IDACORP(IDA) - 2022 Q1 - Quarterly Report

Commonly Used Terms This section provides a glossary of abbreviations and terms for report clarity Cautionary Note Regarding Forward-Looking Statements This section warns that forward-looking statements are subject to risks and uncertainties, and actual results may differ - Forward-looking statements are not guarantees of future performance and involve estimates, assumptions, risks, and uncertainties[14] - Factors that could cause actual results to differ materially include regulatory decisions, ongoing impacts of COVID-19, changes in growth patterns, severe weather, and cyber-security attacks[15] - The companies disclaim any obligation to publicly update forward-looking information, except as required by applicable law[17] Part I. Financial Information This part presents unaudited consolidated financial statements and management's discussion and analysis Item 1. Financial Statements (unaudited) This item presents unaudited consolidated financial statements for IDACORP and Idaho Power with detailed notes IDACORP, Inc. Condensed Consolidated Statements of Income IDACORP, Inc.'s unaudited consolidated statements of income for Q1 2022 and 2021 | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------- | :------------------ | :------------------ | :----------- | | Total operating revenues | $344,288 | $316,054 | +8.9% | | Total operating expenses | $283,620 | $254,945 | +11.2% | | Operating Income | $60,668 | $61,109 | -0.7% | | Net Income Attributable to IDACORP, Inc. | $46,260 | $44,831 | +3.2% | | Earnings Per Share - Basic | $0.91 | $0.89 | +2.2% | | Earnings Per Share - Diluted | $0.91 | $0.89 | +2.2% | IDACORP, Inc. Condensed Consolidated Statements of Comprehensive Income IDACORP, Inc.'s unaudited consolidated statements of comprehensive income for Q1 2022 and 2021 | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :------------------ | :------------------ | :----------- | | Net Income | $46,184 | $44,800 | +3.1% | | Unfunded pension liability adjustment, net of tax of $290 and $289, respectively | $837 | $836 | +0.1% | | Total Comprehensive Income | $47,021 | $45,636 | +3.0% | | Comprehensive Income Attributable to IDACORP, Inc. | $47,097 | $45,667 | +3.1% | IDACORP, Inc. Condensed Consolidated Balance Sheets IDACORP, Inc.'s unaudited consolidated balance sheets as of March 31, 2022 and December 31, 2021 | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (QoQ) | | :--------------------------------- | :------------------------------ | :------------------------------- | :----------- | | Assets: | | | | | Total current assets | $611,898 | $595,873 | +2.7% | | Property, Plant and Equipment - net | $4,986,103 | $4,901,822 | +1.7% | | Total assets | $7,284,557 | $7,210,515 | +1.0% | | Liabilities and Equity: | | | | | Total current liabilities | $327,578 | $325,624 | +0.6% | | Long-Term Debt | $2,050,634 | $2,000,640 | +2.5% | | Total IDACORP, Inc. shareholders' equity | $2,677,508 | $2,668,436 | +0.3% | | Total equity | $2,684,230 | $2,675,234 | +0.3% | | Total liabilities and equity | $7,284,557 | $7,210,515 | +1.0% | IDACORP, Inc. Condensed Consolidated Statements of Cash Flows IDACORP, Inc.'s unaudited consolidated statements of cash flows for Q1 2022 and 2021 | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :------------------------------------ | :------------------ | :------------------ | :----------- | | Net cash provided by operating activities | $92,999 | $83,662 | +11.2% | | Net cash used in investing activities | $(98,287) | $(79,349) | +23.9% | | Net cash provided by (used in) financing activities | $8,595 | $(39,422) | N/A (swing from outflow to inflow) | | Net increase (decrease) in cash and cash equivalents | $3,307 | $(35,109) | N/A (swing from decrease to increase) | | Cash and cash equivalents at end of the period | $218,550 | $240,007 | -8.9% | IDACORP, Inc. Condensed Consolidated Statements of Equity IDACORP, Inc.'s unaudited consolidated statements of equity for Q1 2022 and 2021 | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :------------------ | :------------------ | :----------- | | Common Stock Balance at end of period | $875,067 | $868,944 | +0.7% | | Retained Earnings Balance at end of period | $1,841,644 | $1,742,994 | +5.7% | | Accumulated Other Comprehensive Loss Balance at end of period | $(39,203) | $(42,522) | +7.8% (reduction in loss) | | Total IDACORP, Inc. shareholders' equity at end of period | $2,677,508 | $2,569,416 | +4.2% | Idaho Power Company Condensed Consolidated Statements of Income Idaho Power Company's unaudited consolidated statements of income for Q1 2022 and 2021 | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------- | :------------------ | :------------------ | :----------- | | Operating Revenues | $343,921 | $315,568 | +8.9% | | Total operating expenses | $282,759 | $254,291 | +11.2% | | Operating Income | $61,162 | $61,277 | -0.2% | | Net Income | $46,214 | $44,369 | +4.1% | Idaho Power Company Condensed Consolidated Statements of Comprehensive Income Idaho Power Company's unaudited consolidated statements of comprehensive income for Q1 2022 and 2021 | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :------------------ | :------------------ | :----------- | | Net Income | $46,214 | $44,369 | +4.1% | | Unfunded pension liability adjustment, net of tax of $290, and $289, respectively | $837 | $836 | +0.1% | | Total Comprehensive Income | $47,051 | $45,205 | +4.1% | Idaho Power Company Condensed Consolidated Balance Sheets Idaho Power Company's unaudited consolidated balance sheets as of March 31, 2022 and December 31, 2021 | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (QoQ) | | :--------------------------------- | :------------------------------ | :------------------------------- | :----------- | | Assets: | | | | | Total current assets | $461,001 | $440,285 | +4.7% | | Property, Plant and Equipment, net | $4,973,369 | $4,889,108 | +1.7% | | Total assets | $7,070,637 | $6,990,839 | +1.1% | | Liabilities and Equity: | | | | | Total current liabilities | $322,976 | $315,624 | +2.3% | | Long-Term Debt | $2,050,634 | $2,000,640 | +2.5% | | Total equity | $2,473,155 | $2,464,302 | +0.4% | | Total liabilities and equity | $7,070,637 | $6,990,839 | +1.1% | Idaho Power Company Condensed Consolidated Statements of Cash Flows Idaho Power Company's unaudited consolidated statements of cash flows for Q1 2022 and 2021 | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :------------------------------------ | :------------------ | :------------------ | :----------- | | Net cash provided by operating activities | $90,359 | $78,902 | +14.5% | | Net cash used in investing activities | $(94,943) | $(79,349) | +28.3% | | Net cash provided by (used in) financing activities | $11,728 | $(35,956) | N/A (swing from outflow to inflow) | | Net increase (decrease) in cash and cash equivalents | $7,144 | $(31,068) | N/A (swing from decrease to increase) | | Cash and cash equivalents at end of the period | $67,219 | $134,536 | -50.0% | Notes to Condensed Consolidated Financial Statements Detailed explanatory notes to IDACORP and Idaho Power's unaudited financial statements Summary of Significant Accounting Policies This section outlines the significant accounting policies applied in preparing the condensed consolidated financial statements - IDACORP is a holding company with Idaho Power as its principal operating subsidiary, engaged in electric utility services across southern Idaho and eastern Oregon[48] - Idaho Power's operations are primarily regulated by state utility commissions (Idaho and Oregon) and the Federal Energy Regulatory Commission (FERC), influencing pricing and financial condition[48][50] - Financial statements reflect regulatory accounting principles, deferring or accruing costs as regulatory assets or liabilities based on probable future recovery or refund from customers[51] Income Taxes This section details the income tax expense and effective tax rates for IDACORP and Idaho Power - Income tax expense for Q1 2022 increased compared to Q1 2021, primarily due to higher pre-tax earnings[58] | Metric | IDACORP 2022 (in thousands) | IDACORP 2021 (in thousands) | Idaho Power 2022 (in thousands) | Idaho Power 2021 (in thousands) | | :--------------------------------- | :-------------------------- | :-------------------------- | :---------------------------- | :-------------------------- | | Income tax at statutory rates (federal and state) | $13,458 | $12,849 | $13,619 | $12,932 | | Excess deferred income tax reversal | $(2,503) | $(1,606) | $(2,503) | $(1,606) | | Other | $(4,929) | $(6,157) | $(4,419) | $(5,453) | | Income tax expense | $6,026 | $5,086 | $6,697 | $5,873 | | Effective tax rate | 11.5% | 10.2% | 12.7% | 11.7% | Regulatory Matters This section details regulatory matters impacting Idaho Power's rates and cost recovery - Idaho Power's current base rates are derived from IPUC and OPUC orders, with a May 2018 Idaho settlement stipulation allowing accelerated amortization of ADITC to help achieve a minimum 9.4% Idaho ROE[60][61] - In Q1 2022, Idaho Power recorded no additional ADITC amortization or provision for earnings sharing, with $45 million of ADITC remaining available[63] - Idaho Power filed an application in April 2022 requesting a $103.4 million net increase in Idaho-jurisdiction PCA revenues for the 2022-2023 period, reflecting forecasted reduction in hydroelectric generation and higher market energy/natural gas prices[65] - The company filed an amended application in February 2022 for the Jim Bridger plant, requesting accelerated depreciation and cost recovery for coal-related investments, totaling $27.1 million, pending at the IPUC[68][69] - The IPUC authorized Idaho Power to defer incremental O&M and depreciation expenses for its Wildfire Mitigation Plan (WMP) as a regulatory asset, totaling $8.8 million as of March 31, 2022[70] Revenues This section provides a detailed breakdown of Idaho Power's operating revenues by source | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :------------------------------------ | :------------------ | :------------------ | :----------- | | Revenue from contracts with customers | $318,182 | $291,327 | +9.2% | | Alternative revenue programs and other revenues | $25,739 | $24,241 | +6.2% | | Total electric utility operating revenues | $343,921 | $315,568 | +8.9% | | Revenue Source | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------- | :------------------ | :------------------ | :----------- | | Residential | $169,295 | $154,785 | +9.4% | | Commercial | $78,566 | $72,269 | +8.7% | | Industrial | $49,060 | $45,430 | +8.0% | | Wholesale energy sales | $3,035 | $6,259 | -51.5% | | Transmission wheeling-related revenues | $16,466 | $14,467 | +13.8% | | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :------------------------------------ | :------------------ | :------------------ | :----------- | | FCA mechanism revenues | $10,376 | $16,304 | -36.4% | | Derivative revenues | $15,363 | $7,937 | +93.6% | - Allowance for uncollectible accounts related to customer receivables increased to $4,850 thousand at March 31, 2022, from $4,499 thousand at the beginning of the period, reflecting higher aged accounts receivable due to COVID-19 impacts[76][77] Long-Term Debt This section details Idaho Power's long-term debt activities and outstanding balances - Idaho Power entered into a $150 million two-year senior unsecured delayed draw Term Loan Facility on March 4, 2022[78] - As of March 31, 2022, $50 million in principal amount had been drawn and was outstanding on the Term Loan Facility[79] Common Stock This section outlines IDACORP's common stock activities and dividend restrictions - IDACORP granted 73,131 restricted stock unit awards and issued 42,685 shares of common stock during Q1 2022[80] - Dividend payments are restricted by credit facility covenants requiring a leverage ratio of consolidated indebtedness to total capitalization of no more than 65%[81] - As of March 31, 2022, IDACORP's and Idaho Power's leverage ratios were 43% and 45% respectively, well within compliance limits[81] Earnings Per Share This section presents the basic and diluted earnings per share for IDACORP, Inc | Metric | 2022 | 2021 | Change (YoY) | | :--------------------------------------- | :----- | :----- | :----------- | | Net income attributable to IDACORP, Inc. | $46,260 | $44,831 | +3.2% | | Weighted-average common shares outstanding - basic | 50,632 | 50,567 | +0.1% | | Weighted-average common shares outstanding - diluted | 50,660 | 50,580 | +0.2% | | Basic earnings per share | $0.91 | $0.89 | +2.2% | | Diluted earnings per share | $0.91 | $0.89 | +2.2% | Commitments This section details Idaho Power's contractual commitments and guarantees - Idaho Power entered into new contracts for a non-PURPA solar facility and battery storage assets, increasing contractual purchase obligations by approximately $223 million[90] - Idaho Power guarantees its one-third share of BCC's reclamation obligation, totaling $51.0 million at March 31, 2022, which is supported by a reclamation trust fund valued at $202.2 million[89] Contingencies This section addresses IDACORP's and Idaho Power's legal claims and potential loss contingencies - IDACORP and Idaho Power are involved in various claims and legal proceedings, including those related to utility operations, personal injury, property damage, and wildfires[91][92] - Accruals for loss contingencies are not material to the financial statements as a whole, but future accruals could be material[91] - Idaho Power is monitoring pending environmental regulations and executive orders, but the financial impact is currently unestimable due to uncertainties[93] Benefit Plans This section details the net periodic benefit costs and contributions for employee benefit plans | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :------------------ | :------------------ | :----------- | | Pension Plan Net periodic benefit cost | $8,761 | $12,265 | -28.6% | | SMSP Net periodic benefit cost | $2,397 | $2,217 | +8.1% | | Postretirement Benefits Net periodic benefit cost | $193 | $292 | -33.9% | | Net periodic benefit cost recognized for financial reporting | $7,266 | $7,367 | -1.4% | - Idaho Power made no contributions to its defined benefit pension plan in Q1 2022 but contributed $10 million in April 2022 and is considering an additional $30 million in 2022[98] Investments This section describes Idaho Power's investment activities and portfolio composition - Idaho Power's rabbi trust purchased $29.7 million of held-to-maturity corporate fixed-income and asset-backed debt securities in Q1 2022[100] - As of March 31, 2022, all held-to-maturity securities had a gross unrealized holding loss of $1.8 million due to increased market interest rates[100] Derivative Financial Instruments This section details Idaho Power's use of derivative instruments to manage commodity price risk - Idaho Power uses derivative instruments (physical and financial forward contracts) to manage commodity price risk for electricity and fuel, with primary objectives to meet demand, ensure reliability, and utilize surpluses[101] | Location of Realized Gain/(Loss) | 2022 (in thousands) | 2021 (in thousands) | | :------------------------------- | :------------------ | :------------------ | | Financial swaps - Operating revenues | $582 | $0 | | Financial swaps - Purchased power | $116 | $249 | | Financial swaps - Fuel expense | $1,460 | $733 | | Forward contracts - Operating revenues | $179 | $47 | | Forward contracts - Purchased power | $(179) | $(47) | | Forward contracts - Fuel expense | $(54) | $(1) | - The aggregate fair value of derivative instruments with credit-risk-related contingent features in a liability position was $1.8 million at March 31, 2022; a downgrade below investment grade could require up to $3.6 million in collateral[107] | Commodity | Units | 2022 (in thousands) | 2021 (in thousands) | | :---------------- | :---- | :------------------ | :------------------ | | Electricity purchases | MWh | 538 | 155 | | Electricity sales | MWh | 128 | 0 | | Natural gas purchases | MMBtu | 16,635 | 10,106 | | Natural gas sales | MMBtu | 0 | 78 | Fair Value Measurements This section categorizes financial instruments by fair value measurement levels and presents their values - Financial instruments are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs from non-active markets or models), and Level 3 (unobservable inputs)[113][115][119] | Metric | March 31, 2022 (Total in thousands) | December 31, 2021 (Total in thousands) | | :--------------------------------------- | :---------------------------------- | :----------------------------------- | | Assets: | | | | Money market funds (IDACORP) | $77,838 | $80,406 | | Money market funds (Idaho Power) | $21,900 | $10,393 | | Derivatives | $19,696 | $6,598 | | Equity securities | $22,698 | $54,431 | | IDACORP assets measured at NAV | $1,864 | $1,363 | | Liabilities: | | | | Derivatives | $5,598 | $5,747 | | Metric | March 31, 2022 (Carrying Amount) | March 31, 2022 (Estimated Fair Value) | December 31, 2021 (Carrying Amount) | December 31, 2021 (Estimated Fair Value) | | :--------------------------------------- | :-------------------------------- | :------------------------------------ | :---------------------------------- | :------------------------------------- | | IDACORP Notes receivable | $3,804 | $3,804 | $3,804 | $3,804 | | IDACORP Held-to-maturity securities | $29,366 | $27,521 | $0 | $0 | | IDACORP Long-term debt | $2,050,634 | $2,166,197 | $2,000,640 | $2,381,172 | | Idaho Power Held-to-maturity securities | $29,366 | $27,521 | $0 | $0 | | Idaho Power Long-term debt | $2,050,634 | $2,166,197 | $2,000,640 | $2,381,172 | Segment Information This section provides financial information for IDACORP's reportable utility operations segment - IDACORP's only reportable segment is utility operations, primarily Idaho Power, which encompasses generation, transmission, distribution, purchase, and sale of electricity[122] | Metric | Utility Operations 2022 (in thousands) | All Other 2022 (in thousands) | Consolidated Total 2022 (in thousands) | Utility Operations 2021 (in thousands) | All Other 2021 (in thousands) | Consolidated Total 2021 (in thousands) | | :--------------------------------------- | :----------------------------- | :---------------------------- | :----------------------------------- | :----------------------------- | :---------------------------- | :----------------------------------- | | Revenues | $343,921 | $367 | $344,288 | $315,568 | $486 | $316,054 | | Net income attributable to IDACORP, Inc. | $46,214 | $46 | $46,260 | $44,369 | $462 | $44,831 | | Total assets (as of March 31, 2022 / Dec 31, 2021) | $7,070,637 | $274,805 | $7,284,557 | N/A | N/A | N/A | Changes in Accumulated Other Comprehensive Income This section details changes in accumulated other comprehensive income for the reporting periods | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :------------------ | :------------------ | :----------- | | Balance at beginning of period | $(40,040) | $(43,358) | +8.1% (reduction in loss) | | Amounts reclassified out of AOCI | $837 | $836 | +0.1% | | Balance at end of period | $(39,203) | $(42,522) | +7.8% (reduction in loss) | | Details About AOCI | 2022 (in thousands) | 2021 (in thousands) | | :--------------------------------------- | :------------------ | :------------------ | | Amortization of defined benefit pension items - Prior service cost | $70 | $74 | | Amortization of defined benefit pension items - Net loss | $1,057 | $1,051 | | Total before tax | $1,127 | $1,125 | | Tax benefit | $(290) | $(289) | | Total reclassification for the period, net of tax | $837 | $836 | Changes in Idaho Power Retained Earnings This section outlines changes in Idaho Power's retained earnings, including net income and dividends | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :------------------ | :------------------ | :----------- | | Balance at beginning of period | $1,696,304 | $1,599,155 | +6.1% | | Net income | $46,214 | $44,369 | +4.1% | | Dividends to parent | $(38,198) | $(35,941) | +6.3% | | Balance at end of period | $1,704,320 | $1,607,583 | +6.0% | Reports of Independent Registered Public Accounting Firm - Deloitte & Touche LLP Reports from Deloitte & Touche LLP on IDACORP and Idaho Power's interim financial information - Deloitte & Touche LLP found no material modifications needed for IDACORP's and Idaho Power's interim financial information to conform with GAAP[132][137] - The auditors confirmed the fair statement of the December 31, 2021, consolidated balance sheets in relation to the audited full-year financial statements[133][138] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of IDACORP's and Idaho Power's financial condition and operations INTRODUCTION Introduction to IDACORP as a holding company and Idaho Power as its principal regulated electric utility - IDACORP is a holding company whose principal operating subsidiary, Idaho Power, is an electric utility regulated by the IPUC, OPUC, and FERC[143] - Idaho Power generates revenues primarily from the sale and distribution of electricity, with highest retail energy sales occurring during the summer irrigation and cooling season[143] EXECUTIVE OVERVIEW Executive overview of management's strategic outlook, financial results, and influencing factors Management's Outlook and Company Initiatives Management's strategic outlook, company initiatives, and growth expectations - Idaho Power's strategic areas include growing financial strength, improving core business, enhancing brand, and focusing on safety and employee engagement[145] - Customer count grew by over 3,000 in Q1 2022, with a 2.6% growth rate over the past twelve months, and positive customer growth is expected to continue[145] - Idaho Power anticipates total capital expenditures of up to $2.8 billion over the five-year period from 2022 through 2026[145] - The company is committed to providing 100% clean energy by 2045, alongside water stewardship and workforce unity initiatives[145] Summary of Financial Results Summary of IDACORP's and Idaho Power's financial performance for the reporting period | Metric | 2022 | 2021 | Change (YoY) | | :--------------------------------------- | :----- | :----- | :----------- | | Idaho Power net income | $46,214 | $44,369 | +4.1% | | Net income attributable to IDACORP, Inc. | $46,260 | $44,831 | +3.2% | | IDACORP, Inc. earnings per diluted share | $0.91 | $0.89 | +2.2% | - IDACORP's net income increased by $1.5 million in Q1 2022, primarily due to Idaho Power's higher net income[147] - Customer growth (2.6% increase) contributed $3.0 million to operating income, and higher usage per retail customer (due to colder weather and increased economic activity) added $9.3 million[147] - Increased O&M expenses ($6.4 million) due to a planned maintenance project and inflationary pressures, and a decrease in Idaho FCA revenues ($5.9 million), partially offset these gains[147][149] Overview of General Factors and Trends Affecting Results of Operations and Financial Condition General factors and trends influencing IDACORP's and Idaho Power's operations and financial health - Idaho Power is undertaking significant infrastructure enhancements, including major transmission projects and generation facility upgrades, with plans to timely include completed capital projects into rate base[151] - The company expects continued customer growth (2.6% over the past 12 months) and peak demand, necessitating additional power supply, transmission, and distribution infrastructure investments[153] - Hydropower generation is expected to be in the range of 5.0 to 6.5 million MWh in 2022, compared with a 30-year average of approximately 7.7 million MWh, due to less carry-over storage and below-normal snowpack[153][161] - Idaho Power faces increasing regulatory and environmental compliance costs, including those related to the Jim Bridger plant's accelerated depreciation and wildfire mitigation efforts[155] RESULTS OF OPERATIONS Detailed analysis of IDACORP's and Idaho Power's operating results for Q1 2022 versus Q1 2021 Operating Revenues Analysis of IDACORP's and Idaho Power's operating revenues, including retail and wholesale sales | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :------------------ | :------------------ | :----------- | | Total retail revenues | $295,843 | $271,451 | +8.9% | | Total retail MWh sales | 3,624 | 3,369 | +7.6% | | Number of retail customers at period end | 606,823 | 591,548 | +2.6% | - Retail revenues increased $24.4 million in Q1 2022, primarily due to customer growth ($4.8 million) and higher usage per customer ($17.1 million) driven by colder weather and increased economic activity[166][167] - Wholesale energy sales decreased $3.2 million (77% volume decrease) due to lower system generation and higher retail sales[169] - Transmission wheeling-related revenues increased $2.0 million (14%) due to new long-term agreements and 4% higher OATT rates[169] - Idaho FCA revenue decreased by $5.9 million due to higher usage per residential and small commercial customer[171] Operating Expenses Analysis of IDACORP's and Idaho Power's operating expenses, including purchased power and fuel costs | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :------------------ | :------------------ | :----------- | | Total purchased power expense | $85,424 | $67,988 | +25.6% | | Total MWh purchased | 1,782 | 1,397 | +27.6% | | Weighted average cost per MWh - all sources | $47.94 | $48.67 | -1.5% | | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :--------------------------------------- | :------------------ | :------------------ | :----------- | | Total fuel expense | $45,702 | $33,306 | +37.2% | | Total MWh generated | 1,278 | 1,178 | +8.5% | | Average cost per MWh - Coal | $33.77 | $31.54 | +7.1% | | Average cost per MWh - Natural gas | $39.31 | $25.54 | +53.9% | - Other O&M expenses increased by $6.4 million in Q1 2022 due to a planned maintenance project at the Langley Gulch natural gas plant and inflationary pressures on labor, professional services, and supplies[182] - Power cost adjustment mechanisms in Idaho and Oregon largely mitigate the financial impact of fluctuations in power supply costs, though cash flow timing can differ from cost recovery[178] LIQUIDITY AND CAPITAL RESOURCES Discussion of IDACORP's and Idaho Power's liquidity, capital management, and significant capital expenditures Overview Overview of IDACORP's and Idaho Power's liquidity and capital management strategies - Idaho Power anticipates total capital expenditures of up to $2.8 billion over the five-year period from 2022 through 2026 for utility infrastructure[184] - IDACORP and Idaho Power generally seek to maintain capital structures of approximately 50% debt and 50% equity[188] | Metric | IDACORP | Idaho Power | | :----- | :------ | :---------- | | Debt | 43% | 45% | | Equity | 57% | 55% | Operating Cash Flows Details of IDACORP's and Idaho Power's cash flows from operating activities - IDACORP's operating cash inflows for Q1 2022 were $93 million, an increase of $9 million YoY[190] - Idaho Power's operating cash inflows for Q1 2022 were $90 million, an increase of $11 million YoY[190] - The increase in operating cash flows was primarily due to changes in other current liabilities, including compensation, customer deposits, and accrued interest, related to payment timing[190] Investing Cash Flows Details of IDACORP's and Idaho Power's cash flows from investing activities - IDACORP's net investing cash outflows were $98 million, and Idaho Power's were $95 million in Q1 2022, mainly for utility infrastructure construction[191] - Idaho Power's rabbi trust purchased $20 million in equity and $30 million in held-to-maturity securities, and received $51 million from equity security sales during Q1 2022[192] Financing Cash Flows Details of IDACORP's and Idaho Power's cash flows from financing activities - IDACORP's net financing cash inflows were $9 million, and Idaho Power's were $12 million in Q1 2022[194] - Idaho Power drew $50 million from a new delayed draw term loan facility in March 2022[194] - IDACORP and Idaho Power paid $38 million in common stock dividends during Q1 2022[194] Financing Programs and Available Liquidity Description of IDACORP's and Idaho Power's financing programs and available liquidity sources - Idaho Power entered into a $150 million Term Loan Facility in March 2022, with $50 million drawn and $100 million remaining available[195][197] - IDACORP and Idaho Power have revolving credit facilities of $100 million and $300 million, respectively, and shelf registration statements for debt and equity issuances[186][204] - Idaho Power is seeking authority to issue up to $1.2 billion in new debt securities and first mortgage bonds and plans to increase its Indenture limit from $2.5 billion to $3.5 billion[203] Available Short-Term Borrowing Liquidity Presentation of IDACORP's and Idaho Power's available short-term borrowing capacity | Metric | IDACORP (March 31, 2022) | Idaho Power (March 31, 2022) | IDACORP (December 31, 2021) | Idaho Power (December 31, 2021) | | :-------------------------- | :----------------------- | :--------------------------- | :-------------------------- | :---------------------------- | | Revolving credit facility | $100,000 | $300,000 | $100,000 | $300,000 | | Commercial paper outstanding | $0 | $0 | $0 | $0 | | Identified for other use | $0 | $(24,245) | $0 | $(24,245) | | Net balance available | $100,000 | $275,755 | $100,000 | $275,755 | - As of April 29, 2022, neither IDACORP nor Idaho Power had loans outstanding under their revolving credit facilities or commercial paper outstanding[209] Impact of Credit Ratings on Liquidity and Collateral Obligations Impact of credit ratings on IDACORP's and Idaho Power's liquidity and collateral requirements - Moody's rating outlooks for IDACORP and Idaho Power were modified to negative in June 2021, though ratings remain investment grade[210] - A downgrade to below investment grade could trigger requests for approximately $12.8 million in additional performance assurance collateral from wholesale counterparties[211] Capital Requirements Idaho Power's estimated capital expenditures and construction plans - Idaho Power's construction expenditures, excluding AFUDC, were $99 million during Q1 2022[213] | Year | Estimated Capital Expenditures (in millions) | | :--------- | :----------------------------------- | | 2022 | $480-$500 | | 2023 | $690-$715 | | 2024-2026 | $1,450-$1,550 | Major Infrastructure Projects Details of Idaho Power's significant infrastructure projects, including transmission lines - Idaho Power plans over $400 million in capital expenditures from 2022-2025 for resource additions, including 120 MW of battery storage and a 40 MW solar facility, to meet projected capacity deficits[215] - The Boardman-to-Hemingway transmission line project has expended approximately $129 million through March 31, 2022, with total cost estimates between $1.0 billion and $1.2 billion[217][222] - Idaho Power's interest in the Boardman-to-Hemingway project may increase to approximately 45% following a non-binding term sheet with co-participants[221] - The Gateway West transmission line project has seen Idaho Power expend approximately $49 million for its share of the permitting phase, with total estimated costs for Idaho Power between $250 million and $450 million[224] Defined Benefit Pension Plan Contributions Discussion of Idaho Power's contributions to its defined benefit pension plan - Idaho Power made no contributions to its defined benefit pension plan in Q1 2022, but contributed $10 million in April 2022[226] - The company is considering an additional $30 million contribution in 2022 to balance regulatory collection and mitigate underfunding costs[226] Contractual Obligations Summary of IDACORP's and Idaho Power's contractual cash obligations - Contractual cash obligations include long-term debt, interest payments, purchase obligations, and pension/post-retirement benefit plans[227] Off-Balance Sheet Arrangements Address of IDACORP's and Idaho Power's off-balance sheet arrangements - Off-balance sheet arrangements have not materially changed from the 2021 Annual Report[228] REGULATORY MATTERS Overview of Idaho Power's regulatory environment, rate filings, and cost recovery mechanisms Introduction Introduction to Idaho Power's regulatory environment and the need for rate filings - Idaho Power is regulated by the IPUC, OPUC, and FERC regarding rates, service, accounting, and securities issuance[229] - Significant infrastructure investments are accelerating Idaho Power's need to file general rate cases in Idaho and Oregon[231] Notable Pending Retail Rate Changes Details of significant pending retail rate changes for Idaho Power | Description | Status | Estimated Annual Rate Impact | Notes | | :--------------------------------------- | :--------------------------------------- | :--------------------------- | :--------------------------------------- | | Jim Bridger plant accelerated recovery | Amended application filed Feb 16, 2022; Pending | $27.1 million increase effective June 1, 2022 | Contemplates conversion of units 1 and 2 to natural gas in 2024, removing related assets from proposed cost recovery. | | Power Cost Adjustment Mechanism - Idaho | Filed April 15, 2022; Pending | $103.4 million PCA increase for the period from June 1, 2022, to May 31, 2023 | Reflects forecasted reduction in low-cost hydroelectric generation and higher market/natural gas prices; includes $0.6 million of 2021 earnings shared with customers. | | Fixed Cost Adjustment Mechanism - Idaho | Filed March 15, 2022; Pending | $3.1 million FCA decrease for the period from June 1, 2022, to May 31, 2023 | Designed to remove financial disincentive for energy efficiency by decoupling fixed cost recovery from volumetric charge. | Idaho Earnings Support and Sharing from Idaho Settlement Stipulation Explanation of Idaho Power's earnings support and sharing mechanisms from the Idaho settlement - The May 2018 Idaho Tax Reform Settlement Stipulation provides earnings stability by allowing accelerated amortization of ADITC to help achieve a minimum 9.4% Idaho ROE[236] - In Q1 2022, no additional ADITC amortization or earnings sharing provision was recorded, leaving $45 million of ADITC available for future use[236] Change in Deferred (Accrued) Net Power Supply Costs and the Power Cost Adjustment Mechanisms Changes in deferred net power supply costs and power cost adjustment mechanisms - Idaho Power's power cost adjustment mechanisms in Idaho and Oregon address power supply cost volatility, allowing recovery or refund of fluctuations[238] - The Idaho PCA mechanism passes through 95% of net power supply expense differences to customers, impacting operating cash flows due to timing differences between payment and recovery[238] - Idaho Power filed for a $103.4 million net increase in PCA revenues for 2022-2023, reflecting forecasted reduction in hydroelectric generation and higher market/natural gas prices[239] | Metric | Idaho (in millions) | Oregon (in millions) | Total (in millions) | | :--------------------------------------- | :------------------ | :------------------- | :------------------ | | Deferred (accrued) net power supply costs at December 31, 2021 | $33.8 | $(0.3) | $33.5 | | Current period net power supply costs accrued | $(4.4) | $0 | $(4.4) | | Prior amounts refunded through rates | $4.2 | $0.1 | $4.3 | | SO allowance and renewable energy certificate sales | $(4.1) | $(0.2) | $(4.3) | | Interest and other | $0.7 | $0 | $0.7 | | Deferred (accrued) net power supply costs at March 31, 2022 | $30.2 | $(0.4) | $29.8 | Oregon Resource Procurement Filing Discussion of Idaho Power's Oregon resource procurement filing and competitive bidding rules - Idaho Power's request for a waiver of Oregon's competitive bidding rules for resource procurement was denied by the OPUC in March 2022[243] - The company is now pursuing exceptions to competitive bidding rules for certain projects to meet resource needs for 2023, 2024, and 2025[243] Filing for Certificate of Public Convenience and Necessity for Battery Storage Projects Idaho Power's application for battery storage facilities to meet peak energy needs - Idaho Power filed an application for a CPCN in April 2022 to install, own, and operate two battery storage facilities (120 MW combined capacity) to meet peak energy needs by summer 2023[244] Jim Bridger Power Plant Rate Request Idaho Power's rate request for accelerated depreciation at the Jim Bridger Power Plant - Idaho Power's amended application for the Jim Bridger plant requests authorization to accelerate depreciation by 2030 and adjust customer rates by $27.1 million annually[245][246] - The amended application contemplates converting units 1 and 2 to natural gas in 2024, removing associated investments for gas-fired operations from the requested regulatory treatment[246] Wildfire Mitigation Cost Deferral Deferral of wildfire mitigation costs as a regulatory asset for Idaho Power - The IPUC authorized Idaho Power to defer incremental O&M and depreciation expenses for its Wildfire Mitigation Plan (WMP) as a regulatory asset[247][249] - Idaho Power projects spending approximately $47 million in incremental O&M and $35 million in capital expenditures over five years for wildfire mitigation[249] - As of March 31, 2022, $8.8 million of Idaho-jurisdiction WMP costs have been deferred[249] Industrial Customer Dedicated Renewable Resource Idaho Power's special contract with Micron for a dedicated solar facility - Idaho Power filed an application for a revised special contract with Micron, where Micron would purchase energy from a new 40 MW solar facility[250] - The solar facility is scheduled to begin operating as early as June 2023, and the contract includes revised electric service rates for Micron[250] Renewable and Other Energy Contracts Summary of Idaho Power's renewable and other energy contracts and their capacities | Resource Type | On-line (MW) | Under Contract but not yet On-line (MW) | Total Projects under Contract (MW) | | :---------------- | :----------- | :-------------------------------------- | :--------------------------------- | | PURPA: | | | | | Wind | 627 | 0 | 627 | | Solar | 316 | 74 | 390 | | Hydropower | 150 | 1 | 151 | | Other | 44 | 0 | 44 | | Non-PURPA: | | | | | Wind | 101 | 0 | 101 | | Geothermal | 35 | 0 | 35 | | Solar | 0 | 160 | 160 | - FERC Order No. 872 could affect how states determine PURPA project avoided cost rates and eligibility, but Idaho Power is unable to determine the full impact on future obligations[254] Relicensing of Hydropower Projects Details of Idaho Power's ongoing relicensing efforts for major hydropower facilities HCC Relicensing Details of the ongoing relicensing efforts for the Hells Canyon Complex hydropower facilities - A settlement was reached in April 2019 for CWA Section 401 certification for HCC, requiring increased Chinook salmon releases and $12 million for research/water quality improvements over 20 years[257] - Idaho Power expects the FERC to issue a new HCC license in 2024 or thereafter, with estimated annual relicensing costs of $30 million to $40 million until issuance[258][259] - Relicensing costs of $397 million for the HCC were included in construction work in progress at March 31, 2022[260] American Falls Relicensing Details of the ongoing relicensing efforts for the American Falls hydropower facility - The FERC formally initiated the relicensing of the American Falls hydropower facility in April 2020[262] - Idaho Power's final license application for American Falls is due in 2023, with a new license expected before the current one expires in 2025[262] ENVIRONMENTAL MATTERS Address of IDACORP's and Idaho Power's environmental compliance and potential impacts Overview Overview of IDACORP's and Idaho Power's environmental compliance and potential impacts - Idaho Power is subject to a broad range of federal and state environmental laws, including the Clean Air Act, Clean Water Act, and Endangered Species Act[263] - Compliance with current and future environmental laws may increase operating and construction costs, require plant modifications or curtailments, and could materially affect financial results if costs are not fully recovered in rates[264] Endangered Species Act Matters Lawsuits challenging sage grouse habitat plans and their impact on transmission projects - Lawsuits challenging BLM's sage grouse resource management plans could impact Idaho Power's transmission projects (Boardman-to-Hemingway and Gateway West) if exemptions are overturned, potentially causing re-routing, higher costs, and delays[267] - The lawsuits are currently stayed as parties await further administrative actions from the BLM regarding sage grouse habitat management[270] Changes to NEPA Discussion of changes to NEPA rules and their potential impact on infrastructure projects - The CEQ's April 2022 final rule restored requirements for federal agencies to consider all indirect and cumulative environmental impacts under NEPA, potentially delaying and increasing costs for Idaho Power's infrastructure projects[271] - Further climate change-related reforms to NEPA are anticipated by the current Presidential Administration[271] Clean Air Act Matters Details of Clean Air Act regulations affecting the Jim Bridger plant and compliance efforts - Jim Bridger plant units are subject to regional haze rules under the CAA, requiring NOₓ controls[272] - Wyoming's temporary emergency suspension for Jim Bridger unit 2 expired in April 2022, and the U.S. Environmental Protection Agency (EPA) has proposed disapproving Wyoming's 2019 State Implementation Plan (SIP) revision[273] - A February 2022 consent decree requires PacifiCorp to submit a revised permit application for natural gas conversion of Jim Bridger units 1 and 2 and propose an RFP for carbon capture at units 3 and 4[273] - Idaho Power is evaluating the impact of the EPA's proposed CSAPR rule on Jim Bridger plant operations, which could establish NOx emissions budgets[275] Clean Water Act Matters Coverage of the evolving definition of "Waters of the United States" under the Clean Water Act Definition of "Waters of the United States" Under the CWA Discussion of the evolving definition of "Waters of the United States" under the Clean Water Act - The EPA has proposed a new rule to restore broader protections under the CWA's "Waters of the United States" (WOTUS) definition, reversing the narrower Navigable Waters Protection Rule[276] - The U.S. Supreme Court is reviewing a challenge to the EPA's WOTUS jurisdiction, which could clarify the definition[276] - Idaho Power expects additional permitting and regulatory costs from potential WOTUS definition changes but does not anticipate a material adverse effect, partly due to Idaho's arid climate[277] Section 401 Water Quality Certification Address of the Clean Water Act Section 401 water quality certification for HCC relicensing - The CWA Section 401 water quality certification for HCC relicensing is pending FERC's decision on an Offer of Settlement[278] - The July 2020 Rule, which amended CWA Section 401 regulations, was vacated by a U.S. District Court, temporarily reverting to 1979 regulations, but the U.S. Supreme Court stayed the vacatur[279] - The EPA plans to repeal the July 2020 Rule and finalize a new certification rule, which could impact HCC certification timing and cost if FERC declines the settlement[279][280] CWA Permitting Idaho Power's compliance and permitting obligations under the Clean Water Act - Idaho Power's hydropower generation facilities are subject to CWA compliance and permitting obligations[281] - Idaho Power and IDEQ entered a consent judgment on April 7, 2022, to resolve a permitting issue for 15 hydroelectric projects, requiring a $1.1 million fine and new permit applications[282] - The permitting issue stemmed from a misinterpretation that led to the cancellation of water discharge permits in the mid-1990s[282] OTHER MATTERS Critical accounting policies and recently issued accounting pronouncements Critical Accounting Policies and Estimates Discussion of critical accounting policies and estimates used in financial reporting - Financial statements rely on management's estimates and judgments related to rate regulation, retirement benefits, contingencies, asset impairment, income taxes, unbilled revenues, and bad debt[283] - Critical accounting policies and estimates have not materially changed from the 2021 Annual Report[284] Recently Issued Accounting Pronouncements Impact of recently issued accounting pronouncements on financial statements - No recently issued accounting pronouncements are expected to have a material impact on the condensed consolidated financial statements[285] Item 3. Quantitative and Qualitative Disclosures About Market Risk IDACORP's exposure to market risks, including interest rate, commodity price, credit, and equity price risks Interest Rate Risk IDACORP's exposure to interest rate risk, primarily from fixed-rate debt - As of March 31, 2022, IDACORP had no net variable rate debt, as short-term investments exceeded variable rate debt[288] - IDACORP had $2.0 billion in fixed rate debt, with its fair value estimated to increase by approximately $196 million if market interest rates declined by one percentage point[289] Commodity Price Risk IDACORP's commodity price risk, largely mitigated by power cost adjustment mechanisms - IDACORP's commodity price risk, related to Idaho Power's utility operations, is largely mitigated by Idaho and Oregon power cost adjustment mechanisms[290] - Commodity price risk has not materially changed since the 2021 Annual Report[290] Credit Risk IDACORP's management of credit risk through counterparty reviews and collateral requirements - IDACORP manages credit risk through counterparty credit quality reviews, credit limits, and contractual arrangements, including collateral requirements[291] - A downgrade to below investment grade could trigger requests for approximately $12.8 million in additional performance assurance collateral from wholesale counterparties[292][293] Equity Price Risk IDACORP's equity price risk from pension plan assets and other investments - IDACORP's equity price risk stems from Idaho Power's defined benefit pension plan assets, a mine reclamation trust fund, and other equity security investments[295] - Equity securities are diversified across broad market participation to reduce the impact of single investments, sectors, or regions[295] Item 4. Controls and Procedures Conclusion on the effectiveness of disclosure controls and internal control over financial reporting Disclosure Controls and Procedures Effectiveness of IDACORP's and Idaho Power's disclosure controls and procedures - IDACORP's and Idaho Power's disclosure controls and procedures were deemed effective as of March 31, 2022[297][298] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting during Q1 2022 - No material changes in internal control over financial reporting occurred during Q1 2022 for either IDACORP or Idaho Power[299] Part II. Other Information Other information, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings Idaho Power's recent consent judgment with the Idaho Department of Environmental Quality - Idaho Power entered a consent judgment with IDEQ on April 7, 2022, to resolve a permitting issue for 15 hydroelectric projects[302] - The judgment requires Idaho Power to pay a $1.1 million fine, implement interim compliance measures, and submit applications for new permits[302] - The issue arose from a misinterpretation that led to the cancellation of water discharge permits in the mid-1990s[302] Item 1A. Risk Factors Reference to external reports for factors that could materially affect the companies' business - Readers are referred to the "Risk Factors" in the 2021 Annual Report on Form 10-K and the "Cautionary Note Regarding Forward-Looking Statements" in this report for factors that could materially affect the companies' business and financial condition[304] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Common stock details and confirmation of no share repurchases during the quarter - Restrictions on dividend payments are detailed in Note 6 - "Common Stock"[305] - IDACORP did not repurchase any shares of its common stock during Q1 2022[306] Item 3. Defaults Upon Senior Securities Confirmation of no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[308] Item 4. Mine Safety Disclosures Mine safety disclosures provided in an exhibit to the report - Mine safety disclosures are provided in Exhibit 95.1 of the report[309] Item 5. Other Information Confirmation that no other information is reported in this section - No other information was reported in this item[311] Item 6. Exhibits List of all exhibits filed or furnished with the Quarterly Report on Form 10-Q - Key exhibits include the Sixth Amendment to the Idaho Power Company Employee Savings Plan, the Term Loan Credit Agreement, and various certifications (e.g., Section 302 and 906 of Sarbanes-Oxley Act)[313] - Mine Safety Disclosures are included as Exhibit 95.1[313] Signatures Official signatures for IDACORP, Inc. and Idaho Power Company - The report is signed by Lisa A. Grow (President and CEO) and Brian R. Buckham (SVP and CFO) for both IDACORP, Inc. and Idaho Power Company[316]