8-K
IDACORP INC (IDA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
_______________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 17, 2022
_______________________
| Exact name of registrants as specified in | |||||||
|---|---|---|---|---|---|---|---|
| Commission | their charters, address of principal executive | IRS Employer | |||||
| File Number | offices and registrants' telephone number | Identification Number | |||||
| 1-14465 | IDACORP, Inc. | 82-0505802 | |||||
| 1-3198 | Idaho Power Company | 82-0130980 | |||||
| 1221 W. Idaho Street | |||||||
| Boise, | Idaho | 83702-5627 | |||||
| (208) | 338-2200 | ||||||
| State or Other Jurisdiction of Incorporation: | Idaho | ||||||
| Former name, former address and former fiscal year, if changed since last report: | None |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | IDA | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
□
Item 2.02 Results of Operations and Financial Condition.
On February 17, 2022, IDACORP, Inc. ("IDACORP”) issued a press release reporting its financial results for the quarter and year ended December 31, 2021. A copy of the press release is furnished herewith as Exhibit 99.1. As previously announced, on the same day, members of IDACORP’s management will hold a teleconference to discuss the financial results, and the presentation slides furnished herewith as Exhibit 99.2 will accompany management’s comments.
Item 7.01 Regulation FD Disclosure.
The information set forth in Item 2.02 above is hereby incorporated herein by reference.
______________
The information in Item 2.02 and 7.01 of this report, including the press release and presentation furnished as Exhibits 99.1 and 99.2 hereto, respectively, shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. In addition, the exhibits furnished herewith contain statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in such exhibits.
The exhibits furnished with this report contain business segment information for Idaho Power Company. Accordingly, this report is also being furnished on behalf of such registrant.
______________
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished as part of this report.
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | IDACORP, Inc. press release, dated February 17, 2022 |
| 99.2 | IDACORP, Inc. fourth quarter 2021 financial teleconference presentation, datedFebruary 17, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.
Dated: February 17, 2022
IDACORP, INC.
By: /s/ Lisa A. Grow
Lisa A. Grow
President and Chief Executive Officer
IDAHO POWER COMPANY
By: /s/ Lisa A. Grow
Lisa A. Grow
President and Chief Executive Officer
Document
Exhibit 99.1
February 17, 2022
IDACORP, Inc. Announces Fourth Quarter and Year-End 2021 Results, Initiates 2022 Earnings Guidance
BOISE--IDACORP, Inc. (NYSE: IDA) reported fourth quarter 2021 net income attributable to IDACORP of $32.8 million, or $0.65 per diluted share, compared with $37.5 million, or $0.74 per diluted share, in the fourth quarter of 2020. IDACORP reported 2021 net income attributable to IDACORP of $245.6 million, or $4.85 per diluted share, compared with $237.4 million, or $4.69 per diluted share, in 2020.
“IDACORP's earnings per share have now increased for 14 consecutive years, which is a remarkable achievement," said IDACORP President and Chief Executive Officer Lisa Grow. "We are pleased to again share our earnings with our customers in Idaho, adding to the nearly $130 million we have shared with them since 2011. Strong customer growth and higher weather-related usage per customer and transmission wheeling revenues all contributed to the solid 2021 results.
"In addition to our financial performance, I am pleased to report that 2021 was Idaho Power's safest year on record. In January, our utility was awarded the Edison Electric Institute's inaugural Thomas F. Farrell, II Safety Leadership and Innovation Award.
"Strong customer growth and regional transmission constraints are contributing to Idaho Power executing on the next phase of its Clean Today, Cleaner Tomorrow® plan, with planed resource additions outlined in the 2021 Integrated Resource Plan, which we recently filed with the Idaho and Oregon commissions. We expect needed resource additions could increase our 5-year capital expenditures forecast by nearly $800 million, or 40%, compared with last year's forecast."
IDACORP is initiating its full-year 2022 earnings guidance in the range of $4.85 to $5.05 per diluted share, and IDACORP does not expect Idaho Power to utilize any of the additional tax credits available under its Idaho earnings support regulatory mechanism in 2022. The earnings guidance also assumes normal weather conditions and a sustained return to more normal economic conditions following the impacts of COVID-19.
Performance Summary
A summary of financial highlights for the periods ended December 31, 2021 and 2020 is as follows (in thousands, except per-share amounts):
| Three months ended <br>December 31, | Year ended <br>December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Net income attributable to IDACORP, Inc. | $ | 32,798 | $ | 37,507 | $ | 245,550 | $ | 237,417 |
| Average outstanding shares – diluted (000’s) | 50,697 | 50,617 | 50,645 | 50,572 | ||||
| IDACORP, Inc. earnings per diluted share | $ | 0.65 | $ | 0.74 | $ | 4.85 | $ | 4.69 |
The table below provides a reconciliation of net income attributable to IDACORP for the three and twelve months ended December 31, 2021, from the same periods in 2020 (items are in millions and are before related income tax impact unless otherwise noted).
| Three months ended | Year ended | |||||
|---|---|---|---|---|---|---|
| Net income attributable to IDACORP, Inc. - December 31, 2021 | $ | 37.5 | $ | 237.4 | ||
| Increase (decrease) in Idaho Power net income: | ||||||
| Customer growth, net of associated power supply costs and power cost adjustment (PCA) mechanisms | 3.4 | 16.0 | ||||
| Usage per retail customer, net of associated power supply costs and PCA mechanisms | (7.4) | 13.4 | ||||
| Idaho fixed cost adjustment (FCA) revenues | 6.7 | 0.3 | ||||
| Retail revenues per megawatt-hour (MWh), net of associated power supply costs and PCA mechanisms | (4.1) | (13.4) | ||||
| Transmission wheeling-related revenues | 3.6 | 16.4 | ||||
| Other operations and maintenance (O&M) expenses | (3.1) | (9.2) | ||||
| Other changes in operating revenues and expenses, net | (0.2) | (2.1) | ||||
| (Decrease) increase in Idaho Power operating income prior to sharing mechanism | (1.1) | 21.4 | ||||
| Provision for sharing with customers | (0.6) | (0.6) | ||||
| (Decrease) increase in Idaho Power operating income | (1.7) | 20.8 | ||||
| Non-operating expense, net | (5.0) | (3.1) | ||||
| Income tax expense | 1.4 | (7.7) | ||||
| Total (decrease) increase in Idaho Power net income | (5.3) | 10.0 | ||||
| Other IDACORP changes (net of tax) | 0.6 | (1.8) | ||||
| Net income attributable to IDACORP, Inc. - December 31, 2021 | $ | 32.8 | $ | 245.6 |
Net Income - Fourth Quarter 2021
IDACORP's net income decreased $4.7 million for the fourth quarter of 2021 compared with the fourth quarter of 2020 due primarily to lower net income at Idaho Power. At Idaho Power, customer growth increased operating income by $3.4 million in the fourth quarter of 2021 compared with the fourth quarter of 2020, as the number of Idaho Power customers grew by 2.8 percent during the twelve months ended December 31, 2021. Lower sales volumes on a per-customer basis from residential, commercial, and irrigation customers decreased operating income, but the decrease was partially offset by an increase in sales volumes on a per-customer basis from industrial customers in the fourth quarter of 2021 compared with the fourth quarter of 2020. The decrease in usage per commercial customer related to weather was partially offset by a return to more normal economic conditions compared with the same period in 2020. A return to more normal economic activity led to higher usage per industrial customer in the fourth quarter of 2021 compared with the fourth quarter of 2020, which was affected by negative COVID-19-related business conditions. The slight net decrease in sales volumes per customer was largely offset by the FCA mechanism (applicable to residential and small general service customers), which increased revenues in the fourth quarter of 2021 by $6.7 million compared with the fourth quarter of 2020.
The net decrease in retail revenues per MWh, net of associated power supply costs and PCA mechanisms, decreased operating income by $4.1 million during the fourth quarter of 2021 compared with the fourth quarter of 2020. Affecting the fourth quarter comparative per-MWh rate, Idaho Power decreased annual Idaho customer rates an estimated $3.9 million, on January 1, 2021, and decreased annual Oregon customer rates an estimated $0.3 million on November 1, 2020, to reflect full depreciation of all Boardman power plant investments after ceasing coal-fired operations at the Boardman power plant in October 2020. In addition, the decrease was driven by changes in the customer sales mix, as volumes sold to residential customers in the fourth quarter of 2021 made up a lesser portion of the customer sales mix compared with the fourth quarter of 2020. Residential customers generally pay a higher per-MWh rate than other customers.
Transmission wheeling-related revenues increased $3.6 million during the fourth quarter of 2021 compared with the fourth quarter of 2020, in part due to the effects of two new long-term wheeling agreements. Also,
Idaho Power's open access transmission tariff (OATT) rates were approximately 4 percent higher in the fourth quarter of 2021 compared with the fourth quarter of 2020.
Other O&M expenses were $3.1 million higher in the fourth quarter of 2021, primarily due to a return to more normal levels labor-related costs, of purchased services, and maintenance costs compared with the fourth quarter of 2020, which was affected by the COVID-19 public health crisis. In 2020, the response to the COVID-19 public health crisis affected the availability and performance of some of Idaho Power's service providers, contractors, and vendors, which resulted in lower other O&M expenses in the fourth quarter of 2020 compared with the fourth quarter of 2021. In 2021, while some economic effects of the public health crisis continue, much activity has returned to more normal levels in Idaho Power's service area and where its plants are located.
In the fourth quarter of 2021, Idaho Power recorded $0.6 million as a provision against current revenues to be refunded to customers through a future rate reduction, through the Idaho-jurisdiction PCA mechanism pursuant to a settlement stipulation approved by the Idaho Public Utilities Commission (IPUC) that provides for the potential sharing between Idaho Power and its Idaho customers of Idaho-jurisdictional earnings in excess of 10.0 percent of Idaho-jurisdiction return on year-end equity (Idaho ROE).
Non-operating expense, net, increased $5.0 million in the fourth quarter of 2021 compared with the fourth quarter of 2020, primarily due to increased costs of an Idaho Power postretirement medical plan that are not expected to recur.
The $1.4 million decrease in income tax expense in the fourth quarter of 2021 compared with the fourth quarter of 2020, was primarily due to greater 2021 pre-tax income.
Net Income - Full-Year 2021
IDACORP's net income increased $8.2 million for 2021 compared with 2020, due primarily to higher net income at Idaho Power.
Idaho Power's customer growth of 2.8 percent added $16.0 million to Idaho Power's operating income compared with 2020. Higher sales volumes on a per-customer basis increased operating income by $13.4 million in 2021 compared with 2020, due mostly to warmer and drier weather in the spring and early summer that caused irrigation customers to use more energy for irrigation pumps and residential customers to use more energy for cooling in 2021 compared with 2020. The increase in usage per residential customer from the spring and early summer was mostly offset by lower usage per residential customer from August through December 2021 compared with those same months in 2020 due to milder temperatures. Also, a return to more normal economic conditions for commercial and industrial customers in 2021 compared with 2020 increased sales volumes on a per-customer basis, as 2020 was affected by negative COVID-19-related business conditions.
The net decrease in retail revenues per MWh reduced operating income by $13.4 million in 2021 compared with 2020, primarily due to higher power supply costs. During the summer of 2021, higher wholesale energy market prices due to a heat wave in the western United States and higher energy usage by Idaho Power customers increased Idaho Power's net power supply expenses. The increase in the amount of net power supply expenses that were not deferred through Idaho Power's power cost adjustment mechanisms contributed to the negative variance in net retail revenues per MWh between the comparison periods. Also, Idaho Power decreased annual Idaho customer rates an estimated $3.9 million on January 1, 2021, and decreased annual Oregon customer rates an estimated $0.3 million on November 1, 2020, to reflect full depreciation of all Boardman power plant investments after ceasing coal-fired operations at the Boardman power plant in October 2020.
During 2021, transmission wheeling-related revenues increased $16.4 million compared with 2020, as the warmer and drier weather in the western United States in the spring and early summer, along with two new long-term wheeling agreements which began in April 2021, increased wheeling volumes. Colder winter weather in the southwest United States during the first quarter of 2021 also contributed to increased wheeling volumes in 2021 compared with 2020. In addition, Idaho Power's OATT rates increased approximately 10 percent during the period from October 1, 2020, to September 30, 2021, as compared with the rates in effect
from October 1, 2019, to September 30, 2020. The rate increased an additional four percent on October 1, 2021.
Other O&M expenses increased $9.2 million in 2021 compared with 2020, primarily due to a return to more normal levels of purchased services and maintenance activity compared with 2020, which was affected by the COVID-19 public health crisis. Also, labor-related other O&M expenses increased slightly in 2021 compared with 2020.
In 2021, Idaho Power recorded $0.6 million as a provision against current revenues to be refunded to customers through a future rate reduction, through the Idaho-jurisdiction PCA mechanism pursuant to a settlement stipulation approved by the IPUC that provides for the potential sharing between Idaho Power and its Idaho customers of Idaho-jurisdictional earnings in excess of 10.0 percent of Idaho ROE.
Non-operating expense, net, increased $3.1 million in 2021 compared with 2020, primarily due to increased costs of an Idaho Power postretirement medical plan that are not expected to recur.
The $7.7 million increase in Idaho Power income tax expense in 2021 compared with 2020 was primarily due to greater 2021 pre-tax income and other plant-related income tax return adjustments.
2022 Annual Earnings Guidance and Key Operating and Financial Metrics
IDACORP is initiating its earnings guidance estimate for 2022. The 2022 guidance incorporates all of the key operating and financial assumptions listed in the table that follows (in millions, except per share amounts):
| 2022 Estimate(1) | 2021 Actual | |
|---|---|---|
| IDACORP Earnings Guidance (per share) | $ 4.85 – $5.05 | $ 4.85 |
| Idaho Power Additional ADITCs | None | None |
| Idaho Power O&M Expense | $ 355 – $ 365 | $ 361 |
| Idaho Power Capital Expenditures, Excluding Allowance for Funds Used During Construction(2) | $ 480 – $ 500 | $ 315 |
| Idaho Power Hydropower Generation (MWh) | 5.5 – 7.5 | 5.4 |
(1) As of February 17, 2022.
(2) On an accrual basis.
The guidance above assumes that Idaho Power does not experience significant disruption to its business operations, critical supply-chain shortages, workforce impacts or disruptions, or major declines in customer usage related to the ongoing COVID-19 public health crisis. More detailed information on the operational and financial risks associated with COVID-19, as well as more detailed financial and operational information, are described in IDACORP’s and Idaho Power’s Annual Report on Form 10-K filed on February 17, 2022, with the U.S. Securities and Exchange Commission, which is also available for review on IDACORP’s website at www.idacorpinc.com.
Web Cast / Conference Call
IDACORP will hold an analyst conference call today at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time). All parties interested in listening may do so through a live webcast on IDACORP's website (www.idacorpinc.com), or by calling (855) 761-5600 for listen-only mode. The passcode for the call is 3990987. The conference call logistics are also posted on IDACORP's website and will be included in IDACORP's earnings news release. Slides will be included during the conference call. To access the slide deck, register for the event just prior to the call at www.idacorpinc.com/investor-relations/earnings-center/default.aspx. A replay of the conference call will be available on the company's website for 12 months and will be available shortly after the call.
Background Information
IDACORP, Inc. (NYSE: IDA), Boise, Idaho-based and formed in 1998, is a holding company comprised of Idaho Power, a regulated electric utility; IDACORP Financial, a holder of affordable housing projects and other real estate investments; and Ida-West Energy, an operator of small hydroelectric generation projects that satisfy the requirements of the Public Utility Regulatory Policies Act of 1978. Idaho Power, headquartered in vibrant and fast-growing Boise, Idaho, has been a locally operated energy company since 1916. Today, it
serves a 24,000-square-mile service area in Idaho and Oregon. Idaho Power’s goal to provide 100% clean energy by 2045 builds on its long history as a clean-energy leader that provides reliable service at affordable prices. With 17 low-cost hydropower projects at the core of its diverse energy mix, Idaho Power’s residential, business, and agricultural customers pay among the nation's lowest prices for electricity. It’s 2,000 employees proudly serve more than 600,000 customers with a culture of safety first, integrity always, and respect for all. To learn more about IDACORP or Idaho Power, visit www.idacorpinc.com or www.idahopower.com.
Forward-Looking Statements
In addition to the historical information contained in this press release, this press release contains (and oral communications made by IDACORP, Inc. and Idaho Power Company may contain) statements, including, without limitation, earnings guidance and estimated key operating and financial metrics, that relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, outlook, assumptions, or future events or performance, often, but not always, through the use of words or phrases such as "anticipates," "believes," "continues," "could," "estimates," "expects," "guidance," "intends," "potential," "plans," "predicts," "projects or projected," "targets," or similar expressions, are not statements of historical facts and may be forward-looking. Forward-looking statements are not guarantees of future performance and involve estimates, assumptions, risks, and uncertainties. Actual results, performance, or outcomes may differ materially from the results discussed in the statements. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in forward-looking statements include the following: (a) the effect of decisions by the Idaho and Oregon public utilities commissions and the Federal Energy Regulatory Commission that impact Idaho Power's ability to recover costs and earn a return on investment; (b) changes to or the elimination of Idaho Power's regulatory cost recovery mechanisms; (c) the ongoing impacts of COVID-19 and its variants, and government mandates related to COVID-19 vaccines, masking, and testing, on the global and regional economy and on Idaho Power's employees, customers, contractors, and suppliers, including on loads and revenues, uncollectible accounts, transmission revenues, supply chain availability, attrition of skilled workers, and other aspects of the companies' business; (d) changes in residential, commercial, and industrial growth and demographic patterns within Idaho Power's service area, and their associated impacts on loads and load growth, and the availability of regulatory mechanisms that allow for timely cost recovery through customer rates in the event of those changes; (e) abnormal or severe weather conditions (including conditions and events associated with climate change), wildfires, droughts, earthquakes, and other natural phenomena and natural disasters, which affect customer sales, hydropower generation levels, repair costs, service interruptions, liability for damage caused by utility property, and the availability and cost of fuel for generation plants or purchased power to serve customers; (f) advancement of self-generation, energy storage, energy efficiency, alternative energy sources, and other technologies that may reduce Idaho Power's sale or delivery of electric power or introduction of operational or cyber-security vulnerabilities to the power grid; (g) acts or threats of terrorist incidents, acts of war, social unrest, cyber or physical security attacks, and other malicious acts of individuals or groups seeking to disrupt Idaho Power’s operations or the electric power grid or compromise data, or the disruption or damage to the companies' business, operations, or reputation that may result from such events; (h) the expense and risks associated with capital expenditures for, and the permitting and construction of, utility infrastructure that Idaho Power may be unable to complete or that may not be deemed prudent by regulators for cost recovery or a return on investment; (i) demand for power during peak periods could exceed forecasted supply, resulting in increased costs for purchasing capacity in the market or acquiring or constructing additional generation resources and battery storage facilities; (j) variable hydrological conditions and over-appropriation of surface and groundwater in the Snake River Basin, which may impact the amount of power generated by Idaho Power's hydropower facilities; (k) the ability of Idaho Power to acquire fuel, power, electrical equipment, and transmission capacity on reasonable terms, particularly in the event of unanticipated or abnormally high power demands, price volatility, lack of physical availability, transportation constraints, disruptions or delays in the supply chain, or a lack of credit; (l) disruptions or outages of Idaho Power's generation or transmission systems or of any interconnected transmission systems, which can result in liability for Idaho Power, increase power costs, and reduce revenues; (m) accidents, terrorist acts, electrical contacts, fires (either affecting or caused by Idaho Power facilities or infrastructure), explosions, general system damage or dysfunction, intentional acts of destruction, uncontrolled release of water from hydropower, and other unplanned events that may occur while operating and maintaining assets, which can cause unplanned outages, reduce generating output, damage company assets, operations, or reputation, subject Idaho Power to third-party claims for property damage, personal injury, or loss of life, or result in the imposition of fines and penalties for which Idaho Power may have inadequate insurance coverage; (n) the increased purchased power costs and operational challenges associated with purchasing and integrating intermittent renewable energy sources into Idaho Power's resource portfolio; (o) Idaho Power's concentration in one industry and one region and the lack of diversification, and the resulting exposure to regional economic conditions and regional legislation and regulation; (p) employee workforce factors, including the operational and financial costs of unionization or the attempt to unionize all or part of the companies' workforce, the impact of an aging workforce and retirements, the cost and ability to attract and retain skilled workers and third-party vendors, and the ability to adjust the labor cost structure when necessary; (q) failure to comply with state and federal laws, regulations, and orders, including interpretations and enforcement initiatives by regulatory and oversight bodies, which may result in penalties and fines and increase the cost of compliance and remediation; (r) changes in tax laws or related regulations or interpretations of applicable laws by federal, state, or local taxing jurisdictions, and the availability of tax credits, and the tax rates payable by IDACORP shareholders on common stock dividends; (s) adoption of, changes in, and costs of compliance with laws, regulations, and policies relating to the environment, climate change, natural resources, and threatened and endangered species, and the ability to recover associated increased costs through rates; (t) the inability to timely obtain and the cost of obtaining and complying with required governmental permits and approvals, licenses, rights-of-way, and siting for transmission and generation projects and hydropower facilities; (u) failure to comply with mandatory reliability and cyber and physical security requirements, which may result in penalties, reputational harm, and operational changes; (v) the impacts of economic conditions, including inflation, interest rates, supply costs, population growth or decline in Idaho Power's service area, changes in customer demand for electricity, revenue from sales of excess power, credit quality of counterparties and suppliers, and the collection of receivables; (w) the ability to obtain debt and equity financing or refinance existing debt when necessary and on favorable terms, which can be affected by factors such as credit ratings, volatility or disruptions in the financial markets, interest rate fluctuations, decisions by the Idaho or Oregon public utility commissions, and the companies' past or projected financial performance; (x) the ability to enter into financial and physical commodity hedges with creditworthy counterparties to manage price and commodity risk for fuel, power, and transmission, and the failure of any such risk management and hedging strategies to work as intended; (y) changes in actuarial assumptions, changes in interest rates, increasing healthcare costs, and the actual and projected return on plan assets for pension and other post-retirement plans, which
can affect future pension and other postretirement plan funding obligations, costs, and liabilities and the companies' cash flows; (z) the assumptions underlying the coal mine reclamation obligations at Bridger Coal Company and related funding and bonding requirements, and the remediation costs associated with planned exits from participation in Idaho Power's co-owned coal plants; (aa) the ability to continue to pay dividends and achieve target-payout ratios based on financial performance, and in light of credit rating considerations, contractual covenants and restrictions, and regulatory limitations; and (bb) adoption of or changes in accounting policies and principles, changes in accounting estimates, and new U.S. Securities and Exchange Commission or New York Stock Exchange requirements, or new interpretations of existing requirements. Any forward-looking statement speaks only as of the date on which such statement is made. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Readers should also review the risks and uncertainties listed in IDACORP, Inc.'s and Idaho Power Company's most recent Annual Report on Form 10-K and other reports the companies file with the U.S. Securities and Exchange Commission, including (but not limited to) Part I, Item 1A - “Risk Factors” in the Form 10-K and Management's Discussion and Analysis of Financial Condition and Results of Operations and the risks described therein from time to time. IDACORP and Idaho Power disclaim any obligation to update publicly any forward-looking information, whether in response to new information, future events, or otherwise, except as required by applicable law.
| Investor and Analyst Contact | Media Contact |
|---|---|
| Justin S. Forsberg | Jordan Rodriguez |
| Director of Investor Relations & Treasury | Corporate Communications |
| Phone: (208) 388-2728 | Phone: (208) 388-2460 |
| JForsberg@idacorpinc.com | JRodriguez@idahopower.com |
a4qtr_2021xconferencexca
Earnings Conference Call 4th Quarter & Full-Year 2021 February 17, 2022
Forward-Looking Statements In addition to the historical information contained in this presentation, this presentation contains (and oral communications made by IDACORP, Inc. and Idaho Power Company may contain) statements, including, without limitation, earnings guidance and estimated key operating and financial metrics, that relate to future events and expectations and, as such, constitute forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, outlook, assumptions, or future events or performance, often, but not always, through the use of words or phrases such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “guidance,” “intends,” “potential,” “plans,” “predicts,” “projects,” “targets,” or similar expressions, are not statements of historical facts and may be forward-looking. Forward- looking statements are not guarantees of future performance and involve estimates, assumptions, risks, and uncertainties. Actual results, performance, or outcomes may differ materially from the results discussed in the statements. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in forward-looking statements include the following: (a) the effect of decisions by state and federal regulators affecting Idaho Power's ability to recover costs and earn a return on investments; (b) changes to or the elimination of Idaho Power’s regulatory cost recovery mechanisms; (c) the impacts of COVID-19 on the global and regional economy and Idaho Power’s business; (d) changes in customer growth rates, and related changes in loads; (e) abnormal or severe weather conditions, climate change, wildfires, droughts, earthquakes, and other natural phenomena; (f) advancement of technologies that reduce customer demand or the introduction of vulnerabilities to the power grid; (g) acts or threats of terrorist incidents, social unrest, acts of war, cyber or physical security attacks, the companies’ failure to secure data or the electric power grid; (h) the expense and risks of capital expenditures for utility infrastructure and ability to recover such costs; (i) demand for power during peak periods exceeding forecasted supply; (j) variable hydrological conditions or over-appropriation of surface and groundwater; (k) the ability to acquire fuel, power, electrical equipment, and transmission capacity on reasonable terms; (l) disruptions or outages of Idaho Power’s generation or transmission systems or of any interconnected transmission system; (m) accidents, terrorist acts, electrical contacts, fires, explosions, and general system damage, that can cause outages and subject the companies to third-party claims for damages; (n) increased purchased power costs and challenges associated with integrating intermittent renewable energy sources into Idaho Power's resource portfolio; (o) Idaho Power's concentration in one industry and one region, regional economic condition and regional legislation and regulation; (p) employee and third-party vendor workforce factors, including potential unionization of the companies' workforce, the cost of living, and the impacts of an aging workforce; (q) the failure to comply with state and federal laws, regulations, and orders; (r) changes in tax laws and the availability of tax credits; (s) adoption of or changes in, and costs of compliance with, laws, orders and regulations, and related litigation or proceedings, including those relating to the environment; (t) the inability to timely obtain and the cost of obtaining and complying with government permits and approvals; (u) failure to comply with mandatory reliability and security requirements; (v) the impacts of changes in economic conditions, including on customer demand; (w) the ability to obtain debt and equity financing when necessary and on reasonable terms; (x) the ability to buy and sell power, transmission capacity, and fuel in the markets and the availability to enter into, and success or failure of, financial and physical commodity hedges; (y) the magnitude of future benefit plan funding obligations; (z) the assumptions underlying the coal mine reclamation obligations at Bridger Coal Company and related funding requirements, and remediation costs associated with planned exits from coal plants; (aa) the ability to continue to pay dividends and target-payout ratios, and contractual and regulatory restrictions on those dividends; and (bb) adoption of or changes in accounting policies, principles, or estimates. Any forward-looking statement speaks only as of the date on which such statement is made. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Readers should also review the risks and uncertainties listed in IDACORP, Inc.'s and Idaho Power Company's most recent Annual Report on Form 10-K and Form 10-Q and other reports the companies file with the U.S. Securities and Exchange Commission, including (but not limited to) Part I, Item 1A - “Risk Factors” in the Form 10-K and Form 10-Q and Management's Discussion and Analysis of Financial Condition and Results of Operations and the risks described therein from time to time. IDACORP and Idaho Power disclaim any obligation to update publicly any forward-looking information, whether in response to new information, future events, or otherwise, except as required by applicable law.
Leadership Presenting Today Lisa Grow IDACORP President & Chief Executive Officer Steve Keen IDACORP Senior Vice President & Chief Financial Officer 3 Brian Buckham IDACORP Senior Vice President & General Counsel & Incoming Chief Financial Officer
Three Months Ended December 31 Year Ended December 31 2021 2020 2021 2020 Net income $ 32,798 $ 37,507 $ 245,550 $ 237,417 Average shares outstanding – diluted (000’s) 50,697 50,617 50,645 50,572 Earnings per diluted share $ 0.65 $ 0.74 $ 4.85 $ 4.69 Earnings Performance 4
2021: Safest Year on Record Awarded EEI inaugural Thomas F. Farrell, II Safety Leadership and Innovation Award 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 2000 2016 2017 2018 2019 2020 2021 OSHA Recordable Rates National Average* EEI (1k-<2k Employees) Idaho Power *2021 data not yet available as of the date of this presentation. 5
Our Commitment to Our Customers 6 Idaho Power Received Some of its Highest Customer Satisfaction Ratings in Company History in 2021 My Account
14 Straight Years of Growth in EPS(1) $1.86 $2.17 $2.68 $3.00 $3.43 $3.46 $3.64 $3.85 $3.87 $3.94 $4.21 $4.49 $4.61 $4.69 $4.85 $1.80 $2.20 $2.60 $3.00 $3.40 $3.80 $4.20 $4.60 $5.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (1)Earnings per diluted share. 2008-2012 data adjusted for effect of a change in accounting method for IDACORP Financial Services affordable housing investment amortization. 7.1% CAGR since 2007 7
2.8% Increasing Customer Growth Rate 540,000 550,000 560,000 570,000 580,000 590,000 600,000 610,000 2017 2018 2019 2020 2021 Idaho Power Customer Growth 8 Moody’s GDP Growth Projections Idaho Power’s Service Area: 2022: 5.9% 2023: 4.9% New Enterprise Data Center Kuna, Idaho Expected to need at least 20 MW: • Beginning operations in 2025
Clean Today, Cleaner Tomorrow® 5-Year Forecasted Annual Growth Rate 20-Year Forecasted Annual Growth Rate Retail Sales (Billed MWh) Annual Peak (Peak Demand) Retail Sales (Billed MWh) Annual Peak (Peak Demand) 2021 IRP 2.6% 2.1% 1.4% 1.4% 2019 IRP 1.3% 1.4% 1.0% 1.2% 2017 IRP 1.1% 1.6% 0.9% 1.4% 2021 IRP Load Forecast vs. Prior IRPs 9 *Idaho Power’s planned conversion, shut down and timing of Jim Bridger units is subject to a number of assumptions and uncertainties described in the 2021 Integrated Resource Plan (IRP), including evaluations of regional haze compliance options, and is subject to regulatory approval and change. Updated Coal Exit Timeline Target Year CO2 Emissions Intensity Reduction Short-term 2025 35% below 2005 Medium-term–IRP-based 2030 79% below 2005 Long-term 2045 100% clean Emission Reduction Targets Aligned with Paris Agreement
Resource Additions to Address Capacity Deficits • Idaho Power customer growth and transmission constraints outside Idaho Power’s service area driving need for additional resources. • Expect to sign contracts for 120MW of storage, plus 40MW solar PPA to serve peak energy needs by summer 2023. • Additional RFP issued to solicit resources to come on-line in 2024-2025 to meet identified capacity deficits of 85MW and 125MW. Year Capacity Deficit 2023 101MW 2024 85MW 2025 125MW 10
Idaho Power Anticipates Owning 45% of B2H • Reliable • Affordable • Clean • Idaho Power, Bonneville Power Administration (BPA), and PacifiCorp signed a non-binding term sheet in January 2022. • Idaho Power would acquire BPA’s share and own ~45 percent of the line in the aggregate. • Idaho Power and BPA expect to sign a commensurate long-term transmission service agreement intended to serve BPA’s customers. 11 Approaching $500 million of total additional Idaho Power projected rate base by 2026. Boardman to Hemingway
Precipitation Weather Outlook March Through May 2022 Source: NOAA, National Oceanic Atmospheric Administration, U.S. Dept. of Commerce, January 20, 2022 12 Temperature
Executive & Board Updates Steve Keen IDACORP Senior Vice President & Chief Financial Officer Announced retirement, intended to be effective October 1, 2022 after 40 years of service. Brian Buckham IDACORP Senior Vice President & General Counsel Appointed to succeed Keen as Chief Financial Officer, effective March 1, 2022. Pat Harrington IDACORP Corporate Secretary Appointed to succeed Buckham as Vice President of Legal & General Counsel, effective March 1, 2022 & retain Corporate Secretary role.13 Jeff C. Kinneeveauk IDACORP Member of Board of Directors Appointed effective February 10, 2022.
2020 to 2021 IDACORP, Inc. Net Income (in millions and before related income tax impact unless otherwise noted) Net Income – For the Year Ended December 31, 2020 $ 237.4 Increase (decrease) in Idaho Power net income: Customer growth, net of associated power supply costs and power cost adjustment mechanisms $ 16.0 Usage per retail customer, net of associated power supply costs and power cost adjustment mechanisms 13.4 Retail revenues per megawatt-hour, net of associated power supply costs and power cost adjustment mechanisms (13.4) Transmission wheeling-related revenues 16.4 Other operations and maintenance expenses (9.2) Other changes in operating revenues and expenses, net (2.1) Increase in Idaho Power operating income prior to sharing mechanism 21.4 Provision for sharing with customers (0.6) Increase in Idaho Power operating income 20.8 Non-operating expense, net (3.1) Income tax expense (7.7) Total increase in Idaho Power net income 10.0 Other IDACORP changes (net of tax) (1.8) Net Income – For the Year Ended December 31, 2021 $ 245.6 14
2022 Estimates(1) 2021 Actual IDACORP Earnings Per Diluted Share Guidance $ 4.85 – $ 5.05 $ 4.85 Idaho Power Additional Amortization of Accumulated Deferred Investment Tax Credits None None Idaho Power Operations & Maintenance Expense $ 355 – $ 365 $ 361 Idaho Power Capital Expenditures, Excluding Allowance for Funds Used During Construction(2) $ 480 – $ 500 $ 315 Idaho Power Hydropower Generation (Megawatt-hours) 5.5 – 7.5 5.4 2022 Earnings Per Share Guidance & Estimated Key Operating Metrics (Millions Except for Per Share Amounts) (1) As of February 17, 2022. (2) On an accrual basis. 15
Capital Expenditures Forecast(1) 2022 – 2026 ($ Millions) $0 $100 $200 $300 $400 $500 $600 $700 $800 2022 2023 2024 2025 2026 Distribution ($125-$170M) Hydro ($70-$110M) Transmission ($40-$70M) General Plant ($50-$75M) Thermal ($10-$80M) High Voltage Transmission ($5-$105) New capacity resources (2022-2025) ($15-$220M) (1) As of February 17, 2022. See page 56 of IDACORP’s 2021 Form 10-K for a breakdown of project types included in the 5-year forecast.16 40% overall increase since the previous 5- year CapEx forecast
Total System Rate Base Growth Forecast(1) $ M ill io n s 17 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 2011 Rate Case + Langley Total Rate Base Estimate through 2021 2022 2023 2024 2025 2026 *5-Year Forecasted Rate Base Growth (9.8% CAGR, including Hells Canyon) $2.7B $916M $2.2B $293M Hells Canyon Relicensing Asset – estimated in 2024(2) (1) Idaho Power’s most recent rate cases in its jurisdictions in 2011 provided for a return on a rate base of $2.8 billion, which included the Langley Gulch power plant completed in 2012. 2011 original amounts have been reduced to reflect the elimination of ~$100M of rate base related to coal plants that have been shut down or exited since that time for which rate base has been fully collected. If Idaho Power’s net capital additions and retirements since its last Idaho rate case and expected future net capital expenditures and retirements were approved to be included in rate base, Idaho Power’s total system rate base could reach approximately $5.8 billion by the end of 2026, the year through which Idaho Power currently forecasts capital expenditures. (2) Hells Canyon (HCC) relicensing costs closing to plant are subject to the Federal Energy Regulatory Commission’s ultimate granting of a new operating license, which could be as early as 2023, but Idaho Power believes issuance is more likely be 2024 or thereafter. Estimated to be $293M of rate base in 2024 for illustration purposes here.
Operating Cash Flows, Liquidity, & Capital Structure (millions) IDACORP(1) Idaho Power Revolving Credit Facility – Expires December 2025 $ 100.0 $ 300.0 Commercial Paper Outstanding – – Identified for Other Use(2) – (24.2) Total $ 100.0 $ 275.8 (1) Holding company only. (2) Port of Morrow and American Falls Bonds that Idaho Power could be required to purchase prior to maturity under the optional or mandatory purchase provisions of the bonds, if the remarketing agent for the bonds is unable to sell the bonds to third parties. Cash Flows Twelve Months Ended December 31 IDACORP 2021 2020 Net Cash Provided by Operating Activities $ 363.3 $ 388.1 18 Liquidity (millions) IDACORP Idaho Power Debt 43% 45% Equity 57% 55% Target N/A 50%/50% Capital Structure as of December 31, 2021 As of December 31, 2021
Debt Maturity Profile ($ Millions) – as of 12/31/2021 $ 7 5 $ 5 0 $ 2 0 $ 1 1 6 $ 4 $ 8 0 $ 1 0 0 $ 7 0 $ 5 0 $ 6 0 $ 1 0 0 $ 1 0 0 $ 7 5 $ 7 5 $ 2 5 0 $ 1 2 0 $ 4 5 0 $ 5 5 $ 1 4 0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Manageable refinancing needs and windows of opportunity IDACORP Idaho Power Moody’s S&P Moody’s S&P Long-term Issuer Rating Baa1 BBB A3 BBB Short-term P-2 A-2 P-2 A-2 Outlook Negative Stable Negative Stable Limited near-term refinancing pressure 19 Current profile provides for significant flexibility in potential bond issuance and tenor
Contact Information Justin S. Forsberg Director of Investor Relations & Treasury (208) 388-2728 JForsberg@idacorpinc.com Webcast and presentation on WWW.IDACORPINC.COM Jordan Rodriguez Corporate Communications (208) 388-2460 JRodriguez@idahopower.com Investors & Analysts Media