IDANOTE100411.pdf

Disclosures and Analyst Certifications can be found in Appendix A.
NEW YORK, NY MELVILLE, NY PRINCETON, NJ MIAMI, FL BOCA RATON, FL

520 Madison Avenue y New York, New York 10022 y Telephone: [phone] 800-LAD-THAL

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IIDDAACCOORRPP ((IIDDAA))
Company Update - Reiterating BUY Rating
Highlights
• We are reiterating our BUY rating on IDA shares. Our price target of $42 per share
implies a 2012/2013 P/E of 13.9x/13.3x our EPS estimates of $3.02/$3.15. Our 2011
EPS estimate is $3.53 and reflects the recently announced unicap approval.
• Idaho Power, IPUC Staff and other parties recently filed a GRC settlement stipulation.
Specifically, IDA received a total of $34m net annual revenue increase comprised of non-net power supply increase of $45.5m vs $71.3m in original filing and a net power supply decrease of $11.5m decrease vs $11.3m increase in original filing. The settlement also provides a 7.86% rate of return on approximately $2.36b of rate base. Recall, in June 2011, IDA filed for a $82.6m revenue increase (+9.9%) based on a 10.5% ROE, 51.2% equity ratio, 8.17% return on average 2011 rate base of $2.36b. Prefiled testimony is expected on October 7, 2011, technical hearings are scheduled on December 6-8, 2011,
and new rates are to be effective January 1, 2012.
• ROE and equity ratio were not disclosed but we estimate an allowed ROE of
approximately 10.3% and an equity ratio 51%. The settlement stipulation is pending IPUC
approval and the unicap study was not included in the settlement stipulation. We
generally view the settlement stipulation as positive as IDA received nearly two-thirds of its non-net power supply revenue request. Also the agreement eliminates an overhang and supports our view of a constructive Idaho regulatory environment. We believe that with cost control efforts, ongoing tax benefits, load growth, and other rate mechanisms in place IDA can earn fair returns in 2012.
• The unicap study is likely to be reviewed by the IPUC at a later date and we note that the
study will ultimately benefit customers as earnings above the 10.5% ROE threshold will be
shared/refunded with/to customers. The tax study-related customer sharing, the reversal
of investment tax credits (ADITC), and ongoing tax benefits position IDA favorably in
upcoming regulatory developments, in our opinion. We expect IDA to file for recovery in
base rates of the pre-approved $427m Langley Gulch generation station for new rates in June 2012 driving rate base higher.
• We also expect a common dividend increase in 2H12. The current payout ratio is 40%
(based on our 2012 EPS estimate), well below regulated utility peer group payout ratio
targets of 60-70% (regulated utility peer group defined as electric utiliies with a majority of
operations regulated by the state/federal). We expect IDA capital program to moderate in
the near-term following Langley Gulch completion (2011 capex of $325m, 2012-2013 total
capex of $460m) and then ramp-up longer-term ahead of the expected completion date
(2016) of the $820m (partners expected) Boardman-Hemmingway transmission line.
Therefore, we expect incremental financial flexibility and liquidity going forward supporting
a common dividend increase.
• Our 2011 EPS estimate is $3.53, at this time, which implies a 10.5% ROE ($3.20) and
IDA’s entitlement to 50% of earnings (+$0.33) in excess of a 10.5% return as outlined in
its current rate structure. Our 2011 estimated EPS is subject to change and we expect
IDA to provide an updated 2011 earnings guidance with the release of its 3Q11 financial
results. The estimated ongoing unicap study benefit ($3m annually) was excluded from
the Idaho rate case settlement stipulation and revenue requirement.
COMPANY & MARKET DATA
Price (October 3, 2011) $37.59
Price Target, Excl Dividends (YE11) $42.00
52 - Week Range $33.88-$40.71
Mkt. Capitalization (mill) $1,846
Enterprise Value (mill) $3,404
FD Shares Outstanding (mill) 49
Avg. Daily Trading Vol. (000) 218
Book Value per Share (2Q11A) $33.24
Dividend (FY11E) / Yield $1.20 3.2%
FY2010A FY2011E FY2012E
Revenue (mill) $1,036 $1,121 $1,218
1Q EPS $0.34 $0.60A
2Q EPS $0.82 $0.42A
3Q EPS $1.39
4Q EPS $0.41
EPS $2.95 $3.53 $3.02
Prior EPS
Consensus EPS $3.04 $3.01
P/E 12.7x 10.6x 12.4x
EV/EBITDA 10.8x 11.3x 9.0x
P/FCF nm nm nm
ESTIMATES
Volum e in Millions
0.0
1.0
2.0
3.0
C los e
$20
$25
$30
$35
$40
$45
Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11

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

October 4, 2011
BUY
Brian Russo 646.432.6312 IDACORP (IDA)

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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, 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
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 09/30/11)
Buy 77% (33% are banking clients)
Neutral 23% (12% are banking clients)
Sell 0% ( 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, or other companies
mentioned in this report.

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