IDACORP (IDA) 2 Nov 172017 Q3 Earnings call transcript

Welcome to IDACORP's Third Quarter 2017 Conference Call. Today's call is being recorded and webcast live. A complete replay will be available from the end of the day for a period of 12 months on the company's website at idacorpinc.com. [Operator Instructions] Now, I will turn the call over to Justin Forsberg, Director of Investor Relations.

Thanks, Gary.

today, our and release third XX-Q. opened IDACORP’s to and markets both website quarter the we posted issued the Form Before XXXX earnings slides call supplement our The using available website. also on today's be we’ll are to refer call. the number to those We'll by during slides

our today, of which are with made Slide are undue These represent Commission, to on materially forward-looking supplemented uncertainties and placing on subject risks filings against views you which reliance noted statements Securities listed our statements, on review. will that any and some you forward-looking statements. the Slide and We actual we encourage statements differ our by are from X, X information the As on caution results Exchange may today in what presentation forward-looking include which current holds. to cause future to

from the your an today's along X, financial earnings Keen, and have year's As Treasurer On and President, on quarterly we our third Anderson, present on Vice to available Officer; XXXX per IDACORP's Senior call, quarter. results. shown Executive and Steve answer help President diluted period. with questions $X.XX share individuals we of other Officer share Chief third Financial Slide were per question-and-answer Darrel increase Slide $X.XX, X, during last quarter Chief

over than presentation first the the nine first the months higher Steve. share nine now of $X.XX turn For months I $X.XX, of diluted XXXX, per were XXXX. will earnings to

Thanks, Justin.

strong higher warmer than finish Our internal with exceeded XXXX. weather quarter in good and Earnings our third a position for positive results in economic a results. strong have quarter us driving put expectations activity normal last

by area quarter growth our the walk operating most changes. see Higher earnings $X.X to to see benefits increased annual per from quarter customer now earlier Power, Higher and by increase additions and rate At contributing customers higher to the of of service million during income revenue million increase X, a Valmy public you as in this well commissions, XX% you’ll with commercial XXXX Idaho rate In economic to hour, increased million commercial $X.X customer depreciation are in increase earlier year, in as resulting We industrial megawatt down the utilities million. the further a higher stipulations in X% Idaho as or over per tiers benefit the fixed year third income. through third provided of many and residential And Slide usage by months. where normal residential X% per I’ll usage prior the Idaho revenues from use tempered of approved from On per North operating volumes the the X.X% million. from Ongoing income were addition, sales and Temperatures XXXX. the small growth usage we year. approved based reconciliation much FCA in ongoing continue residential expense by in the in settlement an increase benefits XXXX. attribute also customer. adjustment of hour $X.X summer than reflected the quarter customers in Oregon compared when table. for classes the increased and to during $XX.X also respective $XX increase contributed customer to megawatt the mechanism cost the those

quarter, XXXX. fourth the compared after-tax add quarter $X.X expect an includes $X.X estimate million $X.X this million income recorded settlement. We XXXX our be estimated additional during continue in net an to to third with when to million to without the the for net income of settlement of and stipulations increase of This benefit

Idaho. provide to the is through benefited stipulation period, future end of the the settlement smaller in which in Valmy earnings stipulations expect XXXX We gradually years

was wheeling maintenance thermal increases customers. plant million transmission primarily this O&M to transmission change of going largely income with with operating rate higher to cost Overall, these wheeling The rate, $X.X revenues PacifiCorp at from approved of wheeling service further cannot changes the equity rate rate is third timing while on flat in during of these compared Regulatory the transmission volumes in to to generation to and $XX.X was addition, and asset when the a have Power's providing Power's Federal align FERK compared increase due in to at for Bridger Commission forward. magnitude which Energy XXXX the quarter with Power if on earnings. volumes is we plant, these XXXX. the transmission lower benefited Idaho lower revenues, Idaho effective wheeling in million a million. the of any $X.X of largely timing quarter Idaho the October. $X income coal the by the general will related the and of will relates investments increases into In million expenses fourth maintenance Coal yet tariff and We changes year-to-date both XXXX. the at by Operating Company This in impact XXXX. Earnings better to unconsolidated wheeling collected operating entered method became swap to in of transmission serve estimate or the wheeling increase decreased October business The quarter attributable

higher, from XXXX. Coal XXXX to higher full-year expect earnings. taxes Company million $X.X Bridger pretax Income We to slightly be earnings primarily the related were full-year below

including tax when did last $X nine additional Power's quarter. months. the to ADITC in Idaho strong net million XXXX, quarter. ADITC balance quarter. Power grade along and operating cash Idaho year's quarter amortization to ratings. the affordable amortized million, our mostly which this record combine in regulatory from positions in million investments, in respectively flow income changes Idaho for On from accounts, credit assets X, recorded IDACORP’s liquidity to for and any Cash by $X.X and increase of to expect and first show flows additional increased tax good Idaho and at IDACORP over both Slide with shows Power investment due million, income we continue third XXXX liquidity shown addition, during of This additional changes available Also requirements. record credit Power accumulated liabilities, timing did and X. XXXX. we to the first not of million sheets, Overall, working third the in from end the quarter receipts meet and during $XX.X of operations nine liquidity benefits tax does months bottom record have the year's ADITC and IDACORP’s In $X.X third currently deferred place facilities of the distributions $XXX investment and IDACORP operating liquidity financial to capital XXXX. the IDACORP on of the maintain or metrics credit million and updated short-term housing and facilities amortization not $X.X Slide Idaho $XXX million full-year not the fully compares under The operating credit payment. any for third Slide X respectively third the recorded year-to-date. Power and these million $X.X amortization of XXXX or is

tenth Earnings a We diluted to earnings of within IDACORP’s growth. consecutive range per $X.XX result year are guidance in IDACORP’s increasing this of share. to range would earnings $X.XX

no approved and continued tighten the a generation and rate a ADITC’s. efforts additional guidance XX% our additions. to the turn We For will strong year-end of remain base growing within Current debt capital, megawatt need and million customers cost I’ll to indicate to our equity. assumptions on amortization hours. over for These estimates between to range return range positive and presentation did and Idaho to X.X jurisdictional remains the operating now impacts and benefits earnings both O&M hydroelectric both expected estimates expect results our focus of continue the Preservation X in the same reflect of ADITC we financial effectively the of of revenues. Darrel. key and we to shareholders X.X% authorized be and band manage balance date

and growth I sharing start and area. us call. like joining from economic today's our thanks on afternoon everyone, Steve, Thanks updates and to for by some good

many activity strong to area. that customer choosing on to at X Power Slide the relocate are grow see Idaho stories Idaho. business people companies You growth economic highlight reasons their will Frequent continue or to remained service and

Jayco, Also, the recently, locations. service recreational footprint used plans Falls United uses. announced According vehicles expand operation plans States. Twin their rechargeable of in Western environmentally in is to announced other to manufacturer and primary batteries area. is a only the in the manufacturing other develop motorized State permitted example, several eCobalt mine towable a and Cobalt Idaho production refinery project among For cobalt mining of the to after considering the in our release, company's cobalt

and existing desiring a load seen Looking request both large expand. from potential customers increase continued forward in new have to we customers

with load forecasted a energy in over have year taking set new and to begin large the We fourth service new are projects, of large quarter to next that more taking begin number beyond. service projects the

was income As personal the past live at and area last a show Steve reaching America's in X.X% rate Unemployment in the recent to among of respectively. partly domestic increased article. and our top Compared Gross named months. July percentage increase in in which also on be economic the having states quarter, at improved factors of growth projects health services demand year, X This increase performing the Idaho commodities X.X%. and growth on solid in economic Power's Moody's and the score. transformed variety third growth. XXXX. rate XX state above Number while to was to X.X%, compiled in in manufacturing the the national XXXX from almost project to has July with since in living continues nation fastest to time and came the to over a turn X.X%, increased X.X%, In growth analysis, first XXXX, X,XXX X,XXX megawatts, of previously, translates compared to this Idaho service economy as in at XXXX. Idaho's megawatts CNBC's agriculture, cost X.X% third recording sales, was year's area list X record the level. increasingly an the X which in last points quarter XX overall according the service customer in to X.X% Idaho cheapest Idaho our Bloomberg economic GDP data calculate peak In XXXX nation, record Idaho X approximately August, Idaho noted the contributed from to a over employment is previous analytics grew an companies Number and residential the reflecting set dynamic X.X% at new

categories service our energy certainly we factor see sources X that and Idaho One a the to low moving of lowest in second from fastest business economy for the state Idaho of are Department other state of website. that job list expansion fifth one cost ranking interest the driving tech the cost in variety the on direction. several a on is Idaho indicators growth, the bills. for business Number of ranked as in had monthly all energy These friendliness, factors area. significant sector average right number was and resident’s those our in as growth. business continues Including Commerce's mentioned be rates reported

represents are quarterly share This Now board to approved per when $X.XX $X.XX rate. approved the dividend shareholders of X, growth per XX% In a dividend September, XXXX, to our increased continuing the combined to increase earnings with turning by of form in $X.XX of since benefit increases share. IDACORP’s increase in from Board dividends. the increase a from Slide Directors

We the earnings. XX% the board and target payout until of the to future expect annual near increases between to ratio IDACORP more end upper X% of of XX% recommend get or of sustainable to continue we

Now some updates Slide large for and regulatory XX. on project

to efficiency the our regarding these the deferred XXXX. labor As Idaho Utilities Power this prudently Commission amount to since that annual increases prudence energy expected month, previously part energy or the and The We benefit labor were the previously XXXX to energy efficiency related collection. for increases of cost-effective IPUC approved rider programs. order expensed earnings in rider Idaho efficiency-related of to funded diligent believe an incurred XXXX Idaho jurisdiction. Idaho million increases. efforts further year application Last had through be process continue Public each determining in labor encourages IPUC had $X.X as the decisions XXXX to pre-tax This outcome eligible Idaho its offer of Power is

by benefit result amount expect a this As $X.X XXXX to guidance order, the in we that referred full-year of earnings Steve income to is This million. earlier. operating included

the this transmission perspective our the or milestone This this BXH year. federal key project the process our line allow to our of end an Oregon expect be the from State consistent a BXH which underway important to from customers of needs project, Bureau obtaining us We to Management for of with we The to to continue integrated by approval the would of in-service regulatory Land the beyond. issue well meet date and of plan. or in for expect decision resource result be XXXX record decision proposed is Boardman-to-Hemingway for will

efforts, expenditures to XXXX Canyon date prudence through settlement productive. to proceedings ongoing, to of Moving Hells the and our re-licensing have our are been related

rate to the We are with of in A a the regarding effort water quality to Oregon in customers also do in of or the portion near continue to close general effective rate with and general we and to our look reach will at a realizing continuing term. need in evaluation I either important in not be sensible Idaho states expenses this of Oregon. of the expect work Idaho the filing At continued the a components of solution. time, projections. certification operating growth case file Idaho whether management Oregon timing and cases

Slide Power and service is normal greater a XX, than November XX% projected and generally of precipitation XX% on that Idaho outlook weather outlined above above for area, suggest to normal between the throughout temperatures. there January chance a XX% chance As

are answer new and pack. to begin our That currently that, be others should water reservoir Steve XXXX. good favorable across I region call With bode heavy a precipitation a and another combined than year forecast with to on your will we thanks water normal, As for last in storage happy the levels well year, year's questions. snow higher

Thank go from with question comes first Capital. you. ahead. [Operator KeyBanc Instructions] The Paul Ridzon Please

Good afternoon guys.

Hi Paul.

Hi Paul.

the right? the rest think of Steve, million, the you you in quarter, get year Valmy, the was second that said for recognized timing, of the for X.X balance trying to outlook the said X.X million I and my

we the full it. changed that about haven't gave year we number the originally quarters, three amount Yes. The of since is we And sum yes. talked

FCA, just kind higher tiers? of point the break to when down decoupling the The in mechanism you when you're get

back the What we sell that portion really certainly less. it returns mentioned customers more it from but we we sell hire it takes us, we cost works the some it tiering. the get of that when pay gives to volume of The fact of does is, helps that’s replaces and that and customers. higher how standpoint mechanism when a pure That’s by the people do that, drives some not It impacted and to tiers, benefits why FCA. is

it as argue see winters the there standpoint positive an have it we still So, you to stream. in tell we having is it would didn’t thought, benefits can there a gives had from necessarily couple but where and that I but you usage earnings mitigates a helps of exactly some, summer, higher predictable it we clearly more as like well certainly we

that assume ROE we can going sharing And in be you're the bands? to customers

- between deadband right is what are between we in It have on sit the are in we XX. said where the - now. that s is we that we is is What we X.X today the

Darrel. it Paul, is

guidance that where that deadband sharing the up within levels. between us earning is Steve almost Given to that puts provided, in the

we not range that providing right yet there So, the are given we’re now.

and the there move higher a the point moved is did now. sharing - is moves credit but right show actually of little between beyond need to when We two earnings we those is are beyond why us that ability we giving bit the this a in kind into Paul, band,

that to XX.X? band And X.X is

XX. To

yes. XX, to X.X

on commentary how Darrel, term? you but do I And near your case rate about activity, appreciate think

question a good That’s Paul.

right think is, what as and about of process you then give timing first is, regulatory I file to things. we the you I now, tell of our what to months would notice sorts stay have So, time about the get you it’s those all here for I think seven advance and

will in XXXX. I signal have do we’re something have then and for a we are this so how but of long the obviously to there to think a think we looking XXXX, early right XXXX you So filing to to of going through would standpoint not we from about now anything do time if lead is, balance year assess

I economic to we and So, just is to is, and this done hope would reason but lot in, year, and go to focus we tell for if be to stay that meant have going strong continue the those we - are the in us to us, but go we drivers expenses as what on we see not that, activity can given file. allowing economic and to like seeing are to manage of would activity is as hope tuned I we would continued have have the couple to not key a you

noted, credits. management we not of have and the our allowed out went file. year you the benefits As Well going also into continued use to the - we additional us with to started expenses we and to effect that’s that rate of because base thinking we were saw the economy,

we do our for file to whole can not prices goal raise not would customers. everything have So, we and to to is

that’s this it have. is are and as, like are So manage to we our I so to going of to specificity don't we we say any continue yes, focus want where but sense to date, on file going with

the on the growth tailwind And a dry that to keep out is is front? more certainly X.X% regulatory there customer cost some of then nice arena, you powder

attempted what it’s to good we do. having the targeted not reduction but challenging are you’ve and I do more then meetings say us that have this recalled are say we’ve increases holding heard a we Paul or say in rightsizing massive by and year, major we - past, job level, become a more in in has fairly done know would You each we that it would I

the or with things problems to impact that going customers cutting are We cause system. are not

taken to is era of trying be that We’re had the creative. baby and us people boom we We’ve retirements hit advantage leaving.

opportunity have we’re but could, savings for to not we in where We a every capture looked cut mode. massive

In maintaining the if and anything we’re to improving customers. fact, system service

is but has that before, line each to where believe of how it’s admit you, we I So, have started we in limits down, far new us there be have but kind year to to found tell to that I led continue have were I some with a challenging. have that. focus

of I would the it labor side Steve add one because just equation. thing the on mentioned,

obviously whether to they disclose ways work time things, of work. be four on lot time many, better the five been the we us continue in One to are headcount has pressures trying flat things despite so for do last to of fairly some those or our coming the new in headcount our areas do, and to that compliance from many just that of of to security, a and years, at find we're things which more create out regulations, to all try

so you, timing, on at is as were now business doing we see our keeping track And leadership that, really we but time Part same the where of that have we last even right are open from down and headcount putting focused positions, of a year. and what today, is real at that’s the not but risk.

you much. thank very Okay,

Paul. Thanks

Thanks Paul.

from next Please Ashar Khan Visium. with go question ahead. The comes

you are guys how Hi, doing?

Hi Ashar.

Hi Ashar.

questions, I’m find can trying build this some to is guidance this, the one is would which to see or wanted base year the you we as new it off of guidance, to from new build this two guidance model we portion as [ph], X.XX to this or is good look be we I’m of can and we see trying is, in item there no? midpoint or is one-time at to nature enough out any base, the out one-time I attribute next new

X.X% had a equity. item we the mechanism it’s, in in in settlement the would we one computation year year's is even in, year-end of equity one-time extent the people you that with the because becomes the any called that I would closes that used there equity year-end triangulation out actually the but was most we of Ashar is items, this into way part related did have a future are this have to typical year significant say following to look had I not that place, we in some next that’s it place say brings DSM years. really the year's equity, support wages number year-end it to to management of and try to element a is item you charges, the that that wages it catch-up to level a sort to - of get Well year over demand have side on charges, it an back a that on and estimate And

same XX really, trying and that into really the next would going to into you're it again drops So try that - falls X.X the to equity items be of considered rather one-time, that’s that timeline and to it’s amount see all and a year, but you kind way. easier so than triangulate guess guess the to the it’s can

you grows Understood, to as reason higher what estimate the that started quarter, estimate that it your of the beginning year? the the The for see extra, the or in the I’m is trying right out check-in, year, but what X.X, now that the versus in just off higher this is is because growth to driving higher year of wanted year, third right.

clearly the here, don't the did forecast that And have you and that item, year. an that’s an so one let’s add in weather early be talk there we a weather is about wouldn't had Well impact.

the of that dollars middle in the of rate have some rate terms In to settlements, base there. we did weren't add year

year also things that comes - the So higher now us this in where confident giving in a number. feel at to number picture. gotten a we It’s of into have the point that

we’ll thermal updates another had Part on other lift we left do that reason to contributing you, our those operations of is to areas on know the pressure too. that’s mean - of give upward things, bit you comments O&M earlier other that’s is in the are of managing in that I question did I Paul's we we add, fleet, one expenses. Ashar, this I are job there estimates O&M the and benefit, the doing have that is, what responded have is his Darrel. managing Steve a the just mention for we seen as would number, will thing - thing because and also this also reduced side of does a our which good provide O&M February of pressures a at but but in them we and year, because are there are we

So, helped continue we’re doing decent job but a and that. we that, do will to with that’s

And ahead. go then…

winter Now, I just it wanted the that snow to places say I some a so forget of when little color of but with - other and kind good snow the we had O&M the side with putting all things on we the it the is, that a thinking in was the back pressure you in later, that quarters was dealing mean early accumulated news many that things actually this directions. the much in pressure puts challenge year. was O&M on few

going needed of necessarily we and that take you see. midst that to wait are in the don't, down it project to you So, back and

Now point. as we ways move out looks at this things balance to through the we found good that year,

Darrel liquidity a I providers question is bit any the helpful, little split view trying the over more on management's be to with to trade one with next would you stock, which understand issue kind thoughts here that, on that going to please? was Okay. and don't stock, think face of, liquidity, And we the I’m then nicely but always my it’s hope stock

obviously back have that Ashar. and others we when our that we aware We from from and cons at way time-to-time internal that. we of at and the are look we actually pros that the Yes, seek and look of doing conversations,

is you not at today, does elected we to that are to. a obviously it’s so trading any have And it. same value we liquidity, somewhat of frequently but, at, these and cause us, and same the but the we cost get days, we that evaluate that, at time enhance there for just weigh feedback we of obviously doing you And kind I would would It are continuing the take to proposition given are to tell the time, question have but so we that. a trying where

and important that’s your us investor's this. to is understand always pros to for As helpful the because of it, it cons perspective to on

know, you and do there depends. a before the splits split same you stock after mean I the the lot, go you obviously way As have and the value don't split from

So, quite there - about we frequently. talk is do it

would also on say just I that liquidity your study opinions competing liquidity the seen side, actually I drops. have Ashar there are one And says

I think real that just there’s more liquidity significant. anything to are doesn't attribute they get pointing hard to it that but could changes, say - even error, almost very mild some be it’s very really benefit, not, to it’s to you be modelling almost it appear

from that the perspective cons Darrel? but No, is your what identify that crossed, is you are correct,

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basis So, it utility help makes on harder the should for versus guy very the and relative very, retail buy are I the it know of a on because cap which rest high market the with don't our sector [indiscernible]. liquidity guy average we the versus to stock,

perspective. from So, that away we skewed are way

thought, my - just great seeing and general results forward to but look don't anyways I this you. So, is know

Thank Ashar.

from The comes Ellinghaus next go question Chris with ahead. Please Williams Capital.

how you? are Hi guys,

Hi Chris.

Hi Chris.

have for an split estimate you question, Ashar’s cost? on got what up follow I Can would a

be inclined saw this point. don’t finally wouldn’t we I at but do, We share to it

seen actually would we other have that’s understand comment be. important the always split and the the thing And to yet we just look feedback we’re institutional other on today, We open this time. and other which heavily thing between Chris the so current this follow haven't again you ownership is, we component to retail it, approximate to other just - side and to so institutional it’s do a our on story, do Ashar’s the know are at compelling at cost determined as the the side but

Yes.

add fact, thing. In one I other would

we you strategy dividend a and we’ve time discussion this had don't our did - why shareholder know it with the when of spend to lot difference particularly them have some our do they Chris, borders on as it. saying As from know we largest our approached hearing would way that, in we we

we need listening I we’re So, a to do place if is feedback there hear pay it’s will attention. think we

and recognition I’m that Darrel, will this add no be year. shocked there astonished I can Okay, ADITC

appreciate comment your We Chris.

I didn’t the conditions, earnings, terms this in somewhat unique for call sort do you particular them given, for quarter new it in would to of the you have follow-up want of do third baseline an have of estimate I been third sort quarter impact or this estimate the what did expectations? that might versus weather the have quarter normal, your like consider any where earnings did versus what looked of the spectrum fall into normal, being you

there You done. the Chris, to and that get know it - it something did just approximations, Chris don't that we’ve quarter. ways it’s exactly help isolate typically the we not is we are a is don’t - weather but typically place

to and Steve we about of Part third is right I thing take third there you not cooling know, where the were mitigated to is, small quarter is from in it’s say really Q, a fair year, significantly it’s tie easiest at obviously we a up when you that is to and we the is FCA. how do, as look if but we yes it, last like it from to thing weather said, look you quarter, impact the part at degree Yes, our but significantly talk that days you were say up quantify do. the residential the had, with that in but tough by of that in again a business would to attempting weather, specifically normal,

So, same level we of that don't forget lift.

that? and our the think I'm with on I a we baseline. at comfortable is to the we estimate what to not to is interrupt those capture estimates, We on like, we I and us on outside. that Could piece thing attempted difficult the are not is, do. some maybe do that’s continue really think that focused but other the weather of on share What is, the but our tour look to growth thing side that I to best what does really what internal in for things look and schedule, help doing would quantify of are happening

Right.

FCA, I where irrigation Given about quarter, of, the did like have that? in in was terms fell anything sort any the thinking thought more qualitative of you

growing in was slightly we and is know, you you we actually slightly delayed in down. third year, was, when much sell of throughout actually quarter just not but last of have quarter, third as irrigation the take going the it start more did the down, because year's part weather on things of couple know Well then you the that of season obviously here the - in over a slightly

kilowatts And the so warmer didn’t side. despite more the even normal sell than weather, irrigation we in

Okay.

where ask reservoirs of about you plans upon and already the, NOAH the ways outlook hit going this, You it’s be thinking for XXXX, going with sort think that given think influence NOAH’s precipitation. replication of fair to do next year? planting was of I should, do you about crop and you are a to the reservoir sort secondly, sort of for forecast along to in the is as XXXX levels forecast some NOAH

too say of lot pretty from but a last directly, that Chris, a is early little I in that would on I really it to I year was comment year our snowpack - regions. would think a anomalous don't say, perspective

commodity we, think it I as and not are think year, today, the year, sense the to a so repeat is, I part to as be, stands carryover be it it reservoir sure states much we believe, as have will last will again cases. drives it some to what of What are have forecast I good what water as too. is ag communities, I so, are weather going a in prices on commodity prices but going And we they doing that think the

like, pretty on a barring decent but be forecast will year drop we’re what we what off it believe based look know water of some NOAH’s do might in we precipitation think and today optimistic. temperatures I So,

Okay. week. Thanks, will see you next

Chris. Thanks

Thanks Chris.

conference [Operator will Instructions] for I today. question-and-answer concludes turn Mr. to back the Anderson, you. That session the

the of have lot seeing know look taking really, many for you and you Again, been and participate appreciate hope rest next participating. of today, to We you with of all EEI for Gary, week. but guys a we busy you time thanks really good at day. We Financial Thanks forward today. absolutely a you the thanks to Conference us have your

you Well that Thank your for conference. today's participation. concludes

now You may disconnect.