IDANOTE041913.pdf

Disclosures and Analyst Certifications can be found in Appendix A.
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IIDDAACCOORRPP ((IIDDAA))
PCA Filing – Reiterating NEUTRAL Rating
Highlights
• We are reiterating our NEUTRAL rating IDA shares. Our revised price target of $48 p/s (previously $47 p/s)
implies a 2013/2014/2015 P/E of 14.9x/14.2x/14.7x our EPS estimates of $3.23$3.38/$3.27 (previously $3.26/$3.38/$3.27).
• On April 15, 2013, IDA filed its annual Power cost adjustment (PCA) request. Specifically, IDA is
requesting a $140.4m increase in Idaho PCA rates effective for the 2013-2014 PCA collection period of June 1, 2013 to May 31, 2014. In an attempt to mitigate the single-year rate impact to customers, IDA is
proposing to defer $52.5m of the increase for inclusion in the June 1, 2014 to May 31, 2015 PCA collection
period. Historically, the IPUC has approved the PCA recovery over a single PCA collection period within 4-
6 weeks following the filing. Drivers of the increase include: below normal hydro conditions and actual
hydroelectric generation, updated market prices for 2012-2013 PCA period (April 2012-March 2013),
decreased impact of revenue sharing with customers during 2013 compared with 2012, forecasted below-
average hydro conditions and corresponding lower hydroelectric generation during the 2013-2014 (April 2013-March 2014), and lower market prices for excess power sales and expiration of other credits ($50m).
• We note the size of the PCA adjustment is well above prior periods. Specifically, the PCA request for
$140.4m compares to 2012, 2011, and 2010 Idaho PCA adjustments of $43.0m, $(40.4m), and $(146.9m), respectively. The 2012 PCA increase is net of a $27m revenue sharing benefit. The $140m PCA increase
includes: $42.5m for PCA forecast, $77.8m for PCA true-up and $20m for revenue sharing. While we expect IDA to receive full recovery of fuel-related costs per regulation, we note the double-digit rate
increase in customer bills that will result during the PCA period under review. Assuming the IPUC approves the mitigation period, customer rates are expected to increase 9.8% in year one. We attribute the PCA
forecast adjustment of $42.5m to below average 2013 hydro conditions. Included in the April 4 2013 National Oceanic and Atmospheric Administration (NOAA) Water Supply forecast, the Brownlee and Hells
Canyon, IDA’s largest hydroelectric generation facility, are forecasted to have water supplies at 65% and 62% of their 30-year averages, respectively. IDA’s hydroelectric facilities are primarily located on the
Snake River along the Idaho/Oregon border. Year-to-date monthly run-off of 47-62% is also well below the
30-year averages. According to the company, hydroelectric generation output is forecasted to be 6.8m
MWh. This compares to 8.6m MWh of hydroelectric capacity in a near normal season.
• In our opinion, IDA possesses the least sensitivity to hydro conditions relative to other northwest utility
peers considering the PCA mechanics. Our revised 2013 EPS estimate reflects this view. Under the PCA any shortfall (as compared with the median) is generally replaced with purchaser power from the open
markets and 95% of those costs are recovered through the PCA mechanism in Idaho. A true-up of prior period of the difference between the previous year’s actual net power supply costs and the previous year’s
forecasts is also included. IDA was authorized by the IPUC in January 2009 to change its sharing mechanism to 95/5 (previously 90/10), as well as, implementation of a forward-looking forecasting model for
fuel costs and generation output. Under IDA’s current Idaho rate plan, it can utilize its ADITC balance to support a 9.5% return on year-end shareholder equity further mitigating the earnings impact.
• Our 2013-2014 EPS estimates reflect the current Idaho Power rate plan settlement. Idaho Power may use
up to $45m in aggregate of accumulated deferred investment tax credits (ADITC) over a three year-period (2012-2014) to reach a minimum 9.5% return-on-year-end shareholder equity. We forecast 2014 Idaho
Power year-end shareholder equity estimated at $1.7b. Our 2015 EPS estimate reflects a more traditional
regulated-utility return-on rate base structure supported by 2015 total rate base of $3.1b. A filing requesting
an extension of the current rate plan is also possible prior to June 2014. In the event that a rate extension
is granted, we see upside to our 2015 EPS estimates. If needed, we would expect IDA to file its next rate case by mid-2014 for rates effective 2015. Post-2015 growth is supported by B-H development success
(2018 COD), environmental compliance scenarios still to be determined with details will be provided in the upcoming June 2013 IRP filing.
COMPANY & MARKET DATA
Price (April 18, 2013) $46.97
Price Target, Excl Dividends $48.00
Prior Target $47.00
52 - Week Range $38.17-$48.93
Mkt. Capitalization (mill) $2,307
Enterprise Value (mill) $3,754
FD Shares Outstanding (mill) 49
Avg. Daily Trading Vol. (000) 207
Book Value per Share (4Q12A) $35.29
Dividend (FY13E) / Yield $1.52 3.24%
FY2012A FY2013E FY2014E
Revenue (mill) $1,151 $1,170 $1,179
1Q EPS $0.50
2Q EPS $0.71
3Q EPS $1.84
4Q EPS $0.33
EPS $3.37 $3.23 $3.38
Prior EPS $3.26
Consensus EPS $3.26 $3.37
P/E 13.9x 14.5x 13.9x
EV/EBITDA 9.7x 9.7x 9.7x
P/FCF nm nm nm
ESTIMATES
Volume in Millions
0.01.0
2.0
3.0
4.0
$20
$25
$30
$35
$40
$45
$50
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12

Chart data: Bloomberg
Brian J. Russo, CFA
646-432-6312
[e-mail]
Ira Reibeisen 212-409-2051 [e-mail]
Power and Utilities Sector
Company Update

April 19, 2013
NEUTRAL
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, provided, however, that:
The research analyst primarily responsible for the preparation of this research report has or will receive compensation based upon
various factors, including the volume of trading at the firm in the subject security, as well as 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, and 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
Brian Russo 646.432.6312 IDACORP (IDA)

Ladenburg Thalmann & Co. Inc. PAGE - 3 -

workforce, could increase costs and reduce earnings.

STOCK RATING DEFINITIONS
Buy: The stock’s return is expected to exceed 12.5% over the next twelve months.
Neutral: The stock’s return is expected to be plus or minus 12.5% over the next twelve months.
Sell: The stock’s return is expected to be negative 12.5% 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 3/31/13)
Buy: 74% (38% are banking clients)
Neutral: 25% (6% are banking clients)
Sell: 1% (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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