demand for energy exposes it to greater market and operational risk
as increased reliance on purchased power to meet load requirements could increase costs and reduce earnings and cash flows.
IPC’s reliance on coal and natural gas to fuel its generating facilities exposes it to risk of increased market prices, which could
increase costs and reduced earnings.
Changes in temperature and precipitation can reduce power sales and revenues.
Climate change could affect customer demand and hydroelectric generation and lead to restrictions on generation resources.
If Idaho Public Utility Commission (IPUC), the Oregon Public Utility Commission (OPUC) or the Federal Energy Regulatory
Commission (FERC) grant less rate recovery in rate case filings than IPC needs to cover the costs of providing services, financial
results could be adversely impacted and economic expansion may be limited.
Conditions that may be imposed in connection with hydroelectric license renewals may require large capital expenditures and reduce
earnings and cash flows.
The cost of complying with environmental regulations related to air quality, water quality, natural resources and health and safety can
increase capital expenditures and operating costs and reduce earnings and cash flows.
IDACORP and its subsidiaries are subject to costs and other effects of legal and regulatory proceedings, settlements, investigations
and claims, including those that have arisen out of the western energy situation.
IPC’s business is subject to substantial governmental regulation and may be adversely affected by increased costs resulting from, or
liability under, existing or future regulations or requirements.
Increased capital expenditures can significantly affect liquidity.
As a holding company, IDACORP does not have its own operating income and must rely on the upstream cash flows from its
subsidiaries to pay dividends and make debt payments.
A downgrade in IDA’s credit ratings could negatively affect the company’s ability to access capital and increase their cost of
borrowing.
Adverse results of income tax audits could reduce earnings and cash flows.
Employee workforce factors, including the loss or retirement of key personnel, availability of qualified personnel and an aging
workforce, could increase costs and reduce earnings.
.
IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. Page - 5 -

STOCK RATING DEFINITIONS
Buy: The stock’s return is expected to exceed 15% over the next twelve months.
Neutral: The stock’s return is expected to be plus or minus 15% over the next twelve months.
Sell: The stock’s return is expected to be negative 15% or more over the next twelve months.

Investment Ratings are determined by the ranges described above at the time of initiation of coverage, a change in risk, or a change
in target price. At other times, the expected returns may fall outside of these ranges because of price movement and/or volatility. Such
interim deviations from specified ranges will be permitted but will become subject to review.

RATINGS DISPERSION AND BANKING RELATIONSHIPS (as of 02/01/09)
Buy 73% (5% are banking clients)
Neutral 26% (0% are banking clients)
Sell 1% (0% are banking clients)

INVESTMENT RATING AND PRICE TARGET HISTORY

IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. Page - 6 -
COMPANY SPECIFIC DISCLOSURES:
Ladenburg Thalmann & Co. Inc. does not make a market in subject company. Ladenburg Thalmann & Co. Inc. has neither had an
investment banking relationship with, nor received investment banking fees from the subject company in the past 12 months. Neither
the Analyst, nor members of the Analyst’s household own any securities issued by the subject Company.

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