IDACORP(IDA) - 2024 Q2 - Quarterly Report

Commonly Used Terms This section defines key terminology used throughout the financial report for clarity and understanding Cautionary Note Regarding Forward-Looking Statements This section advises readers about inherent risks and uncertainties associated with forward-looking statements in the report Available Information This section directs readers to where additional public information about the company can be accessed Part I. Financial Information This part presents the company's comprehensive financial data, including statements, notes, and management's analysis Item 1. Financial Statements (unaudited) This section presents IDACORP and Idaho Power's unaudited condensed consolidated financial statements and detailed notes IDACORP, Inc. Condensed Consolidated Statements of Income This statement details IDACORP's revenues, operating income, net income, and diluted EPS for the specified periods | Metric (IDACORP, Inc.) | 3 Months Ended June 30, 2024 (in thousands) | 3 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | | :--------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Total Operating Revenues | $451,039 | $413,838 | $899,975 | $843,497 | | Operating Income | $103,269 | $82,294 | $152,865 | $150,398 | | Net Income Attributable to IDACORP, Inc. | $89,520 | $68,574 | $137,693 | $124,672 | | Diluted EPS | $1.71 | $1.35 | $2.67 | $2.46 | IDACORP, Inc. Condensed Consolidated Statements of Comprehensive Income This statement presents IDACORP's net income and other comprehensive income components for the periods | Metric (IDACORP, Inc.) | 3 Months Ended June 30, 2024 (in thousands) | 3 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | | :--------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net Income | $89,844 | $68,864 | $138,112 | $124,888 | | Unfunded pension liability adjustment, net of tax | $284 | $147 | $568 | $293 | | Total Comprehensive Income Attributable to IDACORP, Inc. | $89,804 | $68,721 | $138,261 | $124,965 | IDACORP, Inc. Condensed Consolidated Balance Sheets This statement provides IDACORP's financial position, including assets, liabilities, and equity at period end | Metric (IDACORP, Inc.) | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--------------------- | :--------------------------- | :------------------------------- | | Total Current Assets | $814,439 | $1,004,054 | | Property, Plant and Equipment - net | $6,116,619 | $5,745,230 | | Total Assets | $8,677,133 | $8,475,918 | | Total Current Liabilities | $525,632 | $634,076 | | Long-Term Debt | $2,776,129 | $2,775,790 | | Total Equity | $3,203,907 | $2,914,743 | IDACORP, Inc. Condensed Consolidated Statements of Cash Flows This statement summarizes IDACORP's cash movements from operating, investing, and financing activities | Metric (IDACORP, Inc.) | 6 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | | :--------------------- | :------------------------------------------ | :------------------------------------------ | | Net Cash Provided by Operating Activities | $256,047 | $6,779 | | Net Cash Used in Investing Activities | $(558,417) | $(263,799) | | Net Cash Provided by Financing Activities | $144,500 | $214,222 | | Cash and Cash Equivalents at End of Period | $169,559 | $134,779 | IDACORP, Inc. Condensed Consolidated Statements of Equity This statement details changes in IDACORP's common stock, retained earnings, and total shareholders' equity | Metric (IDACORP, Inc.) | 6 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | | :--------------------- | :------------------------------------------ | :------------------------------------------ | | Common Stock Balance at End of Period | $1,123,745 | $884,309 | | Retained Earnings Balance at End of Period | $2,089,185 | $1,982,083 | | Total IDACORP, Inc. Shareholders' Equity at End of Period | $3,196,314 | $2,853,763 | Idaho Power Company Condensed Consolidated Statements of Income This statement details Idaho Power's revenues, operating expenses, operating income, and net income | Metric (Idaho Power Company) | 3 Months Ended June 30, 2024 (in thousands) | 3 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | | :--------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Operating Revenues | $449,819 | $412,727 | $898,118 | $842,065 | | Total Operating Expenses | $347,018 | $330,831 | $745,662 | $691,341 | | Operating Income | $102,801 | $81,896 | $152,456 | $150,724 | | Net Income | $87,388 | $67,080 | $134,690 | $122,790 | Idaho Power Company Condensed Consolidated Statements of Comprehensive Income This statement presents Idaho Power's net income and other comprehensive income components for the periods | Metric (Idaho Power Company) | 3 Months Ended June 30, 2024 (in thousands) | 3 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | | :--------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net Income | $87,388 | $67,080 | $134,690 | $122,790 | | Unfunded pension liability adjustment, net of tax | $284 | $147 | $568 | $293 | | Total Comprehensive Income | $87,672 | $67,227 | $135,258 | $123,083 | Idaho Power Company Condensed Consolidated Balance Sheets This statement provides Idaho Power's financial position, including assets, liabilities, and equity at period end | Metric (Idaho Power Company) | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--------------------------- | :--------------------------- | :------------------------------- | | Total Current Assets | $732,157 | $946,312 | | Property, Plant and Equipment, net | $6,104,741 | $5,733,111 | | Total Assets | $8,498,942 | $8,323,531 | | Total Current Liabilities | $538,536 | $640,484 | | Long-Term Debt | $2,776,129 | $2,775,790 | | Total Equity | $3,032,786 | $2,782,173 | Idaho Power Company Condensed Consolidated Statements of Cash Flows This statement summarizes Idaho Power's cash movements from operating, investing, and financing activities | Metric (Idaho Power Company) | 6 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | | :--------------------------- | :------------------------------------------ | :------------------------------------------ | | Net Cash Provided by Operating Activities | $257,426 | $601 | | Net Cash Used in Investing Activities | $(556,137) | $(262,544) | | Net Cash Provided by Financing Activities | $115,031 | $257,465 | | Cash and Cash Equivalents at End of Period | $88,111 | $104,455 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles and methods applied in preparing the financial statements - IDACORP is a holding company with Idaho Power as its principal operating subsidiary, engaged in electric utility services in southern Idaho and eastern Oregon, regulated by state and federal commissions[46] - Idaho Power's financial statements reflect regulatory accounting principles, deferring or accruing costs/revenues as regulatory assets/liabilities based on probable future recovery or refund from customers[48] - The FASB issued ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes), effective for annual periods after December 15, 2023, and December 15, 2024, respectively, which IDACORP and Idaho Power are evaluating for impact[52][53] 2. INCOME TAXES This note details the company's income tax provisions, effective tax rates, and related adjustments - IDACORP and Idaho Power use an estimated annual effective tax rate for interim income tax provisions, with discrete events recorded when they occur[54] Income Tax Expense and Effective Tax Rate | Metric (in thousands) | IDACORP 2024 | IDACORP 2023 | Idaho Power 2024 | Idaho Power 2023 | | :-------------------- | :----------- | :----------- | :--------------- | :--------------- | | Income tax at statutory rates | $36,090 | $36,010 | $35,555 | $35,697 | | Additional ADITC amortization | $(20,000) | $(7,500) | $(20,000) | $(7,500) | | Income tax expense | $2,517 | $15,226 | $3,441 | $15,894 | | Effective tax rate | 1.8% | 10.9% | 2.5% | 11.5% | 3. REGULATORY MATTERS This note discusses ongoing regulatory proceedings, rate cases, and their financial implications for the company - Idaho Power filed a limited-issue rate case in May 2024, requesting a $99.3 million annual revenue increase effective January 1, 2025, focused on incremental plant additions and O&M labor costs[57] - In December 2023, Idaho Power filed an Oregon general rate case, requesting a $10.7 million (19.28%) annual rate increase, proposing a 10.4% authorized return on equity. Partial settlement stipulations in May and June 2024 proposed a $6.7 million (12.14%) increase and a 9.5% Oregon-jurisdiction return on equity, with OPUC decision pending[59][60][61] - Idaho Power recorded $20.0 million in additional ADITC amortization for the six months ended June 30, 2024, under the 2023 Settlement Stipulation to help achieve a minimum 9.12% Idaho ROE, with $65.1 million remaining available[63] - The IPUC approved a $35.7 million net decrease in PCA revenues effective June 1, 2024, reflecting forecasted improved hydropower generation. The OPUC approved a $6.9 million APCU decrease effective June 1, 2024, due to increased hydropower and decreased market prices[65] - The IPUC approved an $11.7 million increase in recovery from the FCA for the 2023 deferral, effective June 1, 2024, linking fixed cost recovery to a set amount per customer[66] 4. REVENUES This note provides a breakdown of operating revenues, including retail sales and alternative revenue programs Total Electric Utility Operating Revenues | Metric (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue from contracts with customers | $442,631 | $385,229 | $860,528 | $770,895 | | Alternative revenue programs and other revenues | $7,188 | $27,498 | $37,590 | $71,170 | | Total electric utility operating revenues | $449,819 | $412,727 | $898,118 | $842,065 | Retail Revenues by Customer Class | Retail Revenues (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :----------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Residential | $145,763 | $134,885 | $330,062 | $323,422 | | Commercial | $96,012 | $87,677 | $190,709 | $175,507 | | Industrial | $66,876 | $58,245 | $132,082 | $113,789 | | Irrigation | $80,771 | $62,781 | $81,809 | $63,713 | | Total Retail Revenues | $387,474 | $341,661 | $730,631 | $672,385 | Alternative Revenue Programs and Other Revenues | Alternative Revenue Programs and Other Revenues (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | FCA mechanism revenues | $(2,140) | $5,974 | $(2,881) | $15,159 | | Derivative revenues | $9,328 | $21,524 | $40,471 | $56,011 | | Total alternative revenue programs and other revenues | $7,188 | $27,498 | $37,590 | $71,170 | 5. LONG-TERM DEBT This note details the company's long-term debt obligations and related financing activities - Idaho Power received regulatory approval to issue and sell up to $1.2 billion in debt securities and first mortgage bonds, with $1.2 billion remaining available as of June 30, 2024[71] 6. COMMON STOCK This note describes changes in common stock, equity issuances, and capital contributions - IDACORP issued 2,638,219 shares of common stock during the six months ended June 30, 2024, including 2,542,442 shares from partial settlement of Forward Sale Agreements (FSAs) for $230.0 million cash[72][78] - IDACORP has an at-the-market offering program to sell up to $300 million of common stock, but no shares were issued under this program during the six months ended June 30, 2024[74] - Idaho Power received a $200 million capital contribution from IDACORP during the six months ended June 30, 2024[80] - IDACORP and Idaho Power maintain leverage ratios of 47% and 48% respectively, well within the 65% maximum required by credit facility covenants, allowing for dividend payments[81][196] 7. EARNINGS PER SHARE This note presents the calculation of basic and diluted earnings per share for IDACORP Diluted Earnings Per Share | Metric (IDACORP, Inc.) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :--------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to IDACORP, Inc. | $89,520 | $68,574 | $137,693 | $124,672 | | Weighted-average common shares outstanding - diluted | 52,236 | 50,758 | 51,519 | 50,741 | | Diluted earnings per share | $1.71 | $1.35 | $2.67 | $2.46 | - Dilutive securities, primarily related to FSAs, added approximately 66 thousand and 52 thousand incremental shares to the diluted EPS calculation for the three and six months ended June 30, 2024, respectively[85] 8. COMMITMENTS This note outlines significant contractual obligations and future capital commitments of the company - Idaho Power increased contractual purchase obligations by approximately $38.0 million over 20 years for hydropower facility power purchase agreements and $84.3 million over 5 years for a 200 MW energy and capacity market purchase agreement[86] - In July 2024, Idaho Power committed to acquire 200 MW of battery storage assets for approximately $156.8 million over a 2-year term, with 150 MW seeking IPUC approval[87] - Idaho Power guarantees its one-third share of BCC's reclamation obligation, totaling $47.6 million at June 30, 2024, which is covered by BCC's reclamation trust fund[88] 9. CONTINGENCIES This note discusses potential liabilities from legal proceedings and other uncertain events - IDACORP and Idaho Power accrue for legal proceedings when loss contingencies are probable and reasonably estimable, with current accruals not material to financial statements[91] - Idaho Power faces claims for damages related to its electric service and operations, including potential wildfire liabilities, but believes resolution of existing claims will not materially adversely affect financial statements[92] 10. BENEFIT PLANS This note provides information on the company's defined benefit pension and other post-retirement plans Net Periodic Benefit Cost | Metric (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net periodic benefit cost recognized for financial reporting | $11,437 | $6,741 | $22,787 | $13,626 | - Idaho Power made no contributions to its defined benefit pension plan during the six months ended June 30, 2024, but is considering contributing up to $30 million in 2024[97] 11. DERIVATIVE FINANCIAL INSTRUMENTS This note describes the company's use of derivative instruments to manage commodity price risks - Idaho Power uses derivative instruments (physical and financial forward contracts) to manage commodity price risks related to electricity and fuel, with no instruments designated as cash flow hedges[99] Realized Gain/(Loss) on Derivatives Recognized in Income | Location of Realized Gain/(Loss) on Derivatives Recognized in Income (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :-------------------------------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Financial swaps - Operating revenues | $2,609 | $5,042 | $3,621 | $3,963 | | Financial swaps - Purchased power | $(1,478) | $(1,733) | $(525) | $(107) | | Financial swaps - Fuel expense | $(1,127) | $(11,422) | $(25,185) | $12,114 | - The aggregate fair value of derivative instruments with credit-risk-related contingent features in a liability position was $25.2 million at June 30, 2024, with Idaho Power posting $30.9 million in cash collateral[104] 12. FAIR VALUE MEASUREMENTS This note explains the fair value hierarchy and measurements for various financial instruments - IDACORP and Idaho Power categorize financial instruments into a three-level fair value hierarchy (Level 1: quoted prices in active markets; Level 2: observable inputs; Level 3: unobservable inputs)[107][108][109] Fair Value Measurements at June 30, 2024 | Assets/Liabilities (in thousands) | Level 1 (June 30, 2024) | Level 2 (June 30, 2024) | Level 3 (June 30, 2024) | Total (June 30, 2024) | | :-------------------------------- | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | IDACORP Money market funds and commercial paper | $30,433 | $— | $— | $30,433 | | Idaho Power Money market funds and commercial paper | $78,476 | $— | $— | $78,476 | | Derivatives (Assets) | $131 | $— | $— | $131 | | Equity securities | $35,947 | $— | $— | $35,947 | | Derivatives (Liabilities) | $2,494 | $1,745 | $— | $4,239 | Long-Term Debt Fair Value | Financial Instrument (in thousands) | Carrying Amount (June 30, 2024) | Estimated Fair Value (June 30, 2024) | | :---------------------------------- | :------------------------------ | :----------------------------------- | | IDACORP Long-term debt | $2,825,929 | $2,535,149 | | Idaho Power Long-term debt | $2,825,929 | $2,535,149 | 13. SEGMENT INFORMATION This note provides financial data for the company's reportable operating segments - IDACORP's only reportable segment is utility operations (Idaho Power), with other operating segments (IFS, Ida-West, holding company expenses) grouped into "All Other"[116] Segment Financial Performance (6 Months Ended June 30, 2024) | Segment (in thousands) | Revenues (6 Months Ended June 30, 2024) | Net Income Attributable to IDACORP, Inc. (6 Months Ended June 30, 2024) | Total Assets (June 30, 2024) | | :--------------------- | :-------------------------------------- | :---------------------------------------------------------------------- | :--------------------------- | | Utility Operations | $898,118 | $134,690 | $8,498,942 | | All Other | $1,857 | $3,003 | $251,246 | | Consolidated Total | $899,975 | $137,693 | $8,677,133 | 14. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME This note details the components and changes in accumulated other comprehensive income Accumulated Other Comprehensive Income | Metric (in thousands) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :-------------------- | :--------------------------- | :--------------------------- | | Balance at beginning of period | $(17,184) | $(12,922) | | Amounts reclassified out of AOCI | $568 | $293 | | Balance at end of period | $(16,616) | $(12,629) | 15. CHANGES IN IDAHO POWER RETAINED EARNINGS This note outlines the changes in Idaho Power's retained earnings, including net income and dividends Idaho Power Retained Earnings | Metric (in thousands) | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :-------------------- | :--------------------------- | :--------------------------- | | Balance at beginning of period | $1,991,319 | $1,836,547 | | Net income | $134,690 | $122,790 | | Dividends to parent | $(84,645) | $(40,578) | | Balance at end of period | $2,041,364 | $1,918,759 | Reports of Independent Registered Public Accounting Firm - Deloitte & Touche LLP This section presents the auditor's opinion on the interim financial information and consolidated financial statements - Deloitte & Touche LLP concluded that no material modifications are needed for the interim financial information to conform with GAAP[126][130] - The firm expressed an unqualified opinion on the consolidated financial statements as of December 31, 2023, and confirmed the fair statement of the accompanying condensed consolidated balance sheets[127][131] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, condition, and future outlook Introduction This section introduces IDACORP and its regulated electric utility subsidiary, Idaho Power, and its revenue sources - IDACORP is a holding company whose principal operating subsidiary is Idaho Power, an electric utility regulated by IPUC, OPUC, and FERC[135] - Idaho Power's highest retail energy sales occur during the summer irrigation and cooling season, with a lower peak in winter due to heating demand[135] Executive Overview This overview summarizes IDACORP's strategic objectives, key financial results, and general factors affecting operations Management's Outlook and Company Objectives This section outlines the company's strategic priorities, including cost recovery, customer growth, and energy resource planning - Idaho Power continues to focus on timely cost recovery and reasonable return on investment, with recent rate case filings in Idaho (limited-issue) and Oregon (general rate case with partial settlement stipulations)[137] - Customer count grew by over 7,500 in the first six months of 2024, with a 2.6% growth rate over the past twelve months, and a new summer peak demand of 3,793 MW was reached on July 22, 2024[137] - To meet future capacity needs, Idaho Power entered an agreement for 200 MW of energy/capacity market purchase (2026 start) and filed for approval to acquire 150 MW of battery storage assets (2026 in-service)[137] Summary of Financial Results This section provides a concise summary of IDACORP's and Idaho Power's key financial performance metrics Summary of Financial Results | Metric (in thousands, except EPS) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Idaho Power net income | $87,388 | $67,080 | $134,690 | $122,790 | | Net income attributable to IDACORP, Inc. | $89,520 | $68,574 | $137,693 | $124,672 | | IDACORP, Inc. earnings per diluted share | $1.71 | $1.35 | $2.67 | $2.46 | Net Income - Second Quarter 2024 This section analyzes the factors contributing to IDACORP's net income changes for the second quarter of 2024 - IDACORP's net income increased by $20.9 million in Q2 2024 compared to Q2 2023, primarily due to higher net income at Idaho Power[140] - Retail revenues, net of power supply costs and adjustment mechanisms, increased operating income by $19.6 million, driven by Idaho base rate increases effective January 1, 2024[140] - Customer growth added $5.1 million to operating income, and increased usage per retail customer (especially irrigation due to higher temperatures) added $6.2 million[141] - Other O&M expenses increased by $13.8 million, mainly due to $4 million in pension-related expenses and $8 million in wildfire mitigation and insurance expenses, partially offset by retail revenue increases[143] - Additional ADITC amortization of $7.5 million in Q2 2024 (vs. $3.75 million in Q2 2023) partially offset increased income tax expense from higher pre-tax income[145] Net Income - Year-To-Date 2024 This section analyzes the factors contributing to IDACORP's net income changes for the first six months of 2024 - IDACORP's net income increased by $13.0 million for the first six months of 2024 compared to the same period in 2023, primarily from Idaho Power[146] - Retail revenues, net of power supply costs and adjustment mechanisms, increased operating income by $24.4 million, mainly due to Idaho base rate increases effective January 1, 2024[146] - Other O&M expenses increased by $27.6 million, primarily from $9 million in pension-related expenses and $16 million in wildfire mitigation and insurance expenses[150] - Income tax expense was consistent year-over-year, as increased taxes from higher pre-tax income were offset by $20.0 million of additional ADITC amortization (vs. $7.5 million in 2023)[152] Overview of General Factors and Trends Affecting Results of Operations and Financial Condition This section discusses broad factors and trends influencing the company's operational and financial performance - Idaho Power's rates are regulated by state and federal commissions, aiming for cost recovery and a reasonable return on investment, with the 2023 Settlement Stipulation providing for accelerated ADITC amortization to achieve a minimum 9.12% Idaho ROE[153] - Significant capital expenditures are planned for infrastructure, including major transmission projects (B2H, GWW) and hydropower facility upgrades, with timely inclusion into rate base being a focus[156] - Customer count grew by 2.6% over the past twelve months, and peak demand reached new highs (3,793 MW summer peak on July 22, 2024), necessitating increased investment in capacity, transmission, and distribution[158][159] - Weather conditions significantly impact energy sales (heating/cooling, irrigation) and hydropower generation, with power cost adjustment mechanisms mitigating earnings volatility from fuel and purchased power costs[160][161][163] - Idaho Power expects 2024 hydropower generation to be 7.0-8.0 million MWh, compared to 6.5 million MWh in 2023 and a 30-year average of 7.6 million MWh[162] - The company faces substantial regulatory and environmental compliance costs, including coal plant retirements/conversions (Jim Bridger units 1 & 2 converted to natural gas in Q2 2024) and ongoing hydropower relicensing efforts[164][165] - Idaho Power is proactively implementing a Wildfire Mitigation Plan (WMP) to reduce risk and strengthen system resiliency, with regulatory mechanisms allowing deferral of certain incremental O&M expenses[166][167] Results of Operations This section analyzes factors impacting IDACORP's and Idaho Power's earnings, including sales, generation, revenues, and expenses Sales Volume and Generation This section details retail and wholesale energy sales volumes, as well as hydropower and total system generation - Retail energy sales increased by 6% in Q2 2024 and 2% in the first six months of 2024, driven by customer growth (2.6% over 12 months) and higher irrigation usage due to warmer weather[172][173] Energy Sales and Generation | Metric (in thousands of MWh) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Retail energy sales | 3,903 | 3,694 | 7,502 | 7,385 | | Wholesale energy sales | 825 | 330 | 1,229 | 538 | | Total energy sales | 5,000 | 4,453 | 9,690 | 8,705 | | Hydropower generation | 2,661 | 2,430 | 4,410 | 3,805 | | Total system generation | 3,474 | 2,917 | 6,787 | 5,600 | Weather Metrics (Boise, Idaho) | Weather Metric (Boise, Idaho) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :---------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Heating degree-days | 577 | 685 | 2,904 | 3,169 | | Cooling degree-days | 246 | 188 | 272 | 246 | | Precipitation (inches) | 3.0 | 3.4 | 10.9 | 6.7 | Operating Revenues This section analyzes changes in retail, wholesale, and transmission revenues and their contributing factors - Retail revenues increased by $45.8 million in Q2 2024 and $58.2 million in the first six months of 2024, primarily due to average customer rate increases ($28.8 million in Q2, $42.4 million YTD) from the 2023 Settlement Stipulation[177][178] - Customer growth (2.6%) increased retail revenues by $7.6 million in Q2 2024 and $16.4 million YTD 2024. Higher usage per customer, especially irrigation, increased Q2 revenues by $10.6 million[178] Wholesale Energy Revenues | Metric (in thousands, except per MWh) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Wholesale energy revenues | $20,744 | $15,201 | $58,813 | $45,397 | | Wholesale MWh sold | 825 | 330 | 1,229 | 538 | | Wholesale energy revenues per MWh | $25.14 | $46.06 | $47.85 | $84.38 | - Transmission wheeling-related revenues decreased by $3.5 million in Q2 2024 and $0.9 million YTD 2024, mainly due to lower energy prices and the inclusion of transmission line losses in the PCA mechanism since January 1, 2024[179] Operating Expenses This section examines trends in purchased power, fuel, operations and maintenance, and income tax expenses Purchased Power Expense | Metric (in thousands, except per MWh) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Purchased power expense | $95,383 | $91,460 | $207,282 | $262,554 | | MWh purchased | 1,823 | 1,856 | 3,527 | 3,756 | | Average cost per MWh | $52.32 | $49.28 | $58.77 | $69.90 | Fuel Expense | Fuel Expense (in thousands, except per MWh) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total fuel expense | $22,699 | $31,113 | $114,940 | $120,194 | | Total MWh generated | 813 | 487 | 2,377 | 1,795 | | Weighted average cost per MWh - all sources | $27.92 | $63.89 | $48.36 | $66.96 | Power Cost Adjustment Mechanisms | Power Cost Adjustment Mechanisms (in thousands) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Idaho power supply cost accrual (deferral) | $32,599 | $34,917 | $33,521 | $(25,351) | | Oregon power supply cost accrual | $2,881 | $312 | $2,353 | $336 | | Total power cost adjustment (income statement) | $59,156 | $49,629 | $81,519 | $(1,708) | - Other O&M expenses increased by $13.8 million in Q2 2024 and $27.6 million YTD 2024, mainly due to higher pension-related and wildfire mitigation/insurance expenses, partially offset by increased retail revenues[189] Income Taxes This section discusses the company's income tax expense and the factors influencing its changes - IDACORP's and Idaho Power's income tax expense decreased by $12.7 million and $12.5 million, respectively, for the six months ended June 30, 2024, compared to 2023, primarily due to increased ADITC amortization[190] Liquidity and Capital Resources This section details IDACORP's and Idaho Power's liquidity, capital management, cash flows, and capital requirements Overview This section provides a general summary of the company's liquidity sources and capital structure objectives - Idaho Power funds liquidity needs through cash flows from operations, debt offerings, commercial paper, credit facilities, and capital contributions from IDACORP[191] - IDACORP received $230 million from partial settlement of FSAs in May 2024 and contributed $200 million to Idaho Power[192] - IDACORP and Idaho Power aim to maintain capital structures of approximately 50% debt and 50% equity, with current leverage ratios of 47% and 48% respectively, well within the 65% covenant limit[194][196] Operating Cash Flows This section analyzes the drivers of cash generated from IDACORP's and Idaho Power's operating activities - IDACORP's and Idaho Power's operating cash inflows for the six months ended June 30, 2024, increased significantly to $256 million and $257 million, respectively, compared to 2023[199] - Key drivers for the increase included a $13 million (IDACORP) and $12 million (Idaho Power) increase in net income, and a $93 million increase from changes in regulatory assets and liabilities[199] Investing Cash Flows This section details cash used in IDACORP's and Idaho Power's investing activities, primarily for capital expenditures - IDACORP's and Idaho Power's net investing cash outflows for the six months ended June 30, 2024, increased to $558 million and $556 million, respectively, primarily for utility infrastructure construction[200] Financing Cash Flows This section examines cash flows from IDACORP's and Idaho Power's financing activities, including debt and equity - IDACORP's and Idaho Power's net financing cash inflows for the six months ended June 30, 2024, decreased to $145 million and $115 million, respectively, compared to 2023[201] - 2024 inflows were mainly from IDACORP's common stock issuance and Idaho Power's capital contribution from IDACORP, offset by dividend payments[202] Available Short-Term Borrowing Liquidity This section outlines the company's available short-term borrowing capacity and credit facilities Available Short-Term Borrowing Liquidity | Metric (in thousands) | IDACORP (June 30, 2024) | Idaho Power (June 30, 2024) | | :-------------------- | :---------------------- | :-------------------------- | | Revolving credit facility | $100,000 | $400,000 | | Identified for other use | $— | $(19,885) | | Net balance available | $100,000 | $380,115 | - Neither IDACORP nor Idaho Power had commercial paper outstanding at June 30, 2024[204] Impact of Credit Ratings on Liquidity and Collateral Obligations This section discusses how credit ratings affect the company's liquidity and potential collateral requirements - Moody's rating outlook for IDACORP and Idaho Power was modified to negative from stable in April 2024, with issuer credit ratings of Baa2 and Baa1, respectively (both investment grade)[205] - A downgrade below investment grade could require Idaho Power to post an additional $15 million in collateral for wholesale commodity contracts as of June 30, 2024[267] Capital Requirements This section details planned capital expenditures for infrastructure projects and other significant investments - Idaho Power's cash capital expenditures (excluding AFUDC) were $593 million for the six months ended June 30, 2024[208] Expected Capital Expenditures | Year | Expected Capital Expenditures (excluding AFUDC, in millions) | | :---------- | :----------------------------------------------------------- | | 2024 | $925-$975 | | 2025 | $850-$950 | | 2026-2028 | $2,000-$2,500 | - Major infrastructure projects include resource additions (battery storage, market purchase agreements, solar facilities) totaling over $430 million from 2024-2026 to address energy/capacity deficits[210][211] - The Boardman-to-Hemingway (B2H) transmission line project (Idaho Power's 45% ownership) has incurred $281 million (including AFUDC) through June 30, 2024, with total cost estimates between $1.5 billion and $1.7 billion, and an in-service date no earlier than 2027[212][213][216] - The Gateway West (GWW) transmission line project (Idaho Power's share) has expended $62 million (including AFUDC) through June 30, 2024, with total estimated costs between $900 million and $1.1 billion, and segment 8 in-service date of 2029 or later[217][218] Contractual Obligations This section summarizes the company's material contractual cash obligations and commitments - Contractual cash obligations for IDACORP and Idaho Power have not materially changed during the six months ended June 30, 2024, except as disclosed in Note 5 (Long-Term Debt) and Note 8 (Commitments)[221] Dividends This section discusses IDACORP's dividend policy and Idaho Power's dividend payment restrictions - IDACORP's dividend payments are discretionary by its board and depend on subsidiary dividends (primarily Idaho Power), financial position, capital requirements, and regulatory restrictions[222] - Idaho Power's ability to pay dividends to IDACORP is restricted if its common equity capital falls below 35% of total adjusted capital; at June 30, 2024, it was 52%[82] Off-Balance Sheet Arrangements This section describes the company's off-balance sheet arrangements and their potential financial impact - IDACORP's and Idaho Power's off-balance sheet arrangements have not materially changed from those reported in the 2023 Annual Report[224] Regulatory Matters This section details Idaho Power's regulatory environment, including rate cases, earnings support, and environmental compliance Introduction This section introduces Idaho Power's regulatory oversight by state and federal commissions - Idaho Power is regulated by the IPUC, OPUC, and FERC regarding rates, service, accounting, and securities issuance[225] - Idaho Power filed a limited-issue rate case in Idaho in May 2024 and a general rate case in Oregon in December 2023, with partial settlement stipulations filed in May/June 2024 for the Oregon case[226][227] Notable Retail Rate or Revenue Changes This section highlights significant approved changes in retail rates and revenue mechanisms - The IPUC approved a $35.7 million PCA decrease effective June 1, 2024, due to improved hydropower generation forecasts[230] - The IPUC approved an $11.7 million FCA increase effective June 1, 2024, to adjust for fixed cost recovery[230] - The OPUC approved a $6.9 million APCU decrease effective June 1, 2024, reflecting increased hydropower and lower market prices[230] Idaho Earnings Support and Sharing from Idaho Settlement Stipulation This section details mechanisms for earnings support and sharing under the Idaho Settlement Stipulation - Idaho Power recorded $20.0 million in additional ADITC amortization for the first six months of 2024 under the 2023 Settlement Stipulation to support a minimum 9.12% Idaho ROE, with $65.1 million remaining available[231] Change in Deferred (Accrued) Net Power Supply Costs and the Power Cost Adjustment Mechanisms This section explains changes in deferred power supply costs and the impact of power cost adjustment mechanisms Deferred (Accrued) Net Power Supply Costs | Metric (in millions) | Idaho (June 30, 2024) | Oregon (June 30, 2024) | Total (June 30, 2024) | | :------------------- | :-------------------- | :--------------------- | :-------------------- | | Balance at December 31, 2023 | $115.6 | $(1.3) | $114.3 | | Current period net power supply costs (accrued) deferred | $(33.5) | $(2.4) | $(35.9) | | Prior amounts (collected) refunded through rates | $(45.3) | $(0.4) | $(45.7) | | Balance at June 30, 2024 | $28.8 | $(4.5) | $24.3 | Open Access Transmission Tariff Draft Posting This section discusses the proposed transmission rate and revenue requirement for Idaho Power's tariff - Idaho Power publicly posted a 2024 draft transmission rate of $31.59 per kW-year, effective October 1, 2024, based on a net annual transmission revenue requirement of $138.0 million, up from $30.74 per kW-year[236] Integrated Resource Plan and Resource Procurement Filings This section covers Idaho Power's resource planning and applications for new energy and capacity resources - The IPUC acknowledged Idaho Power's 2023 Integrated Resource Plan (IRP) in June 2024[237] - Idaho Power filed applications with the IPUC in March and April 2024 for approval of a 200 MW market purchase agreement and a CPCN for 150 MW of battery storage to meet anticipated energy and capacity needs[237] Large Customer Rate Proceedings This section details regulatory proceedings related to special contracts and rates for large industrial customers - The IPUC approved an additional contract for a 125 MW solar project in May 2024 for Brisbie, LLC (Meta Platforms, Inc.) data center, and Idaho Power filed for approval of a second amendment to the Brisbie Special Contract[239][240] - Idaho Power filed for approval of a third amendment to the Micron Technology, Inc. Special Contract in May 2024, proposing changes to pricing elements[240] Relicensing of Hydropower Projects This section provides updates on the relicensing processes for the company's hydropower facilities - Relicensing costs for the Hells Canyon Complex (HCC) totaled $478 million (including AFUDC) at June 30, 2024, with a new FERC license expected in 2025 or later[242][243] - The FERC issued an updated schedule for the HCC supplemental EIS, indicating draft and final supplemental EIS by July 2024 and February 2025, respectively, though the July 2024 draft was not issued[241] - For American Falls, Idaho Power filed a final license application in February 2023, and the FERC issued a Notice of Intent to prepare an Environmental Assessment in April 2024, with a new license anticipated in 2025[244][245] U.S. Supreme Court Decision in Loper Bright v. Raimondo This section discusses the implications of the Supreme Court's decision on agency interpretations of federal law - The U.S. Supreme Court's decision in Loper Bright v. Raimondo overturned the Chevron doctrine, requiring courts to exercise independent judgment on agency interpretations of federal law[246] - This decision is expected to increase challenges to agency interpretations, potentially impacting legal costs, project delays, and regulatory certainty in areas like energy and environment[247] Environmental Matters This section addresses Idaho Power's compliance with environmental regulations and their impact on operations and costs Overview This section provides a general overview of environmental regulations affecting Idaho Power's operations - Idaho Power is subject to extensive environmental laws (e.g., CAA, CWA, ESA), which can increase operating/construction costs, require plant modifications/curtailments, or necessitate alternative energy sources[248][249] - Compliance costs and early plant retirements (e.g., Boardman, North Valmy) could significantly affect financial results if not fully recovered in rates[250] Clean Air Act Matters This section details regulatory developments and compliance efforts under the Clean Air Act - EPA proposed to approve revisions to Wyoming's Regional Haze SIP, replacing the NO determination for Jim Bridger facility with limits based on natural gas conversion of Units 1 and 2, which Idaho Power supports[252] - The U.S. Supreme Court stayed EPA's Good Neighbor Provision FIP, halting compliance obligations for the North Valmy plant until a D.C. Circuit Court decision[252] - EPA finalized the New Section 111 Rule in April 2024, regulating carbon dioxide emissions from power plants, which Idaho Power is challenging in court[253] - EPA finalized Mercury and Air Toxic Standards (MATS Rule) in April 2024, amending filterable particulate matter emission standards for coal-fired power plants[254] Clean Water Act Matters This section discusses permitting obligations and effluent limitations under the Clean Water Act - Idaho Power is engaged with EPA and IDEQ on CWA permitting obligations for its hydropower facilities, expecting to incur costs, but unable to estimate them with certainty[255] - In June 2022, Idaho Power entered a consent judgment to resolve a National Pollutant Discharge Elimination System permitting issue for 15 hydropower projects, resulting in a $1.1 million fine and new permit applications[256] - EPA finalized effluent limitation guidelines in April 2024, likely requiring Idaho Power's coal-fired facilities to upgrade wastewater treatment systems[257] Resource Conservation and Recovery Act Matters This section addresses regulations concerning coal combustion residuals and waste management - EPA finalized changes to coal combustion residual regulations for inactive surface impoundments, establishing new requirements for groundwater monitoring, corrective action, closure, and post-closure care[258] Other Matters This section covers critical accounting policies and estimates, and references new accounting pronouncements Critical Accounting Policies and Estimates This section highlights key accounting policies and management's significant estimates in financial reporting - Management makes estimates and judgments for financial statements, including rate regulation, retirement benefits, contingencies, asset impairment, income taxes, unbilled revenues, and bad debt, which are reviewed by audit committees[260] - Critical accounting policies have not materially changed from the 2023 Annual Report[261] Recently Issued Accounting Pronouncements This section refers to disclosures regarding new and recently adopted accounting standards - Refer to Note 1 - "Summary of Significant Accounting Policies" for discussion of new and recently adopted accounting pronouncements[262] [Item 3. Quantitative and Qualita