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IDACORP Inc. (IDA-$42.73) NEUTRAL
Initiation of Coverage Target: $45
Michael Klein [phone] ([e-mail]) September 21, 2012
Market Cap (Mil) $2,140
Avg. Daily Trading Volume 231,000
Shares Out (Mil) 50.100
Float Shares (Mil) 49.900
Institutional Holdings 69%
Dividend $1.52
Dividend Yield 3.6%
Price to Book Value 1.3x
Return on Equity (2014E) 8.9%
LT Debt-to-Total Capital 47%
5-Year EPS Growth Rate Projection 4%
52-Week Range (NYSE) 43-34
Russell 2000 765
Short Interest (Mil) 1.240

Note: 2011 exclude $1.01 benefit from tax accounting method change and ADITC reversal. 2011-2014E include $0.08 in annual stock-based
compensation expense. The Russell 2000 Index includes IDACORP. Sum of quarterly EPS may not equal full year total due to rounding and/or changes
in share count. NC = Not covered by Sidoti & Company, LLC.
ea 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E
Rev.(Mil.) $842.9 $926.3 $879.4 $960.4 $1049.8 $1036.0 $1026.8 $1097.4 $1117.4 $1144.2
GAAP EPS $2.02 $2.33 $1.86 $2.17 $2.64 $2.95 $3.36 $3.27 $3.23 $3.38
Dividend $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.37 $1.56 $1.71
Description: IDACORP Inc. (www.idacorpinc.com) is a holding company that operates through a regulated utility segment, Idaho
Power Company, and two unregulated arms: Ida-West Energy, which focuses on independent power production, and IDACORP
Financial Services (IFS), which manages tax-advantaged real estate investments. The utility serves 496,000 customers in Idaho
and Oregon. Headquarters are in Boise, ID.
Initiate Coverage of IDACORP Inc. With A NEUTRAL Rating And $45 Price Target
‰ IDACORP’s ability to accelerate the use of accumulated deferred investment tax credits (ADITC) provides good
earnings visibility through 2014, in our opinion. Idaho Power has about $70 million in tax credits from adding plant in its
service territory. A 2010 settlement with the Idaho Public Utility Commission (IPUC) allowed Idaho Power to accelerate the
use of these tax credits to achieve a minimum 9.5% ROE on year-end equity in its Idaho jurisdiction; the allowance was
since extended for 2012-2014. IDA may use no more than $25 million in 2012 and up to $45 million in the three years. In
our view, Idaho Power’s ability to tap this resource to maintain at least a 9.5% ROE provides a visible floor to earnings and
will allow consistent earnings growth, with upside potential and limited downside.
‰ Regulatory pre-approval to construct the Langley Gulch plant increased Idaho rates by $58.1 million and provided a
$335.9 million rise in the Idaho rate base. In 2009, the IPUC approved Idaho Power’s request to construct a 300-
megawatt (MW) natural gas-fired combined cycle combustion turbine plant. In June 2012, the IPUC approved final terms
that enable Idaho Power to begin recovering these costs and earn a return, as of July 1, 2012 when the plant went into
service. We view the IPUC’s pre-approval as an incremental positive and a demonstration of Idaho Power’s favorable––and
improving––regulatory environment.
‰ However, a lack of growth drivers tempers our enthusiasm for the stock. With Langley Gulch now in the rate base and
two transmission projects––the Boardman-to-Hemingway and Gateway West lines––not slated for completion before 2018
at the earliest, we see few meaningful earnings growth drivers in the near term. We think load growth driven by an

2011 2012E 2013E 2014E
Mar. $0.60 $0.50 $0.52 $0.58
June 0.42 0.71 0.60 0.63Set. 1.15 1.51 1.51 1.54
Dec. 0.18 0.55 0.60 0.63

EPS $2.35 $3.27 $3.23 $3.38

P/E 13.1x 13.2x 12.6x
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improving economy, increased population, and industrial activity––will be key to sustainable earnings gains without the
ADITC backstop. We view the company’s 2013 Integrated Resource Plan (IRP) as a potential catalyst as the updated 20-
year outlook may highlight an improved economic pickup and/or indentify increased base load opportunities.
‰ The utility’s earnings are mostly shielded from variations in hydroelectric conditions. Idaho Power’s 17 hydro
generating stations on the Snake River provide about half the utility’s total annual generation; the Hells Canyon Complex
provides nearly 70% of Idaho Power’s hydro generation and 35% of all energy generated. That said, power supply costs
can be inconsistent from year to year depending on hydro conditions and whether Idaho Power can tap this low-cost
resource or must rely on more costly thermal resource generating plants. To combat this, the power cost adjustment (PCA)
mechanism enables Idaho Power to recover from customers, or refund, up to 95% of net power supply expenses. Before
2009, only 90% was shared with customers, so 10% of the power supply cost variability fell to Idaho Power’s bottom line.
With this 95/5 band, we contend that earnings will be more consistent than in the past.
‰ We model a 14% annualized dividend increase in 2013 and 10% in 2014. In September 2012, the Board announced a
15% hike in the quarterly dividend to $0.38 per share which followed a 10% increase in 1Q:12 (the first time the dividend
was raised since 2004). On a full-year basis, the annual dividend was raised almost 27% from the 2011 payout. In our
view, these recent dividend hikes demonstrate the company’s commitment to achieving a long-term target of a 50%-60%
payout ratio. We assume 10% increases in the quarterly payout in 4Q:13 and 4Q:14, which imply annual payout ratios of
48% and 51%, respectively, based on our EPS estimates. We note that the current dividend yield of 3.6% still lags the peer
group average of 4.0%. With Langley Gulch now complete and transmission projects five-plus years away, we think the
Board has the financial flexibility to raise the dividend more than our current projected increases.
‰ IDA maintains a solid balance sheet, in our view. IDA targets a 50/50 capital structure; with about 51% equity at the end
of 2Q:12, we see limited risk from dilution near term. In addition, with a single-A senior secured credit rating from S&P and
Moody’s (respective corporate credit ratings of BBB and Baa1), we contend that IDA will benefit from lower financing costs
when raising debt. We think this is highlighted by the $150 million in first-mortgage bonds issued in April 2012; the debt was
issued in 10-year and 30-year bonds and carries 2.95% and 4.3% coupon rates, respectively. Furthermore, after $70 million
of debt matures in 2013, IDA does not have any maturities until 2018. Based on estimated capital spending of $250 million
in both 2013 and 2014, we model respective free cash flow of $4.3 million ($0.08 per share) and $19.3 million ($0.37) before
dividend payments. We project a cash outflow of $15.7 million ($0.31) in 2012 owing largely to the $35.2 million contribution
to the company’s pension plan in 1Q:12.
‰ We initiate coverage of IDACORP Inc. with a NEUTRAL rating and $45 price target. We view IDA as a solid small-cap
utility that offers good visibility into consistent, stable earnings through at least 2014 thanks to the use of accelerated ADITC
and a 95/5 customer sharing band under the PCA. However, the dividend yield is a below-average 3.6% and we perceive a
lack of earnings drivers in the next few years. Historically, IDA traded at about 14x one-year forward earnings and 13x two-
year forward EPS, about in line with the peers’ historical averages. Thus, we value IDA at about 13x our 2014 EPS
estimate of $3.38 to arrive at a $45 price target. Given the limited total return implied by this price target and the dividend
yield, we initiate coverage of IDACORP Inc. with a NEUTRAL rating.
Company Overview

IDACORP Inc. traces its roots to 1916 when five utility
companies on the Snake River combined to form Idaho
Power. Today, the company comprises the Idaho Power
regulated utility and two unregulated segments: IDACORP
Financial Services (IFS), which makes investments in
affordable housing and real estate investments, and Ida-
West Energy, which operates small hydroelectric
generation plants.
Idaho Power’s retail rates are regulated by the Idaho Public
Utilities Commission (IPUC) and the Oregon Public Utility
Commission (OPUC); the Federal Energy Regulatory
Commission (FERC) regulates transmission and wholesale
power sales. About 95% of Idaho Power’s rate base is
allocated to Idaho; the remaining 5% is split between
Oregon and FERC jurisdiction.
Idaho Power

IDACORP’s regulated utility, Idaho Power, serves some
496,000 customers across a 24,000 square-mile service
territory spanning southern Idaho and eastern Oregon. The
utility is dual-peaking, with peaks in the summer and winter.
Usage largely reflects weather and the agricultural growing
season when customers use more electricity to operate
irrigation pumps.

The utility operates 17 hydroelectric projects on the Snake
River and its tributaries; total nameplate capacity is 1,709
MW. This low-cost electricity source is the main reason
Idaho Power customers benefit from rates about 30% below
the national average. The utility is also a part owner of
three coal-fired plants (one each in Wyoming, Oregon, and
S ource: C om pany reports
E xhibit 1. Idaho P ower S ervice Territory
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Nevada) and owns two natural gas-fired combustion turbine
power plants (both in Idaho).

A third natural gas-fired plant, the 300-MW Langley Gulch
plant, entered commercial operation on June 29, 2012 and
is now included in the company’s Idaho rate base. Based
on IDACORP’s 2011 IRP, management anticipates that
peak-hour load will grow 69 MW annually, with an average-
system load of 29 MW annually through 2030. Aside from
Langley Gulch (now online) and a 50-MW expansion of the
Shoshone Falls hydroelectric facility, no significant new
generation is expected online for 20 years.

Idaho Power’s hydroelectric projects must obtain licenses
from the FERC; these typically last 30-50 years. Idaho
Power is in the process of relicensing the Hells Canyon
Complex and Swan Falls hydroelectric project.

The Hells Canyon Complex provides about 68% of Idaho
Power’s annual hydroelectric generation and approximately
35% of the total energy generated, based on a normal
water year (see Exhibit 2). The Brownlee Reservoir is the
only Hells Canyon Complex reservoir and Idaho Power’s
only reservoir with significant active storage.

Local Economy

As with many other utilities, the recession slowed growth in
Idaho Power’s new residential customers. Before the
recession, Idaho Power was adding about 15,000 new
residential customers annually; post-recession adds are
approximating 2,000 a year. Megawatt hour sales (MWH)
fell 4.1% in 2009, followed by 3.1% in 2010––the first
decline in overall energy in the utility’s jurisdiction since
2001, before rising 1.6% in 2011.

However, the local economy is beginning to rebound and
this will drive positive results for Idaho Power, in our view.
People are again migrating to Idaho Power’s service
territory from other states; households in Idaho are
projected to grow at an annual average rate of 1.2%
through 2030, according to the company’s 2011 Integrated
Resource Plan. Average system load growth is 1.4%––
1.5% residential, 1.3% commercial, 0.3% irrigation, 1.7%
industrial, and 2.0% additional firm load growth.

Unemployment in Idaho is also trending better than the
national average. Historically, Idaho’s unemployment rate
was 100-200 basis points below the national average.
While this variance narrowed, as of July 2012, Idaho’s
unemployment rate was still 80 basis points below the
national average.

Regulatory Environment

One main reason we are attracted to IDACORP is the
regulatory environment for Idaho Power. While there is still
room for improvement, we contend that recent regulatory
actions were favorable and provide investors with good
visibility into earnings through at least 2014.

Over time, Idaho Power accumulated about $70 million in
tax credits associated with plant construction. As part of a
2010 rate case settlement, the IPUC allowed Idaho Power
to accelerate the amortization of these accumulated
deferred investment tax credits (ADITC) if the utility’s Idaho
jurisdictional ROE fell below 9.5%. In 2011, the IPUC
extended this ruling for 2012-2014. In these years, Idaho
Power can access the ADITC benefit to maintain a
minimum ROE of 9.5%. Idaho Power can use no more
than $25 million in 2012 (management’s 2012 earnings
guidance excludes the use of additional ADITC) and up to a
total $45 million for 2012-2014; however, IDA may not use
any tax credits if the Idaho ROE exceeds 9.5%. Thus, IDA
offers good visibility into earnings in the next three years
with the 9.5% Idaho ROE serving as a backstop. In our
view, IDA could receive an incremental boost to earnings
from the baseline 9.5% ROE which is calculated off year-
end equity and not rate base equity.

Other terms of the settlement included sharing bands with
customers based on reported earnings (see Exhibit 3). The
utility can keep all earnings on a 9.5%-10.0% Idaho ROE;
at 10.0%-10.5%, earnings are shared evenly with Idaho
customers; above 10.5%, 75% is returned to customers.

In 2011, Idaho Power filed a general rate case proposing an
$82.6 million increase in Idaho jurisdictional revenue. The
case ultimately settled, with the parties agreeing to a $34
million rise, or an average rate increase of about 4%,
effective January 1, 2012. Idaho Power can earn a 7.86%
rate of return on its $2.36 billion Idaho jurisdictional rate
base; while the IPUC did not grant an allowed ROE, we
estimate it is right around 10%.

The IPUC is moving toward a forward test year––a
significant positive for Idaho Power, in our view, as recovery
would be based on expected costs, not figures that can be
stale by the time new rates are implemented. In the latest
rate case (2011), the Commission allowed Idaho Power to
base its revenue requirement on a combination of historical
and projected costs. While not a true forward test year
because the projected costs were estimates from the filing
date and not from when new rates were implemented, to
us, this demonstrates the utility’s positive regulatory
environment, and the potential for improvement over time.
Exhibit 2. Percent of Total Generation
53%51%
69%
45%48%30%
1%1%2%
0%
25%
50%
75%
100%
2009 2010 2011
Source: Company reports, Sidoti & Company, LLC
Natural gas
Coal
Hydro
Exhibit 3.
Idaho ROE Comments
9.5% Use of ADITC to ensure 9.5% Idaho jursidictional ROE
9.5% to 10.0% Idaho Power keeps all earnings
10% to 10.5% Earnings are split 50/50 with customers
Above 10.5% Idaho Power keeps 25% of earnings
Source: Company reports, Sidoti & Company, LLC
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In addition, Idaho Power was granted pre-approval for the
Langley Gulch plant, the utility’s first base-load resource to
come online since the 1980s. The pre-approval enables
Idaho Power to begin recovering costs, and earning a
return, as soon as the asset enters service, eliminating a
significant amount of regulatory lag and uncertainty.

To address the earnings volatility that power supply costs
can introduce, Idaho Power uses a power cost adjustment
(PCA) mechanism. Most of this volatility stems from the
variability in hydro conditions. The two aspects of the PCA,
a forecast component based on the company’s expectation
of net power supply costs and a true-up component for the
previous year, take effect each June and enable IDA to
recover from or refund to customers up to 95% of the
difference in power supply costs. Before 2009, Idaho
Power was allowed to recover a maximum 90% of the
variance. Thus, Idaho Power is giving up the potential for
higher earnings when hydro conditions are strong, but also
eliminating much of the downside risk when conditions are
less favorable. We view this as another regulatory positive.

The Load Growth Adjustment Rate (LGAR), an element of
the PCA formula, stops the company from recovering power
supply expenses associated with weather-related load
growth, an increase in customers served or changing
customer use patterns.

The Fixed Cost Adjustment mechanism (FCA) is designed
to remove Idaho Power’s disincentive to invest in energy
efficiency programs by decoupling fixed cost recovery from
a variable kilowatt-hour charge. Instead, customers are
charged a fixed amount. The FCA began as a pilot
program; the IPUC approved it as a permanent program on
March 30, 2012.

Utility Capex

Management expects utility-related capex of approximately
$250 million annually through 2014. The majority of this
spending will focus on routine maintenance and system
reliability as there are no significant projects on the near-
term horizon. With depreciation estimated to be about
$125-$130 million per year, we project annual rate base
growth of roughly $100 million.

The Boardman-to-Hemingway line is a 300 mile, 500-kV
transmission project. Idaho Power, PacifiCorp (private) and
Bonneville Power Association (BPA) entered a joint funding
agreement in January 2012 to begin permitting for the
project. Idaho Power has a 21% interest in the permitting
phase, or $11 million; total project costs are estimated at
$820 million. Idaho Power originally anticipated a 2016 in
service date for the transmission project; however, it now
appears 2018 is the earliest the project will be complete as
a result of federal and state permitting issues, regulatory
approvals and other hold-ups. The project is important for
the development of renewable resources as Northeast
Oregon has the potential for both wind and geothermal
resources. Classified as a “smaller utility” in Oregon, Idaho
Power must meet only a 10% renewable portfolio standard
(RPS) beginning in 2025. Idaho does not have a formal
RPS mandate.
The Gateway West Line is another joint transmission
project with PacifiCorp. This 1,150 mile project will run from
the Windstar substation near Glenrock, Wyoming, to the
Hemingway substation near Melba, Idaho. Idaho Power’s
costs for the permitting phase are estimated at $24 million,
with the total project costing $150-$300 million. This project
is not expected to be complete and in service until after the
Boardman-to-Hemingway line.

Industrial Customer Activity

In 2009, Idaho Power and Hoku Materials (NASDAQ:
HOKU, NC) signed a four-year service agreement with a
maximum demand obligation of 82 MW for Hoku’s
polysilicon production facility. Idaho Power was set to
receive revenue of about $5.4 million in 2012 from Hoku
under a February 2012 amended agreement; however, in
May 2012, Hoku stopped construction of the facility and
Idaho Power subsequently terminated the contract. While
this is a negative for Idaho Power, management factored
the loss of business into 2012 EPS guidance, which was
raised to $3.20-$3.35 (from $3.00-$3.15) after 2Q:12 results
were reported.

Unregulated Businesses

IDACORP Financial Services (IFS) makes investments in
affordable housing and other real estate. IDA recognizes
the return from these investments principally through tax
credits that reduce federal and state income taxes and
accelerate tax depreciation benefits. The investments
cover 49 states, Puerto Rico, and the U.S. Virgin Islands;
they generated tax credits of $6 million in 2011 and $7
million in 2010; our model includes annual tax credits of $4
million in 2012-2014. We do not expect management to
make additional investments, at least in the near term, as it
focuses on growing the regulated utility.

Ida-West operates and has a 50% interest in nine
hydroelectric plants with generating capacity of 45 MW.
These plants are qualifying facilities under the Public Utility
Regulatory Policies Act of 1978 (PURPA), which is
designed to encourage the use of renewable energy
sources.

Dividend

From 2004 through 2010, IDA maintained a flat $1.20 per
share annual dividend. However, in November 2011, the
Board adopted a long-term 50%-60% payout ratio target
and raised the per share quarterly distribution 10% to $0.33
(from $0.30) effective 1Q:12. In September 2012, a 15%
increase in the quarterly payout to $0.38 per share was
announced, implying about a 27% cumulative annual
increase and a 42% payout in 2012, based on our EPS
estimate. We model 10% quarterly increases in 4Q:13 and
4Q:14, implying full-year payout ratios of 48% and 51%,
respectively, based on our EPS estimates.

We think the Board has the financial flexibility to be more
aggressive with dividend increases than in the past now
that Langley Gulch is complete and with no significant
projects on the horizon. However, we project just 14% and
10% annual increases in 2013 and 2014 since the
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upcoming 2013 IRP may identify new growth opportunities
and a better use of capital, in the company’s view.

Recent Results

IDA reported 1Q:12 EPS of $0.50, down 17% year over
year. A 10% decrease in heating degree days offset much
of the benefit from a change in base rates and recovery
through various regulatory mechanisms. An increase in
operating and maintenance (O&M) expense, primarily $3
million related to pension expense, also contributed to the
year-over-year decline.

IDA reported 2Q:12 EPS of $0.71, representing a 6 9% year
over year increase. The surge in earnings was driven by a
$19.5 million increase associated with volume, as well as
higher irrigation sales. In 2Q:12 irrigation sales nearly
doubled from the year-ago period and were near historic
highs; usage among this customer group was the third
highest in more than 10 years. These results were driven
by less precipitation, combined with warmer temperatures.

During 2Q:12, Idaho Power did not use any additional
ADITC and does not expect to use the tax credits in 2012
as the Idaho-jurisdictional base is expected to earn an ROE
that exceeds 9.5%.

Earnings Outlook

In 2012, we forecast almost a 7% revenue increase from
rate changes implemented in January 2012 in the Idaho
jurisdiction that are more weighted toward the summer
months, plus inclusion of the Langley Gulch plant into rates
as of July 1. After adjusting 2011 results to exclude a $57
million tax benefit from an accounting method change and a
$6.7 million ADITC reversal, we project 2012 net income
increases 39% driving EPS of $3.27. We assume Idaho
Power does not utilize any amortization of ADITC because
we estimate the utility will achieve a 10.0% Idaho-
jurisdiction ROE.

Our 2013 estimates assume 1.5% load growth, normalized
weather and a 1.8% sales advance to $1.12 billion. We
project a 2% increase in O&M expense, the use of $18
million in ADITC, a 12% rise in interest expense, and a tax
rate of 29.5%; these assumptions drive our forecast for
EPS of $3.23, down 1% year over year.

For 2014, we project 1.7% load growth (assuming the
regional economy continues to improve) lifts sales 2.4% to
$1.14 billion. We project another 2% rise in O&M expense,
the use of $25 million in ADITC (will help achieve a baseline
9.5% ROE in Idaho), and a tax rate of 26.7% lead to EPS of
$3.38, up 4.8% year over year.

Balance Sheet & Cash Flow

In April 2012, Idaho Power issued $150 million of first
mortgage bonds, split equally between 10- and 30-year
maturities. The 10-year bonds carry a 2.95% interest rate
and the 30-year bonds, a 4.3% rate, both favorable terms,
in our view. The company has no significant maturities until
2018 and maintains single-A senior secured debt ratings
from S&P and Moody’s; corporate credit and long-term
issue ratings from the credit rating agencies are BBB and
Baa1, respectively. IDA has access to $125 million and
$300 million in credit facilities via IDACORP and Idaho
Power, respectively, which expire in 2016. Our model
assumes a $200 million debt issuance in 2013 as we think
management will look to be opportunistic given the
favorable financing environment.

We project 2012 operating cash flow of $227 million.
Combined with a 28% expected decrease in capex at Idaho
Power, we forecast a cash outflow of $15.7 million ($0.31
per share). This is before estimated dividend payments of
$69.1 million, which reflect the recent increase in the per
share quarterly payout to $0.38 (from $0.33).

For 2013, we forecast operating cash flow rises 12% to
$254.3 million and capex increases 3% to $250 million,
driving projected free cash flow of $4.3 million ($0.08 per
share).

Our 2014 estimates assume a 6% increase in operating
cash flow to $269.3 million, flat capex of $250 million, and
free cash flow of $19.3 million ($0.37 per share).

Risks

Regulatory. Idaho Power’s retail operations are regulated
by the IPUC and OPUC, while the FERC regulates
wholesale and interstate activity.

Weather. Idaho Power’s results are subject to weather.
The utility is dual-peaking with the greater peak in demand
coming in the summer months. In 1Q:12, a 10% decrease
in heating degree days, year-over-year, contributed to a 4%
decline in operating revenue.

Liquidity and interest rates. As a regulated utility, Idaho
Power wants to maintain a 50/50 debt-equity capital
structure. As such, debt is required and there is no
assurance that future debt will be issued at favorable terms.

Valuation

In our view, IDA operates in a favorable regulatory
environment that enables the company to accelerate its use
of ADITC to maintain a minimum 9.5% Idaho-jurisdictional
ROE, while other rate mechanisms shield the utility from
hydro generation’s variability. Offsetting these positives, in
our opinion, are a below-average dividend yield and lack of
growth drivers beyond “organic” load growth as the regional
economy improves.

Historically, IDA traded at about 14x one-year forward
earnings and 13x two-year forward EPS, about in line with
the peers’ historical averages. Balancing the positives and
negatives detailed above, we value IDA at about 13x our
2014 EPS estimate of $3.38, to arrive at a $45 price target.
Given the limited total return implied by this target and the
3.6% dividend yield, we initiate coverage of IDACORP Inc.
with a NEUTRAL rating. We would become more positive
on the stock on evidence of greater rate base growth
opportunities, a faster than expected pickup in the local
economy, or a stock price decline to about $37, assuming
no change to underlying fundamentals.
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Table 1: IDACORP Income Statement
(in thousands, except where noted)
Mar Jun Sep Dec 2011 Mar A Jun A Sep E Dec E 2012E Mar E Jun E Sep E Dec E 2013E 2014E
Total operating revenue 251,494 234,983 309,630 230,649 1,026,756 241,140 254,701 340,783 260,786 1,097,410 251,257 254,970 346,194 264,938 1,117,359 1,144,237
Purchased power 25,094 36,423 66,141 35,678 163,336 34,277 45,178 52,913 28,542 160,910 34,963 46,082 53,971 29,113 164,128 167,411
Fuel expense 29,902 19,704 41,195 40,741 131,542 32,751 21,285 39,135 41,148 134,320 33,406 21,711 39,918 41,971 137,006 139,746
Power cost adjustment 31,306 15,501 (10,189) 1,879 38,497 9,008 (3,211) (17,831) 1,917 (10,117) 9,008 (3,211) (17,831) 1,917 (10,117) (10,117)
Other O&M 70,661 85,472 84,562 97,945 338,640 78,515 86,005 81,180 88,151 333,850 80,084 87,725 82,803 89,914 340,526 347,337
Energy efficiency programs 6,711 5,796 18,504 6,652 37,663 4,477 8,084 18,874 6,785 38,220 4,611 8,327 19,440 6,989 39,367 40,548
Gain on sale of emission allowances - - - -
Depreciation 29,464 29,693 30,115 30,517 119,789 30,542 29,879 30,477 30,781 121,679 31,089 31,400 31,714 32,031 126,234 131,360
Taxes other than income taxes 7,211 7,182 7,302 7,200 28,895 8,100 7,849 7,886 7,776 31,611 8,748 8,477 8,517 8,398 34,140 36,871
Other 1,054 913 607 1,572 4,146 1,127 832 800 800 3,559 800 800 800 800 3,200 3,200
Total Operating income- EBIT 50,091 34,299 71,393 8,465 164,248 42,343 58,800 127,350 54,886 283,378 48,548 53,660 126,861 53,805 282,874 287,881
EBITDA 79,555 63,992 101,508 38,982 284,037 72,885 88,679 157,826 85,667 405,057 79,637 85,060 158,575 85,837 409,109 419,242
Other income, net 4,538 5,041 6,010 5,620 21,209 6,593 6,571 10,814 5,811 29,789 5,588 5,663 7,487 5,862 24,600 24,946
Equity-method investments (1,294) (4,447) 2,085 4,454 798 1,419 (1,928) (509) - -
Total interest expense, net 18,959 17,568 17,446 17,553 71,526 17,205 17,436 15,462 17,325 67,428 20,293 18,933 17,730 18,534 75,491 75,024
Pre-tax income 34,376 17,325 62,042 986 114,729 33,150 46,007 122,702 43,372 245,231 33,842 40,390 116,618 41,133 231,984 237,804
Tax rate 14.2% NM 7.7% NM NM 25.1% 23.0% 38.2% 36.7% 33.3% 22.7% 25.4% 34.3% 25.6% 29.5% 26.7%
Income tax (benefit) expense 4,888 (3,652) 4,776 (7,997) (1,985) 8,333 10,569 46,854 15,915 81,671 7,699 10,252 39,981 10,542 68,474 63,543
Net Income 29,488 20,977 57,266 8,983 116,714 24,817 35,438 75,848 27,457 163,560 26,144 30,138 76,637 30,591 163,510 174,260
(Income) loss, noncontrolling interests 252 (76) (347) 2 (169) 112 (137) (25) - -
Net income attributable to IDA 29,740 20,901 56,919 8,985 116,545 24,930 35,301 75,848 27,457 163,535 26,144 30,138 76,637 30,591 163,510 174,260
EPS, diluted 0.60 0.42 1.15 0.18 2.35 0.50 0.71 1.51 0.55 3.27 0.52 0.60 1.51 0.60 3.23 3.38
Dividend per share 0.30 0.30 0.30 0.30 1.20 0.33 0.33 0.33 0.38 1.37 0.38 0.38 0.38 0.42 1.56 1.71
Payout ratio 51.0% 42.0% 48.3% 50.7%
Shares outstanding, diluted 49,356 49,516 49,622 49,734 49,558 49,905 49,984 50,134 50,284 50,077 50,435 50,587 50,738 50,890 50,663 51,530
Margin Analysis
O&M as % of Sales 28.1% 36.4% 27.3% 42.5% 33.0% 32.6% 33.8% 23.8% 33.8% 30.4% 31.9% 34.4% 23.9% 33.9% 30.5% 30.4%
Operating Margin 19.9% 14.6% 23.1% 3.7% 16.0% 17.6% 23.1% 37.4% 21.0% 25.8% 19.3% 21.0% 36.6% 20.3% 25.3% 25.2%
EBITDA Margin 31.6% 27.2% 32.8% 16.9% 27.7% 30.2% 34.8% 46.3% 32.8% 36.9% 31.7% 33.4% 45.8% 32.4% 36.6% 36.6%
Pretax Margin 13.7% 7.4% 20.0% 0.4% 11.2% 13.7% 18.1% 36.0% 16.6% 22.3% 13.5% 15.8% 33.7% 15.5% 20.8% 20.8%
Net Margin 11.7% 8.9% 18.5% 3.9% 11.4% 10.3% 13.9% 22.3% 10.5% 14.9% 10.4% 11.8% 22.1% 11.5% 14.6% 15.2%
YoY Change
Revenue -0.6% -2.8% 0.1% -0.6% -0.9% -4.1% 8.4% 10.1% 13.1% 6.9% 4.2% 0.1% 1.6% 1.6% 1.8% 2.4%
O&M -2.0% 13.8% 17.5% 31.0% 15.2% 11.1% 0.6% -4.0% -10.0% -1.4% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Operating profit 47.1% -6.3% -19.8% -78.3% -17.3% -15.5% 71.4% 78.4% 548.4% 72.5% 14.7% -8.7% -0.4% -2.0% -0.2% 1.8%
EBITDA 27.0% -2.0% -14.1% -43.1% -9.7% -8.4% 38.6% 55.5% 119.8% 42.6% 9.3% -4.1% 0.5% 0.2% 1.0% 2.5%
Pretax profit 100.3% -23.4% -19.7% -96.0% -19.1% -3.6% 165.6% 97.8% 4298.8% 113.7% 2.1% -12.2% -5.0% -5.2% -5.4% 2.5%
Net income 86.0% -46.5% -14.7% -55.6% -18.1% -15.8% 68.9% 32.4% 205.7% 40.1% 5.3% -15.0% 1.0% 11.4% 0.0% 6.6%
Pro forma EPS, diluted 79.6% -48.3% -17.6% -56.4% -20.4% -17.1% 67.3% 31.9% 202.2% 38.9% 3.8% -15.6% -0.2% 10.1% -1.2% 4.8%
2011 EPS exclude $1.01 benefit from tax accounting method change and ADITC reversal
Source: Company reports, Sidoti & Company, LLC estimates
IDACORP INC

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Table 2: IDACORP Statement of Cash Flows
(in thousands, except where noted)
2010 Mar Jun Sep Dec 2011 Mar A Jun A 2012E 2013E 2014E
Operating Activities
Net income 142,460 29,488 20,977 107,413 8,984 166,862 24,818 35,437 163,560 163,510 174,260
- - -
Depreciation and amortization 121,849 31,592 29,798 31,256 32,013 124,659 31,875 31,054 124,187 126,234 131,360
Deferred income taxes and investment tax credits 41,742 1,266 (23,260) (32,346) 1,427 (52,913) 5,008 6,856 11,864 - -
Changes in regulatory assets and liabilities 46,510 35,850 16,218 2,976 13,001 68,045 15,586 (1,781) 13,805 - -
Pension and postretirement benefit plan expense 14,728 4,553 5,344 7,382 27,944 45,223 7,673 7,531 15,204 - -
Contributions to pension and postretirement benefit plans (65,601) (593) (917) (18,684) (1,894) (22,088) (35,203) (1,613) (46,816) (35,000) (35,000)
(Earnings) Lossess of unconsolidated equity-method investments (3,008) 1,294 4,447 (2,084) (4,455) (798) (1,419) 1,928 509 - -
Distributions from unconsolidated equity-method investments 6,530 - 2,375 125 2,500 9,050 (4,850) 4,200 - -
Impairment of long-lived asset - - -
Allowance for equity funds used during construction (16,551) (5,329) (6,365) (6,570) (7,220) (25,484) (7,616) (7,833) (15,449) - -
Other non-cash adjustments to net income, net 3,061 724 1,196 1,811 756 4,487 827 1,975 2,802 - -
Excess tax benefit from share-based payment arrangements - - -
Accounts receivable and prepayments 14,243 (4,774) 3,820 (11,167) 9,889 (2,232) 365 237 (746) (1,696) (2,285)
Accounts payable and other accrued liabilities 4,014 (26,910) 13,067 11,634 7,637 5,428 (23,215) 16,456 1,290 2,619 2,713
Taxes accrued/receivable (14,216) 22,665 15,878 (7,071) (16,359) 15,113 10,352 (1,563) 19,652 (898) (1,210)
Other current assets 3,848 54 (22,419) (2,191) 4,872 (19,684) (1,242) (25,765) (23,671) (2,694) (2,976)
Other current liabilities 13,682 8,440 3,836 (10,901) 796 2,171 4,812 (8,581) (38,169) 436 475
Other assets (3,662) (109) 655 4,049 (265) 4,330 305 (2,647) (5,200) (100) (134)
Other liabilities (4,229) (4,992) 1,400 134 (1,918) (5,376) (4,326) (1,454) 389 1,891 2,060
Cash Flows From Operating Activities 305,400 93,219 63,675 78,016 75,333 310,243 37,650 45,387 227,411 254,304 269,264
Investing Activities
Additions to PP&E (338,252) (101,880) (84,163) (80,948) (70,774) (337,765) (48,382) (74,709) (243,091) (250,000) (250,000)
Proceeds from the sale of utility assets 18,982 - - - - -
Proceeds from the sale of emission allowances and RECs 6,408 2,055 1,442 1,666 1,151 6,314 785 1,111 1,896 - -
Investments in affordable housing (13,390) (905) - (50) (603) (1,558) (350) 37 (313) - -
Investments in unconsolidated affiliates - (300) (800) 1,100 (2,645) (2,645) - - - -
Purchase of available-for-sale securities (7,000) - - - - -
Other 4,918 1,026 663 746 861 3,296 (1,034) (102) (1,136) - -
Cash Flows From Investing Activities (328,334) (100,004) (82,858) (77,486) (72,010) (332,358) (48,981) (73,663) (242,644) (250,000) (250,000)
Financing Activities
Issuance of long-term debt 200,000 - - 150,000 150,000 200,000 -
Retirement of long-term debt (1,064) (121,064) - - - (121,064) (1,064) (100,000) (101,064) - -
Dividends on common stock (57,872) (15,147) (14,815) (14,846) (14,860) (59,668) (16,800) (16,670) (69,122) (78,941) (88,328)
Net change in short-term borrowings 13,150 7,200 (7,700) (14,900) 2,700 (12,700) 8,800 1,700 29,483 (132,948) 61,702
Issuance of common stock 48,644 2,215 6,039 2,154 7,093 17,501 2,487 2,352 8,839 8,000 8,000
Acquisition of treasury stock (869) (1,904) (29) - - (1,933) (2,062) - (2,062) - -
Other (3,365) 749 63 60 (1,757) (885) 1,014 (3,589) (2,575) - -
Cash Flows From Financing Activities 198,624 (127,951) (16,442) (27,532) (6,824) (178,749) (7,625) 33,793 13,499 (3,889) (18,626)
Change in cash and cash equivalents 175,690 (134,736) (35,625) (27,002) (3,501) (200,864) (18,956) 5,517 (1,734) 415 639
Cash and cash equivalents, beginning 52,987 228,677 93,941 58,316 31,314 228,677 27,813 8,857 27,813 26,079 26,494
Cash and cash equivalents, end 228,677 93,941 58,316 31,314 27,813 27,813 8,857 14,374 26,079 26,494 27,132
Free cash flow (32,852) (8,661) (20,488) (2,932) 4,559 (27,522) (10,732) (29,322) (15,680) 4,304 19,264
Free cash flow per share (0.68) (0.18) (0.41) (0.06) 0.09 (0.56) (0.22) (0.59) (0.31) 0.08 0.37
Source: Company reports, Sidoti & Company, LLC estimates
IDACORP INC

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Table 3: IDACORP Balance Sheet
(in thousands, except where noted)
2010 Mar Jun Sep 2011 Mar A Jun A 2012E 2013E 2014E
Assets
Cash and cash equivalents 228,677 93,941 58,316 31,314 27,813 8,857 14,374 26,079 26,494 27,132
Receivables- customer 62,114 66,634 61,691 75,540 66,296 68,246 62,814 71,332 72,628 74,375
Receivables- other 10,157 13,426 8,050 10,693 8,197 14,102 15,612 10,974 11,174 11,442
Income taxes receivable 12,130 - - - 421 786 743 743 743 743
Accrued unbilled revenues 47,964 41,592 49,779 49,368 46,441 37,078 60,246 49,383 50,281 51,491
Materials and supplies 45,601 45,871 45,650 46,558 46,490 48,428 48,354 46,646 47,579 48,531
Fuel stock 27,547 33,595 48,356 49,742 47,865 56,531 59,204 53,141 54,204 55,288
Prepayments 11,063 9,197 10,976 11,245 12,405 11,323 13,506 10,974 11,174 11,442
Deferred income taxes 10,715 9,537 7,411 3,850 16,159 37,359 46,627 46,627 46,627 46,627
Current regulatory assets 6,216 21,726 35,060 26,438 34,279 35,958 33,975 38,409 39,108 40,048
Other 1,854 1,294 1,284 4,507 4,606 4,617 2,629 5,487 5,587 5,721
Total current assets 464,038 336,813 326,573 309,255 310,972 323,285 358,084 359,796 365,598 372,842
Investments 202,944 202,605 198,305 192,343 199,931 195,978 198,083 198,083 198,083 198,083
PP&E, net 3,161,382 3,232,584 3,306,992 3,356,046 3,406,590 3,420,605 3,473,025 3,531,767 3,655,533 3,774,173
Total other assets 847,691 818,246 810,454 969,291 1,043,116 1,050,753 1,073,811 1,073,811 1,073,811 1,073,811
Total Assets 4,676,055 4,590,248 4,642,324 4,826,935 4,960,609 4,990,621 5,103,003 5,163,457 5,293,025 5,418,908
Liabilities
Current maturities of long-term debt 122,572 1,667 1,667 1,667 101,064 1,064 1,064 1,064 1,064 1,064
Notes payable 66,900 74,100 66,400 51,500 54,200 63,000 64,700 64,700 64,700 64,700
Accounts payable 103,100 64,569 87,014 90,088 100,432 71,275 92,024 100,378 102,386 104,433
Income taxes accrued - 4,146 22,911 8,785 505 2,837 5,513 5,513 5,513 5,513
Interest accrued 23,937 23,812 22,277 23,388 21,797 23,434 22,095 21,790 22,401 23,066
Uncertain tax position 74,436 73,700 56,898 - - - - -
Current regulatory liabilities 8,011 20,669 14,036 16,067 29,738 49,487 49,964 15,564 16,001 16,476
Other 50,103 68,679 68,496 62,966 60,511 72,847 61,275 67,444 69,336 71,396
Total current liabilities 449,059 331,342 339,699 254,461 368,247 283,944 296,635 276,453 281,399 286,649
Total other liabilities 1,202,725 1,218,025 1,248,451 1,424,118 1,543,118 1,545,613 1,573,463 1,563,463 1,528,463 1,493,463
Long-term debt 1,488,287 1,487,305 1,487,387 1,487,468 1,387,550 1,486,568 1,536,514 1,555,497 1,622,550 1,684,252
Shareholders' Equity
Total equity 1,535,984 1,553,576 1,566,787 1,660,888 1,661,694 1,674,496 1,696,391 1,768,044 1,860,613 1,954,545
Total Liabilities + Shareholders' Equity 4,676,055 4,590,248 4,642,324 4,826,935 4,960,609 4,990,621 5,103,003 5,163,457 5,293,025 5,418,908
Book Value / Share $31.24 $31.48 $31.64 $33.47 $33.41 $33.55 $33.94 $35.16 $36.56 $37.65
Total Debt / Capital 52.3% 50.2% 49.9% 48.2% 48.2% 48.1% 48.6% 47.9% 47.6% 47.3%
Long-Term Debt / Capital 46.4% 47.8% 47.7% 46.5% 43.4% 46.1% 46.6% 45.9% 45.8% 45.5%
ROA 3.0% 3.4% 3.0% 2.7% 2.4% 2.2% 2.5% 3.2% 3.1% 3.2%
ROE 9.3% 10.0% 8.8% 7.7% 7.0% 6.7% 7.5% 9.3% 8.8% 8.9%
Source: Company reports, Sidoti & Company, LLC estimates
Appendix Continued

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Required Disclosures

IDACORP Inc. (IDA-$42.73) NEUTRAL Target: $45 September 21, 2012

Risks

Regulatory. Idaho Power’s retail operations are regulated by the IPUC and OPUC, while the FERC regulates wholesale and
interstate activity.

Weather. Idaho Power’s results are subject to weather. The utility is dual-peaking with the greater peak in demand coming in the
summer months. In 1Q:12, a 10% decrease in heating degree days, year-over-year, contributed to a 4% decline in operating
revenue.

Liquidity and interest rates. As a regulated utility, Idaho Power wants to maintain a 50/50 debt-equity capital structure. As
such, debt is required and there is no assurance that future debt will be issued at favorable terms.
Valuation

In our view, IDA operates in a favorable regulatory environment that enables the company to accelerate its use of ADITC to
maintain a minimum 9.5% Idaho-jurisdictional ROE, while other rate mechanisms shield the utility from hydro generation’s
variability. Offsetting these positives, in our opinion, are a below-average dividend yield and lack of growth drivers beyond
“organic” load growth as the regional economy improves.

Historically, IDA traded at about 14x one-year forward earnings and 13x two-year forward EPS, about in line with the peers’
historical averages. Balancing the positives and negatives detailed above, we value IDA at about 13x our 2014 EPS estimate of
$3.38, to arrive at a $45 price target. Given the limited total return implied by this target and the 3.6% dividend yield, we initiate
coverage of IDACORP Inc. with a NEUTRAL rating. We would become more positive on the stock on evidence of greater rate
base growth opportunities, a faster than expected pickup in the local economy, or a stock price decline to about $37, assuming no
change to underlying fundamentals.

Required Disclosures
The Sidoti & Company, LLC (Sidoti) Equity Research rating system consists of BUY and NEUTRAL recommendations. BUY
suggests capital appreciation of at least 25% from initiation of coverage over the next 12 months, while NEUTRAL denotes that a
stock is not likely to provide similar gains over a 12-month period. As of 09/21/12, Sidoti provides research on 502 companies, of
which 353 (70%) are rated BUY and 149 (30%) are rated NEUTRAL. Of the BUYS, Sidoti has received investment banking
income from 3 companies (0.85%). Of the NEUTRALS, Sidoti has received investment banking income from 1 company (0.67%).
Of the NEUTRALS, 73 trade above our price targets. A risk to our price target is that the analyst’s estimates or forecasts may not
be met. This report contains forward-looking statements, which involve risks and uncertainties. Actual results may differ
significantly from such forward-looking statements. Factors that may cause such a difference include, but are not limited to, those
discussed in the “Risk Factors” section in the SEC filings available in electronic format through SEC Edgar filings at www.sec.gov.
The research analyst certifies that this report accurately reflects his/her personal views about the subject securities and issuers
and that none of the research analyst's compensation was, is or will be directly or indirectly related to the analyst's specific
recommendations or views contained in this research report. Sidoti does NOT own securities of the issues described herein.
Sidoti policy does not allow an analyst or a member of their household to own shares in any company that he/she covers. Sidoti
policy does not allow employees or household members to serve as an officer or director of a covered company. Sidoti does not
make a market in any securities. Sidoti has a non-research Capital Markets employee that will seek compensation for investment
banking services from this company. Sidoti employees, including research analysts, receive compensation that is based in part

Appendix Continued

Sidoti & Company, LLC
10
upon the overall performance of the firm, including revenues generated by Sidoti’s investment banking activities, but
compensation is not directly related to investment banking revenues.

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