IDACORP, Inc. is an electric utility holding company based in Boise, Idaho, with its principal operating subsidiary being Idaho Power Company. As one of the oldest and largest regulated utility companies in the Western United States, IDACORP has a long and storied history of providing reliable, affordable electricity to its growing customer base across southern Idaho and eastern Oregon.

Company Background

IDACORP was formed in 1998 as a holding company with Idaho Power as its principal operating subsidiary. Idaho Power's service area covers approximately 24,000 square miles in southern Idaho and eastern Oregon, engaging in the generation, transmission, distribution, sale, and purchase of electric energy and capacity. The company is primarily regulated by the state utility regulatory commissions of Idaho and Oregon, as well as the Federal Energy Regulatory Commission.

Historical Challenges

In the early 2000s, IDACORP faced significant challenges during the West Coast energy crisis, which led to high wholesale electricity prices and supply shortages. The company had to make substantial purchases of wholesale power at elevated prices to meet customer demand, putting strain on its finances. In response, IDACORP implemented cost-cutting measures and sought rate increases from regulators to recover the higher power supply costs.

The late 2000s brought another set of challenges with the Great Recession, resulting in decreased electricity demand from residential and commercial customers. IDACORP adapted by adjusting its operations and capital spending plans to align with lower sales volumes. Despite these obstacles, the company maintained its commitment to providing reliable electric service and continued to invest in infrastructure upgrades for its transmission and distribution systems.

Strategic Developments

During the 2010s, IDACORP made significant strides in diversifying its electricity generation portfolio. The company added more renewable energy sources, such as wind and solar power, to complement its existing hydroelectric and natural gas-fired generation. This period also saw IDACORP undertaking major transmission projects, including the Boardman-to-Hemingway and Gateway West transmission lines, aimed at enhancing the reliability and flexibility of its electric grid. These investments were made in collaboration with state regulators to ensure timely and equitable cost recovery for customers.

Throughout its history, IDACORP has demonstrated a strong commitment to operational excellence, financial discipline, and customer service. The company has successfully navigated various industry and economic changes, leveraging its regulated utility model and constructive relationships with stakeholders to continue delivering value to its shareholders and the communities it serves.

Current Market Position

As of September 30, 2024, IDACORP served a customer base of over 645,000 across its service area, a 2.6% increase compared to the same period in 2023. This growth has been driven by a robust economy and an influx of new residential, commercial, and industrial customers, particularly in the manufacturing, food processing, and data center sectors.

Financials

IDACORP's financial strength is evident in its key performance metrics. For the nine months ended September 30, 2024, the company reported net income of $251.30 million, up from $229.94 million in the same period of 2023. This translates to earnings per diluted share of $4.82, compared to $4.53 in the prior-year period. The company's operating cash flow for the first nine months of 2024 was $457.98 million, a significant increase from $162.03 million in the same period of 2023.

For the most recent fiscal year 2023, IDACORP reported revenue of $1.77 billion, net income of $261.19 million, and operating cash flow of $267.03 million. The company's free cash flow for 2023 was negative $344.11 million.

In the most recent quarter (Q3 2024), IDACORP achieved revenue of $528.53 million, net income of $113.61 million, and operating cash flow of $201.94 million. The free cash flow for the quarter was negative $16.13 million. The company experienced a year-over-year revenue growth of 3.44%, primarily due to higher retail rates and customer growth, partially offset by lower power cost adjustment mechanism revenues.

IDACORP's utility operations segment, which includes Idaho Power Company, is the primary source of revenue and net income. For the three months ended September 30, 2024, this segment reported operating revenues of $527.49 million and net income of $111.09 million. For the nine months ended September 30, 2024, the utility operations segment reported operating revenues of $1.43 billion and net income of $245.78 million.

Liquidity and Financial Stability

Despite the challenges posed by the COVID-19 pandemic and inflationary pressures, IDACORP has demonstrated its ability to adapt and maintain its financial stability. The company's diversified power generation mix, which includes hydroelectric, natural gas, and renewable sources, has helped mitigate the impact of volatility in commodity prices and weather patterns.

As of September 30, 2024, IDACORP's debt-to-equity ratio stood at 0.95, with cash and cash equivalents of $427.95 million. The company maintains strong liquidity with a $100 million revolving credit facility, which was fully available as of the reporting date. Additionally, Idaho Power has a $400 million revolving credit facility, of which $380.12 million was available. IDACORP's current ratio was 1.70, and its quick ratio was 1.34, indicating a solid ability to meet short-term obligations.

Moreover, IDACORP's proactive approach to regulatory matters has been instrumental in ensuring the timely recovery of its investments and the preservation of its financial health. In 2024, the company filed a limited-issue rate case in Idaho, seeking to recover costs associated with its significant infrastructure investments and increased labor expenses. Additionally, the Oregon Public Utility Commission approved a general rate case settlement in September 2024, resulting in a 12.14% increase in annual Oregon-jurisdiction retail revenue.

Future Outlook and Growth Strategy

Looking ahead, IDACORP faces a period of substantial growth and investment. The company's updated five-year forecast for its retail sales growth rate stands at 7.7% annually, a significant increase from the 5.5% rate included in its 2023 Integrated Resource Plan. This growth is driven by a robust pipeline of commercial and industrial customers, as well as planned large-scale projects in the data center, manufacturing, and food processing sectors. Notably, this forecast does not include potential load from two prospective energy-intensive projects, suggesting further upside potential.

To meet this growing demand, IDACORP has unveiled an ambitious capital expenditure plan, with an estimated $5.4 billion to $6.1 billion in investments from 2024 to 2028. This represents a 46% increase, or $1.8 billion, from its February 2023 estimate. These investments will focus on expanding the company's generation, transmission, and distribution infrastructure, as well as the integration of renewable energy sources and energy storage technologies.

To support this substantial capital program, IDACORP estimates it will need approximately $1.3 billion in equity financing and $2 billion in debt financing for the 2025-2028 period. The company expects its rate base compound annual growth rate (CAGR) to reach 16.9% based on the latest capital expenditure forecast, up from the previous estimate of 10.8%.

IDACORP's ability to execute on its growth strategy will be critical in maintaining its competitive position and delivering value to its shareholders. The company's management team has a proven track record of navigating complex regulatory environments and adapting to industry changes, which provides confidence in their ability to manage the challenges and opportunities that lie ahead.

Guidance and Performance

IDACORP has demonstrated strong performance and has provided updated guidance for investors. In the third quarter of 2024, the company recorded $2.5 million of additional tax credit amortization under the Idaho regulatory stipulation, compared to no additional ADITC amortization in the same period last year. For the first nine months of 2024, earnings per diluted share reached $4.82, up from $4.53 in the same period of 2023. This included additional tax credit amortization of $22.5 million through Q3 2024, compared to $7.5 million through Q3 2023.

Based on its strong performance, IDACORP has increased the lower end of its previously-reported full-year 2024 earnings guidance to a range of $5.35 to $5.45 per diluted share. The company's expectation of additional tax credit usage to support earnings has also improved to a range of $25 million to $35 million for 2024.

Conclusion

In conclusion, IDACORP's long-standing history, financial strength, and strategic vision position the company well for continued success in the years to come. With its updated growth forecasts, ambitious capital expenditure plans, and solid financial foundation, IDACORP is well-equipped to meet the increasing energy demands of its service area. As it powers through growth and adaptation, IDACORP remains committed to providing reliable, affordable, and increasingly sustainable electricity to its growing customer base, while delivering value to its shareholders and contributing to the economic development of the communities it serves.