COC Ladenburg-Thalmann-Oct-30-2009.pdf

Power and Utilities Sector
Company Update

October 30, 2009
NEUTRAL

IIDDAACCOORRPP ((IIDDAA))
3Q09 Financial Results - Maintaining NEUTRAL Rating
Highlights
• We are reiterating our NEUTRAL rating on IDA shares. Our price target
of $30 per share is based on a 2009/2010 P/E of 12.3/11.2x EPS of
$2.44/$2.69 (previously $2.56/$2.69). We have adjusted our 2009 EPS
modestly lower to reflect year-to-date results and 4Q09 expectations.
• Importantly, our 2010 EPS was previously predicated on our expectations for a base rate increase in early 2010 following a 4Q09 general rate case filing.
However, IDA indicated that a settlement has been reached in principal with all
parties and that an announcement is expected in early November 2009. We
await the announcement and will likely adjust our estimates accordingly.
• We continue to view IDA as a fundamentally-sound small-cap utility that has
made great strides on the regulatory front in terms of several favorable
regulatory outcomes for timely recovery of infrastructure investments and
energy efficiency initiatives, as well as, fuel cost management/recovery.
Further, the recently IPUC approved baseload power plant Langley Gulch is
viewed as a source of meaningful long-term earnings power.
• On October 29, 2009, IDA reported 3Q09 net income of $54.5m or $1.16 per
share compared to a net income of $51.7m or $1.14 per share in 3Q08. Idaho
Power Company reported 3Q09 net income of $51.1m compared to $47.4m in
3Q08. IDACORP Financial Services (IFS) contributed $245k in 3Q09
compared to $710k in 3Q08. Results include: implementation of new base
rates in Idaho (Feb 2009) and reallocation of PCA related costs (+$4.3m), reduced effective income tax rate (+$3.8m), partially offset by decreased retail
sales volumes (-4%) due to mild weather.
• The company revised certain components of its 2009 operating/financial
assumptions. Revisions include: Idaho Power 2009 capital expenditures of $255m-$270m (previously $220m-$230m) to reflect additional Langley Gulch
Power Plant construction costs of approximately $50m, and IPC hydroelectric
generation 8.0m-8.5m MWh (previously 7.5m-8.5m) due to above normal
precipitation and above normal storage levels at Brownlee.
• The Company expects utility capital expenditures to be approximately $975m-
$1b in 2009-2011 (previously $730m-$750m) which now includes Langley
Gulch, siting and permitting expenditures for major transmission expansions for
Boardman to Hemingway line, Gateway West, the Hemingway-Bowmont line
and the Hemingway Station. The company believes it can finance its 2009
capital expenditures with internally generated funds and its DRIP program and
does not need to access the capital markets in the near-term. Longer-term
infrastructure-related projects would likely be financed by a combination of
internally generated cash flow and external debt/equity financing.
COMPANY & MARKET DATA
Price $28.09
Price Target, Excl Dividends (YE09)$30.00
Rating NEUTRAL
52 - Week Range $20.91-$33.89
Mkt. Capitalization (mill)$1,327
Enterprise Value (mill)$2,501
FD Shares Outstanding (mill)47
Avg. Daily Trading Vol. (000)366
Book Value per Share (1Q09A)$28.03
Dividend (FY09E) / Yield $1.20 4.3%
FY2007A FY2008A FY2009E
Revenue (mill)$879 $992 $1,059
1Q EPS $0.56 $0.48 $0.40
2Q EPS $0.42 $0.35 $0.58
3Q EPS $0.62 $1.14 $1.16
4Q EPS $0.23 $0.26
EPS $1.86 $2.22 $2.44
Prior EPS $2.56
Consensus EPS $2.37
P/E 15.1x 12.7x 11.5x
EV/EBITDA 9.8x 8.2x 7.7x
P/FCF -57.9x -57.9x -53.0x
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 Apr-09 Aug-09
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]

Disclosures and Analyst Certifications can be found in Appendix A.
NEW YORK, NY, 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: NYSE, NYSE Amex, FINRA, all other principal exchanges and SIPC
Brian Russo 646.432.6312 IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. Page - 2 -

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.
Brian Russo 646.432.6312 IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. Page - 3 -

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 10/01/09)
Buy 67% (11% are banking clients)
Neutral 31% (0% are banking clients)
Sell 2% (0% are banking clients)

INVESTMENT RATING AND PRICE TARGET HISTORY

Brian Russo 646.432.6312 IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. Page - 4 -
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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