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IDACORP 10-Q 2011
IDA 6.30.11 10Q


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q
(Mark One)
X
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 
 
EXCHANGE ACT OF 1934
 
 
For the quarterly period ended June 30, 2011
 
 
OR
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 
 
EXCHANGE ACT OF 1934
 
 
For the transition period from __________ to __________
 
 
Exact name of registrants as specified
I.R.S. Employer
Commission File
in their charters, address of principal
Identification
Number
executive offices, zip code and telephone number
Number
1-14465
IDACORP, Inc.
82-0505802
1-3198
Idaho Power Company
82-0130980
 
1221 W. Idaho Street
 
 
 
Boise, Idaho  83702-5627
 
 
 
(208) 388-2200
 
 
 
State of Incorporation:  Idaho
 
 
 
None
 
 
Former name, former address and former fiscal year, if changed since last report.
 
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  Yes  X   No  ___
 
Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files). 
IDACORP, Inc.: Yes  X   No  ___  Idaho Power Company: Yes  X  No  ___
 
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or smaller reporting companies.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):
IDACORP, Inc.:
 
Large accelerated filer
X
Accelerated filer
 
Non-accelerated  filer
 
Smaller reporting company
 
Idaho Power Company:
 
Large accelerated filer
 
Accelerated filer
 
Non-accelerated  filer
X
Smaller reporting company
 
 
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).
Yes ___  No   X 
 
Number of shares of common stock outstanding as of July 29, 2011:
IDACORP, Inc.:
49,711,638
Idaho Power Company:
39,150,812, all held by IDACORP, Inc.
 
This combined Form 10-Q represents separate filings by IDACORP, Inc. and Idaho Power Company.  Information contained herein relating to an individual registrant is filed by that registrant on its own behalf.  Idaho Power Company makes no representations as to the information relating to IDACORP, Inc.’s other operations.
 
Idaho Power Company meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this report on Form 10-Q with the reduced disclosure format.

1



COMMONLY USED TERMS
 
The following select abbreviations or acronyms are commonly used in this report:
 
 
 
ADITC
-
Accumulated Deferred Investment Tax Credits
AFUDC
-
Allowance for Funds Used During Construction
AMI
-
Advanced Metering Infrastructure
APCU
-
Annual Power Cost Update
BCC
-
Bridger Coal Company, a joint venture of IERCo
CAA
-
Clean Air Act
Cal ISO
-
California Independent System Operator
CalPX
-
California Power Exchange
CAMP
-
Comprehensive Aquifer Management Plan
DSR
-
Demand-Side Resources
EGUs
-
Electric Utility Steam Generating Units
EPA
-
United States Environmental Protection Agency
EPS
-
Earnings per share
ESPA
-
Eastern Snake Plain Aquifer
FCA
-
Fixed Cost Adjustment Mechanism
FERC
-
Federal Energy Regulatory Commission
GHG
-
Greenhouse Gas
HAPs
-
Hazardous Air Pollutants
HCC
-
Hells Canyon Complex
Ida-West
-
Ida-West Energy, a subsidiary of IDACORP, Inc.
IE
-
IDACORP Energy, a subsidiary of IDACORP, Inc.
IERCo
-
Idaho Energy Resources Co., a subsidiary of Idaho Power Company
IFS
-
IDACORP Financial Services, a subsidiary of IDACORP, Inc.
IPUC
-
Idaho Public Utilities Commission
IRS
-
Internal Revenue Service
kW
-
Kilowatt
LCAR
-
Load Change Adjustment Rate
MD&A
-
Management’s Discussion and Analysis of Financial Condition and Results of Operations
MW
-
Megawatt
MWh
-
Megawatt-hour
NSPS
-
New Source Performance Standards
O&M
-
Operations and Maintenance
OATT
-
Open Access Transmission Tariff
OPUC
-
Oregon Public Utility Commission
PCA
-
Power Cost Adjustment
PCAM
-
Power Cost Adjustment Mechanism
PURPA
-
Public Utility Regulatory Policies Act of 1978
REC
-
Renewable Energy Certificate
RES
-
Renewable Energy Standard
SEC
-
Securities and Exchange Commission
SO2
-
Sulfur Dioxide
SRBA
-
Snake River Basin Adjudication
USBR
-
United States Bureau of Reclamation
Valmy
-
North Valmy Steam Electric Generating Plant
VIEs
-
Variable Interest Entities
WECC
-
Western Electricity Coordinating Council

2



TABLE OF CONTENTS
 
Page
Part I.  Financial Information:
 
 
 
 
 
Item 1.  Financial Statements (unaudited)
 
 
 
IDACORP, Inc.:
 
 
 
 
Condensed Consolidated Statements of Income
 
 
 
Condensed Consolidated Balance Sheets
 
 
 
Condensed Consolidated Statements of Cash Flows
 
 
 
Condensed Consolidated Statements of Comprehensive Income
 
 
 
Condensed Consolidated Statements of Equity
 
 
Idaho Power Company:
 
 
 
 
Condensed Consolidated Statements of Income
 
 
 
Condensed Consolidated Balance Sheets
 
 
 
Condensed Consolidated Statements of Capitalization
 
 
 
Condensed Consolidated Statements of Cash Flows
 
 
 
Condensed Consolidated Statements of Comprehensive Income
 
 
Notes to the Condensed Consolidated Financial Statements
 
 
Reports of Independent Registered Public Accounting Firm
 
 
 
 
 
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of
 
 
 
 
Operations
 
 
 
 
 
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
 
 
 
 
 
 
Item 4.  Controls and Procedures
 
 
 
 
 
Part II.  Other Information:
 
 
 
 
 
Item 1.  Legal Proceedings
 
 
 
 
Item 1A.  Risk Factors
 
 
 
 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
 
Item 5.  Other Information
 
 
 
 
Item 6.  Exhibits
 
 
 
Signatures
 
 
Exhibit Index
SAFE HARBOR STATEMENT
 
This Quarterly Report on Form 10-Q contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995.  Forward-looking statements should be read with the cautionary statements and important factors included in this Form 10-Q at Part I, Item 2 - “MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - FORWARD-LOOKING STATEMENTS,” and in IDACORP, Inc.'s and Idaho Power Company's Annual Report on Form 10-K for the year ended December 31, 2010, at Part I, Item 1A - “RISK FACTORS” and Part II, Item 7 - “MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.” Forward-looking statements are all statements other than statements of historical fact, including, without limitation, those that are identified by the use of the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "may result," "may continue," or similar expressions.

3



PART I – FINANCIAL INFORMATION
Item 1.  Financial Statements

IDACORP, Inc.
Condensed Consolidated Statements of Income
(unaudited)
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(thousands of dollars except for per share amounts)
Operating Revenues:
 
 
 
 
 
 
 
 
Electric utility:
 
 
 
 
 
 
 
 
General business
 
$
194,296

 
$
204,277

 
$
397,568

 
$
408,022

Off-system sales
 
20,720

 
17,769

 
50,565

 
52,175

Other revenues
 
18,908

 
18,744

 
36,853

 
33,053

Total electric utility revenues
 
233,924

 
240,790

 
484,986

 
493,250

Other
 
1,059

 
963

 
1,491

 
1,466

Total operating revenues
 
234,983

 
241,753

 
486,477

 
494,716

Operating Expenses:
 
 
 
 
 

 

Electric utility:
 
 
 
 
 

 

Purchased power
 
36,423

 
30,349

 
61,517

 
51,523

Fuel expense
 
19,704

 
27,558

 
49,606

 
64,744

Power cost adjustment
 
15,501

 
28,071

 
46,807

 
76,395

Other operations and maintenance
 
85,472

 
75,125

 
156,133

 
147,219

Energy efficiency programs
 
5,796

 
8,765

 
12,507

 
13,799

Depreciation
 
29,693

 
28,726

 
59,157

 
57,309

Taxes other than income taxes
 
7,182

 
5,805

 
14,394

 
11,485

Total electric utility expenses
 
199,771

 
204,399

 
400,121

 
422,474

Other
 
913

 
749

 
1,966

 
1,590

Total operating expenses
 
200,684

 
205,148

 
402,087

 
424,064

Operating Income
 
34,299

 
36,605

 
84,390

 
70,652

Other Income, Net
 
5,041

 
3,012

 
9,579

 
7,493

(Losses) Earnings of Unconsolidated Equity-Method Investments
 
(4,447
)
 
380

 
(5,741
)
 
(1,998
)
Interest Expense:
 
 
 
 
 

 

Interest on long-term debt
 
19,504

 
19,427

 
40,351

 
38,868

Other interest, net of AFUDC
 
(1,936
)
 
(2,038
)
 
(3,823
)
 
(2,491
)
Total interest expense, net
 
17,568

 
17,389

 
36,528

 
36,377

Income Before Income Taxes
 
17,325

 
22,608

 
51,700

 
39,770

Income Tax (Benefit) Expense
 
(3,652
)
 
(16,629
)
 
1,235

 
(15,324
)
Net Income
 
20,977

 
39,237

 
50,465

 
55,094

Adjustment for (income) loss attributable to noncontrolling interests
 
(76
)
 
(28
)
 
176

 
178

Net Income Attributable to IDACORP, Inc.
 
$
20,901

 
$
39,209

 
$
50,641

 
$
55,272

Weighted Average Common Shares Outstanding - Basic (000’s)
 
49,420

 
47,888

 
49,355

 
47,831

Weighted Average Common Shares Outstanding - Diluted (000’s)
 
49,516

 
48,048

 
49,436

 
47,966

Earnings Per Share of Common Stock:
 
 
 
 
 
 
 

Earnings Attributable to IDACORP, Inc. - Basic
 
$
0.42

 
$
0.82

 
$
1.03

 
$
1.16

Earnings Attributable to IDACORP, Inc. - Diluted
 
$
0.42

 
$
0.82

 
$
1.02

 
$
1.15

Dividends Declared Per Share of Common Stock
 
$
0.30

 
$
0.30

 
$
0.60

 
$
0.60



The accompanying notes are an integral part of these statements.

4



IDACORP, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
 
 
 
June 30,
2011
 
December 31, 2010
Assets
 
(thousands of dollars)
Current Assets:
 
 
 
 
Cash and cash equivalents
 
$
58,316

 
$
228,677

Receivables:
 
 
 
 
Customer (net of allowance of $1,075 and $1,499, respectively)
 
61,691

 
62,114

Other (net of allowance of $168 and $1,471, respectively)
 
8,050

 
10,157

Income taxes receivable
 

 
12,130

Accrued unbilled revenues
 
49,779

 
47,964

Materials and supplies (at average cost)
 
45,650

 
45,601

Fuel stock (at average cost)
 
48,356

 
27,547

Prepayments
 
10,976

 
11,063

Deferred income taxes
 
7,411

 
10,715

Current regulatory assets
 
35,060

 
6,216

Other
 
1,284

 
1,854

Total current assets
 
326,573

 
464,038

Investments
 
198,305

 
202,944

Property, Plant and Equipment:
 
 
 
 
Utility plant in service
 
4,388,461

 
4,332,054

Accumulated provision for depreciation
 
(1,653,298
)
 
(1,614,013
)
Utility plant in service - net
 
2,735,163

 
2,718,041

Construction work in progress
 
545,649

 
416,950

Utility plant held for future use
 
7,081

 
7,076

Other property, net of accumulated depreciation
 
19,099

 
19,315

Property, plant and equipment - net
 
3,306,992

 
3,161,382

Other Assets:
 
 
 
 
American Falls and Milner water rights
 
20,536

 
22,120

Company-owned life insurance
 
26,689

 
26,672

Regulatory assets
 
717,401

 
753,172

Long-term receivables (net of allowance of $3,266 and $1,861, respectively)
 
5,041

 
3,965

Other
 
40,787

 
41,762

Total other assets
 
810,454

 
847,691

Total
 
$
4,642,324

 
$
4,676,055


The accompanying notes are an integral part of these statements.

5



IDACORP, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
 
 
 
June 30,
2011
 
December 31, 2010
Liabilities and Equity
 
(thousands of dollars)
Current Liabilities:
 
 
 
 
Current maturities of long-term debt
 
$
1,667

 
$
122,572

Notes payable
 
66,400

 
66,900

Accounts payable
 
87,014

 
103,100

Income taxes accrued
 
22,911

 

Interest accrued
 
22,277

 
23,937

Uncertain tax positions
 
56,898

 
74,436

Current regulatory liabilities
 
14,036

 
8,011

Other
 
68,496

 
50,103

Total current liabilities
 
339,699

 
449,059

Other Liabilities:
 
 
 
 
Deferred income taxes
 
586,856

 
566,473

Regulatory liabilities
 
307,724

 
298,094

Other
 
353,871

 
338,158

Total other liabilities
 
1,248,451

 
1,202,725

Long-Term Debt
 
1,487,387

 
1,488,287

Commitments and Contingencies
 

 

Equity:
 
 
 
 
IDACORP, Inc. shareholders’ equity:
 
 
 
 
Common stock, no par value (shares authorized 120,000,000;
     49,715,327 and 49,419,452 shares issued, respectively)
 
816,891

 
807,842

Retained earnings
 
754,771

 
733,879

Accumulated other comprehensive loss
 
(8,541
)
 
(9,568
)
Treasury stock (10,455 and 14,302 shares at cost, respectively)
 
(29
)
 
(40
)
Total IDACORP, Inc. shareholders’ equity
 
1,563,092

 
1,532,113

Noncontrolling interests
 
3,695

 
3,871

Total equity
 
1,566,787

 
1,535,984

Total
 
$
4,642,324

 
$
4,676,055

 
 
 
 
 
The accompanying notes are an integral part of these statements.


6



IDACORP, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
 
 
Six months ended
June 30,
 
 
2011
 
2010
Operating Activities:
 
(thousands of dollars)
Net income
 
$
50,465

 
$
55,094

Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

Depreciation and amortization
 
61,390

 
61,023

Deferred income taxes and investment tax credits
 
(21,994
)
 
(19,726
)
Changes in regulatory assets and liabilities
 
52,068

 
78,974

Pension and postretirement benefit plan expense
 
9,897

 
6,032

Contributions to pension and postretirement benefit plans
 
(1,510
)
 
(3,080
)
Losses of unconsolidated equity-method investments
 
5,741

 
1,998

Allowance for equity funds used during construction
 
(11,694
)
 
(8,020
)
Other non-cash adjustments to net income, net
 
1,920

 
(148
)
Change in:
 
 

 
 

Accounts receivable and prepayments
 
(954
)
 
6,613

Accounts payable and other accrued liabilities
 
(13,843
)
 
(8,495
)
Taxes accrued/receivable
 
38,543

 
9,279

Other current assets
 
(22,365
)
 
(3,081
)
Other current liabilities
 
12,276

 
18,215

Other assets
 
546

 
(2,512
)
Other liabilities
 
(3,592
)
 
(4,951
)
Net cash provided by operating activities
 
156,894

 
187,215

Investing Activities:
 
 

 
 

Additions to property, plant and equipment
 
(186,043
)
 
(166,687
)
Proceeds from the sale of utility assets
 

 
19,230

Proceeds from the sale of emission allowances and RECs
 
3,497

 
3,497

Investments in affordable housing
 
(905
)
 
(6,147
)
Investments in unconsolidated affiliates
 
(1,100
)
 
(2,020
)
Other
 
1,689

 
3,468

Net cash used in investing activities
 
(182,862
)
 
(148,659
)
Financing Activities:
 
 

 
 

Retirement of long-term debt
 
(121,064
)
 
(1,064
)
Dividends on common stock
 
(29,962
)
 
(28,830
)
Net change in short-term borrowings
 
(500
)
 
(36,250
)
Issuance of common stock
 
8,254

 
5,299

Acquisition of treasury stock
 
(1,933
)
 
(846
)
Other
 
812

 
(364
)
Net cash used in financing activities
 
(144,393
)
 
(62,055
)
Net decrease in cash and cash equivalents
 
(170,361
)
 
(23,499
)
Cash and cash equivalents at beginning of the period
 
228,677

 
52,987

Cash and cash equivalents at end of the period
 
$
58,316

 
$
29,488

Supplemental Disclosure of Cash Flow Information:
 
 

 
 

Cash paid (received) during the period for:
 
 

 
 
Income taxes
 
$
(12,696
)
 
$
(3,387
)
Interest (net of amount capitalized)
 
$
36,848

 
$
33,662

Non-cash investing activities:
 
 
 
 
Additions to property, plant and equipment in accounts payable
 
$
32,681

 
$
21,435

Investments in affordable housing
 
$

 
$
3,168

The accompanying notes are an integral part of these statements.

7



IDACORP, Inc.
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(thousands of dollars)
Net Income
 
$
20,977

 
$
39,237

 
$
50,465

 
$
55,094

Other Comprehensive Income:
 
 
 
 
 
 
 
 
Net unrealized holding gains (losses) arising during the period,
  net of tax of $4, ($758), $359, and ($492)
 
6

 
(1,181
)
 
560

 
(765
)
Unfunded pension liability adjustment, net of tax
  of $150, $114, $300, and $227
 
234

 
177

 
467

 
354

Total Comprehensive Income
 
21,217

 
38,233

 
51,492

 
54,683

Comprehensive (income) loss attributable to noncontrolling interests
 
(76
)
 
(28
)
 
176

 
178

Comprehensive Income Attributable to IDACORP, Inc.
 
$
21,141

 
$
38,205

 
$
51,668

 
$
54,861


The accompanying notes are an integral part of these statements.
 
 


8



IDACORP, Inc.
Condensed Consolidated Statements of Equity
(unaudited)
 
 
 
Six months ended
June 30,
 
 
2011
 
2010
 
 
(thousands of dollars)
Common Stock
 
 
 
 
Balance at beginning of period
 
$
807,842

 
$
756,475

Issued
 
8,254

 
5,299

Other
 
795

 
1,129

Balance at end of period
 
816,891

 
762,903

Retained Earnings
 
 
 
 
Balance at beginning of period
 
733,879

 
649,180

Net income attributable to IDACORP, Inc.
 
50,641

 
55,272

Common stock dividends ($0.60 per share)
 
(29,749
)
 
(28,851
)
Balance at end of period
 
754,771

 
675,601

Accumulated Other Comprehensive Income (Loss)
 
 
 
 
Balance at beginning of period
 
(9,568
)
 
(8,267
)
Unrealized gain (loss) on securities (net of tax)
 
560

 
(765
)
Unfunded pension liability adjustment (net of tax)
 
467

 
354

Balance at end of period
 
(8,541
)
 
(8,678
)
Treasury Stock
 
 
 
 
Balance at beginning of period
 
(40
)
 
(53
)
Issued
 
1,944

 
882

Acquired
 
(1,933
)
 
(846
)
Balance at end of period
 
(29
)
 
(17
)
Total IDACORP, Inc. shareholders’ equity at end of period
 
1,563,092

 
1,429,809

Noncontrolling Interests
 
 
 
 
Balance at beginning of period
 
3,871

 
4,209

Net loss attributable to noncontrolling interests
 
(176
)
 
(178
)
Balance at end of period
 
3,695

 
4,031

Total equity at end of period
 
$
1,566,787

 
$
1,433,840


The accompanying notes are an integral part of these statements.

9




Idaho Power Company
Condensed Consolidated Statements of Income
(unaudited)
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(thousands of dollars)
Operating Revenues:
 
 
 
 
 
 
 
 
General business
 
$
194,296

 
$
204,277

 
$
397,568

 
$
408,022

Off-system sales
 
20,720

 
17,769

 
50,565

 
52,175

Other revenues
 
18,908

 
18,744

 
36,853

 
33,053

Total operating revenues
 
233,924

 
240,790

 
484,986

 
493,250

Operating Expenses:
 
 
 
 
 
 
 
 
Operation:
 
 
 
 
 
 
 
 
Purchased power
 
36,423

 
30,349

 
61,517

 
51,523

Fuel expense
 
19,704

 
27,558

 
49,606

 
64,744

Power cost adjustment
 
15,501

 
28,071

 
46,807

 
76,395

Other operations and maintenance
 
85,472

 
75,125

 
156,133

 
147,219

Energy efficiency programs
 
5,796

 
8,765

 
12,507

 
13,799

Depreciation
 
29,693

 
28,726

 
59,157

 
57,309

Taxes other than income taxes
 
7,182

 
5,805

 
14,394

 
11,485

Total operating expenses
 
199,771

 
204,399

 
400,121

 
422,474

Income from Operations
 
34,153

 
36,391

 
84,865

 
70,776

Other Income (Expense):
 
 
 
 
 
 
 
 
Allowance for equity funds used during construction
 
6,365

 
4,362

 
11,694

 
8,020

(Losses) earnings of unconsolidated equity-method investments
 
(3,428
)
 
1,987

 
(2,570
)
 
2,335

Other expense, net
 
(1,363
)
 
(1,410
)
 
(2,375
)
 
(1,171
)
Total other income
 
1,574

 
4,939

 
6,749

 
9,184

Interest Charges:
 
 
 
 
 
 
 
 
Interest on long-term debt
 
19,504

 
19,427

 
40,351

 
38,868

Other interest
 
1,311

 
1,178

 
2,525

 
2,031

Allowance for borrowed funds used during construction
 
(3,375
)
 
(3,287
)
 
(6,589
)
 
(5,478
)
Total interest charges
 
17,440

 
17,318

 
36,287

 
35,421

Income Before Income Taxes
 
18,287

 
24,012

 
55,327

 
44,539

Income Tax (Benefit) Expense
 
(2,414
)
 
(14,816
)
 
4,779

 
(12,510
)
Net Income
 
$
20,701

 
$
38,828

 
$
50,548

 
$
57,049


The accompanying notes are an integral part of these statements.

10



Idaho Power Company
Condensed Consolidated Balance Sheets
(unaudited)
 
 
 
June 30,
2011
 
December 31, 2010
Assets
 
(thousands of dollars)
Electric Plant:
 
 
 
 
In service (at original cost)
 
$
4,388,461

 
$
4,332,054

Accumulated provision for depreciation
 
(1,653,298
)
 
(1,614,013
)
In service - net
 
2,735,163

 
2,718,041

Construction work in progress
 
545,649

 
416,950

Held for future use
 
7,081

 
7,076

Electric plant - net
 
3,287,893

 
3,142,067

Investments and Other Property
 
119,179

 
120,641

Current Assets:
 
 
 
 
Cash and cash equivalents
 
53,538

 
224,233

Receivables:
 
 
 
 
Customer (net of allowance of $1,075 and $1,499, respectively)
 
61,691

 
62,114

Other (net of allowance of $168 and $142, respectively)
 
7,699

 
8,835

Income taxes receivable
 

 
21,063

Accrued unbilled revenues
 
49,779

 
47,964

Materials and supplies (at average cost)
 
45,650

 
45,601

Fuel stock (at average cost)
 
48,356

 
27,547

Prepayments
 
10,794

 
10,910

Deferred income taxes
 
4,031

 
7,334

Current regulatory assets
 
35,060

 
6,216

Other
 
1,284

 
1,238

Total current assets
 
317,882

 
463,055

Deferred Debits:
 
 
 
 
American Falls and Milner water rights
 
20,536

 
22,120

Company-owned life insurance
 
26,689

 
26,672

Regulatory assets
 
717,401

 
753,172

Other
 
39,792

 
40,666

Total deferred debits
 
804,418

 
842,630

Total
 
$
4,529,372

 
$
4,568,393



The accompanying notes are an integral part of these statements.

11



Idaho Power Company
Condensed Consolidated Balance Sheets
(unaudited)
 
 
 
June 30,
2011
 
December 31, 2010
Capitalization and Liabilities
 
(thousands of dollars)
Capitalization:
 
 
 
 
Common stock equity:
 
 
 
 
Common stock, $2.50 par value (50,000,000 shares
     authorized; 39,150,812 shares outstanding)
 
$
97,877

 
$
97,877

Premium on capital stock
 
688,758

 
688,758

Capital stock expense
 
(2,097
)
 
(2,097
)
Retained earnings
 
650,961

 
630,259

Accumulated other comprehensive loss
 
(8,541
)
 
(9,568
)
Total common stock equity
 
1,426,958

 
1,405,229

Long-term debt
 
1,487,387

 
1,488,287

Total capitalization
 
2,914,345

 
2,893,516

Current Liabilities:
 
 
 
 
Long-term debt due within one year
 
1,064

 
121,064

Accounts payable
 
86,246

 
102,474

Accounts payable to related parties
 
1,348

 
1,110

Income taxes accrued
 
21,690

 

Interest accrued
 
22,277

 
23,930

Uncertain tax positions
 
56,898

 
74,436

Current regulatory liabilities
 
14,036

 
8,011

Other
 
67,960

 
48,733

Total current liabilities
 
271,519

 
379,758

Deferred Credits:
 
 
 
 
Deferred income taxes
 
684,038

 
661,165

Regulatory liabilities
 
307,724

 
298,094

Other
 
351,746

 
335,860

Total deferred credits
 
1,343,508

 
1,295,119

 
 
 
 
 
Commitments and Contingencies
 

 

 
 
 
 
 
Total
 
$
4,529,372

 
$
4,568,393

 
 
 
 
 
The accompanying notes are an integral part of these statements.

12



Idaho Power Company
Condensed Consolidated Statements of Capitalization
(unaudited)
 
 
June 30,
2011
 
December 31, 2010
 
 
(thousands of dollars)
Common Stock Equity:
 
 
 
 
Common stock
 
$
97,877

 
$
97,877

Premium on capital stock
 
688,758

 
688,758

Capital stock expense
 
(2,097
)
 
(2,097
)
Retained earnings
 
650,961

 
630,259

Accumulated other comprehensive loss
 
(8,541
)
 
(9,568
)
Total common stock equity
 
1,426,958

 
1,405,229

Long-Term Debt:
 
 
 
 
First mortgage bonds:
 
 
 
 
6.60% Series due 2011
 

 
120,000

4.75% Series due 2012
 
100,000

 
100,000

4.25% Series due 2013
 
70,000

 
70,000

6.025% Series due 2018
 
120,000

 
120,000

6.15% Series due 2019
 
100,000

 
100,000

4.50 % Series due 2020
 
130,000

 
130,000

3.40% Series due 2020
 
100,000

 
100,000

6    % Series due 2032
 
100,000

 
100,000

5.50% Series due 2033
 
70,000

 
70,000

5.50% Series due 2034
 
50,000

 
50,000

5.875% Series due 2034
 
55,000

 
55,000

5.30% Series due 2035
 
60,000

 
60,000

6.30% Series due 2037
 
140,000

 
140,000

6.25% Series due 2037
 
100,000

 
100,000

4.85% Series due 2040
 
100,000

 
100,000

Total first mortgage bonds
 
1,295,000

 
1,415,000

Amount due within one year
 

 
(120,000
)
Net first mortgage bonds
 
1,295,000

 
1,295,000

Pollution control revenue bonds:
 
 
 
 
5.15% Series due 2024
 
49,800

 
49,800

5.25% Series due 2026
 
116,300

 
116,300

Variable Rate Series 2000 due 2027
 
4,360

 
4,360

Total pollution control revenue bonds
 
170,460

 
170,460

American Falls bond guarantee
 
19,885

 
19,885

Milner Dam note guarantee
 
6,382

 
7,446

Note guarantee due within one year
 
(1,064
)
 
(1,064
)
Unamortized premium/discount - net
 
(3,276
)
 
(3,440
)
Total long-term debt
 
1,487,387

 
1,488,287

Total Capitalization
 
$
2,914,345

 
$
2,893,516


The accompanying notes are an integral part of these statements.

13



Idaho Power Company
Condensed Consolidated Statements of Cash Flows
(unaudited)
 
 
Six months ended
June 30,
 
 
2011
 
2010
 
 
(thousands of dollars)
Operating Activities:
 
 
 
 
Net income
 
$
50,548

 
$
57,049

Adjustments to reconcile net income to net cash provided by
 
  

 
 

operating activities:
 
 

 
 

Depreciation and amortization
 
61,101

 
60,709

Deferred income taxes and investment tax credits
 
(19,504
)
 
(17,559
)
Changes in regulatory assets and liabilities
 
52,068

 
78,974

Pension and postretirement benefit plan expense
 
9,897

 
6,032

Contributions to pension and postretirement benefit plans
 
(1,510
)
 
(3,080
)
Losses (earnings) of unconsolidated equity-method investments
 
2,570

 
(2,335
)
Allowance for equity funds used during construction
 
(11,694
)
 
(8,020
)
Other non-cash adjustments to net income
 
778

 
(2,474
)
Change in:
 
 

 
 

Accounts receivables and prepayments
 
(1,282
)
 
6,250

Accounts payable
 
(13,984
)
 
(8,315
)
Taxes accrued/receivable
 
46,144

 
(8,791
)
Other current assets
 
(22,365
)
 
(3,081
)
Other current liabilities
 
12,276

 
18,211

Other assets
 
546

 
(2,512
)
Other liabilities
 
(2,798
)
 
(4,309
)
Net cash provided by operating activities
 
162,791

 
166,749

Investing Activities:
 
 

 
 

Additions to utility plant
 
(186,043
)
 
(166,687
)
Proceeds from the sale of utility assets
 

 
19,230

Proceeds from the sale of emission allowances and RECs
 
3,497

 
3,497

Investments in unconsolidated affiliates
 
(1,100
)
 
(2,020
)
Other
 
1,070

 
2,890

Net cash used in investing activities
 
(182,576
)
 
(143,090
)
Financing Activities:
 
 

 
 

Retirement of long-term debt
 
(121,064
)
 
(1,064
)
Dividends on common stock
 
(29,846
)
 
(28,869
)
Capital contribution from parent
 

 
10,000

Other
 

 
(233
)
Net cash used in financing activities
 
(150,910
)
 
(20,166
)
Net (decrease) increase in cash and cash equivalents
 
(170,695
)
 
3,493

Cash and cash equivalents at beginning of the period
 
224,233

 
21,625

Cash and cash equivalents at end of the period
 
$
53,538

 
$
25,118

Supplemental Disclosure of Cash Flow Information:
 
 

 
 

Cash paid (received) during the period for:
 
 

 
 

Income taxes
 
$
(19,244
)
 
$
15,335

Interest (net of amount capitalized)
 
$
36,599

 
$
32,706

Non-cash investing activities:
 
 
 
 
Additions to property, plant and equipment in accounts payable
 
$
32,681

 
$
21,435

The accompanying notes are an integral part of these statements.

14



Idaho Power Company
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2011
 
2010
 
2011
 
2010
 
 
(thousands of dollars)
Net Income
 
$
20,701

 
$
38,828

 
$
50,548

 
$
57,049

Other Comprehensive Income:
 
 
 
 
 
 
 
 
Net unrealized holding gains (losses) arising during the period,
  net of tax of $4, ($758), $359, and ($492)
 
6

 
(1,181
)
 
560

 
(765
)
Unfunded pension liability adjustment, net of tax
  of $150, $114, $300, and $227
 
234

 
177

 
467

 
354

Total Comprehensive Income
 
$
20,941

 
$
37,824

 
$
51,575

 
$
56,638


The accompanying notes are an integral part of these statements.
 
 


15



IDACORP, INC. AND IDAHO POWER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
This Quarterly Report on Form 10-Q is a combined report of IDACORP, Inc. (IDACORP) and Idaho Power Company (Idaho Power).  Therefore, these Notes to Condensed Consolidated Financial Statements apply to both IDACORP and Idaho Power.  However, Idaho Power makes no representation as to the information relating to IDACORP’s other operations.
 
Nature of Business
 
IDACORP is a holding company formed in 1998 whose principal operating subsidiary is Idaho Power.  Idaho Power is an electric utility with a service territory covering approximately 24,000 square miles in southern Idaho and eastern Oregon.  Idaho Power is regulated by the Federal Energy Regulatory Commission (FERC) and the state regulatory commissions of Idaho and Oregon.  Idaho Power is the parent of Idaho Energy Resources Co. (IERCo), a joint venturer in Bridger Coal Company (BCC), which mines and supplies coal to the Jim Bridger generating plant owned in part by Idaho Power.
 
IDACORP’s other subsidiaries include IDACORP Financial Services, Inc. (IFS), an investor in affordable housing and other real estate investments; Ida-West Energy Company (Ida-West), an operator of small hydroelectric generation projects that satisfy the requirements of the Public Utility Regulatory Policies Act of 1978; and IDACORP Energy (IE), a marketer of energy commodities, which wound down operations in 2003.
 
Principles of Consolidation
 
IDACORP’s and Idaho Power’s consolidated financial statements include the accounts of each company, the subsidiaries that the companies control, and any variable interest entities (VIEs) for which the companies are the primary beneficiaries.  Intercompany balances have been eliminated in consolidation.  Investments in subsidiaries that the companies do not control and investments in VIEs for which the companies are not the primary beneficiaries, but have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method of accounting.
 
The entities that IDACORP and Idaho Power consolidate consist primarily of the wholly-owned subsidiaries discussed above.  In addition, IDACORP consolidates one VIE, Marysville Hydro Partners (Marysville), which is a joint venture owned 50 percent by Ida-West and 50 percent by Environmental Energy Company (EEC).  Marysville has approximately $20 million of assets, primarily a hydroelectric plant, and approximately $16 million of intercompany long-term debt, which is eliminated in consolidation.  EEC has borrowed amounts from Ida-West to fund a portion of its required capital contributions to Marysville.  The loans are payable from EEC’s share of distributions and are secured by the stock of EEC and EEC’s interest in Marysville.  Ida-West is the primary beneficiary because the ownership of the intercompany note and the EEC note result in it controlling the entity.  Creditors of Marysville have no recourse to the general credit of IDACORP and there are no other arrangements that could require IDACORP to provide financial support to Marysville or expose IDACORP to losses.
 
Through IERCo, Idaho Power holds a variable interest in BCC, a VIE for which it is not the primary beneficiary.  IERCo is not the primary beneficiary because the power to direct the activities that most significantly impact the economic performance of BCC is shared with the joint venture partner.  The carrying value of BCC is $89 million at June 30, 2011, and the maximum exposure to loss at BCC is the carrying value, plus any additional future contributions to BCC and the $63 million guarantee for reclamation costs at the mine that is discussed further in Note 8 – “Commitments.”
 
Through IFS, IDACORP also holds variable interests in VIEs for which it is not the primary beneficiary.  These VIEs are affordable housing developments and other real estate investments in which IFS holds limited partnership interests ranging from 5 to 99 percent.  As a limited partner, IFS does not control these entities and they are not consolidated.  These investments were acquired between 1996 and 2010.  IFS’s maximum exposure to loss in these developments is limited to its net carrying value, which was $69 million at June 30, 2011.
 

16



Financial Statements
 
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly their consolidated financial positions as of June 30, 2011, consolidated results of operations for the three and six months ended June 30, 2011 and 2010, and consolidated cash flows for the six months ended June 30, 2011 and 2010.  These adjustments are of a normal and recurring nature.  These financial statements do not contain the complete detail or footnote disclosure concerning accounting policies and other matters that would be included in full-year financial statements and should be read in conjunction with the audited consolidated financial statements included in IDACORP’s and Idaho Power’s Annual Report on Form 10-K for the year ended December 31, 2010.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.
 
Use of Estimates
 
The preparation of condensed consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities, as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results experienced could differ materially from those estimates.
 
Reclassifications
 
Certain prior year amounts have been reclassified to conform to the current year presentation, including amounts related to regulatory assets and liabilities in the condensed consolidated balance sheets.  Net income, cash flows, and shareholders' equity were not affected by these reclassifications.
 
New Accounting Pronouncements
 
The Financial Accounting Standards Board (FASB) has issued the following accounting guidance, which is effective for periods beginning after December 15, 2011:

In May 2011, the FASB issued guidance to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between generally accepted accounting principles in the United States and International Financial Reporting Standards. The guidance changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 fair value measurements. IDACORP and Idaho Power are currently assessing the impact of the guidance but do not believe that the adoption of this guidance will have a material effect on their consolidated financial statements.

In June 2011, the FASB issued guidance on the presentation of comprehensive income in an entity's financial statements. The guidance requires that comprehensive income be presented either in one continuous statement or in two separate but consecutive statements presenting the components of net income and its total, the components of other comprehensive income and its total, and total comprehensive income. The guidance also requires that reclassification adjustments from other comprehensive income to net income be presented in both the components of net income and the components of other comprehensive income. IDACORP and Idaho Power do not expect the adoption of this guidance to have a material effect on their consolidated financial statements.
 
2.  INCOME TAXES:
 
In accordance with interim reporting requirements, IDACORP and Idaho Power use an estimated annual effective tax rate for computing their provisions for income taxes. An estimate of annual income tax expense (or benefit) is made each interim period using estimates for annual pre-tax income, income tax adjustments, and tax credits. The estimated annual effective tax rates do not include discrete events such as tax law changes, examination settlements, or method changes. Discrete events are recorded in the interim period in which they occur.

The estimated annual effective tax rate is applied to year-to-date pre-tax income to determine income tax expense (or benefit) for the interim period consistent with the annual estimate. In subsequent interim periods, income tax expense (or benefit) for the period is computed as the difference between the year-to-date amount reported for the previous interim period and the current period's year-to-date amount.



17



Income Tax Expense

An analysis of income tax expense (benefit) for the three and six months ended June 30 is as follows (in thousands of dollars): 
 
 
IDACORP
 
Idaho Power
 
 
2011
 
2010
 
2011
 
2010
Three months ended June 30,
 
 
 
 
 
 
 
 
Income tax at statutory rates (federal and state)
 
$
6,744

 
$
8,829

 
$
7,150

 
$
9,389

Additional ADITC amortization
 
(2,895
)
 
4,512

 
(2,895
)
 
4,512

Accounting method change
 

 
(25,187
)
 

 
(25,187
)
Examination settlement
 
(3,428
)
 

 
(3,428
)
 

Other
 
(4,073
)
 
(4,783
)
 
(3,241
)
 
(3,530
)
Income tax benefit
 
$
(3,652
)
 
$
(16,629
)
 
$
(2,414
)
 
$
(14,816
)
Effective tax rate
 
(21.2
)%
 
(73.6
)%
 
(13.2
)%
 
(61.7
)%
Six months ended June 30,
 
 
 
 
 
 
 
 
Income tax at statutory rates (federal and state)
 
$
20,284

 
$
15,620

 
$
21,633

 
$
17,415

Additional ADITC amortization
 
(6,750
)
 

 
(6,750
)
 

Accounting method change
 

 
(25,187
)
 

 
(25,187
)
Examination settlement
 
(3,428
)
 

 
(3,428
)
 

Other
 
(8,871
)
 
(5,757
)
 
(6,676
)
 
(4,738
)
Income tax expense (benefit)
 
$
1,235

 
$
(15,324
)
 
$
4,779

 
$
(12,510
)
Effective tax rate
 
2.4
 %
 
(38.4
)%
 
8.6
 %
 
(28.1
)%