IDA010212-195457.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.

January 3, 2012

Equit Research
IDACORP, Inc.
IDA: Increasing 13E & 14E EPS Following Rate Approvals
Reiterate Market Perform

• Summary. We are increasing our 13E & 14E EPS to $3.20 & $3.30 from $3.10
& $3.20 to reflect last week’s approvals of two Idaho Power Company (IPC) rate
settlements. No change to our 11E & 12E EPS. We reiterate our Market Perform
rating. Our 12-18 month valuation range is $44-45 per share.
• Rate Actions. On 12/30/11 the Idaho Public Utilities Commission (IPUC) approved a settlement in IPC’s general rate case (GRC). The order includes a
$34mm, or 4%, revenue increase including a $45.5mm base rate increase and an
$11.5mm decrease in net power supply costs (NPSE). The agreement was silent
on the authorized ROE and capital structure. Separately, on 12/27/11 the IPUC
approved a settlement that allows IPC to accelerate the amortization of $45mm
of accumulated deferred investment tax credits (ADITCs) during the period
2012-2014 in order to achieve a 9.5% ROE on year-end Idaho jurisdictional
equity. IPC cannot utilize more than $25mm of ADITCs in a given year. The
plan also provides for the sharing of earnings above certain ROE thresholds
between ratepayers/shareholders (50/50 from 10-10.5% and 75/25 above 10.5%)
– these thresholds reset if the IPUC specifies an allowed ROE in a future GRC.
• EPS Outlook. We are increasing our 13E & 14E EPS by $0.10, or 3%, to $3.20
& $3.30, respectively, reflecting the ADITC settlement approval. As the 9.5%
ROE is largely consistent with our previously assumed earned ROEs in ’13 & ’14,
the EPS upside is primarily driven by the use of year-end Idaho jurisdictional
equity versus our previously assumed average rate base estimates.
• Our Thoughts. We view IPUC approval of both settlements favorably as they
(1) provide base rate relief and (2) enhance earnings visibility through 2014.
While acceleration of the ADITCs represents a non-cash benefit, we are
encouraged that IPC is not precluded from filing for additional base rate relief
and we highlight IDA’s solid financial position and cash flow outlook. We
consider this yet another positive data point on the Idaho regulatory
environment.
• We Maintain our Market Perform Rating despite our higher EPS outlook
in '13 & '14 and positive regulatory sentiment. Our neutral rating reflects
valuation considerations, a below average dividend yield and a 3-4% compound
annual EPS growth outlook post-2012 vs. 4-5% for peers. Of note, IDA’s Board
recently adopted a dividend policy (long-term payout ratio target of 50-60%)
that should drive double digit annual dividend growth for the next 3-5 years.

Valuation Range: $44.00 to $45.00
We value IDA under P/E multiple (14.0X multiple on our 13E EPS of $3.20),
dividend discount and residual income analyses. Risks to our valuation include
project delays/cancellations, negative regulatory developments and economic
weakness.

Investment Thesis:
We are attracted to IDA's increasingly constructive regulatory environment and
attractive service territory. Our neutral rating reflects valuation considerations.

Market Perform

Sector: Regulated Electric Utilities
Market Weight

Company Note

2010A 2011E 2012E
EPS Curr. Prior Curr. Prior
Q1 (Mar.) $0.34 $0.60 NC NE
Q2 (June) 0.82 0.42 A NC NE
Q3 (Sep.) 1.39 2.16 A NC NE
Q4 (Dec.) 0.41 0.22 NC NE
FY $2.95 $3.40 NC $3.05 NC
CY $2.95 $3.40 $3.05
FY P/E 14.4x 12.5x 13.9x
Rev.(MM)$1,036 $1,070 $1,148
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 (12/30/2011) $42.41
52-Week Range: $33-43
Shares Outstanding: (MM) 49.7
Market Cap.: (MM) $2,107.8
S&P 500: 1,257.60
Avg. Daily Vol.: 267,456
Dividend/Yield: $1.20/2.8%
LT Debt: (MM) $1,487.5
LT Debt/Total Cap.: 46.5%
ROE: 10.0%
3-5 Yr. Est. Growth Rate: 4.0%
CY 2012 Est. P/E-to-Growth: 3.5x
Last Reporting Date: 11/04/2011
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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Utilities EQUITY RESEARCH DEPARTMENT

4

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%
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So
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:

W
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s

F
a
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o

S
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c
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,

L
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c
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p
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f
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l
i
n
g
s

WELLS FARGO SECURITIES, LLC
IDACORP, Inc. EQUITY RESEARCH DEPARTMENT

5

Required Disclosures

$18.00
$20.00
$22.00
$24.00
$26.00
$28.00
$30.00
$32.00
$34.00
$36.00
$38.00
$40.00
$42.00
$44.00
$46.00
$48.00
12
/
3
1
/
0
8
1/2
8
/
0
9
2/2
5
/
0
9
3/2
5
/
0
9
4/2
2
/
0
9
5/2
0
/
0
9
6/1
7
/
0
9
7/1
5
/
0
9
8/1
2
/
0
9
9/9
/
0
9
10
/
7
/
0
9
11
/
4
/
0
9
12
/
2
/
0
9
12
/
3
0
/
0
9
1/2
7
/
1
0
2/2
4
/
1
0
3/2
4
/
1
0
4/2
1
/
1
0
5/1
9
/
1
0
6/1
6
/
1
0
7/1
4
/
1
0
8/1
1
/
1
0
9/8
/
1
0
10
/
6
/
1
0
11
/
3
/
1
0
12
/
1
/
1
0
12
/
2
9
/
1
0
1/2
6
/
1
1
2/2
3
/
1
1
3/2
3
/
1
1
4/2
0
/
1
1
5/1
8
/
1
1
6/1
5
/
1
1
7/1
3
/
1
1
8/1
0
/
1
1
9/7
/
1
1
10
/
5
/
1
1
11
/
2
/
1
1
11
/
3
0
/
1
1
12
/
2
8
/
1
1
Se
c
u
r
i
t
y

P
r
i
c
e

IDACORP, Inc. (IDA) 3-yr. Price PerformanceIDACORP, Inc. (IDA) 3-yr. Price Performance
Date
Date Publication Price ($) Rating Code Val. Rng. Low Val. Rng. High Close Price ($) 12/31/2008 Kalton
12/31/2008 NA 2 30.00 32.00 29.45
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
z 10/29/2010 37.00 2 38.00 39.00 36.80
cz 11/15/2010 36.34 1 40.00 41.00 36.52
z 2/9/2011 38.22 1 41.00 42.00 38.05
z 5/5/2011 38.91 1 42.00 43.00 38.91
z 7/19/2011 39.83 1 43.00 44.00 39.84
z 8/4/2011 36.47 1 41.00 42.00 36.47
dz 10/24/2011 40.51 2 42.00 43.00 40.43
z 11/4/2011 41.33 2 43.00 44.00 40.43
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 maintains a market in the common stock of IDACORP, Inc.
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 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 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 nonsecurities services to IDACORP, Inc.
WELLS FARGO SECURITIES, LLC
Utilities EQUITY RESEARCH DEPARTMENT

6

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.
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 an affiliate of IDACORP, Inc.

IDA: Risks to our valuation include project delays/cancellations, negative regulatory developments and economic weakness.

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: January 3, 2012
50% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Outperform.
Wells Fargo Securities, LLC has provided investment banking
services for 40% of its Equity Research Outperform-rated
companies.
48% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Market Perform.
Wells Fargo Securities, LLC has provided investment banking
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companies.
2% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Underperform.
Wells Fargo Securities, LLC has provided investment banking
services for 24% 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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SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE