COC wells fargo.docx

From: Wells Fargo Electric Utility Team [mailto:[e-mail]]
Sent: Tuesday, February 23, 2010 7:27 AM
Subject: IDACORP (IDA/Market Perform): Strong 2009 Results; Provides EPS Guidance for the First Time
Regulated Electric Utilities
Neil Kalton, CFA, Senior Analyst [phone]
IDACORP, Inc. (IDA-NYSE)--Market Perform (2)
Price as of 2/22/2010: $32.70
FY 09 EPS: $2.40
FY 10 EPS: $2.50
Shares Out.: 47.7 MM
Market Cap.: $1,559.79 MM
Sector Rating: Regulated Electric Utilities, Market Weight
IDA:  Strong 2009 Results; Provides EPS Guidance for the First Time
On 2/23, IDA reported 2009 EPS of $2.64, well above our estimate of $2.40 and consensus of $2.42.  We previously thought there could be upside to our number in light of a favorable rate settlement covering the period 2009-2011, which provides IDA the opportunity to employ Accumulated Deferred Investment Tax Credits (ADITC) if the Idaho jurisdictional ROE falls below 9.5%; the ADITCs would be recognized in the fourth quarter.  Positively, however, the better-than-expected results were achieved without the use of ADITCs in 2009.  As a result, we not only view the 2009 EPS as a strong number, but also a quality one.
Breaking from IDA's practice of only providing key operating and financial metric estimates, the company for the first time initiated 2010 EPS guidance of $2.65-2.80.  The likely driver behind the additional disclosure is the aforementioned settlement.  The settlement allows Idaho Power to amortize ADITCs up to $25mm per year, no to exceed $45mm total, to help achieve a minimum ROE of 9.5%.  It appears IDA is assuming some level of ADITC amortization in its 2010 guidance as the projected Idaho Power effective tax rate of 13-17% reflects the utilization of up to $25mm of ADITC.  
We view 2009 results, the fact that IDA is now providing EPS guidance and the $2.65-2.80 range for 2010 favorably.  We plan to reevaluate our 2010E EPS of $2.50 as well as our 11E EPS of $2.65 following IDA's conference call today at 4:30pm Eastern (617-614-3472; pass-code ''Idaho'').
Regards,
Neil A. Kalton
Wells Fargo Securities, LLC
Utility Analyst
[phone]
[e-mail]  
Sarah E. Akers
Wells Fargo Securities, LLC
Utility Associate Analyst
[phone]
[e-mail]