Northwest Hydro Update 040513.pdf

Disclosures and Analyst Certifications can be found in Appendix A.
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Industry Update
• On April 4, 2013, the National Oceanic and Atmospheric Administration (NOAA) issued its April Forecast for
2013 water supply for the Northwest United States. In general, water supply conditions remain below-to-near
normal with heavy precipitation in Fall 2012 followed by dryer conditions year-to-date. Conditions also remain
well-below last year’s level. According to the NOAA, 2013 water supply forecasts at the Columbia - Dalles Dam are 94% of normal based on the 30-year average. See Table 1 for water supply data and Table 2 for runoff
data. See Table 7 for Mid-C spot power prices. See Table 8 for October 2012-April 2013 Seasonal
Precipitation.
• Snowpack and precipitation are essential throughout the winter season, followed by average temperatures in early spring that allow for steady run-off and favorable hydroelectric generation. Also, potential additional snow
pack accumulation through April/May can support improved conditions.
• Within the Ladenburg Thalmann utility universe (and in order of sensitivity to changes in hydro conditions),
Portland General Electric (POR-$30.52-NEUTRAL), Avista Corp (AVA-$27.05-NEUTRAL), and IDACORP (IDA-$47.57-NEUTRAL) are the companies primarily affected by these reports as their generation portfolios all
contain substantial hydroelectric assets. See Table 9 for Sharing Mechanism Descriptions.
• As of April 4, 2013, forecast stations St. Regis, Near Plains and Cabinet Gorge Dam along the Clark Fork River
are forecasted to have water supplies 78%, 91%, and 92% respectively, of their 30-year averages. The Spokane forecast station in Spokane and Coeur D’Alene Lake in northern Idaho, primary outflow is the Spokane
River, are forecasted to have water supplies 93% and 93% of their 30-year averages, respectively. AVA’s
hydroelectric generating facilities are located along the Clark Fork River (~80% or 794 MW) in Idaho and
Montana and the Spokane River (~20% or 180 MW) in Washington. See Table 3 and Table 4.
• Brownlee and Hells Canyon, IDA’s largest hydroelectric generation facility, are forecasted to have water
supplies 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. While conditions appear to be weakest at Brownlee
and Hells Canyon, we note that IDA is the least sensitive to hydro conditions relative to its Northwest peers.
See Table 5.
• The Estacada forecasting station along the Clackamas River is forecasted to be 90% of its average. POR’s
wholly-owned hydro facilities (~190MW) are located on the Clackamas River in northern Oregon, and POR’s
jointly-owned facilities (66.7% ownership in ~300MW) are on the Deschutes River in Oregon. POR also has
long-term purchase power contracts for output of 4 hydroelectric projects in the mid-Columbia River totaling 507
MW and a long-term agreement for output of the Pelton/Round Butte hydroelectric project totaling 150 MW.
See Table 6.

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

April 5, 2013
Brian Russo 646.432.6312 INDUSTRY UPDATE

Ladenburg Thalmann & Co. Inc. PAGE - 2 -

NOAA March 2013 Official Forecast

Table 1: NOAA Water Supply Updates –2012/2013
Jan Feb Mar pr May Jun Jul
Clark Fork
St Regis 95% 86% 81% 78%
2012 92% 99% 101% 112% 111% 111% 112%
Near Plains 96% 86% 88% 91%
2012 82% 92% 96% 110% 110% 114% 122%
Cabinet Gorge Dam 98% 90% 89% 92%
2012 83% 93% 96% 112% 112% 115% 121%
Spokane
At Spokane 101% 91% 94% 93%
2012 90% 94% 105% 136% 146% 148% 160%
Coeur D'Alene Lake 93% 85% 89% 93%
2012 85% 89% 99% 121% 130% 136% 150%
Clackamas
Estacada 103% 101% 99% 90%
2012 88% 94% 94% 111% 132% 130% 133%
Snake
Brownlee Dam 82% 79% 72% 65%
2012 82% 82% 85% 103% 92% 84% 87%
Hells Canyon 78% 74% 71% 62%
201 79% 80% 79% 100% 91% 92% 94%
April - September

Source: Ladenburg Thalmann & Co, Inc., NOAA, as of April 4, 2013

Table 2: NOAA Monthly Runoff Summary (2012/2013)
Avista (AVA)
Spokane at Spokane JAN FEB MAR APR MAY JUNE JULY JAN FEB MAR APR MAY JUNE JULY
Adjusted Volumes 165 235 788 1,669 1,153 1,011 283 244 267 492 41
30 Year Avg 356 446 623 870 1,002 548 184 330 426 604 845
% Avg 46% 53% 126% 192% 115% 184% 154% 74% 63% 94% 91%
Clark Fork at St Regis
Observed Volumes 203 185 312 1,054 1,303 1,200 443 178 161 221 20
30 Year Avg 201 208 292 536 1,215 1,278 489 184 188 272 523
% Avg 101% 89% 107% 197% 112% 94% 91% 97% 85% 81% 59%
Portland General (POR)
Clackamas JAN FEB MAR APR MAY JUNE JULY JAN FEB MAR APR MAY JUNE JULY
Observed Volumes 406 239 358 348 280 163 87 173 153 209 17
30 Year Avg 281 249 238 222 208 136 74 263 234 229 220
% Avg 144% 96% 150% 157% 204% 120% 117% 66% 66% 91% 114%
IDACORP (IDA)
Snake at Hells Canyon JAN FEB MAR APR MAY JUNE JULY JAN FEB MAR APR MAY JUNE JULY
Adjusted Volumes 1,060 974 1,528 2,166 1,797 1,088 726 677 697 807 54
30 Year Avg 1,271 1,316 1,849 1,978 2,006 1,682 827 1,090 1,133 1,574 1,688
% Avg 83% 74% 83% 110% 109% 65% 88% 61% 62% 47% 48%
(Units: Thousands of Acre-feet)
*References 1971-2000 data for 30 year average
**30 Year average adjusted from 1971-2000 to 1981-2010
2013**
2013**
2013**2012*
2012*
2012*

Source: Ladenburg Thalmann & Co, Inc., NOAA, as of April 4, 2013

Brian Russo 646.432.6312 INDUSTRY UPDATE

Ladenburg Thalmann & Co. Inc. PAGE - 3 -

Table 3: NOAA – Clark Fork
River Water Supply (% of
normal)
Table 4: NOAA – Spokane
River Water Supply (% of
normal)
70%
80%
90%
100%
110%
120%
130%
Jan Feb Mar Apr May Jun Jul
St Regis 2013 St Regis 2012
Near Plains 2013 Near Plains 2012
Cabinet Gorge 2013 Cabinet Gorge 2012
75%
95%
115%
135%
155%
175%
Jan Feb Mar Apr May Jun JulSpokane at Spokane 2013
Spokane at Spokane 2012
Couer D'Alene Lake 2013
Couer D'Alene Lake 2012
Source: Ladenburg Thalmann & Co, Inc., NOAA, as of April 4, 2013

Table 5: NOAA – Snake River
Water Supply (% of normal)
Table 6: NOAA – Clackamas
Water Supply (% of normal)
55%
65%
75%
85%
95%
105%
Jan Feb Mar Apr May Jun Jul
Brownlee Dam 2013 Brownlee Dam 2012
Hells Canyon 2013 Hells Canyon 2012
85%
95%
105%
115%
125%
135%
Jan Feb Mar Apr May Jun Jul
Estacada (Clackamas) 2013
Estacada (Clackamas) 2012
Source: Ladenburg Thalmann & Co, Inc., NOAA, as of April 4, 2013

Brian Russo 646.432.6312 INDUSTRY UPDATE

Ladenburg Thalmann & Co. Inc. PAGE - 4 -

Table 7: 2012-YTD Mid-
Columbia Off-Peak Spot Power
Prices
Table 8: October 2012 -April
2013 Seasonal Precipitation
0
5
10
15
20
25
30
35
40
45
1/
5
/
1
2
3/
5
/
1
2
5/
5
/
1
2
7/
5
/
1
2
9/
5
/
1
2
11
/
5
/
1
2
1/
5
/
1
3
3/
5
/
1
3
5/
5
/
1
3
$/M
W
h

Source: Ladenburg Thalmann & Co, Inc., Bloomberg, NOAA

Table 9: Sharing Mechanism Description
Avista Corp
Under the Energy Recovery Mechanism (ERM), there is a 50% customer sharing when
actual power supply expenses are higher than the amount between $4-$10m, there is a
75% customer sharing when actual power supply expenses are lower (rebate to customer)
than the amount included in base rates between $4-$10m, AVA receives 100% of the cost
or benefit within the $4m “deadband”, and 10% of the cost variance when power supply
costs exceed $10m.
Idacorp
Any shortfall (as compared with the median) is generally replaced with purchase power from
the open markets and 95% of those costs are recovered through the PCA mechanism in
Idaho. IDA was authorized by the Idaho Public Utility Commission (IPUC) in January 2009
to change its sharing mechanism to 95/5 (previously 90/10 sharing with customers), as well
as, the implementation of a forward-looking model forecasting fuel costs.
Portland General
POR utilizes a Power Cost Adjustment Mechanism (PCAM) to adjust rates to reflect
differences between forecast and actual power costs. The PCAM deadband range is from
$15m below to $30m above the baseline of net variable power costs. Amounts above or
below the deadband are shared with customers/shareholders 90/10. An earnings test is
also conducted that further mitigates cost pressures with customer surcharge if actual ROE
is no greater than 9.0% and customer refund if actual ROE is no less than 11.0%.
Source: Ladenburg Thalmann & Co, Inc., Company Reports

Brian Russo 646.432.6312 INDUSTRY UPDATE

Ladenburg Thalmann & Co. Inc. PAGE - 5 -

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.

RISKS
On top of normal economic and market risk factors that impact most all equities, the utility industry is uniquely at risk to:
Political opposition to rate increases and demand elasticity. The rise in commodity prices and expectations of soaring customer utility
bills have manifested into a political issue in a number of states.
Rising fuel costs could adversely impact financial performance. High and volatile supply costs could negatively impact near-term
results.
Complex utility regulation which could adversely affect the Companies’ results of operations, financial position and cash flows.
The outcome of retail rate proceedings which could have a material impact on the business and is largely outside the Companies’
control.
Current and potential environmental requirements and the incurrence of environmental liabilities, any or all of which may adversely
affect the business and financial results.
Weather variations and demand fluctuations can directly impact results of operations.
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)

COMPANY SPECIFIC DISCLOSURES:
Avista Corp (AVA-$27.05-NEUTRAL)
IDACORP (IDA-$47.57-NEUTRAL)
Portland General Electric (POR-$30.52-NEUTRAL)
Ladenburg Thalmann & Co. Inc. does not make a market in Avista (AVA), IDACORP (IDA), Portland General Electric (POR).
Ladenburg Thalmann & Co. Inc. has not had an investment banking relationship with AVA, IDA, POR nor received compensation for
investment banking services in the past 12 months. Neither the Analyst, nor members of the Analyst’s household own any securities
issued by AVA, IDA, POR.

For Company-specific information, please write to Ladenburg Thalmann & Co., Inc, Attention: Research Department, 520 Madison
Ave, New York, NY 10022, or call 212-409-2000 or 800-LAD-THAL

Brian Russo 646.432.6312 INDUSTRY UPDATE

Ladenburg Thalmann & Co. Inc. PAGE - 6 -

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