IDACORP(IDA) - 2019 Q1 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for IDACORP, Inc. and Idaho Power Company for Q1 2019 IDACORP, Inc. Financial Statements IDACORP, Inc. reported Q1 2019 net income of $42.7 million ($0.84/share), an increase from $36.1 million ($0.72/share) in Q1 2018 IDACORP, Inc. Condensed Consolidated Statements of Income (Q1 2019 vs Q1 2018) | Metric | Q1 2019 (in thousands) | Q1 2018 (in thousands) | | :--- | :--- | :--- | | Total operating revenues | $350,319 | $310,107 | | Operating Income | $58,119 | $50,589 | | Net Income Attributable to IDACORP, Inc. | $42,686 | $36,142 | | Earnings Per Share - Diluted | $0.84 | $0.72 | IDACORP, Inc. Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2019 (in thousands) | Dec 31, 2018 (in thousands) | | :--- | :--- | :--- | | Total Assets | $6,387,815 | $6,382,754 | | Total Liabilities | $4,002,177 | $4,006,943 | | Total Equity | $2,385,638 | $2,375,811 | IDACORP, Inc. Condensed Consolidated Statements of Cash Flows | Metric | Q1 2019 (in thousands) | Q1 2018 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $56,999 | $91,738 | | Net cash used in investing activities | ($56,732) | ($44,693) | | Net cash (used in) provided by financing activities | ($36,417) | $183,583 | Idaho Power Company Financial Statements Idaho Power Company, the primary subsidiary, reported a net income of $41.6 million for Q1 2019, up from $35.9 million in Q1 2018 Idaho Power Company Condensed Consolidated Statements of Income (Q1 2019 vs Q1 2018) | Metric | Q1 2019 (in thousands) | Q1 2018 (in thousands) | | :--- | :--- | :--- | | Operating Revenues | $349,771 | $309,461 | | Income from Operations | $58,734 | $51,120 | | Net Income | $41,584 | $35,857 | Idaho Power Company Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2019 (in thousands) | Dec 31, 2018 (in thousands) | | :--- | :--- | :--- | | Total Assets | $6,254,189 | $6,254,400 | | Total Capitalization and Liabilities | $6,254,189 | $6,254,400 | Idaho Power Company Condensed Consolidated Statements of Cash Flows | Metric | Q1 2019 (in thousands) | Q1 2018 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $54,447 | $89,436 | | Net cash used in investing activities | ($56,732) | ($44,687) | | Net cash (used in) provided by financing activities | ($32,054) | $187,269 | Notes to Condensed Consolidated Financial Statements Notes provide detailed explanations of accounting policies, regulatory matters, revenue recognition, income taxes, and commitments - The company adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019, which did not have a material impact on its financial statements as neither IDACORP nor Idaho Power has material lease agreements[63] - In April 2019, Idaho Power filed for a $50.1 million net decrease in Idaho-jurisdiction power cost adjustment (PCA) revenues for the June 2019 - May 2020 period, reflecting reduced power supply costs and customer credits[74] - In March 2019, Idaho Power requested IPUC approval for an agreement with NV Energy to exit the Valmy coal-fired power plant and to recover an associated $1.2 million incremental annual revenue requirement[77] - At March 31, 2019, IDACORP's and Idaho Power's leverage ratios were 44% and 46% respectively, well below the 65% covenant limit, allowing for dividend payments up to $1.4 billion and $1.2 billion[84] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2019 financial results, attributing IDACORP's net income increase to Idaho Power's higher earnings from customer growth and usage Executive Overview IDACORP's Q1 2019 net income rose to $42.7 million ($0.84/share), driven by Idaho Power's increased earnings from customer growth and higher usage Summary of Financial Results (Q1 2019 vs Q1 2018) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Idaho Power net income | $41.6 million | $35.9 million | | Net income attributable to IDACORP, Inc. | $42.7 million | $36.1 million | | IDACORP, Inc. earnings per diluted share | $0.84 | $0.72 | - Idaho Power announced a goal to provide 100% clean energy by 2045, building on its history as a clean-energy leader[150][152] - The company anticipates total capital expenditures of approximately $1.5 billion over the five-year period from 2019 through 2023[150][204] Results of Operations Retail sales volumes in Q1 2019 increased by 4% due to customer growth and higher usage, while wholesale energy revenues surged by $33.4 million - Retail sales volumes increased by 4% in Q1 2019 compared to Q1 2018, driven by a 2.4% growth in customer numbers and a 3% increase in residential usage per customer due to colder weather[175] Wholesale Energy Sales (Q1 2019 vs Q1 2018) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Wholesale energy revenues | $47.2 million | $13.8 million | | Wholesale MWh sold | 860,000 | 860,000 | | Wholesale energy revenues per MWh | $54.90 | $16.01 | - Fuel expense increased by $24.1 million (87%) in Q1 2019, driven by a more than doubling of thermal generation volumes to offset a 23% decrease in hydroelectric generation[196] - Transmission wheeling-related revenues increased by $4.0 million (34%) due to higher wheeling volumes from regional market activity[187] Liquidity and Capital Resources IDACORP's Q1 2019 operating cash flow decreased by $35 million to $57 million, with $280-$290 million in capital expenditures planned for 2019 - Operating cash flows for Q1 2019 decreased by $35 million for both IDACORP and Idaho Power compared to Q1 2018, primarily due to changes in working capital balances like accounts receivable and payable[210][212] Estimated Capital Expenditures (2019-2023, in millions) | Period | Expected Capital Expenditures (excluding AFUDC) | | :--- | :--- | | 2019 | $280 - $290 | | 2020 | $285 - $300 | | 2021-2023 | $875 - $925 | - The Boardman-to-Hemingway transmission line project is now expected to have an in-service date of 2026 or beyond, with total cost estimates between $1.0 billion and $1.2 billion[238][241] - As of March 31, 2019, IDACORP and Idaho Power had available short-term borrowing liquidity of $100 million and $275.8 million, respectively[230] Regulatory Matters This section details key regulatory filings, including a requested $50.1 million decrease in PCA and the status of the Hells Canyon Complex relicensing Notable Pending Retail Rate Changes (as of Q1 2019) | Filing | Status | Estimated Rate Impact | | :--- | :--- | :--- | | Power Cost Adjustment (PCA) - Idaho | Filed April 2019; Pending | $50.1 million decrease | | Fixed Cost Adjustment (FCA) - Idaho | Filed March 2019; Pending | $19.2 million increase | | Valmy Plant Agreement - Idaho | Filed March 2019; Pending | $1.2 million annual increase | - A settlement was reached with Idaho and Oregon regarding the Hells Canyon Complex (HCC) relicensing, which removes the fish passage requirement for at least 20 years in exchange for expanded hatchery production and research funding[261] - Idaho Power expects the FERC to issue a new license for the HCC no earlier than 2022. Relicensing costs of $304 million were included in construction work in progress as of March 31, 2019[261][262] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure remains largely unchanged, with key risks in interest rates, commodity prices, and credit risk - As of March 31, 2019, IDACORP had $1.8 billion in fixed-rate debt with a fair market value of approximately $1.9 billion[277] - Commodity price risk from utility operations is largely mitigated by Idaho Power's power cost adjustment mechanisms in Idaho and Oregon[278] - If Idaho Power's credit rating were downgraded to below investment grade, it could be required to post approximately $6.5 million in additional collateral for its energy and fuel portfolio as of March 31, 2019[280] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2019, with no material changes in internal control over financial reporting - The CEOs and CFOs of both IDACORP and Idaho Power concluded that their disclosure controls and procedures were effective as of March 31, 2019[284][285] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the companies' internal controls[286] Part II. Other Information Item 1. Legal Proceedings The company reported no material legal proceedings for the period - None[289] Item 1A. Risk Factors There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - The risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2018, remain relevant and have not materially changed[290] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds IDACORP repurchased 42,202 shares of common stock at an average price of $97.32 per share, primarily for tax obligations Issuer Purchases of Equity Securities (Q1 2019) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2019 | 9,423 | $90.02 | | Feb 2019 | 32,779 | $99.42 | | Mar 2019 | 0 | - | | Total | 42,202 | $97.32 | - The repurchased shares were withheld to satisfy tax obligations upon the vesting of restricted stock and were not part of a publicly announced repurchase plan[292] Item 4. Mine Safety Disclosures Mine safety disclosures required by the Dodd-Frank Act are provided in Exhibit 95.1 of the report - Mine safety disclosures required by Section 1503(a) of the Dodd-Frank Act are provided in Exhibit 95.1[295] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - The report includes a list of all exhibits filed, such as CEO/CFO certifications and XBRL data[299]