Idacorp Inc (IDA) Q3 2026 Earnings Call Transcript

Good afternoon, everyone, and welcome to IDACORP's third quarter 2026 earnings call. Today's call is being recorded, and our webcast is live. A replay will be available later today and for the next 12 months on the IDACORP website. If you need assistance at any time during the presentation, please press star zero on your phone. I will now turn the call over to Amy Shaw, Vice President of Finance, Compliance, and Risk.

Thank you. Good afternoon, everyone. We appreciate you joining our call. The slides will reference during today's call are available at IDACorp's website. As noted on slide two, our discussion today includes forward-looking statements, including things like earnings guidance, spending forecasts, financing plans, regulatory plans, and actions, and estimates and assumptions that reflect our current views on what the future holds. These are all subject to risks and uncertainties. Those risks and uncertainties may cause actual results to differ materially from statements made today, And we caution against placing undue reliance on any forward-looking statements. We've included our cautionary note on forward-looking statements and various risk factors in more detail for your review in our filings with the Securities and Exchange Commission. As shown on slide three, also presenting today, we have Lisa Groh, President and CEO, Brian Buckham, CFO, and John Wunderlich, Investor Relations Manager. Slide four has a summary of our third quarter financial results. IDACORP's diluted earnings per share were $273,000, compared with $226,000 for last year's third quarter. For the first nine months of 2026, diluted earnings per share were $576,000 versus $513,000 in 2025. And those results only include additional tax credit amortization of $6.3 million in the first nine months of 2026 versus $39 million in the first nine months of last year, which showcases the strong performance so far for 2026. For our key operating metrics, we're raising our full-year IdaCorp diluted earnings per share guidance range by $0.10 on the bottom and $0.05 at the top of the range. Our new range is $6.40 to $6.50 per share. This increase is driven by our strong operational results in the third quarter. It includes our expectation that Idaho Power will use less than $10 million of additional tax credit amortization for this whole year, which is a reduction from the less than $15 million in our prior guidance. These estimates also assume historically normal weather conditions for the rest of the year. Now I'll turn the call over to Lisa.

Thank you, Amy, and thanks to everyone for joining us today. I'll start by highlighting the impressive growth we continue to see across our service area. This growth is diverse, happening across all customer types in a wide variety of industries. As you can see on slide five, our customer count has increased 2.2% since last year's third quarter, including 2.4% growth in the residential segment. A particular note for this quarter are industrial revenues, which increased by an incredible 27% since last year's third quarter. After years of diligent planning and project execution, we're seeing significant revenues coming in from large contract customers as they construct their facilities and come online. We're excited to be part of their success. META officially began operations at its data center south of Boise in September and is now ramping up, while Micron Fab 1 and Fab 2 expansions in Boise continue to make impressive progress. We've included photos on slide 6, so you can see the scale of these projects as well as a couple others. Our preliminary load growth CAGR for the 2027 IRP is 8.9% for retail sales for the next five years. That increase includes the higher base year load in the calculation. While this is still preliminary, you can see the substantial growth on slide 7. To put this in perspective, that's a load forecast of about 19,000 gigawatt hours in 2027, growing to about 29,000 gigawatt hours by 2032. This growth is substantial, and we're working hard to ensure Idaho Power stays ready to meet it, and that we do so responsibly. As a reminder, for large contract customers, our preliminary load projections only include the customers who have signed contracts or made significant financial commitment to Idaho Power for infrastructure build-out. In addition to large customers that we've already discussed, there's a diverse group of new and expanding customers interested in investing in our service area, including manufacturing, mining, food processing, transportation, data centers, and other energy-intensive industries. To date in 2026, we've received 76 inquiries from projects with energy needs greater than one megawatt, which is on pace for another year of historically high project activity. These projects have the potential to bring new jobs, investment, and long-term economic opportunities. They also reinforce the importance of thoughtful planning to ensure we continue providing affordable and reliable service to our customers. To highlight a few other projects, Idaho Power broke ground this month on transmission facilities needed to provide electric service to Perpetua Resources' Stibnite Project, which will support domestic production of critical minerals and strengthen U.S. supply chain. We also recently celebrated the grand opening of Tractor Supply Company's new distribution center in Nampa, another great example of economic growth and business investment happening across our service area. Idaho Power is focused on affordability as we grow, and we're proud that our prices remain 20 to 30 percent lower than the national average. As shown on slide 8, since 2016, average national electric rates have increased 41%. Rent in Boise has increased 85%, and CPI inflation has grown 39%, while Idaho power residential rates have increased 24% over that same period, an average of just 2.2% a year. We're strong advocates of Idaho's growth pace for growth regulatory approach, and our contracts with large contract customers seek to protect Idaho Power and our existing customers from risk and cost shifting. On slide nine, you can see some of the contract protections we target in energy service agreements with large contract customers. As I mentioned on last quarter's call, the substantial increase in revenues we're seeing from these customers was a key driver for Idaho Power not filing a rate case in 2026, which helps demonstrate the benefit of the growth pace for growth model in Idaho. We're moving full speed ahead, executing on projects to serve our growing customer base and enhance our grid. As shown on slide 10, we're making great progress on the Boardman to Hemingway transmission line. To date, more than 1,200 structure pads have been built, 1,100 foundations have been installed, and about 780 towers have gone up, which represents about 60% of the project total. And additionally, we've installed around 100 miles of conductor. B2H remains on schedule for an in-service date in late 2027. In addition, construction in Nevada continues on the Swift North Transmission Project, which we expect to be completed in 2028. On Gateway West Transmission Project, we continue to make progress, and we have the transmission line construction out for bid. Moving to slide 11, we're continuing to make progress on three company-owned natural gas-fueled projects. Construction is underway on a 167-megawatt resource we're building next to our existing Bennett Mountain gas plant. The new Bennett facility has a scheduled in-service date of 2028, and we have a CPCN, air permit, and EPC contract in place. We have CPCN applications filed for South Hills, a 222-megawatt project scheduled for operation in 2029, as well as the 430-megawatt Peregrine project, which is slated for 2030. We've executed equipment supply agreements for all three projects. Additionally, we signed an EPC contract for the Peregrine project, and we're negotiating a contract for the South Hills project. The dispatchable energy from these plants will help us meet our projected load deficits and serve our customers with the least cost, least risk resources. Looking ahead to additional capacity and energy needs, our evaluation team received more than 100 bids for our 2032 RFP and has developed a final shortlist of 11 projects as shown on slide 12. As has been the case in past Last RFPs, Idaho Power has multiple company-owned projects on the final shortlist, and we were pleased to have competitive bids. In fact, the 2031 self-built project on the slide is the top-ranked project. The list also includes third-party-owned solar, wind, and battery facilities, along with a few market purchase bids. We don't intend to contract with every project on the list as of now. It's a substantial number of megawatts in total, more megawatts than in our updated load forecast through However, consistent with what we've done previously, our final shortlist can accommodate potential incremental growth, and it's good to have that optionality. We're working to get contracts in place and expect to move forward with the selected projects by the end of this year, so keep an eye out for CPCN filings. And finally, as the Oregon sale goes, we continue to expect the sales to close in the spring of 2027, pending successful regulatory outcomes. We recently received BERT's approval, and the Oregon and Idaho state regulatory processes continue. And with that, I will turn the time over to Brian.

Hi, everybody. Thanks for joining. I'm going to jump right into the drivers of the quarter's results on slide 13. You can see the biggest driver was higher retail revenues resulting from a combination of incremental benefits from current base rates and customer growth. Those were nearly a $44 million benefit for the quarter, and they were about $90 million year-to-date combined. Overall per-customer usage was essentially flat for the quarter. The fixed cost adjustment mechanism decreased retail revenues for the quarter. That was a result of slightly higher sales to the residential and small. The new line we added in the second quarter, revenues from large contract customers, increased operating income by almost $12 million for the quarter. From a year-to-date perspective, it was around $20 million, which this piece is important because we're seeing the benefit of large contract customers materializing. And that accounts for much of the 27% increase in industrial customer revenues. As we expected, O&M expense came in higher in the third quarter, and the primary drivers were the amortization of Wyoming plants. The amortization expense increased a little over $7 million for the quarter. That's also not surprising because we continue to invest heavily in system infrastructure. We had more plant and service. Other changes in operating revenues and expenses increased operating income by $10.6 million. Similar to the impact we saw in the first half of the year, this benefit resulted Primarily from a decrease in net power supply expenses not accrued. That was mechanism-based and last year. Lower property tax expense, a non-operating expense increased slightly, and driven again by heavy. If you take a look at the balance sheet, you'll see WIP was over $2.1 billion a quarter. Income tax expense, if you exclude ADITC, $6 million of additional ADITC so far this year, compared to $39 million recorded, particularly notable given the higher estimated of the strong financial performance. We've been working through our capital budget forecast, which entails updating project timing and pricing, as well as incorporating new projects. The CapEx graph from prior quarters is outdated, and as you might expect, may underrepresent what we expect our capital will look like over the planning window. We plan to provide an updated CapEx forecast on our Q4 earnings conference call on our more typical cadence, and it'll incorporate our standard updates RFP, at least that are far enough along in the process and ready for prime. I want to spend a We have a little time talking about financing ahead of what we expect to be more detail in the Q4. In the third quarter, we executed $268 million of additional forward sale agreements through our 2026 ATM program. That added to the $265 million we sold and our follow-up, we pre-funded our equity needs so we can blend debt and equity. At the end of the Q4, the current plan through 20-any amount of equity. Additional capex would require some additional debt and growth equity with the amount dependent in large part on the payment timing. You need to be mindful of managing reimbursable customers. Related to that, I thought it'd be good to talk about interest expense. They have limited long-term debt refining. Each of those attributes reach until June 2027 rate case filing. Revenues from the outcome of contract customers expect some of the larger projects built for the benefit of our broad customer base won't convert from Quip. Those are projects like B2H or other transmission projects system hardening that benefit all customers, just as a few examples. Contrast that with the infrastructure we build for large contract customers, which we recover through ESAs with those customers. Having a large portion of 27 increases the likelihood of us filing a general rate case. As we head into the last couple months, we're seeing large contract customer revenues continue to ramp after years of investment. We've had strong financial results year to date, and we're looking good going into year end for what we expect to be a 19th consecutive year of EPS growth. And we're focused on affordability Thanks, Brian.

Turning to slide 16, you can see our 2026 full-year earnings guidance and key operating metrics. We've had some solid improvement in our earnings and ADITC guidance. As usual, we assume normal weather for the remainder of 2026 for our guidance. With continued strong operating performance, we now expect IdaCorp's diluted earnings per share this year to be in the range of $6.40 to $6.50. We lifted the bottom and top ends of the range. We also see improvement in our ADITC expectations, so we're cutting $5 million off of our previous guidance. We now expect that Idaho Power will use less than $10 million of additional investment tax credit amortization in 2026. This is much less than the $40 million we amortized for full year 2025, especially when considering the significant increase in year-end book equity. We now expect full-year O&M expense to be in the range of $535 to $545 million. We still anticipate spending between $1.3 and $1.5 billion on CapEx in 2026. As noted on the second quarter call, at this point, it's fair to say we're trending to the high end of that range for CapEx. Based on our current forecast of hydropower operating conditions, we now expect hydropower generation to be within the range of 5.5 to 6.0 million megawatt hours for the year. With that, we're happy to address questions you might have.

We will now begin the question and answer session for attendees who have joined the Q&A line. If you would like to ask a question, please do so by pressing star 1 on your phone. Please ensure your mute function is turned off before you ask your question. We will take as many questions as time permits on a first-come basis. Once again, please press star 1 on your phone to ask a question. Your first question comes from the line of Shar Pereza with Wells Fargo. Your line is open. Please go ahead.

Hi, Shar. Good afternoon. Good afternoon. This is Whitney Motelema on for Shar. Hi, Wendy. Yes, thank you for taking my question. Assuming the shortlist is larger than the committed forecast, what has to happen before you contract beyond committed need? Does a pipeline customer have to sign and now get commission approval within the 270 days before you'd commit to more self-build?

It can be that, but we also, anytime a customer really, you know, there's a signed ESA or they've made a significant financial commitment, then we would add them to the load forecast. So it doesn't have to necessarily go all the way through commission approval.

Okay, understood. And since the 29,000 gigawatt hours only includes signed or committed customer, How big is the pipeline sitting outside in megawatts, given the 76 inquiries this year?

It's sitting right about 4,000 megawatts, and I know that number seems familiar. We've said that number for several calls, only it's not the same 4,000, because as projects go into construction, we move them out of that as other projects come in. So I think – do you want to add something, Adam?

Yeah, I think you mentioned the four gigawatts, and that's what we've mentioned in the past. Just a couple quick things. The four gigawatts does not include Micron Fab 1 or Meta 1. Meta 1, obviously, as we mentioned in the call, is complete Micron Fab 1. Four gigawatts we talk about. And of that four gigawatts, I'd say one gigawatt is what we often refer to. It usually includes a financial commitment, and those entities are moving toward construction. We have another one gigawatt of the four that are being actively studied, so we commonly refer to those as the study phase. Maybe no major financial commitments yet, but we've been paid to study those projects. And then around two gigawatts of the four feel preliminary is lots of times what we refer to them as, but we have another three gigawatts that have come in the door since we talked about the four gigawatt number. So, really, 5 gigawatts or 1 gigawatt is promised.

Yes, I'm all set. Thank you, Lisa. Thank you, Adam.

Your next question comes from the line of Michael Lonegan with Barclays. Your line is open. Please go ahead.

Hi, Dan. Hi, good afternoon. Hi, good afternoon. Thanks for taking my questions. So, on the RFP, I understand the total resources on the final shortlist may exceed your capacity needs. I was just wondering if you could share, you know, a specific amount of resource and megawatts, you know, you expect to procure, and then, you know, on the self-builds, you know, can you talk about the timing of when the capital will start being spent and the profile of that investment?

Michael, this is Adam. So I think with slide 12 that we showed you for 2031, and that resource is the 430 megawatt gas plan. It's actually an advanced simple cycle plan. We have started moving forward with that project. The turbines have been reserved for that year. I think the project we're really diving deep into right now is the 2,432 megawatts. That's a combined cycle. We're just evaluating load right now to make sure that that's the project we're going to go forward with. In terms of CapEx, it's spread out throughout 28, 29, 30 transmission lines. It stays pretty. One of the things we're noticing now is a lot of time.

Thank you. And then, Ben, I think you alluded to it could be at the incremental capital, it could be at 50-50 equity debt. Is that correct?

Yeah, this is Brian. So, the incremental cost of what's in the plan that's out there now, if you look back at our slides from last quarter, there may be opportunities. As Adam mentioned, typically it's milestone payment.

Thank you. And then lastly from me, on Micron Fab 2, just wondering if you could share the status of negotiations, you know, and when you expect to sign an ESA. I would say, I think, you know, you previously said before year end, so is that still the expectation, you know, something very near term next couple months?

Well, we certainly are continuing to work with them, and we feel like it's going well, and certainly we're hopeful that we'll meet those timelines, and we'll certainly see the filing when we do.

Okay, thank you very much for taking my question. Thank you.

Your next question comes from the line of Chris Ellinghouse with Seibert William Schenck. Your line is open. Please go ahead.

Hi, everybody. Slide 12. You know, you've had a continuous flow. At what point does, you know, a conventional combined cycle start to make sense?

Well, we certainly would have taken a few of those if we could have got them by now, but certainly when you start looking into the 2032 range, I think that's when that's a combined cycle.

Yeah, Chris, this is Adam, that 20... ...qualify the quarter in terms of what the weather benefit looked like for the period.

Sure, if I have that. Do you have that, Brian?

Yeah, I can give you some. I can give you some indication on that. I mean, one of the big drivers of Fort Nat, I think maybe, I think a lot of the drivers.

Continuing dividend increase was, you start to run up against the bottom of the payout range, or a minimum you're willing to get to, or just sort of what are your thoughts?

They were not too far off of that. In fact, we...

The preliminary numbers in terms of load growth have accelerated a little bit. How much of that can you sort of characterize, given the higher base, where you're seeing that acceleration come from?

This is Adam Criss. So the 8.9 that we just showed you, it includes the better one, which we talked about, that just went online. What that does not include, or with a PAP3, or a diode, which we've talked about.

Okay, that's really helpful. We'll see you in a week or so. Thanks, appreciate it.

Your next question comes from the line of Brian Russo with Jeffries. Your line is open. Please go ahead. Hi there.

Hi, good afternoon. Just to try to triangulate the 8.9% IRP low growth with the 2032 RFP. I mean, in theory, what does that RFP imply in terms of 2032 needs?

Sorry, I didn't hear that last bit.

I think – so this is Adam. I think the biggest question on the 2032 is, again, that 432-megawatt combined cycle. It feels – you kind of look at the load forecast, a few other things, and then we'll make a decision on that front. But to your point, we're likely going to need to reach something in addition to what we have in 31.

Got it. And then just, I mean, given the pipeline that you discussed earlier and this new IRP, and should we expect, like, a similar cadence of, like, annual RFPs, even past 32, like we've seen the past four or five years? I mean, is there still, you know, a lot more load, you know, behind, say, you know, Micron Fab 2?

Certainly. I mean, as load continues to come in and we continue to negotiate these ESAs, it is possible, absolutely. And that's been kind of the nice part about our growth story is we are seeing into the 2030s with some of these customers. But, of course, it will be contingent upon the final negotiations. But, yeah, I mean, from where we sit, I think it's possible.

Okay, great. Well, thank you very much.

Thank you.

As a reminder, please press star 1 to ask a question. Your next question comes from the line of David Arcero with Morgan Stanley. Your line is open. Please go ahead.

Hi, this is Alex. Thanks for taking my question. So starting with the ADITCs, you're not expecting to use less than $10 million this year. So looking forward, do you think you could be earning above the minimum ROE in the next few years and no longer be requiring the ADITCs?

Well, that'll largely depend on sort of the project timing and sort of how, you know, the financing plan, but certainly our goal to use as few as possible. What would you add?

Yeah, Alex, just looking at each individual year, this year, you know, with a number of less than 10 million, it's possible to get down to zero and grow above that. It would take very strong operating performance in the fourth quarter for that to happen, some of it probably weather-driven. If you look ahead to 2027, one of the things that I've really focused on is just what's happening operationally in a closing perspective. So you see a lot of quip convert. When that happens, if there's no rate, then you do end up with the losses. That makes it hard. And then 28, we file a rate case, and instead of that rate case, again, you've got quite a supply chain.

You have a large CapEx 10 ahead, and you have signed more contracts since the last update. So, could you comment on where do you see the main supply chain bottlenecks from your perspective and also how you are preparing to execute on that plan and on the potential incremental cap that should be announced in the next update? Like, how much of that is already procured or on track?

As far as the turbines go, we either have reservation agreements or supply agreements, so we feel really strong about the plant. Of course, there's always the breakers and transformers and conductor that just seems to be a challenge, but we get ahead of it, so I feel like we're in a really good spot for those projects. Is there anything you would add, Adam?

No, the only thing maybe is that the EPC contractor market has been tough, too, and we've been really fortunate in that area to be able to award and select EPC contractors. Every one of these plants are worried about. I think contractors are very interested in our diverse load, and so they've been interested in bidding into these projects, and we've been pleasantly surprised with the variety of contractors we've received and the bids we've received. Got it.

Thank you so much.

Thank you.

Your next question comes from the line of Nicholas Woods with Bank of America. Your line is open. Please go ahead.

Hi, good afternoon, team. Hey, maybe could you just give me a sense, you know, which data center loads that were mentioned earlier are already included in the demand assumptions underpinning the 2032 RFP? And then, you know, you mentioned about, you know, you guys are running the numbers to see if you guys file a 2027 break case. When can we expect an update on whether you guys do proceed on doing that or not?

Generally, you know, we kind of look to file in June. We have to give a 60-day notice of intensive file in Idaho. So, you know, that's kind of how we're thinking about it when we feel like we'll have a, you know, a good look at what we have coming at us. So I think that's generally what we're focused on.

Yeah, that's Brian. All of that. By the time we have the fourth quarter, we'll at least make a preliminary call on whether...

Okay, got it. Thank you so much.

That concludes the question and answer session for today. Ms. Groh, I will now turn the conference back to you.

Well, thank you everyone for joining us today and for your continued interest in IDACOR. I look forward to seeing you all at EEI and I hope you have a great evening and I wish you a very happy Halloween. I hope you get all dark chocolate. Thanks.

This concludes today's call. Thank you for attending. You may now disconnect.