COC IDA_RBC_Note_2008_05_09_1Q08.pdf

COMPANY UPDATE | COMMENT
MAY 8, 2008
IDACORP, Inc.(NYSE: IDA)
Poor hydrology leads to 1Q08 miss for IDA
Sector Perform
Above Average Risk
Price:31.31
Shares O/S (MM):44.1
Dividend:1.20
Price Target:38.00
Implied All-In Return:25.2%
Market Cap (MM):1,381
Yield:3.8%
IDA reported 1Q08 adjusted-EPS of $0.48 vs. consensus of
$0.61 and our $0.59 estimate
Maintaining CNAV and Target Price of $38, SP rating and Above Average
risk.
As expected, unpredictability of hydrology prevails
Although the overall hydrology for 2008 is projected to be above last year's levels
at 78% of normal compared to 44%, in the first quarter hydroelectric generation
dropped to 1,663MM MWh as compared to 1,846MM MWh in 2007. This was
primarily due to a more gradual snowmelt, less rainfall and lower starting water
levels in the Brownlee Reservoir. These factors further demonstrate the difficulty
in predicting hydrology from quarter to quarter. Year over year, we still expect
results to improve over 2007 due to better hydrology and the recovery of
purchased power from last year.
Lowering estimates for 2008 due to 1Q08 results and lower projected
hydroelectric generation
The initial forecast in February called for inflows of 5.7million acre-feet (maf) for
April-July, compared to 2.8maf in 2007. As of May, this forecast has been
reduced to 4.9maf. Accordingly, IDA has decreased its expectations for
hydroelectric generation to a range of 6.0-8.0MM MWh, down from 7.0-9.0MM
MWh.Due to the ensuing purchased power and fuel costs, we are lowering
our 2008 estimate to $2.01 from $2.15. For 2009 our estimate is $2.14, down
from $2.16.
Customer growth slows to 2% from 2.5%, fortunately
With the current Load Growth Adjustment Mechanism (LGAR), incremental
customers actually cost the utility money. At 2% for 1Q08, the damage was only
a $3.2MM ($0.07) reduction in earnings. This mechanism is currently under
review, but IDA will continue to pay the price until a neutral resolution is
reached, if ever.
Conclusion: Nothing has changed for IDA in the longer-term
Quarterly fluctuations in hydrology must be expected to some degree. Although
the headline risk associated with the shortcomings puts pressure on the stock, the
largest drain for the quarter will be mostly recouped in 2009 through the
purchased power adjustment clause. The more pressing issue, and possible
growth opportunity, for IDA is its growing power gap. With customer growth
being an earnings drag, IDA must expand through rate base growth. In addition to
its transmission projects, a baseload power plant would fit this bill nicely.
Priced as of prior trading day's market close, EST (unless otherwise noted).
RBC Capital Markets Corp.
Lasan Johong (Analyst)
[phone]; [e-mail]
Emily Christy (Associate)
[phone]; [e-mail]
Ella Faynzilberg (Associate)
[phone]; [e-mail]
FY Dec 2007A 2008E 2009E
Adj EPS - FD 1.86 2.01 2.14
Prev.2.15 2.16
P/AEPS 16.8x 15.6x 14.6x
Adj CFPS - FD 1.77 4.84 5.08
Prev.1.78 5.19 5.27
P/ACFPS 17.7x 6.5x 6.2x
EBITDA/Share - FD 5.92 6.97 8.36
Prev.5.90 7.28
FCFPS - FD (2.63) (1.12) (0.51)
Prev.(2.64) (0.88) (0.34)
P/FCF NM NM NM
Adj EPS - FD Q1 Q2 Q3 Q4
2007 0.56A 0.42A 0.65A 0.23A
2008 0.48A 0.51E 0.71E 0.31E
Adj CFPS - FD
2007 0.98A 0.30A 0.50A 0.00A
Prev.0.01A
2008 1.02A 1.27E 1.47E 1.08E
EBITDA/Share - FD
2007 1.60A 1.41A 1.71A 1.21A
Prev.1.19A
2008 1.57A 1.78E 2.06E 1.56E
All values in USD unless otherwise noted.
For Required Disclosures, please see Page 6.
2
Details
The effects of low hydrology highlight the risks associate with IDA's growing power gap
Although IDA's risk management policies and the ID regulatory environment shelter the utility from utter disaster in low hydrology
years, earnings still take a hit. Needing more purchased power and fossil-fuel generation in the lean years, IDA gets a taste of the
future where demand will outpace generation, even under perfect hydrology scenarios. This reinforces the tremendous need for
additional baseload generation. Furthermore, we believe that IDA should build this capacity rather than pay for the off-take of a
third-party plant. In addition to its transmission projects, a baseload plant would boost the rate base and provide for greater growth in
the longer term.
IDA submitted a Notice of Filing to the IPUC for a 2008 General Rate Case
In a January settlement, IDA received roughly half of its requested $64MM revenue increase in its rate case, but uncertainty lingered
as to which costs were covered by the settlement, which costs were disallowed, and which costs remain pending for the next rate case.
Through this process, IDA seeks to establish a solidified forecast test-year methodology and an applicable ROE for a specific equity
ratio. This filing will base costs on forecasts for 2008 that are built from the last audited year, 2007. As the forecasting methodology
will be new to the commission, this hearing may take some time. It is our hope that the details be examined and the issues fully
resolved, rather than reaching another cash settlement agreement filled with loose-ends. If the timing of costs and projects can be more
favorably treated by this process, shareholder value would increase accordingly.
Free power in OR may be near an end
Cost recovery from the Power Cost Adjustment Mechanism (PCAM) in OR could take effect as early as June 2008. In accordance
with the newly approved PCAM, in March of this year IDA filed an updated forecast of its expected purchased power costs for April
2008 through March 2009. If approved, IDA would collect an additional $4.8MM in OR revenues. IDA is currently waiting for a
decision on the PCAM. Prior to the PCAM, in the last OR general rate case regulators imposed a negative value to purchased power
expenses, assuming that the owned generation would be not only sufficient to serve the load, but also enough for off-system sales.
Rate case will take center stage, LGAR workshops still waiting in the wings
As of the last settlement with regulators, IDA refunds $62.40/MWh on 50% of its load growth, netting $31.395/MWh. In the first
quarter, with a growth rate of 2%, this mechanism cost IDA $3.2MM. This mechanism is completely counter-intuitive as strong
demographics typically translate into stronger earnings for utilities. At this time the regulators seem to agree in principle, but action
has yet to be taken. With the impending General Rate Case filing, we assume that the LGAR discussions will be tabled, possibly until
2009.
Continuous Equity Shelf has 1.1MM shares remaining
IDA expressed its intent to tap this shelf once again in 2008 as needed. Although any issued shares would have a dilutive effect, we
believe this is a useful tool for financial flexibility with minimal overall effect when the lack of interest expense is considered.
Siting process continues for transmission projects
The company continues to pursue the Gateway West transmission project, consisting of two 500 kV lines to be built with commercial
date of operations in 2012-2014. Original cost estimates to IDA were $800-$1,200MM, but cost escalations are likely before the
project is brought before the Commission. The project would require FERC and IPUC approvals.
IDACORP, Inc.May 8, 2008
3
Valuation
Our target price and our calculated net-asset-value (CNAV) is $38. We determine our CNAV based on a full discounted cash flow
model using an average of Free Cash Flow to the Firm and Free Cash Flow to Equity. We apply a multistage growth rate with a terminal
multiple of 11.0x based on a dynamic WACC with an initial rate of 8.12%. The terminal value is calculated approximately 25 years
forward.
As a pure-play electric utility with a significant hydroelectric generation fleet, IDA operates in a heavily regulated environment.
Considering the risk management policies of IDA, the Idaho regulatory structure, solid operations and the above-average population
growth for the service territory, the company continues to perform as expected.
Price Target Impediment
Investment risk/Price target impediment:Volatile hydrology, unfavorable regulatory decisions, poor growth project selections,
operational setbacks, changes in credit ratings, environmental regulations, cost overruns with the capex projects and weather.
Company Description
IDACORP is a holding company for the following subsidiaries: Idaho Power Company, IDACORP Financial, and Ida-West Energy.
Idaho Power Company (IPC) is a regulated utility serving approximately 472,000 customers in Idaho and western Oregon. Through its
regulated operations, IPC generates, purchases, transmits, distributes, and sells electric power. Through its 17 hydroelectric power plants,
IPC is one of few utilities with a predominant hydro generating base. The company also owns and operates coal and natural gas-fired
plants to round out its approximately 3,300MW power portfolio. Additionally, IPC has 4,600 miles of transmission lines and 26,000
miles of distribution lines. IDACORP Financial is an investment company with a focus on affordable housing and historic preservation
projects. Ida-West Energy is an independent power project development company with 44.6MW of combined interest in nine
hydroelectric power plants in California and Idaho.
IDACORP, Inc.May 8, 2008
4
IDA 2006 2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 2009
SUMMARY FINANCIALS ($ Millions)2006 Q1A Q2A Q3A Q4A 2007 Q1A Q2E Q3E Q4E 2008 2009
GENERATION (MWh)16,228.0 3,593.0 3,000.0 3,632.0 3,323.0 13,548.0 3,642.0 3,688.0 3,513.1 3,311.7 14,154.7 13,781.4
INCOME STATEMENT
TOTAL NET REVENUE $926.3 $206.7 $213.8 $261.5 $197.4 $879.4 $213.4 $267.0 $389.7 $269.7 $1,139.7 $1,419.2
DOC (Incl. Cost of Fuel and Plant O&M)$359.8 $82.0 $58.5 $74.9 $96.9 $312.3 $95.4 $118.0 $132.4 $133.7 $479.5 $556.2
Other Direct Operating Costs $302.1 $55.7 $85.1 $114.8 $51.5 $307.1 $50.1 $60.1 $165.1 $67.2 $342.5 $483.0
General & Administrative Expenses $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
DIRECT OPERATING COSTS $661.9 $137.7 $143.6 $189.7 $148.4 $619.4 $145.5 $178.2 $297.5 $200.9 $822.0 $1,039.2
GROSS PROFIT $264.4 $69.0 $70.2 $71.8 $49.1 $260.0 $68.0 $88.8 $92.2 $68.8 $317.7 $380.0
Depreciation, Amortization and Expl. Exp.$99.8 $25.3 $25.6 $26.0 $26.2 $103.1 $25.8 $27.0 $27.4 $27.6 $107.8 $112.0
Other Operating Costs $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
TOTAL OPERATING COSTS $761.7 $163.0 $169.2 $215.7 $174.6 $722.5 $171.2 $205.2 $324.9 $228.5 $929.9 $1,151.2
OPERATING INCOME $164.6 $43.7 $44.6 $45.8 $22.9 $156.9 $42.2 $61.8 $64.8 $41.1 $209.9 $268.0
Non-Operating Expenses ($14.9)($0.9)($1.6)($2.2)($2.6)($7.3)($0.0)($2.9)($2.7)($3.6)($9.2)($15.4)
EARNINGS BEFORE INTEREST & TAXES $179.4 $44.5 $46.2 $48.0 $25.5 $164.2 $42.2 $64.7 $67.5 $44.7 $219.1 $283.3
Net Interest Expense, Incl. TCP Dividend $61.0 $15.2 $15.4 $16.6 $16.2 $63.3 $17.5 $22.6 $23.6 $24.4 $88.0 $105.9
PRE-TAX INCOME $118.5 $29.4 $30.8 $31.4 $9.3 $100.8 $24.7 $42.1 $43.9 $20.4 $131.1 $177.5
Income Tax Expense $15.4 $4.9 $3.4 $4.6 $0.8 $13.7 $5.6 $7.3 $10.1 $4.4 $27.3 $61.7
Minority Interest, Pref. Dividend & Other $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
NET INCOME PRE-X-ITEMS $100.1 $24.6 $18.5 $28.9 $10.3 $82.3 $21.7 $23.0 $31.9 $14.0 $90.6 $96.5
Extraordinary Items & Other $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
NET INCOME $107.4 $24.6 $18.5 $28.9 $10.3 $82.3 $21.7 $23.0 $31.9 $14.0 $90.6 $96.5
NET INCOME PRE-X-ITEMS PER SHARE $2.33 $0.56 $0.42 $0.65 $0.23 $1.86 $0.48 $0.51 $0.71 $0.31 $2.01 $2.14
Extraordinary Items & Other $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
NET INCOME PER SHARE $2.50 $0.56 $0.42 $0.65 $0.23 $1.86 $0.48 $0.51 $0.71 $0.31 $2.01 $2.14
CASH FLOW STATEMENT
Adjustments to Revenue and Income $2.9 $0.0 $0.0 $0.0 ($6.3)($6.3)$0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Depreciation, Amortization and Expl. Exp.$122.6 $30.3 $30.1 $30.9 $29.1 $120.4 $30.8 $27.0 $27.4 $27.6 $112.9 $112.0
Deferred Income Taxes ($17.3)$7.6 $11.2 $10.5 ($18.2)$11.0 $12.6 $12.0 $12.0 $12.0 $48.6 $48.0
Other Operating Cash Flow Items ($58.0)($19.7)($46.6)($47.9)($14.7)($129.0)($19.4)($5.0)($5.0)($5.0)($34.4)($28.0)
Changes in Working Capital $12.2 ($21.8)$7.3 ($16.6)$33.2 $2.1 ($24.8)$0.0 $0.0 $0.0 ($24.8)$0.0
OPERATING CASH FLOW $169.8 $21.0 $20.4 $5.7 $33.4 $80.6 $20.9 $57.1 $66.3 $48.6 $192.9 $228.5
Cap. Ex., Acquisitions, Investments ($286.0)($48.1)($74.7)($83.2)($88.3)($294.2)($65.1)($77.6)($77.6)($77.6)($297.9)($310.3)
Proceeds from Sales $32.9 $7.3 $2.7 $17.2 ($0.0)$27.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Other Investing Cash Flow Items $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 ($9.0)($4.0)($3.1)($16.1)($5.6)
INVESTING CASH FLOW ($253.0)($40.8)($72.0)($66.1)($88.3)($267.1)($65.1)($86.5)($81.6)($80.7)($313.9)($315.9)
Net Equity Financing $41.3 $2.2 $10.2 $22.4 $2.3 $37.2 $2.2 $0.0 $0.0 $0.0 $2.2 $0.0
Net Debt Capital & Other Financing $52.6 $24.7 $205.5 ($84.4)$56.6 $202.4 $55.3 $60.5 $28.8 $45.6 $190.1 $141.3
Financing Costs $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Common and Preferred Dividends ($51.3)($13.1)($13.2)($13.3)($13.4)($53.0)($13.5)($13.5)($13.5)($13.5)($53.8)($53.8)
Other Financing Cash Flow Items ($1.7)($0.4)($2.1)($0.2)$0.7 ($2.0)($0.4)$0.0 $0.0 $0.0 ($0.4)$0.0
FINANCING CASH FLOW $40.8 $13.5 $200.4 ($75.5)$46.2 $184.6 $43.6 $47.1 $15.3 $32.1 $138.1 $87.5
CHANGE IN CASH ($42.5)($6.3)$148.9 ($135.8)($8.7)($1.9)($0.6)$17.6 ($0.0)$0.0 $17.0 ($0.0)
OP. CF BEFORE W/C PER SHARE $3.67 $0.98 $0.30 $0.50 $0.00 $1.77 $1.02 $1.27 $1.47 $1.08 $4.84 $5.08
BALANCE SHEET
Cash and Equivalents $9.9 $3.6 $12.5 $16.7 $8.0 $8.0 $7.4 $25.0 $25.0 $25.0 $25.0 $25.0
Accounts Receivables $69.4 $73.4 $70.3 $75.1 $74.7 $74.7 $74.4 $74.4 $74.4 $74.4 $74.4 $74.4
Inventory, Fuels and Materials $54.3 $57.1 $58.3 $62.6 $60.5 $60.5 $64.4 $64.4 $64.4 $64.4 $64.4 $64.4
Other Current Assets $335.8 $324.8 $351.4 $338.7 $324.5 $324.5 $323.1 $323.1 $323.1 $323.1 $323.1 $323.1
TOTAL CURRENT ASSETS $469.4 $458.9 $492.4 $493.1 $467.8 $467.8 $469.4 $487.0 $487.0 $487.0 $487.0 $487.0
TOTAL PP&E $2,419.1 $2,446.6 $2,501.6 $2,554.6 $2,616.6 $2,616.6 $2,649.0 $2,705.6 $2,756.8 $2,807.0 $2,807.0 $2,999.2
Other Long-term Assets $556.7 $501.8 $538.3 $564.9 $569.0 $569.0 $591.1 $599.0 $607.0 $614.9 $614.9 $654.5
TOTAL ASSETS $3,445.1 $3,407.4 $3,532.3 $3,612.6 $3,653.3 $3,653.3 $3,709.5 $3,791.6 $3,850.8 $3,908.8 $3,908.8 $4,140.7
Accounts Payables $86.4 $199.9 $172.5 $210.6 $271.6 $271.6 $302.0 $302.0 $302.0 $302.0 $302.0 $302.0
Short-term Debt & Current Portions $224.1 $94.2 $91.3 $92.4 $11.5 $11.5 $11.3 $232.5 $252.5 $272.5 $272.5 $192.5
Other Current Liabilities $99.8 $98.9 $84.5 $81.5 $92.3 $92.3 $100.5 $100.5 $100.5 $100.5 $100.5 $100.5
TOTAL CURRENT LIABILITIES $410.3 $393.0 $348.4 $384.5 $375.3 $375.3 $413.9 $635.1 $655.1 $675.1 $675.1 $595.1
Long-term Debt and Other Obligations $928.6 $926.9 $1,064.6 $1,061.3 $1,156.9 $1,156.9 $1,155.3 $1,149.7 $1,158.5 $1,184.0 $1,184.0 $1,405.3
Deferred Income Taxes $498.5 $463.5 $475.1 $486.0 $466.2 $466.2 $479.6 $491.6 $503.6 $515.6 $515.6 $563.6
Other Long-term Liabilities $483.5 $471.2 $474.7 $472.7 $447.6 $447.6 $443.2 $288.1 $288.1 $288.1 $288.1 $288.1
TOTAL LONG-TERM LIABILITIES $1,910.6 $1,861.6 $2,014.5 $2,020.0 $2,070.7 $2,070.7 $2,078.1 $1,929.5 $1,950.2 $1,987.8 $1,987.8 $2,257.0
Long-term Financings $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
TOTAL LIABILITIES $2,320.9 $2,254.5 $2,362.8 $2,404.5 $2,446.0 $2,446.0 $2,492.0 $2,564.5 $2,605.3 $2,662.8 $2,662.8 $2,852.1
Equity and Additional Paid-in Capital $638.8 $639.5 $650.1 $672.9 $675.8 $675.8 $678.7 $678.7 $678.7 $678.7 $678.7 $678.7
Retained Earnings $493.4 $520.0 $525.3 $540.8 $537.7 $537.7 $545.9 $555.5 $573.9 $574.4 $574.4 $617.1
Other Stockholders' Equity ($8.0)($6.7)($5.9)($5.6)($6.2)($6.2)($7.2)($7.2)($7.2)($7.2)($7.2)($7.2)
TOTAL STOCKHOLDERS' EQUITY $1,124.2 $1,152.8 $1,169.5 $1,208.1 $1,207.3 $1,207.3 $1,217.5 $1,227.1 $1,245.5 $1,246.0 $1,246.0 $1,288.6
TOTAL LIABILITIES & EQUITY $3,445.1 $3,407.4 $3,532.3 $3,612.6 $3,653.3 $3,653.3 $3,709.5 $3,791.6 $3,850.8 $3,908.8 $3,908.8 $4,140.7
Sources: Company reports; RBC Capital Markets estimates. Lasan Johong - [phone]; [e-mail]
IDACORP, Inc.May 8, 2008
5
Ticker Symbol IDA
Year Quarter EPS Oper.CF EBITDA FCF EFCF Capital Type Amount %Type %of Total
Assumptions Rate 03/2008 ($MM)
2007 1 $0.56 $0.98 $1.60 ($0.08)$0.14 Equity Capital $1,217.5 51%Equity 6.13%
DCF Start Year 2008 2007 2 $0.42 $0.30 $1.41 ($0.80)$3.48 Preferred Stock $0.0 0%Preferred 0.00%
DCF Start Month 4 2007 3 $0.65 $0.50 $1.71 ($0.95)($3.22)Total Debt $1,166.6 49%Debt 1.99%
Current Betaof Company 1.00 2007 4 $0.23 $0.00 $1.21 ($0.80)$0.06 Total $2,384.1 100%WACC 8.12%
Static or Variable Beta (S/V)V Total 5 $1.86 $1.77 $5.92 ($2.63)$0.41
Normalized Long-Term Risk-free Rate 5.00%
Market Return 12.00%2008 1 $0.48 $1.02 $1.57 ($0.60)$0.24 Terminal Value Multiple Terminal Value Multiple
Current Equity Discount Rate 12.00%2008E 2 $0.51 $1.27 $1.78 ($0.27)$0.69 Multiple of FCF 11.0 x Multiple ofEFCF 10.2 x
Current Cost ofPreferred Stock 0.00%2008E 3 $0.71 $1.47 $2.06 $0.06 $0.30
Current Cost ofDebt Capital 6.67%2008E 4 $0.31 $1.08 $1.56 ($0.30)$0.30 Term.Val.in Months 309 Term.Val.in Months 309
Current WACC 8.12%Total 5 $2.01 $4.84 $6.97 ($1.12)$1.53
Basic Shares Outstanding (MM)44.8 Category Valuation Category Valuation
Diluted Shares Outstanding (MM)45.0 03/2008
Assumed Tax Rate 39%Calc.Ent.Value $2,834.2 Equity FCF Value $1,666.9
Assumed Inflation Rate 3.50%Preferred Stock $0.0 Cash Balance @ Start
Minimum Cash Balance Required $25 2009E Total Debt ($1,166.6)ofValuation $7.4
RevolverOverflow Alert Total 5 $2.14 $5.08 $8.36 ($0.51)$1.20 Equity Value $1,667.6 EquityValue $1,674.3
Current Stock Price of IDA ($/Sh.)$31.31 Shares NAV Average Shares NAV
Current Book Value per Share $27.05 Basic $37.18 $37.26 Basic $37.33
Current Price-to-Book Ratio 1.2 x Diluted $37.05 $37.13 Diluted $37.20
Current MarketCap ($MM)$1,404.2
Current MarketEnt.Value ($MM)$2,570.8 Ratios P/NAV P/NAV Ratios P/NAV
Current MarketEnt.Value Per Sh.$57.32 Basic 0.8 x 0.8 x Basic 0.8 x
Current Book Ent.Value ($MM)$2,384.1 Diluted 0.8 x 0.8 x Diluted 0.8 x
Current Book Ent.Value Per Sh.$53.16
Ratios P/Book
Namesof Regions Name Basic 1.2 x
Region 1 Idaho Power Company (IPC)
Region 2 Idacorp Financial Services(IFS)Criteria Multiple 2009Eow #Multiple Analysis
Region 3 Idacorp Energy (IE)Ratios
Region 4 Other Year P/EP/Oper.CFEV/EBITDA EV/FCF P/EFCF Net Debt per Share N/A $40.17 497 N/A
Basic Shares Out N/A 44.8 166 N/A
2007 16.8 x 17.7 x 9.7 x N/M 76.2 x P/E 17.7 x $2.14 174 $38.00
2008E 15.6 x 6.5 x 8.2 x N/M 20.5 x P/CF 7.5 x $5.08 363 $38.00
2009E 14.6 x 6.2 x 6.9 x N/M 26.2 x EV/EBITDA 9.4 x $8.36 198 $38.00
Average $38.00
Sources:Company reports;RBC Capital Markets estimates;Lasan Johong (212)[e-mail];Emily Christy [phone],[e-mail];Ella Faynzilberg [phone],[e-mail]
Per Share Estimates Capital Structure Cost of Capital
Net AssetValue Cash Flow Valuation
IDACORP, Inc.May 8, 2008
6
Required Disclosures
Explanation of RBC Capital Markets Rating System
An analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assigned to
a particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative to the analyst's
sector average.
Ratings
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months; provides best risk-reward ratio; approximately 10% of analyst's recommendations.
Outperform (O):Expected to materially outperform sector average over 12 months.
Sector Perform (SP):Returns expected to be in line with sector average over 12 months.
Underperform (U):Returns expected to be materially below sector average over 12 months.
Risk Qualifiers (any of the following criteria may be present):
Average Risk (Avg):Volatility and risk expected to be comparable to sector; average revenue and earnings predictability; no
significant cash flow/financing concerns over coming 12-24 months; fairly liquid.
Above Average Risk (AA):Volatility and risk expected to be above sector; below average revenue and earnings predictability; may
not be suitable for a significant class of individual equity investors; may have negative cash flow; low market cap or float.
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Sector Perform and Underperform most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the same
because our ratings are determined on a relative basis (as described above).
Distribution of Ratings/IB Services
RBC Capital Markets
Investment Banking
Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY[TP/O] 507 46.34 195 38.46
HOLD[SP] 493 45.06 122 24.75
SELL[U] 94 8.59 19 20.21
References to a Recommended List in the recommendation history chart may include one or more recommended lists or model
portfolios maintained by a business unit of the Wealth Management Division of RBC Capital Markets Corporation. These
Recommended Lists include the Prime Opportunity List (RL 3), the Private Client Prime Portfolio (RL 4), the Prime Income List (RL
IDACORP, Inc.May 8, 2008
7
6), the Guided Portfolio: Large Cap (RL 7), and the Guided Portfolio: Dividend Growth (RL 8). The abbreviation 'RL On' means the
date a security was placed on a Recommended List. The abbreviation 'RL Off' means the date a security was removed from a
Recommended List.
Analyst Certification
All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all of the
subject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly or
indirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.
Dissemination of Research
RBC Capital Markets endeavours to make all reasonable efforts to provide research simultaneously to all eligible clients, having
regard to local time zones in overseas jurisdictions. RBC Capital Markets' research is posted to our proprietary websites to ensure
eligible clients receive coverage initiations and changes in rating, targets and opinions in a timely manner. Additional distribution may
be done by the sales personnel via email, fax or regular mail. Clients may also receive our research via third party vendors. Please
contact your investment advisor or institutional salesperson for more information regarding RBC Capital Markets research.
RBC Capital Markets also provides eligible clients with access to a database which may contain Short-Term trading calls on certain of
the subject companies for which it currently provides equity research coverage. The database may be accessed via the following
hyperlink https://www2.rbccm.com/cmonline/index.html. The information regarding Short-Term trading calls accessible through the
database does not constitute a research report. These Short-Term trading calls are not formal ratings and reflect the research analyst's
views with respect to market and trading events in the coming days or weeks and, as such, may differ from the price targets and
recommendations in our published research reports reflecting the research analyst's views of the longer-term (one year) prospects of
the subject company. Thus, it is possible that a subject company's common equity that is considered a long-term 'sector perform' or
even an 'underperform' might be a Short-Term buying opportunity as a result of temporary selling pressure in the market; conversely, a
subject company's common equity rated a long-term 'outperform' could be considered susceptible to a Short-Term downward price
correction.
Conflicts Disclosures
RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request. To
access our current policy, clients should refer to
http://www.rbccm.com/cm/file/0,,63022,00.pdf
or send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower,
Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.
Important Disclosures
The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including total
revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated by
investment banking activities of the member companies of RBC Capital Markets and its affiliates.
A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking services from
IDACORP, Inc. in the past 12 months.
A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other than
investment banking services from IDACORP, Inc. during the past 12 months. During this time, a member company of RBC Capital
Markets or one of its affiliates provided non-securities services to IDACORP, Inc.
RBC Capital Markets is currently providing IDACORP, Inc. with non-securities services.
RBC Capital Markets has provided IDACORP, Inc. with investment banking services in the past 12 months.
RBC Capital Markets has provided IDACORP, Inc. with non-securities services in the past 12 months.
Additional Disclosures
RBC Capital Markets is the business name used by certain subsidiaries of Royal Bank of Canada, including RBC Dominion Securities Inc., RBC Capital Markets
Corporation, Royal Bank of Canada Europe Limited and Royal Bank of Canada - Sydney Branch. The information contained in this report has been compiled by RBC
Capital Markets from sources believed to be reliable, but no representation or warranty, express or implied, is made by Royal Bank of Canada, RBC Capital Markets, its
affiliates or any other person as to its accuracy, completeness or correctness. All opinions and estimates contained in this report constitute RBC Capital Markets'
judgement as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Nothing in this report
constitutes legal, accounting or tax advice or individually tailored investment advice. This material is prepared for general circulation to clients and has been prepared
without regard to the individual financial circumstances and objectives of persons who receive it. The investments or services contained in this report may not be suitable
for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. This report is
IDACORP, Inc.May 8, 2008
8
not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of
original capital may occur. RBC Capital Markets research analyst compensation is based in part on the overall profitability of RBC Capital Markets, which includes
profits attributable to investment banking revenues. Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulating
the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, the securities discussed in this
report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as securities broker or
dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. To the full
extent permitted by law neither RBC Capital Markets nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss
arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copied by any means without the prior
consent of RBC Capital Markets.
Additional information is available on request.
To U.S. Residents:
This publication has been approved by RBC Capital Markets Corporation, which is a U.S. registered broker-dealer and which accepts responsibility for this report and its
dissemination in the United States. Any U.S. recipient of this report that is not a registered broker-dealer or a bank acting in a broker or dealer capacity and that wishes
further information regarding, or to effect any transaction in, any of the securities discussed in this report, should contact and place orders with RBC Capital Markets
Corporation.
To Canadian Residents:
This publication has been approved by RBC Dominion Securities Inc. Any Canadian recipient of this report that is not a Designated Institution in Ontario, an Accredited
Investor in British Columbia or Alberta or a Sophisticated Purchaser in Quebec (or similar permitted purchaser in any other province) and that wishes further information
regarding, or to effect any transaction in, any of the securities discussed in this report should contact and place orders with RBC Dominion Securities Inc., which, without
in any way limiting the foregoing, accepts responsibility for this report and its dissemination in Canada.
To U.K. Residents:
This publication has been approved by Royal Bank of Canada Europe Limited ('RBCEL') which is authorized and regulated by Financial Services Authority ('FSA'), in
connection with its distribution in the United Kingdom. This material is not for distribution in the United Kingdom to private customers, as defined under the rules of the
FSA. RBCEL accepts responsibility for this report and its dissemination in the United Kingdom.
To Persons Receiving This Advice in Australia:
This material has been distributed in Australia by Royal Bank of Canada - Sydney Branch (ABN 86 076 940 880, AFSL No. 246521). This material has been prepared for
general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, any recipient should, before acting on this
material, consider the appropriateness of this material having regard to their objectives, financial situation and needs. If this material relates to the acquisition or possible
acquisition of a particular financial product, a recipient in Australia should obtain any relevant disclosure document prepared in respect of that product and consider that
document before making any decision about whether to acquire the product.
To Hong Kong Residents:
This publication is distributed in Hong Kong by RBC Investment Services (Asia) Limited, a licensed corporation under the Securities and Futures Ordinance. This
material has been prepared for general circulation and does not take into account the objectives, financial situation, or needs of any recipient. Hong Kong persons wishing
to obtain further information on any of the securities mentioned in this publication should contact RBC Investment Services (Asia) Limited at 17/Floor, Cheung Kong
Center, 2 Queen's Road Central, Hong Kong (telephone number is 2848-1388).
®Registered trademark of Royal Bank of Canada. RBC Capital Markets is a trademark of Royal Bank of Canada. Used under license.
Copyright © RBC Capital Markets Corporation 2008 - Member SIPC
Copyright © RBC Dominion Securities Inc. 2008 - Member CIPF
Copyright © Royal Bank of Canada Europe Limited 2008
Copyright © Royal Bank of Canada 2008
All rights reserved
IDACORP, Inc.May 8, 2008