The URL can be used to link to this page

Home My WebLink About20030312Application Attachments.pdfnr;-.r-/EO ".,_.. \- ,;,, \.',-1':.'-J ;.,~ r~'n(:'!l I ,~,- 7"0'JM':f) '"I r,.C;LdJiiiH\I- itY' .. UTILI fL.:) CU'\iSSION ATTACHMENT II(a) J.' p c ~ t1 3 ~ tJ IDAHO POWER COMPANY BALANCE SHEET As of September 30, 2002 ASSETS Electric Plant: In service (at original cost)................................................................. Accumulated provision for depreciation........................................ In service - Net.............................................................................. Construction work in progress............................................................ Held for future use.............................................................................. Electric plant - Net......................................................................... Investments and Other Property: Nonutility property.............................................................................. Investment in subsidiary companies .................................................. Other.................................................................................................. Total investments and other property................................................. Current Assets: Cash and cash equivalents (A).......................................................... Receivables: Customer...................................................................................... Allowance for uncollectible accounts............................................. Notes............................................................................................. Employee notes ........................................................................... Related party..............................................................................,.. Other............................................................................................. Accrued unbilled revenues... ...........................................................". Materials and supplies (at average cost)............................................ Fuel stock (at average cost)............................................................... Prepayments.................................................................,.................... Regulatory assets associated with income taxes............................... Total current assets...................................................................... Deferred Debits: American Falls and Milner water rights.............................................. Company owned life insurance...................................................,...... Regulatory assets associated with income taxes............................... Regulatory assets -PCA.................................................................... Regulatory assets - other................................................................." Other.................................................................................................. Total deferred debits.............................................................,............ Total................................................................................................... (A) See Statement of Adjusting Journal Entries. Actual 043,566 304 $ 278,568,264 ) 764 998 040 98,263,888 335,078 865.597.006 Adjustments 300,000,000 300 000 000 The accompanying Notes to Financial Statements are an integral part of this statement 050 389 20,576,816 17.332.118 959 323 15,163,442 70,652,835 (1,516,892) 988,276 514 914 20,753,816 789,523 742,437 842,008 646,740 33,784 150 853,118 229,214,367 585,000 35,440,064 311 782 923 176,273 769 889,686 46.095.321 After Adjustments 043,566,304 278,568 264) 764 998,040 98,263 888 335,078 865.597,006 050 389 20,576 816 332,118 959,323 315.163,442 652 835 516.892) 988,276 514 914 20,753,816 789,523 28,742,437 842 008 10,646,740 33,784,150 853,118 529,214 367 585 000 35,440,064 311 782 923 176,273,769 32.889,686 095,321 634.066.763634.066.763 767 837,459 $ 300 000 000 $067 837,459 IDAHO POWER COMPANY BALANCE SHEET As of September 30, 2002 CAPITALIZATION AND LIABILITIES Common Shares Common SharesAuthorized Outstanding Equity Capital: 50 000,000 37 612 351 . Common stock .................................................................................. Preferred stock ..................................................................................Premium on capital .stock.................................................................. Capital stock expense........................................................................ Retained earnings.............................................................................. Accummulated other comprehensive income..................................... Total equity capital........................................................................ Long-Term Debt: First mortgage bonds (A)................................................................... Pollution control revenue bonds ................... ..................................... Other long-term debt......................................................................... American Falls bond and Milner note guarantees ............................. Unamortized discount on long-term debt (Dr).................................... Total long-term debt..................................................................... Current Liabilities: Long-term debt due within one year................................................... Notes payable.................................................................................". Accounts payable .............................................................................. Notes and accounts payable to related parties.................................. Taxes accrued.................................................................................... Interest accrued................................................................................. Deferred income taxes................................,....................................,. Other........,......................................................................................... Total current liabilities................................................................... Deferred Credits: Regulatory liabilities associated with accumulated deferred investment tax credits .................................................................. Deferred income taxes................................................................,...... Regulatory liabilities associated with income taxes ........................... Regulatory liabilities-other.................................................................. Other................................................................................... ;.............. Total deferred credits.................................................................... Total.................................... :.................................."..................... (A) See Statement of Adjusting Journal Entries. After Actual ustments ustments 030,878 94,030,878 53,985 100 53,985 100 361 874 913 361 874,913 724,027)(2,724 027) 336 128,388 336 128 388 980,195 980,195 837,315,057 837 315,057 470,000,000 170,460,000 120 254 585 000 (842 223) 300,000,000 770,000,000 170,460 000 120,254 585,000 (842,223) 672,323,031 300,000,000 972 323,031 107,084 021 133,300 000 37,533,427 110 888,847 36,295,498 19,569,756 853 118 22,336,755 107 084 021 133 300,000 533,427 110,888,847 36,295,498 19,569,756 853,118 336,755 481 861,422 481,861,422 831,560 68,831 560 588 190,654 588,190,654 41,785,011 785,011 055,837 055,837 71,474 887 71,474 887 776,337 949 776 337 949 767,837,459 300 000 000 067,837,459 The accompanying Notes to Financial Statements are an integral part of this statement IDAHO POWER COMPANY STATEMENT OF ADJUSTING JOURNAL ENTRIES As of September 30, 2002 Giving Effect to the Proposed issuance of Short-term notes Cash..................................................................................................300. DOO. DOO Notes Payable...................................................................................................... To record the proposed issuance of short-term notes and receipt of cash. 300.000,000 IDAHO POWER COMPANY CLASSIFICATION OF ELECTRIC UTILITY PLANT AND ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION As of September 30, 2002 Classification of Electric Plant Electric Utility Plant 1. Electric plant in service: (a) Intangible plant..................................... (b) Steam plant.......................................... (c) Hydro production plant......................... (d) Other production plant......................... (e) Transmission plant............................... (f) Distribution plant.................................. (g) General plant....................................... S 60.919 111 760,044,704 620.537 149 49.107 099 474 772 255 881.030,211 197.610.224 044 020 753 2. Electric plant held for future use.......................................................335,078 3. Construction work in progress.......................................................... _263 888 Total electric utility plant....................................................144 619,719 Classification of Accumulated Provision for Depreciation and Amortization Applicable to Electric Plant Accumulated provision for depreciation of electric plant .................,......... Accumulated provision for amortization of electric plant ................"......... 255,107 011 23.692 262 Total accumulated provision for depreciation and amortization...............................................................278,799 273 The accompanying Notes to Financial Statements are an integral part of this statement IDAHO POWER COMPANY NOTES TO FINANCIAL STATEMENTS As of September 30, 2002 1. Property Plant and Equipment: The cost of additions to utility plant in service represents the original cost of contracted services, direct labor and material, allowance for funds used during construction and indirect charges for engineering, supervision and similar overhead items. Maintenance and repairs of property and replacements and renewals of items determined to be less than units of property are expensed to operations. The Company records repair and maintenance costs associated with planned major maintenance as these costs are incurred. For property replaced or renewed the original cost plus removal cost less salvage is charged to accumulated provision for depreciation while the cost of related replacements and renewals is added to property, plant and equipment. 2. Depreciation: All utility plant is depreciated using the straight-line method at rates approved by regulatory authorities. 3. Revenues In order to match revenues with associated expenses, the Company accrues unbilled revenues for electric services delivered to customers but not yet billed at month-end. 4. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on hand and highly liquid temporary investments with maturity dates at date of acquisition of three months or less. 5. Requlation of Utility Operations The Company follows SFAS No. 71 , " Accounting for the Effects of Certain Types of Regulations," and its financial statements reflect the effects of the different rate making principles followed by the various jurisdictions regulating the Company. The economic effects of regulation can result in regulated companies recording costs that have been or are expected to be allowed in the ratemaking process in a period different from the period in which the cost would be charged to expense by an unregulated enterprise. When this occurs, costs are deferred as assets in the balance sheet (regulatory assets) and recorded as expenses in the periods when those same amounts are reflected in rates. Additionally, regulators can impose liabilities upon a regulated company for amounts previously collected from customers and for amounts that are expected to be refunded to customers (regulatory liabilities). 6. Manaqement Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 7. FinancinQ: The Company has regulatory authority to incur up to $350 million of short-term indebtedness. The Company also has a $200 million 364-day revolving credit facility that expires in March 2003, under which the Company pays a facility fee on the commitment quarterly in arrears, based on its corporate credit rating. Commercial paper may be issued subject to the regulatory maximum , up to the amount supported by the credit facilities. At September 30. 2002, short- term borrowing under this facility totaled $133 million. The Company repaid $100 million of NOTES TO FINANCIAL STATEMENTS (Continued) floating rate notes in September 2002 using short-term borrowings from IDACORP which are payable on November 15, 2002. The Company plans to replace this intercompany debt with external financing, The Company currently has a $200 million shelf registration that can be used for first mortgage bonds, including medium-term notes, unsecured debt or preferred stock. At September 30 2002 none had been issued. In March 2002 , $50 million of First Mortgage Bonds 8.75% Series due 2027 were redeemed early using short-term borrowings. 8. Income Taxes The Company follows the liability method of computing deferred taxes on all temporary differences between the book and tax basis of assets and liabilities and adjusts deferred tax assets and liabilities for enacted changes in tax laws or rates, Consistent with orders and directives of the Idaho Public Utilities Commission (IPUC), the regulatory authority having principal jurisdiction , the Company s deferred income taxes (commonly referred to as normalized accounting) are provided for the difference between income tax depreciation and straight-line depreciation computed using book lives on coal-fired generation facilities and properties acquired after 1980. On other facilities, deferred income taxes are provided for the difference between accelerated income tax depreciation and straight-line depreciation using tax guideline lives on assets acquired prior to 1981. Deferred income taxes are not provided for those income tax timing differences where the prescribed regulatory accounting methods do not provide for current recovery in rates. Regulated enterprises are required to recognize such adjustments as regulatory assets or liabilities if it is probable that such amounts will be recovered from or returned to customers in future rates. The State of Idaho allows a three percent investment tax credit upon certain qualifying plant additions. Investment tax credits earned on regulatory assets are deferred and amortized to income over the estimated service lives of the related properties. Credits earned on non- regulated assets or investments are recognized in the year earned. Tax Accounting Method Change During the third quarter ended September 30 , 2002 the Company filed its 2001 federal income tax return and adopted a change to our tax accounting method for capitalized overhead costs. The old method allocated such costs primarily to construction of plant, while the new method allocates such costs to both construction of plant and the production of electricity. The Company adopted this method change during 2002 to take advantage of new tax rules enacted or promulgated during the first half of 2002. The key rule changes include: an announcement in January that this method change qualifies for the automatic change procedures; the signing in March of an economic stimulus bill that expanded the loss carryback period from two years to five years; and the announcement in March that the full effects of method changes could be absorbed in the year of change. These new rules provided sufficient incentive to adopt the method change with the Company s 2001 tax return, filed in September 2002. The tax accounting method change has been recorded as a decrease to income tax expense for the third quarter ended September 30 , 2002 of $31 million, attributable to 2001 and prior years and is consistent with prior regulatory treatment. The 2002 effects of the method change have been included as a $3 million decrease to income tax expense for the third quarter ended September 30, 2002. NOTES TO FINANCIAL STATEMENTS (Continued) 9. Allowance For Funds Used Durinq Construction (AFDC) AFDC, a non-cash item , represents the composite interest costs of debt, and a return on equity funds, used to finance construction. While cash is not realized currently from such allowance, it is realized under the rate making process over the service life of the related property through increased revenues resulting from higher rate base and higher depreciation expense. 10. Requlatorv Issues Wind Down of Power Marketing IDACORP announced on June 21, 2002 that IE would wind down its power marketing operations. The announcement stated that IE would not seek new electric customers; would limit its maximum value at risk to less than $3 million; would target a reduction of working capital requirements to less than $100 million by the end of 2003; and would reduce its workforce by approximately 50 percent. IE planned to continue its natural gas marketing operations in Houston and was evaluating growth opportunities in the natural gas mid-stream markets through an office established in Denver. On November 5, 2002, IDACORP announced that it was terminating further evaluation of growth opportunities in the mid-stream natural gas markets. The announcement stated that IE would close its Denver office by year-end, affecting five employees, and because of its link to the natural gas platform, would shut down its natural gas trading operation in Houston by March 2003, affecting six employees. The announcement concluded that IE's continued wind down of its electric trading operations would result in additional work-force reductions at IE's Boise operations through mid-2003. Beginning August 1, 2002, IPC resumed the function of buying and selling wholesale electricity to support its utility operations. IPC conducted electricity marketing until June 2001 when those operations were transferred to IE. In connection with the wind down of power marketing at IE , certain matters were identified that require resolution with the FERC or the Idaho Public Utility Commission (IPUC). Matters that need to be resolved with the FERC include: a utility such as IPC is entitled to transmission priority for its retail customers, while transmission for trading transactions must be purchased under the utility s open access tariff on the same basis as third parties. It appears that in some transactions this distinction was not observed; certain transactions between a utility and an affiliate are required to have prior FERC approval. Such prior approval was not sought for some electricity transactions between IE and lPG, such as spinning reserves and load following services, which are common industry services; and although IPC informed the FERC before IE was split off from IPC that it intended to move the utility s power marketing business to IE, lPG's power marketing contracts were assigned without formally obtaining the requisite prior approval of the FERC. IE and IPC voluntarily contacted the FERC in September 2002 to discuss these matters. The FERC requested certain documents and other information most of which IE and IPC have supplied. IE and IPC expect to make additional filings with the FERC in November 2002 which will include requests for approval of certain electricity transactions, the assignment of certain contracts between IPC and IE and termination of the Electricity Supply Management Services Agreement entered into between IPC and IE in June 2001. Should the FERC conclude that its regulations or rate schedules were not complied with, it has significant discretion as to the appropriate remedies, if any. The FERC's remedial authority includes the authority to require refunds, to order equitable relief, to suspend the authorization to sell wholesale power at market-based rates, and , in some instances, to impose monetary penalties. NOTES TO FINANCIAL STATEMENTS (Continued) In an IPUC proceeding that has been underway since May 2001 , IPC and the IPUC staff have been working to determine the appropriate compensation IE should provide to IPC as a result of transactions between the affiliates since February 2001. Similar state regulatory issues relating to the period prior to February 2001 were resolved by the parties involved and approved by the IPUC by Order No. 28852 issued on August 28, 2002. In that order, the IPUC approved lPG's ongoing hedging and risk management strategies. This formalized lPG' agreement to implement a number of changes to its existing practices for managing risk and initiating hedging purchases and sales. In Order No. 29102, the IPUC directed IPC to present a resolution or a status report to the IPUC no later than December 20,2002 on additional compensation due to the utility for the use of its transmission system and other capital assets by IE and any remaining transfer pricing issues. The companies do not believe that resolution of these transactions will have any adverse impact on retail customers or a material adverse effect on ongoing operations. However because it cannot be predicted at this point what regulatory actions might be taken or when , it cannot be determined what effect there may be on earnings and whether it will be material. As previously disclosed, the filing made with the FERC on May 14, 2001 , with respect to the pricing of real-time energy transactions between IPC and IE, is still under review by the FERC. For the period June 2001 through March 2002 , IE paid IPC approximately $6 million, which was calculated based upon the pricing methodology for the period that was most favorable to IPC. This amount was credited to ratepayers through the Power Cost Adjustment (PCA). An additional $1 million has been paid to IPC for the period April 2002 through July 2002 based upon the same pricing methodology. However, until the FERC takes final action on this filing, rates for real-time transactions between IE and IPC are subject to adjustment. Deferred Power Supply Costs Idaho: Our PCA mechanism provides for annual adjustments to the rates charged to Idaho retail customers. These adjustments , which typically take effect in May, are based on forecasts of net power supply expenses. During the year , the difference between actual and forecasted costs is deferred with interest. The balance of this deferral, called a true-up, is then included in the calculation of next year s PCA adjustment. On May 13, 2002, the IPUC issued Order No. 29026 related to the 2002-2003 PCA rate filing. The order granted recovery of $255 million of excess power supply costs, consisting of: $209 million of voluntary load reduction and power supply costs incurred between March 1,2001 and March 31 , 2002. $28 million of excess power supply costs forecasted for the period April 2002-March 2003. $18 million of unamortized costs previously approved for recovery beginning October 1 2001. The amount authorized in October 2001 totaled $49 million. This order spreads the remaining October rate increase, which would have ended in September 2002 through May 2003. The order also: Denied recovery of $12 million of lost revenues resulting from the irrigation load reduction program, and $2 million of other costs we sought to recover. Authorized recovery over a one-year period for all but $12 million of the $255 million of allowed deferred costs. In June 2002 , the IPUC issued Order No. 29065 deferring an additional $4 million applicable to certain industrial customers. The $16 million will be recovered during the 2003-2004 PCA rate year, and we will earn a six percent carrying charge on the balance. NOTES TO FINANCIAL STATEMENTS (Continued) Denied our request to issue $172 million in Energy Cost Recovery Bonds, which would have spread the recovery of that amount over three years. Discontinued the IPUC-required three-tiered rate structure for residential customers. Authorized a separate surcharge to collect approximately $3 million annually to fund future conservation programs. The IPUC had previously issued an order disallowing the lost revenue portion of the irrigation load reduction program. We believe that the IPUC's order is inconsistent with an earlier order that allowed recovery of such costs and we filed a Petition for Reconsideration on May 2, 2002. On August 29, 2002, the IPUC issued Order No. 29103 denying the Petition for Reconsideration. As a result of this order , approximately $12 million was expensed in September 2002. We still believe we should be entitled to receive recovery of this amount and have asked the Idaho Supreme Court to review the IPUC's decision. Oregon: We filed an application with the Oregon Public Utility Commission (OPUC) to begin recovering extraordinary 2001 power supply costs in our Oregon jurisdiction. On June 18, 2001 , the OPUC approved new rates that would recover less than $1 million over the next year. Under the provisions of the deferred accounting statute, annual rate recovery amounts were limited to three percent of our 2000 gross revenues in Oregon. During the 2001 session, the Oregon Legislature amended the statute giving the OPUC authority to increase the maximum annual rate of recovery of deferred amounts to six percent for electric utilities. We subsequently filed on October 5, 2001, to recover an additional three percent extraordinary deferred power supply costs. As a result of this filing, the OPUC issued Order No. 01-994 allowing us to increase our rate of recovery to six percent effective November 28, 2001. Deferred power supply costs consist of the following (in thousands of dollars): September 30, 2002 December 31 2001 Oregon deferral 14,284 866 Idaho PCA current deferral: Deferral for 2001-2002 rate year Deferral for 2002-2003 rate year Irrigation load reduction program Astaris load reduction agreement Irrigation and small general service deferral for recovery in the 2003-2004 rate year Industrial customer deferral for recovery in the 2003-2004 rate year 003 78,395 69,586 62,24718,449 876 690 Idaho PCA true-up: Remaining true-up authorized October 2001 Remaining true-up authorized May 2001 Remaining true-up authorized May 2002 Total deferral 500 42,895 124 972 176,274 304,489 NOTES TO FINANCIAL STATEMENTS (Continued) FMC/Astaris Settlement Agreement On January 8, 2002, the IPUC initiated an investigation to examine the load reduction rates contained iri our Voluntary Load Reduction (VLR) Agreement with FMC/Astaris. This VLR Agreement amended the Electric Service Agreement (ESA) that governed the delivery of electric service to FMC/Astaris' Pocatello plant, which ceased operations late in 2001. On June 2002, we, along with FMC/Astaris, signed and filed a proposed Stipulation and Settlement Agreement (Agreement) with the IPUC and on June 10 2002, the IPUC approved the Agreement in Order No. 29050 which included the following provisions: The VLR payments that we would have made to FMC/Astaris through May 2003 were decreased $5 million, reducing overall payments to $37 million. Approximately 90 percent of this reduction will flow through the PCA mechanism as a reduction in costs to Idaho retail customers. FMC/Astaris agreed to dismiss, with prejudice, a declaratory judgment action concerning the FMC/Astaris contract that it had previously filed against us in the Fourth Judicial District for the State of Idaho. FMC/Astaris will pay us approximately $31 million through March 2003 to settle the ESA. Garnet Power Purchase Agreement We had entered into a power purchase agreement (PPA) with Garnet Energy LLC (Garnet), a subsidiary of Ida-West Energy (Ida-West), a subsidiary of IDACORP, to purchase energy produced by Garnet's to-be-built natural gas generation facility. A hearing before the IPUC was scheduled for July 23, 2002 on our application for an order approving the PPA and an accounting order authorizing the inclusion of power supply expenses associated with the purchase of capacity and energy from Garnet in the PCA. Prior to the hearing date, Garnet informed us that there was a substantial likelihood that it would be unable to obtain the financing at acceptable terms necessary to construct the facility. Garnet further advised that there might be alternative financing arrangements that could allow Garnet to obtain financing within the constraints of the PPA. However, pursuing alternative financing arrangements would require additional time. As a result we sought a continuance in the hearing scheduled for July 23,2002. Ida-West has capitalized approximately $11 million related to the Garnet facility as of September 30, 2002. On July 24, 2002 , the IPUC issued its ruling effectively closing the proceeding involving our petition to enter into a PPA with Garnet. We were directed to return in 90 days with a report on the status of Garnet's progress in obtaining financing for the project and how we propose to meet future power requirements if the Garnet facility is not built. On October 30, 2002, we submitted our compliance report to the IPUC, which included (1) Ida-West'snotification that due to the dramatic changes in the electricity industry, financing the project on acceptable terms under the PPA was impracticable, (2) Ida-West's offering of three alternatives to allow the project to go forward and (3) our revised plan for meeting future load requirements absent the . PPA associated with the Garnet project including wholesale power purchases, energy exchanges , obtaining certain transmission rights or constructing or acquiring generation resources located in our service territory. Application to Defer Extraordinary Costs Associated With Security Measures In November 2001 , we filed an application requesting the IPUC to issue an accounting order authorizing the deferral of extraordinary costs associated with increased security measures subsequent to the events of September 11 , 2001. The additional or extraordinary security measures are needed to help ensure the safety of our employees and to protect our facilities. In March 2002 the IPUC issued Order No. 28975 directing the following related to these costs: NOTES TO FINANCIAL STATEMENTS (Continued) Costs in excess of $11 000 per month are to be deferred in a regulatory asset account. Such costs incurred in 2001 are to be amortized over a five-year period beginning in January 2003. Costs deferred in each subsequent year are to be amortized beginning in January of the next calendar year. Deferred costs are to receive the appropriate carrying charge. Costs are to be allocated among our various jurisdictions and affiliates. The IPUC deferred making a final decision regarding final allocation of deferred security expenses to other affiliates and sharing with shareholders until such time as the IPUC conducted its prudence review of the expenses. At September 30,2002 , $1 million of extraordinary secority costs had been deferred. IDACORP Energy and Idaho Power Company Agreement We entered into an Electricity Supply Management Services Agreement (Agreement) with IE in June 2001. The IPUC is currently assessing issues associated with this Agreement. While some of the issues likely became moot with the decision to wind down IE's trading operation the IPUC staff has indicated its desire to continue to review whether adequate compensation has been provided to our customers as a result of transactions with IE after February 2001. Similar issues arising prior to February 2001 were resolved by IPUC Order No. 28852. IPUC Order No. 29102 requires that the remaining IPCIIE compensation and transfer pricing issues be brought to resolution or that a status report be filed by December 20, 2002. A preliminary review of uncompensated amounts for transactions between IE and IPC occurring after February 2001 showed that the amount that IE would pay to IPC could be approximately $6 million. 11. Other Accounting Policies: Debt discount, expense and premium are being amortized over the terms of the respective debtissues. ATTACHMENT II (b) IDAHO POWER COMPANY The following statement as to each class of the capital stock of applicant is as of September 30 2002, the date of the balance sheet submitted with this application: Common Stock (1) Description - Common Stock, $2.50 par value; 1 vote per share (2) Amount authorized - 50,000,000 shares ($125 000,000 par value) (3) Amount outstanding - 37 612,351 shares (4) Amount held as reacquired securities - None (5) Amount pledged by applicant - None (6) Amount owned by affiliated corporations - All (7) Amount held in any fund - None Applicant's Common Stock is held by IDACORP, Inc., the holding company of Idaho Power Company. IDACORP , Inc.'s Common Stock is registered (Pursuant to Section 12(b) of the Securities Exchange Act of 1934) and is listed on the New York and Pacific stock exchanges. 4% Preferred Stock (1) Description - 4% Preferred Stock , cumulative, $100 par value; 20 votes per share (2) Amount authorized - 215,000 shares ($21 500,000 par value) (3) Amount outstanding - 139,851 shares (4) Amount held as reacquired securities - None (5) Amount pledged by applicant - None (6) Amount owned by affiliated corporations - None (7) Amount held in any fund - None Applicant's 4% Preferred Stock is registered as part of a class pursuant to Section 12(g) of the Securities Exchange Act of 1934. Series Serial Preferred Stock, $100 Par Value (1) Description - 7.68% Series Serial Preferred Stock, cumulative, $100 par value; 1 vote per share (2) Amount authorized - 150 000 shares ($15,000 000 par value) (3) Amount outstanding - 150,000 shares (4) Amount held as reacquired securities - None (5) Amount pledged by applicant - None (6) Amount owned by affiliated corporations - None (7) Amount held in any fund - None Applicant's 7.68% Series Serial Preferred Stock is registered as part of a class pursuant to Section 12(g) of the Securities Exchange Act of 1934. Serial Preferred Stock, Without Par Value (1) Description - Serial Preferred Stock, without par value (2) Amount authorized - 3,000,000 shares (3) Amount outstanding - Amount outstanding - 250,000 shares, 7.07% Series, cumulative, $100 stated value, non-voting shares (4) Amount held as reacquired securities - None (5) Amount pledged by applicant - None (6) Amount owned by affiliated corporation - None (7) Amount held in any fund - None Appliqmt's Serial Preferred Stock is registered as part of a class pursuant to Section 12(g) of the Securities Exchange Act of 1934. Provisions of the Articles of Incorporation authorize the Board of Directors to fix dividend rates and redemption prices for the authorized but unissued Serial Preferred Stock. For a full statement concerning the terms and provisions relating to the Common , 4% Preferred and Serial Preferred Stocks of applicant, reference is made to the Applicant's Articles of Incorporation presently on file with the Commission. IDAHO POWER COMPANY The following statement as to funded debt of applicant is as of September 30, 2002, the date of the balance sheet submitted with this application. First Mortgage Bonds Description (3) Amount Outstanding (1 ) FIRST MORTGAGE BONDS: 85 % Series due 2002 , dated as of Oct 2, 1996, due Oct 1, 2002 6.40 % Series due 2003, dated as of May 1 , 1993, due May 1, 2003 8 % Series due 2004, dated as of Mar 25, 1992, due Mar 15 , 2004 83 % Series due 2005, dated as of Sep 9,1998, due Sep 9, 2005 38 % Series due 2007, dated as of Dec 1 , 2000 , due Dec 1 , 2007 20 % Series due 2009 , dated as of Nov 23, 1999, due Dec 1 , 2009 60 % Series due 2011 , dated as of Mar 2, 2001 , due Mar 2, 2011 5 % Series due 2023 , dated as of May 1 , 1993, due May 1, 2023 $27,000 000 80,000,000 50,000,000 60,000,000 000 000 000,000 120,000 000 80,000,000 $577 000 000 (2) Amount authorized - Limited within the maximum of $900 000,000 (or such other maximum amount as may be fixed by supplemental indenture) and by property, earnings, and other provisions of the Mortgage. (4) Amount held as reacquired securities - None (5) Amount pledged - None (6) Amount owned by affiliated corporations - None (7) Amount of sinking or other funds - None For a full statement of the terms and provisions relating to the respective Series and amounts of applicant's outstanding First Mortgage Bonds above referred to, reference is made to the Mortgage and Deed of Trust dated as of October 1 , 1937 , and First to Thirty-Fifth Supplemental Indentures thereto, by Idaho Power Company to Bankers Trust Company and R. G. Page (Stanley Burg, successor individual trustee), Trustees, presently on file with the Commission, under which said bonds were issued. IDAHO POWER COMPANY Pollution Control Revenue Bonds (A) Variable Rate Series 2000 due 2027: (1) Description - Pollution Control Revenue Bonds , Variable Rate Series due 2027 , Port of Morrow, Oregon, dated as of May 17, 2000, due February 1 , 2027. (2) Amount authorized - $4,360,000 (3) Amount outstanding - $4 360,000 (4) Amount held as reacquired securities - None (5) Amount pledged - None (6) Amount owned by affiliated corporations - None (7) Amount in sinking or other funds - None (B) 8.30% Series 1984 due 2014: (1) Description - Pollution Control Revenue Bonds, 8.30% Series due 2014 , County of Humboldt, Nevada, dated as of December 20 , 1984 due December 1 , 2014 (secured by First Mortgage Bonds, Pollution Control Series A) (2) Amount authorized - $49 800,000 (3) Amount outstanding - $49,800,000 (4) Amount held as reacquired securities - None (5) Amount pledged - None (6) Amount owned by affiliated corporations - None (7) Amount in sinking or other funds - None (C) 6.05% Series 1996A due 2026: (1) Description - Pollution Control Revenue Bonds, 6.05% Series 1996A due 2026, County of Sweetwater, Wyoming, dated as of July 15, 1996, due July 15 2026 (2) Amount authorized - $68 100 000 (3) Amount outstanding - $68,100 000 (4) Amount held as reacquired securities - None (5) Amount pledged - None (6) Amount owned by affiliated corporations - None (7) Amount in sinking or other funds - None (D) Variable Rate Series 1996B due 2026: (1) Description - Pollution Control Revenue Bonds, Variable Rate 1996B Series due 2026, County of Sweetwater, Wyoming, dated as of July 15,1996, due July 15, 2026. (2) Amount authorized - $24 200,000 (3) Amount outstanding - $24,200,000 (4) Amount held as reacquired securities - None (5) Amount pledged - None (6) Amount owned by affiliated corporations - None (7) Amount in sinking or other funds - None IDAHO POWER COMPANY Pollution Control Revenue Bonds (E) Variable Rate Series 1996C due 2026: (1) Description - Pollution Control Revenue Bonds, Variable Rate 1996C Series due 2026, County of Sweetwater, Wyoming, dated as of July 15,1996, due July 15, 2026. (2) Amount authorized - $24,000,000 (3) Amount outstanding - $24 000 000 (4) Amount held as reacquired securities - None (5) Amount pledged - None (6) Amount owned by affiliated corporations - None (7) Amount in sinking or other funds - None For a full statement of the terms and provisions relating to the outstanding Pollution Control Revenue Bonds above referred to , reference is made to (A) copies of Trust Indenture by Port of Morrow, Oregon, to the Bank One Trust Company, N. A., Trustee, and Loan Agreement between Port of Morrow, Oregon and Idaho Power Company, both dated May 17,2000, under which the Variable Rate Series 2000 bonds were issued , (B) copies of Loan Agreement between Idaho Power Company and Humboldt County, Nevada; Indenture of Trust between Humboldt County, Nevada and Morgan Guaranty Trust Company of New York; Escrow Agreement between Humboldt County, Nevada and Bankers Trust Company and Idaho Power Company; Placement Agreement between Humboldt County, Nevada and Bankers Trust Company; all dated December , 1984; agreement among Idaho Power Company, Bankers Trust Company, as Remarketing Agent, Goldman, Sachs & Co., and Kidder, Peabody & Co. Inc. dated May 20 1986; Pledge Agreement between Idaho Power Company and Morgan Guaranty Trust Company of New York dated May 1 , 1986; under which the 8.30% Series bonds were issued and (C) (D) (E) copies of Indentures ofTrust by Sweetwater County, Wyoming, to the First National Bank of Chicago, Trustee, and Loan Agreements between Idaho Power Company and Sweetwater County, Wyoming, all dated July 15, 1996, under which the 6.05% Series 1996A bonds, Variable Rate Series 1996B bonds and Variable Rate Series 1996C bonds were issued. IDAHO POWER COMPANY Rural Electrification Association Notes (A) 2.0% and 5.0% Series due 1998-2023: (1) Description - REA Notes, 2.0% and 5.0% interest rate with various maturity dates (secured by property). (2) Amount authorized - Various Amounts (3) Amount outstanding - $1 204 275 (4) Amount held as reacquired securities - None (5) Amount pledged - None (6) Amount owned by affiliated corporations - None (7) Amount in sinking or other funds - None For a full statement of the terms and provisions relating to the outstanding Rural Electrification Association Notes above referred to, reference is made to the Restated Mortgage and Security Agreement dated as of May 1 , 1992, and Agreement between the United States of America and Idaho Power Company dated May 1 , 1992. ATTACHMENT II( IDAHO POWER COMPANY Commitments and Continqent Liabilities: Commitments under contracts and purchase orders relating to the Company s program for construction and operation of facilities amounted to approximately $6 million at September 30 2002, The commitments are generally revocable and are subject to reimbursement of manufacturers' expenditures incurred and/or other termination charges. The Company is currently purchasing energy from 66 on-line cogeneration and small power production facilities with contracts ranging from 1 to 30 years. Under these contracts the Company is required to purchase all of the output from these facilities. During the fiscal year ended December 31 2001, the Company purchased 728,155 MWh at a cost of $45 million. From time to time the Company is a party to various other legal claims, actions and complaints not discussed below. The Company believes that it has meritorious defenses to all lawsuits and legal proceedings in which it is a defendant and will vigorously defend against them although the Company is unable to predict with certainty whether or not it will ultimately be successful. However, based on its evaluation, the Company believes that the resolution of these matters will not have a material adverse effect on its consolidated financial position, results of operations or cash flows. Other Legal Proceedings Truckee-Donner Public Utility District: IDACORP Energy (IE) has received notice from Truckee- Donner Public Utility District (Truckee), located in California , asserting that IE was in purported breach of and that Truckee has the right to renegotiate certain terms of, the Agreement for the Sale and Purchase of Firm Capacity and Energy in place between the two entities. Generally, the terms of the contract provide for IE to sell to Truckee 10 megawatts (MW) light load energy and 20 MW heavy load energy for the term January 1 , 2002 through December 31 2002 at $72 per megawatt hour (MWh) and 25 MW flat energy for the term January 1 , 2003 through December 31 , 2009 at $72 per MWh. On May 30, 2002, IE filed a lawsuit against Truckee in the Idaho State District Court in and for the County of Ada. IE seeks a declaration that it is not in breach of the contract, injunctive relief requiring Truckee to make payments pursuant to the terms of the contract and to raise its rates as stipulated in the contract. The lawsuit has been removed to the United States District Court for the District of Idaho. On August 15, 2002, Truckee answered the complaint, denying the material allegations, and asserted various counterclaims against IE, IPC and IDACORP, in which it contends that these entities were in breach of the contract, inter alia, incident to the sale of surplus energy for Truckee, and by failing to provide firm backing for the capacity and associated energy provided pursuant to the contract. On September 23, 2002, IE, IPC and IDACORP filed a reply to the counterclaim, denying the material allegations of Truckee s counterclaim. Trial of the lawsuit is scheduled to commence September 8, 2003. On July 23, 2002, Truckee filed a complaint against IPC, IE and IDACORP with the FERC seeking relief under its long-term power contract for the purchase of wholesale electric power from IPC and IE. The complaint requests that the FERC, among other matters, (1) reform or terminate the contract under Section 206 of the Federal Power Act, (2) order refunds , (3) assert exclusive jurisdiction over the rate issues and exercise primary jurisdiction to consider state-law claims arising out of the contract provisions and underlying facts and (4) assess the market power of IE and IPC with the Sierra Pacific and IPC control areas under the FERC's Supply Margin Assessment test and impose appropriate remedies if the test is not passed. The companies intend to vigorously defend their position in these proceedings and believe these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. This has been previously reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2002. United Systems, Inc., f/kla Commercial Building Services, Inc.: On March 18 2002, United Systems, Inc. (United System) filed a complaint against IDACORP Services Co.. a subsidiary of IDACORP, dba IDACORP Solutions. United Systems is a heating, ventilation , refrigeration and plumbing contracting company that entered into a contract with IDACORP Services in December 2000. Under the terms of the contact, lOACORP Services authorized United Systems to do business as IOACORP Solutions." The contract was to be effective from January 2001 through December 2005. In November 2001, IDACORP Services notified United Systems that IDACORP Services was terminating the contract for convenience. The contract allowed for such termination but required the terminating party to compensate the other party for all costs incurred in preparation for, and in performance of the contract, and for reasonable net profit for the remaining term of the contract. United Systems claims $7 million in net profits lost and costs incurred. IDACORP Services asserts that termination related compensation owed to United Systems, if any, is substantially less than the amount claimed by United Systems. On August 8 2002, United Systems filed an amended complaint adding IDACORP, IE , and IPC as additional Defendants claiming they should be held jointly and severally liable for any judgment entered against IDACORP Services. This case is set for a jury trial the week of June 13, 2003. The companies intend to vigorously defend their position in this proceeding and believe these matters will not have a material adverse effect on our consolidated financial position , results of operations or cash flows. Public Utility District No.1 of Grays Harbor County, Washington: On October 15, 2002, Public Utility District No.1 of Grays Harbor County, Washington (Grays Harbor) filed a lawsuit in the Superior Court of the State of Washington , for the County of Grays Harbor, against IPC, IDACORP and IE. On March 9, 2001 , Grays Harbor entered into a 20MW purchase transaction with IPC for the purchase of electric power from October 1, 2001 through March 31 , 2002, at a rate of $249 per MWh. In June 2001, with the consent of Grays Harbor, IPC assigned all of its rights and obligations under the contract to IE. In its lawsuit, Grays Harbor alleges that the assignment was void and unenforceable, and seeks restitution from IE and IDACORP. Alternatively, Grays Harbor alleges that the contract should be rescinded or reformed as against IPC, IDACORP and IE , claiming that the contract was entered into pursuant to a mutual or unilateral mistake; that it is unconscionable; or that Grays Harbor entered into the contract under duress. Grays Harbor seeks as damages an amount equal to the difference between $249 per MWh and the "fair value" of electric power delivered by IE during the period October 1 , 2001 through March 31 , 2002. IDACORP, IPC, and IE have removed this action from the state court to the United States District Court forlhe Western District of Washington at Tacoma. The companies intend to vigorously defend this lawsuit and believe these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. State of California Attorney General: The California Attorney General (AG) filed the complaint in this case in the California Superior Court in San Francisco on May 30, 2002. This is one of thirteen virtually identical cases brought by the AG against various sellers of power in the California market, seeking civil penalties pursuant to California s unfair competition law - California Business and Professions Code Section 17200. Section 17200 defines unfair competition as any "unlawful, unfair or fraudulent business act or practice. . . ." The AG alleges that IPC engaged in unlawful conduct by violating the Federal Power Act (FPA) in two respects: (1) by failing to file its rates with the FERC as required by the FPA; and (2) charging unjust and unreasonable rates in violation of the FPA. The AG alleges that there were thousands of . . . sales or purchases" for which IPC failed to file its rates , and that IPC charged unjust and unreasonable rates on "thousands of occasions." Pursuant to Business and Professions Code Section 17206, the AG seeks civil penalties of up to $2,500 for each alleged violation. IPC is vigorously defending the action. On June 25, 2002, IPC removed the action to federal court, and on July 25, 2002 the AG filed a motion to remand back to state court. The court previously denied the AG's prior motions to remand back to state court in the companion cases. IPC's Motion to Dismiss was heard by the court on July 31 , 2002. A decision is expected before the end of the year. We intend to vigorously defend our position in this proceeding and believe these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. Wholesale Electricity Antitrust Cases I & II: These cross-actions against IE and IPC emerge from multiple California state court proceedings first initiated in late 2000 against various power generators/marketers' by various California municipalities and citizens , including California Lieutenant Governor Cruz Bustamante and California legislator Barbara Mathews in their personal capacities. Suit was filed against entities including Reliant Energy Services, Inc., Reliant Ormond Beach, L.L.C., Reliant Energy Etiwanda, L.L.C., Reliant Energy Ellwood, L.L.C., Reliant Energy Mandalay, L.L.C., and Reliant Energy Coolwater, L.L.C. (collectively, Reliant); and Duke Energy Trading and Marketing, L.L.C., Duke Energy Morro Bay, L.L.C., Duke Energy Moss Landing; L.l.C., Duke Energy South Bay, L.L.C., Duke Energy Oakland, L.L.C. (collectively, Duke). While varying in some particulars, these cases made a common claim that Reliant, Duke and certain others (not including IE or IPC), colluded to influence the price of electricity in the California wholesale electricity market. Plaintiffs asserted various claims that the defendants violated California Antitrust law , (the Cartwright Act) Business & Professions Code Section 16720, et seq., and California s Unfair Competition Law, Business & Professions Code Section 17200, et seq. Among the acts complained of are bid rigging, information exchanges, withholding of power and various other wrongful acts. These actions were subsequently consolidated, resulting in the filing of Plaintiffs' Master Complaint (PMC) in San Diego Superior Court on March 8, 2002. On April 22, 2002, more than a year after the initial complaints had been filed, two of the original defendants, Duke and Reliant, filed separate cross-complaints against IPC and IE, and approximately 30 other cross-defendants. Duke and Reliant's cross-complaints seek indemnity from IPC, IE and the other cross-defendants for an unspecified share of any amounts they must pay in the underlying suits because, . they allege, other market participants like lPC and IE engaged in the same conduct at issue in the PMC. Duke and Reliant also seek declaratory relief as to the respective liability and conduct of each of the cross-defendants in the actions alleged in the PMC. Reliant has also asserted a claim against IPC for alleged violations of the California Unfair Competition Law , Business and Professions Code Section 17200, et seq. As a buyer of electricity in California, Reliant seeks the same relief from the cross- defendants, including IPC, as that sought by plaintiffs in the PMC as to any power Reliant purchased through the California markets. Some of the newly added defendants (foreign citizens and federal agencies) removed that litigation to federal court. IPC and IE, together with numerous other defendants added by the cross-complaints, have moved to dismiss these claims, and those motions were heard in September 2002, together with motions to remand the case back to state court filed by the original plaintiffs. As a result of the various motions, no trial date is set at this time. The companies cannot predict the outcome of this proceeding, nor can they evaluate the merits of any of the claims at this time, but they intend to vigorously defend these lawsuits. California Energy Situation On July 25, 2001, the FERC issued an order establishing a proceeding to explore whether there may have been unjust and unreasonable charges for spot market sales in the Pacific Northwest during the period December 25, 2000 through June 20, 2001. The FERC Administrative Law Judge (AU) submitted recommendations and findings to the FERC on September 24 , 2001. The AU found that prices should be governed by the Mobile-Sierra standard of the public interest rather than the just and reasonable standard, that the Pacific Northwest spot markets were competitive and that no refunds should be allowed. Procedurally, the AU's decision is a recommendation to the commissioners of the FERC. Multiple parties have submitted comments to the FERC respecting the AU's recommendations. The City of Tacoma and the Port of Seattle have requested that the docket be reopened to allow the submission of additional evidence related to alleged manipulation of the power market by Enron and others. In a series of requests for information ending on May 8, 2002, the FERC issued a data request to all sellers of Wholesale Electricity and/or Ancillary Services to the CallSO and/or the CalPX during the years 2000-2001. The request required IPC and IE to respond in the form of an affidavit to inquiries respecting various trading practices that the FERC identified in its fact-finding investigation of Potential Manipulation of Electric and Natural Gas Prices in Docket No. PA02-000. IPC and IE filed the various responses sought by the FERC. The May 22, 2002 response indicated that although they did export energy from the CalPX outside of California during the period 2000-2001 , they did not engage in any impermissible trading practice described in the Enron memoranda. The energy was resold to supply preexisting load obligations. to supply term transactions or to supply a contemporaneous sales transaction. The companies denied engaging in the other ten practices identified by the FERC. IPC and IE filed additional responses with the FERC on May 31 and June 5, 2002. In the May 31 response, the companies denied engaging in the practice referred to as "wash, " " round trip" or "sell/buyback" trading involving the sale of an electricity product to another company together with a simultaneous purchase of the same product at the same price. In the June 5 response , where the data request was directed to all sellers of natural gas in the Western Systems Coordinating Council and/or Texas during the years 2000-2001, the companies denied engaging in the practice referred to as "wash " " round trip" or "sell/buyback" trading involving the. sale of natural gas together with a simultaneous purchase of the same product at the same price. On October 2, 2002 , the United States Commodity Futures Trading Commission (CFTC) issued a subpoena to IPC requesting, among other things , all records related to all natural gas and electricity trades by IPC involving "round trip trades , also known as "wash trades" or "sell/buyback trades including, but not limited to those made outside the Western Systems Coordinating Council region. The subpoena applies to both IE and IPC. As discussed above. on May 22, 2002, both IE and IPC responded to a similar request from the FERC stating that they did not engage in "round trip" or "wash" trades. By letter from the CFTC dated October 7, 2002 the Division of Enforcement agreed to hold in abeyance until a later date all items requested in the subpoena with the exception of one paragraph which related to three trades on a certain date with a specific party. The companies have provided the requestedinformation. TT ACHMENT II( IDAHO POWER COMPANY STATEMENT OF RETAINED EARNINGS AND UNDISTRIBUTED SUBSIDIARY EARNINGS For the Twelve Months September 30, 2002 Retained Earninqs Retained earnings (at the beginning of period) ................................. Balance transferred from income....................................................... Dividends received from subsidiary................................................... Balance transferred to parent............................................................ Total........................................................................ Dividends: Preferred Stock ........................................................................, Common Stock ......................................................................... TotaL.................................................... ................... Retained earnings (at end of period)................................................. Undistributed Subsidiarv Earninqs Balance (at beginning of period)........................................................ Equity in earnings for the period........................................................ Dividends paid (Debit)......................................................................., Balance transferred to parent.....................................,..................... Balance (at end of period)................................................................., 453,808,703 284 254 ()OO OOO (62,282) 534 030,675 851 264 69,983,803 835,067 459,195,608 13,419,836 197 391 000,000 282 17 ,679,509 The accompanying Notes to Financial Statements are an integral part of this statement TT ACHMENT II( IDAHO POWER COMPANY STATEMENT OF INCOME For the Twelve Months Ended September 30, 2002 Operating Revenues......................................................................................... Operating Expenses: Purchased power......................................................................."............. Fuel......................................................................................................... Power cost adjustment........................................................................... Other operation and maintenance expense.............................................. Depreciation expense......................................................................."...... Amortization of limited-term electric plant................................................. Taxes other than income taxes................................................................. Income taxes - Federal.........................................................................,... Income taxes - Other..................................................................,............. Provision for deferred income taxes......................................................... Provision for deferred income taxes - Credit............................................. Investment tax credit adjustment.............................................................. Total operating expenses..................................................................,. Operating Income............................................................................................. Other Income and Deductions: Allowance for equity funds used during construction................................ Income taxes............................................................................................ Other - Net................................................................................................ Net other income and deductions............................................................. Income Before Interest Charges.....................................................,..............,.. Interest Charges: Interest on first mortgage bonds............................................................... Interest on other long-term debt............................................................... Interest on short-term debt....................................................................... Amortization of debt premium, discount and expense - Net......................................................................."............ Other interest expense............................................................................. Total interest charges............................................................. Allowance for borrowed funds used during construction - Credit.............. Net interest 'charges............................................................... Net Income..................................................................,.......,............................ Actual $ 858,678,419 172 657 794 100 939,726 141,555,291 214 344 379 728,041 951,917 19,517 ,538 810,236 828 639 781 838 (104 598,321) 975,483 734,492,561 124,185,858 33,433 954 442) 836 759 915 750 140,101,608 303,522 341 530 768,239 356,907 500,442 62,270,639 194,954 60,075 685 80,025,923 The accompanying Notes to Financial Statements are an integral part of this statement IDAHO POWER COMPANY EXPLANATION OF ADJUSTMENTS SHOWING EFFECT OF TRANSACTION IN THE INCOME STATEMENT For the Twelve Months Ended September 30,2002 Interest on long-term debt Interest savings on $300,000,000 principal amount of first mortgage bonds and short term debt retired at interest rates ranging between 3% and 8%....................(19,518 000) Interest on new $300,000,000 principal amount of first mortgage bonds issued at interest rate estimated at 6.000/0.................. ........,.. ......".... .....,......... ...................000 000 Interest expense..............................................,..............,..................,... Income taxes: Increase in Federal income taxes: due to decrease in interest expense ($1 518,000 x 32./0)................................................................................."...... Increase in State income taxes: due to decrease in interest expense ($1 518,000 x 6.50/0).................................................................,................"....... 518 000) 496,386 98,670