| Benefit Plans | BENEFIT PLANS Idaho Power sponsors defined benefit and other postretirement benefit plans that cover the majority of its employees. Idaho Power also sponsors a defined contribution 401(k) employee savings plan and provides certain post-employment benefits. Pension Plans Idaho Power has pension plans–a noncontributory defined benefit pension plan (pension plan) and two nonqualified defined benefit pension plans for certain senior management employees called the Security Plan for Senior Management Employees I and Security Plan for Senior Management Employees II (together, SMSP). Idaho Power also has a nonqualified defined benefit pension plan for directors that was frozen in 2002. Remaining vested benefits from that plan are included with the SMSP in the disclosures below. The benefits under these plans are based on years of service and the employee's final average earnings. The following table summarizes the changes in benefit obligations and plan assets of these plans (in thousands of dollars): Pension Plan SMSP 2021 2020 2021 2020 Change in projected benefit obligation: Benefit obligation at January 1 $ 1,337,395 $ 1,134,752 $ 134,791 $ 122,443 Service cost 54,202 42,987 813 213 Interest cost 37,317 40,013 3,557 4,350 Actuarial (gain) loss (35,833) 163,610 33 13,420 Plan amendment — — — 130 Benefits paid (46,551) (43,967) (6,182) (5,765) Projected benefit obligation at December 31 1,346,530 1,337,395 133,012 134,791 Change in plan assets: Fair value at January 1 871,603 763,119 — — Actual return on plan assets 119,412 112,451 — — Employer contributions 40,000 40,000 — — Benefits paid (46,551) (43,967) — — Fair value at December 31 984,464 871,603 — — Funded status at end of year $ (362,066) $ (465,792) $ (133,012) $ (134,791) Amounts recognized in the balance sheet consist of: Other current liabilities $ — $ — $ (6,226) $ (6,154) Noncurrent liabilities (362,066) (465,792) (126,786) (128,637) Net amount recognized $ (362,066) $ (465,792) $ (133,012) $ (134,791) Amounts recognized in accumulated other comprehensive income consist of: Net loss $ 322,908 $ 437,859 $ 51,365 $ 55,537 Prior service cost 43 49 2,687 2,983 Subtotal 322,951 437,908 54,052 58,520 Less amount recorded as regulatory asset (1) (322,951) (437,908) — — Net amount recognized in accumulated other comprehensive income $ — $ — $ 54,052 $ 58,520 Accumulated benefit obligation $ 1,120,036 $ 1,115,923 $ 121,591 $ 119,517 (1) Changes in the funded status of the pension plan that would be recorded in accumulated other comprehensive income for an unregulated entity are recorded as a regulatory asset for Idaho Power as Idaho Power believes it is probable that an amount equal to the regulatory asset will be collected through the setting of future rates. The actuarial gains reflected in the benefit obligations for the pension and SMSP plans in 2021 are due primarily to increases in the assumed discount rates of both plans from December 31, 2020, to December 31, 2021. The actuarial losses affecting the benefit obligations for the pension and SMSP plans in 2020 are due primarily to decreases in the assumed discount rates from December 31, 2019, to December 31, 2020. For more information on discount rates, see “Plan Assumptions” below in this Note 12. As a non-qualified plan, the SMSP has no plan assets. However, Idaho Power has a Rabbi trust designated to provide funding for SMSP obligations. The Rabbi trust holds investments in marketable securities and corporate-owned life insurance. The recorded value of these investments was approximately $117.1 million and $108.8 million at December 31, 2021 and 2020, respectively, and is reflected in Investments and in company-owned life insurance on the consolidated balance sheets. The following table shows the components of net periodic pension cost for these plans (in thousands of dollars). For purposes of calculating the expected return on plan assets, the market-related value of assets is equal to the fair value of the assets. Pension Plan SMSP 2021 2020 2019 2021 2020 2019 Service cost $ 54,202 $ 42,987 $ 34,061 $ 813 $ 213 $ (181) Interest cost 37,317 40,013 42,312 3,557 4,350 4,575 Expected return on assets (64,090) (56,239) (48,623) — — — Amortization of net loss 23,796 17,325 13,564 4,205 3,734 2,533 Amortization of prior service cost 6 6 6 296 290 96 Net periodic pension cost 51,231 44,092 41,320 8,871 8,587 7,023 Regulatory deferral of net periodic pension cost (1) (48,962) (42,042) (39,379) — — — Previously deferred pension cost recognized (1) 17,154 17,154 17,154 — — — Net periodic pension cost recognized for financial reporting (1)(2) $ 19,423 $ 19,204 $ 19,095 $ 8,871 $ 8,587 $ 7,023 (1) Net periodic pension costs for the pension plan are recognized for financial reporting based upon the authorization of each regulatory jurisdiction in which Idaho Power operates. Under IPUC order, the Idaho portion of net periodic pension cost is recorded as a regulatory asset and is recognized in the income statement as those costs are recovered through rates. (2) Of total net periodic pension cost recognized for financial reporting $17.8 million, $15.9 million, and $15.1 million respectively, was recognized in "Other operations and maintenance" and $10.5 million, and $11.9 million, and $11.0 million respectively, was recognized in "Other (income) expense, net" on the consolidated statements of income of the companies for the twelve months ended December 31, 2021, 2020, and 2019. The following table shows the components of other comprehensive (loss) income for the plans (in thousands of dollars): Pension Plan SMSP 2021 2020 2019 2021 2020 2019 Actuarial gain (loss) during the year $ 91,156 $ (107,399) $ (82,631) $ (33) $ (13,420) $ (17,888) Plan amendment service cost — — — — (130) (2,839) Reclassification adjustments for: Amortization of net loss 23,796 17,325 13,564 4,205 3,734 2,533 Amortization of prior service cost 6 6 6 296 290 96 Adjustment for deferred tax effects (29,590) 23,184 17,776 (1,150) 2,452 4,658 Adjustment due to the effects of regulation (85,368) 66,884 51,285 — — — Other comprehensive income (loss) recognized related to pension benefit plans $ — $ — $ — $ 3,318 $ (7,074) $ (13,440) The following table summarizes the expected future benefit payments of these plans (in thousands of dollars): 2022 2023 2024 2025 2026 2026-2030 Pension Plan $ 45,239 $ 47,038 $ 48,890 $ 50,850 $ 52,855 $ 293,409 SMSP 6,226 6,439 6,619 6,638 6,738 34,700 Idaho Power’s funding policy for the pension plan is to contribute at least the minimum required under the Employee Retirement Income Security Act of 1974 (ERISA) but not more than the maximum amount deductible for income tax purposes. In 2021, 2020, and 2019, Idaho Power elected to contribute more than the minimum required amounts in order to bring the pension plan to a more funded position, to reduce future required contributions, and to reduce Pension Benefit Guaranty Corporation premiums. As of the date of this report, IDACORP and Idaho Power have no estimated minimum required contributions to the pension plan for 2022. Depending on market conditions and cash flow considerations in 2022, Idaho Power could contribute up to $40 million to the pension plan during 2022 in order to help balance the regulatory collection of these expenditures with the amount and timing of contributions and to mitigate the cost of being in an underfunded position. Postretirement Benefits Idaho Power maintains a defined benefit postretirement benefit plan (consisting of health care and death benefits) that covers all employees who were enrolled in the active-employee group plan at the time of retirement as well as their spouses and qualifying dependents. Retirees hired on or after January 1, 1999, have access to the standard medical option at full cost, with no contribution by Idaho Power. Benefits for employees who retire after December 31, 2002, are limited to a fixed amount, which has limited the growth of Idaho Power’s future obligations under this plan. The following table summarizes the changes in benefit obligation and plan assets (in thousands of dollars): 2021 2020 Change in accumulated benefit obligation: Benefit obligation at January 1 $ 80,952 $ 71,029 Service cost 1,063 1,029 Interest cost 2,059 2,493 Actuarial (gain) loss (5,805) 9,359 Benefits paid (1) (4,194) (2,958) Benefit obligation at December 31 74,075 80,952 Change in plan assets: Fair value of plan assets at January 1 41,311 39,625 Actual return on plan assets 6,308 5,248 Employer contributions (1) (1,961) (604) Benefits paid (1) (4,194) (2,958) Fair value of plan assets at December 31 41,464 41,311 Funded status at end of year (included in noncurrent liabilities) $ (32,611) $ (39,641) (1) Contributions and benefits paid are each net of $3.0 million and $3.4 million of plan participant contributions for 2021 and 2020, respectively. Amounts recognized in accumulated other comprehensive income consist of the following (in thousands of dollars): 2021 2020 Net (gain) loss $ (8,020) $ 6,434 Prior service cost 80 127 Subtotal (7,940) 6,561 Less amount recognized in regulatory assets 7,940 (6,561) Net amount recognized in accumulated other comprehensive income $ — $ — The net periodic postretirement benefit cost was as follows (in thousands of dollars): 2021 2020 2019 Service cost $ 1,063 $ 1,029 $ 853 Interest cost 2,059 2,493 2,989 Expected return on plan assets (2,395) (2,404) (2,220) Immediate recognition of loss from temporary deviation (1) 4,736 — — Amortization of prior service cost 47 47 48 Net periodic postretirement benefit cost $ 5,510 $ 1,165 $ 1,670 (1) In 2021, a loss associated with a temporary deviation from the cost-sharing provisions of the substantive plan was recognized in "Other (income) expense, net" on the consolidated statements of income of the companies. The following table shows the components of other comprehensive income for the plan (in thousands of dollars): 2021 2020 2019 Actuarial gain (loss) during the year $ 9,718 $ (6,515) $ (249) Reclassification adjustments for: Immediate recognition of loss from temporary deviation (1) 4,736 — — Reclassification adjustments for amortization of prior service cost 47 47 48 Adjustment for deferred tax effects (2,514) 1,665 52 Adjustment due to the effects of regulation (11,987) 4,803 149 Other comprehensive income related to postretirement benefit plans $ — $ — $ — (1) In 2021, a loss associated with a temporary deviation from the cost-sharing provisions of the substantive plan was recognized in "Other (income) expense, net" on the consolidated statements of income of the companies. The following table summarizes the expected future benefit payments of the postretirement benefit plan (in thousands of dollars): 2022 2023 2024 2025 2026 2026-2029 Expected benefit payments $ 5,447 $ 5,241 $ 4,982 $ 4,790 $ 4,557 $ 19,841 Plan Assumptions The following table sets forth the weighted-average assumptions used at the end of each year to determine benefit obligations for all Idaho Power-sponsored pension and postretirement benefits plans: Pension Plan SMSP Postretirement 2021 2020 2021 2020 2021 2020 Discount rate 3.05 % 2.80 % 3.00 % 2.70 % 2.95 % 2.70 % Rate of compensation increase (1) 4.49 % 4.43 % 4.75 % 4.75 % — — Medical trend rate — — — — 6.3 % 6.8 % Dental trend rate — — — — 3.5 % 4.0 % Measurement date 12/31/2021 12/31/2020 12/31/2021 12/31/2020 12/31/2021 12/31/2020 (1) The 2021 rate of compensation increase assumption for the pension plan includes an inflation component of 2.40% plus a 2.09% composite merit increase component that is based on employees' years of service. Merit salary increases are assumed to be 8.0% for employees in their first year of service and scale down to 0.6% for employees in their fortieth year of service and beyond. The following table sets forth the weighted-average assumptions used to determine net periodic benefit cost for all Idaho Power-sponsored pension and postretirement benefit plans: Pension Plan SMSP Postretirement 2021 2020 2019 2021 2020 2019 2021 2020 2019 Discount rate 2.80 % 3.60 % 4.55 % 2.70 % 3.65 % 4.60 % 2.70 % 3.60 % 4.60 % Expected long-term rate of return on assets 7.40 % 7.40 % 7.50 % — — — 6.00 % 6.50 % 6.75 % Rate of compensation increase 4.49 % 4.43 % 4.37 % 4.75 % 4.75 % 4.75 % — — % — % Medical trend rate — — — — — — 6.3 % 6.8 % 6.7 % Dental trend rate — — — — — — 3.5 % 4.0 % 4.0 % The assumed health care cost trend rate used to measure the expected cost of health benefits covered by the postretirement plan was 6.3 percent in 2021 and is assumed to decrease to 5.7 percent in 2022, 5.1 percent in 2023 and 2024, 5.0 percent in 2025 and to gradually decrease to 3.9 percent by 2074. The assumed dental cost trend rate used to measure the expected cost of dental benefits covered by the plan was 3.5 percent, or equal to the medical trend rate if lower, for all years. Plan Assets Pension Asset Allocation Policy: The target allocation and actual allocations at December 31, 2021, for the pension asset portfolio by asset class is set forth below: Asset Class Target Actual Debt securities 24 % 23 % Equity securities 59 % 61 % Real estate 9 % 8 % Other plan assets 8 % 8 % Total 100 % 100 % Assets are rebalanced as necessary to keep the portfolio close to target allocations. The plan’s principal investment objective is to maximize total return (defined as the sum of realized interest and dividend income and realized and unrealized gain or loss in market price) consistent with prudent parameters of risk and the liability profile of the portfolio. Emphasis is placed on preservation and growth of capital along with adequacy of cash flow sufficient to fund current and future payments to plan participants. The three major goals in Idaho Power’s asset allocation process are to: • determine if the investments have the potential to earn the rate of return assumed in the actuarial liability calculations; • match the cash flow needs of the plan. Idaho Power sets bond allocations sufficient to cover approximately five years of benefit payments. Idaho Power then utilizes growth instruments (equities, real estate, venture capital) to fund the longer-term liabilities of the plan; and • maintain a prudent risk profile consistent with ERISA fiduciary standards. Allowable plan investments include stocks and stock funds, investment-grade bonds and bond funds, real estate funds, private equity funds, and cash and cash equivalents. With the exception of real estate holdings and private equity, investments must be readily marketable so that an entire holding can be disposed of quickly with only a minor effect upon market price. Rate-of-return projections for plan assets are based on historical risk/return relationships among asset classes. The primary measure is the historical risk premium each asset class has delivered versus the yield on the Moody's AA Corporate Bond Index. This historical risk premium is then added to the current yield on the Moody's AA Corporate Bond Index. Additional analysis is performed to measure the expected range of returns, as well as worst-case and best-case scenarios. Based on the current low interest rate environment, current rate-of-return expectations are lower than the nominal returns generated over the past 30 years when interest rates were generally much higher. Idaho Power’s asset modeling process also utilizes historical market returns to measure the portfolio’s exposure to a “worst-case” market scenario, to determine how much performance could vary from the expected “average” performance over various time periods. This “worst-case” modeling, in addition to cash flow matching and diversification by asset class and investment style, provides the basis for managing the risk associated with investing portfolio assets. Fair Value of Plan Assets: Idaho Power classifies its pension plan and postretirement benefit plan investments using the three-level fair value hierarchy described in Note 17 - "Fair Value Measurements." The following table presents the fair value of the plans' investments by asset category (in thousands of dollars). Level 1 Level 2 Level 3 Total Assets at December 31, 2021 Cash and cash equivalents $ 24,636 $ — $ — $ 24,636 Intermediate bonds 39,133 187,048 — 226,181 Equity Securities: Large-Cap 104,318 — — 104,318 Equity Securities: Mid-Cap 113,621 — — 113,621 Equity Securities: Small-Cap 85,244 — — 85,244 Equity Securities: Micro-Cap 42,915 — — 42,915 Equity Securities: Global and International 67,625 — — 67,625 Equity Securities: Emerging Markets 7,393 — — 7,393 Plan assets measured at NAV (not subject to hierarchy disclosure) Commingled Fund: Equity Securities: Global and International 134,752 Commingled Fund: Equity Securities: Emerging Markets 47,332 Real estate 73,958 Private market investments 56,489 Total $ 484,885 $ 187,048 $ — $ 984,464 Postretirement plan assets (1) $ 2,391 $ 39,073 $ — $ 41,464 Level 1 Level 2 Level 3 Total Assets at December 31, 2020 Cash and cash equivalents $ 25,008 $ — $ — $ 25,008 Intermediate bonds 34,455 163,000 — 197,455 Equity Securities: Large-Cap 79,259 — — 79,259 Equity Securities: Mid-Cap 104,089 — — 104,089 Equity Securities: Small-Cap 82,069 — — 82,069 Equity Securities: Micro-Cap 44,715 — — 44,715 Equity Securities: Global and International 69,687 — — 69,687 Equity Securities: Emerging Markets 10,574 — — 10,574 Plan assets measured at NAV (not subject to hierarchy disclosure) Commingled Fund: Equity Securities: Global and International 116,223 Commingled Fund: Equity Securities: Emerging Markets 50,019 Real estate 54,630 Private market investments 37,875 Total $ 449,856 $ 163,000 $ — $ 871,603 Postretirement plan assets (1) $ 1,333 $ 39,978 $ — $ 41,311 (1) The postretirement benefits assets are primarily life insurance contracts. For the years ended December 31, 2021 and 2020, there were no material transfers into or out of Levels 1, 2, or 3. Fair Value Measurement of Level 2 Plan assets and Plan assets measured at NAV: Level 2 Bonds : These investments represent United States government, agency bonds, and corporate bonds. The United States government and agency bonds, as well as the corporate bonds, are not traded on an exchange and are valued utilizing market prices for similar assets or liabilities in active markets. Level 2 Postretirement Asset: This asset represents an investment in a life insurance contract and is recorded at fair value, which is the cash surrender value, less any unpaid expenses. The cash surrender value of this insurance contract is contractually equal to the insurance contract's proportionate share of the market value of an associated investment account held by the insurer. The investments held by the insurer's investment account are all instruments traded on exchanges with readily determinable market prices. Commingled Funds : These funds, made up of global, international and emerging markets equity securities are measured at NAV, are not publicly traded, and therefore no publicly quoted market price is readily available. The values of the commingled funds are presented at estimated fair value, which is determined based on the unit value of the fund. The values of these investments are calculated by the custodian for the fund company on a monthly or more frequent basis, and are based on market prices of the assets held by each of the commingled funds divided by the number of fund shares outstanding for the respective fund. The investments in commingled funds have redemption limitations that permit monthly redemption following notice requirements of 5 to 7 days. Real Estate : Real estate holdings represent investments in open-end and closed-end commingled real estate funds. As the property interests held in these real estate funds are not frequently traded, establishing the market value of the property interests held by the fund, and the resulting unit value of fund shareholders, is based on unobservable inputs including property appraisals by the fund companies, property appraisals by independent appraisal firms, analysis of the replacement cost of the property, discounted cash flows generated by property rents and changes in property values, and comparisons with sale prices of similar properties in similar markets. These real estate funds also furnish annual audited financial statements that are also used to further validate the information provided. Redemptions on the open-end funds are generally available on a quarterly basis, with 10 to 35 days written notice, depending on the individual fund. If the fund has sufficient liquidity, the redemption will be processed at the fund NAV or the fund’s estimate of fair value at the end of the quarter. If the fund does not have sufficient liquidity to honor the full redemption, the remainder will be set for redemption the following quarter on a pro-rata basis with other redemption requests. This same process will repeat until the redemption request has been completed. To protect other fund holders, real estate funds have no duty to liquidate or encumber funds to meet redemption requests. The closed-end funds are formed for a stated life of 7 to 9 years. The fund can be further extended with the approval of the limited partners. There are generally no redemption rights associated with these funds. The limited partner must hold the fund for the life of the fund or find a third-party buyer. Private Market Investments : Private market investments represent two categories: fund of hedge funds and venture capital funds. These funds are valued by the fund companies based on the estimated fair values of the underlying fund holdings divided by the fund shares outstanding or multiplied by the ownership percentages of the holder. Some hedge fund strategies utilize securities with readily available market prices, while others utilize less liquid investment vehicles that are valued based on unobservable inputs including cost, operating results, recent funding activity, or comparisons with similar investment vehicles. Redemptions are available on a quarterly basis with 70 days written notice. Redemptions will be processed at the quarterly NAV or fair value within 60 days following quarter end. In the event of a full redemption, a reserve amount of 5% to 10% of the redemption amount may be held in reserve until the audited financial statements of the fund are published. This allows the fund to adjust the redemption so that other fund holders are not adversely impacted. Venture capital fund investments are valued by the fund companies based on estimated fair value of the underlying fund holdings divided by the fund shares outstanding. Some venture capital investments have progressed to the point that they have readily available exchange-based market valuations. Early stage venture investments are valued based on unobservable inputs including cost, operating results, discounted cash flows, the price of recent funding events, or pending offers from other viable entities. These private market investments furnish annual audited financial statements that are also used to further validate the information provided. These funds are formed for a stated life of 10 to 15 years. The general partner can extend the fund life for 2 or 3 one-year periods. The fund can be further extended with the approval of the limited partners. There are generally no redemption rights associated with these funds. The limited partner must hold the fund for the life of the fund or find a third-party buyer. Employee Savings Plan Idaho Power has a defined contribution plan designed to comply with Section 401(k) of the Internal Revenue Code and that covers substantially all employees. Idaho Power matches specified percentages of employee contributions to the plan. Matching annual contributions were approximately $8.2 million, $7.9 million, and $7.7 million in 2021, 2020, and 2019, respectively. Post-employment Benefits Idaho Power provides certain benefits to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement, in addition to the health care benefits required under the Consolidated Omnibus Budget Reconciliation Act. These benefits include salary continuation, health care and life insurance for those employees found to be disabled under Idaho Power’s disability plans, and health care for surviving spouses and dependents. 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