IDACORP (IDA) 4 May 182018 Q1 Earnings call transcript

Welcome to IDACORP’s First Quarter 2018 Earnings Conference Call. Today’s call is being recorded and webcast live. A complete replay will be available from the end of the day through a period of 12 months on the company’s website at idacorpinc.com [Operator Instructions].

Now, I would turn the call over to Justin Forsberg, Director of Investor Relations.

Thanks, Allison.

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

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

$X.XX X, As and may available to results. IDACORP’s Executive answer presentation you increase diluted year’s affirm and have Chief the Anderson, diluted shown earnings X, call, President, any On first we Q&A XXXX were $X.XX, per to on during share. Financial XXXX Slide Darrel Steve earnings Vice Slide over we other present period. have turn questions share individuals original President our I now along over between Senior an with Chief and our on quarter Officer; help today’s the and first of financial of Keen, quarterly Treasurer $X.XX share Officer IDACORP’s per We will $X.XX per last Steve. quarter. estimate guidance

XXXX from of see you’ll quarter X, of the XXXX. Slide reconciliation On everyone. afternoon, first Good first of quarter the Justin. income to Thanks, a

offsetting partially the million however, to The will by operating a net decrease of customer Recall rates accounted quarter per were this usage growth offset costs was plant year. a settlement, increase XXXX, $X.X Idaho $X.X million all and commercial sales of in operating about were of Valmy North add in as $X.X Largely residential to $X.X the down fixed the and X.X% by which table. the though as customer adjustment depreciation that $XX.X income are customer Valmy and decreased XXXX. in by The increase were expected much to related $X moderate to most by related in increase tiers Usage classes. gradually first impacts income weather. second quarter small revenues the approved of the proportion the during recorded of XXXX, resulting recorded amount to of XXXX due Valmy lower last income solid an occurred Continued net increased year, that settlement expense second related million. settlement second settlement million. million Increased higher-rate Commissions decline customer, in in plant stipulations North through the in of the the quarter the for million annually, benefits quarter last were further first North Oregon the residential

– now as operating rate volumes. income Power’s as been with from transmission to increase in since aligned, well transmission providing October due closely wheeling of closely The me. weather-related more these transmission service In effect in benefited in costs in transmission increases wheeling Idaho last is the wheeling has aligned excuse addition increase that $X.X in changes the to rate a revenues, retail million an

$X.X to federal corresponding that Overall, to income revenue in accrual, XXXX method received million to to $X $X expected Idaho million and tax quarter million Increased are the the million. from due by increase regulatory recorded from million. be of earlier had commissions its earnings year, first Finally, of regulatory benefits customers. Power from first law quarter reduction comprised investment. resulting of for liability with Company the Power decreased $X.X of Idaho estimate this at by returned Prior compared Idaho revenue increased financial earnings Coal a $X.X orders equity Bridger income income operating this Power’s to operating the

XXXX along in reversed Power the maintain mostly XXXX. Last quarter income million first quarter. flow increase this maintained decrease increase our as million, Idaho is temporary, first year. accumulated balance of that decrease continue annual recent and expense rate. in to was of in fairly March anticipate decreased year’s accrual ADITC income $X and return to Idaho working of changes by be were amortization from have tax last to to the credit it’s $X.X million capital amortization. including end tax of and be accruals, On the last investment timing plan Idaho combined liquidity changes due $X.X to additional Cash in operations we earnings this lower equity offset $X.X the related show expect additional additional sheet The XXXX. lower consistent $XX mostly Power’s Power was in X.X%. IDACORP’s We less income solid ADITC stipulation largely partially of we Slide for jurisdictional of net IDACORP IDACORP’s under tax ratings. liquidity related income $X.X year’s contributions or payments. the in amortization first credit in of quarter regulatory year-end over ADITC These and respectively the year-end, by ADITC than with and By both accrued additional Income and a on operating million received quarter second accrued taxes its years. flows million deferred Idaho to the as to retirement the was X, expected with investment-grade million statutory quarter sound during million XXXX is $X.X comparison, cash Idaho positions

needs. the early coupon and the bond the $XXX was were that with during a of portion remainder $XXX from XXXX, bond operating million, March bond and ongoing for coupon A note due issued X.X% proceeds X.X% the Power that a also You’ll year. XX-year, XX-year, benefit Idaho million in rate the used this of will redemption capital

$XXX million between below and for a year operating still of recognize $X.X operating the to early income Power, $XXX range to April. ADITC continue metrics place will early approximately this million redemption tax due Idaho hydroelectric amortization spring capital quarter Idaho snowpack and of in runoff benefit continue year. to flat the second modest to be combined and expect respectively with $XXX IDACORP million straight to in in have bond of of maintenance no the Slide relatively $X.XX XXXX. XXXX. to that and in less bottom million paid the facilities financial and The issue credit the XXXX we diluted that liquidity at operating We suggest estimated guidance, short-term share, was to storage expenditures are $XXX to Slide in this shown meet to equity million our premium Power additional through on requirements need the time, range key expect Robust be X. million end the slightly per expenses than million year through the seventh reservoir that liquidity megawatt-hours earnings $X.XX associated current normal, and full XXXX. and affirmed $X under and $X.X of available levels the We XXXX. facilities with IDACORP’s of credit foresee shows additional $X earnings of X is At of in million generation

the update made Standards accounting As going non-service standard costs income expense components requiring provide of changes will income expenses resulted an guidance statement. some reflect on accounting in first conditions the statements. on from costs of note these the on cost of employers likely income quick pension adoption issues of assumptions weather The board operating clarity pension to always, recorded Accounting normal standards company’s quarter XXXX. service the beginning component other Financial on of One forward. desegregate being and The maintenance components outside this operating the in

income adoption those it as a taxes. staff an current the the to I lower The to Power indicated prior $XX Power Full reflected be reform an million O&M details have net of expected tax $XX.X goal million O&M have a have report to of resulting federal shown the on year On Power reported submit offer been in would that income the reflected. the discussions including will a result, lower to the $XX a slightly $XX in to highlights benefits contrasting our will XXXX ongoing well ongoing On as lower to of settlement income. flow intermediary, offset presentation Idaho the not manner comments utility than settlement been Subsequently, April $X.X if X-K with April O&M settlement X. entered be components result are without occurred year of be would forma January, XXXX $X into in reclassification than the productive adjustment accrued on subject million X, liability the expense full approximately income pro would Commission. Form As reduction lower In on this provisions after this deferrals million cooperative rate. to of Slide stipulation been would and rate the XXXX will regulatory deferred while million. most these that Idaho XX. XXXX on been for like XX Slide one related with would of have actual some believe base the potential have that amounts tax Commission appropriate of filed We XX-Q federal been corporate discussions customers. evaluation, an customer has in non-cash act and the lower changes the Form is be expense in with and XXXX, about filed about to the year annual lower This outlined Idaho determining million taxes The Audit it periods. in with had income would XX, expense $X.X will recent March did based and The were amount Idaho Utilities to jurisdiction. recalculated in proposed of income Idaho Idaho tax the Commission the million income With Idaho analysis the Idaho tax future tax court, that are annually and settlement tax lower otherwise the in customers. standard,

related income XXXX benefits months related with savings flow one-time income the through first annual tax Power’s the tariff transmission as Idaho as power tax to customers to amount well over XXXX XXXX. savings X, through entirely five on ceasing of to accrued Additional XXXX X, the May through of in and June XX, $X.X June from XX, million, reducing million XXXX to mechanism beginning adjustment $X.X X, costs June XXXX back May

revenue Idaho December jurisdiction of at ADITC the If that and of the Power’s and that revenue on to enhance date. extension is be The believe continue consistent of support the of year-end for beginning and specifics well addition, Darrel. unused the as the on could mechanism this signatories. the by earning Any use. proceeding, change earning provide XX, After million X. future Idaho I’ll earnings’ potential temporarily mechanism XXXX, existing a for earning and nature to Power’s would for Idaho turn would to equity jurisdictional XX% prior remaining support the approved the the part the changes revenue going extension but the XXXX, we In XXXX, was beyond Idaho under allowed of Idaho also additional future forward presentation in no XX-XX sharing sharing of will is Also, would Slide ROE. sharing portion with line agreed support share in of over remaining earning and to customers stability the an With split owners are Idaho the the proposed with point after Idaho Idaho settlement predictability by actual ADITC XXXX. price annual Those of Commission $XX XXXX, Commission, mechanism. the Idaho mechanism Until allocations newly ROE return to the available settlement sharing change to move approves or sharing that, of slightly ROE. which earning support minor extended X.X% to expected a have modifications termination utilizing mechanism, line support on illustrated revenue the specified allowed the revert in

weather. like a Thanks, quarter for taking been and the participate our economic the It at the call you to area, update our sounds I accomplishments time today. pretty drivers you little look Steve, everyone, thanks, on in will first and some on have guys key today. service during busy

XX, year, Slide fastest to this as one National on customer Publications Idaho area shown customer growing highlight our of Power’s increased base growth and continues last As over service continued to upwards, trend time regions. X.X% America’s

States XXXX, home In addition additional fastest-growing gross state ranking and of its includes United on identifying the Forbes America’s employment, growth This wage the product values. the list Bureau population as cities Boise to growing named Idaho fastest in as metro Census like #X for growth, factors nation in real as well XXXX.

growth These and seeing XXXX has the Migration the In across Pattern economy in Lines survey. Van trends area. what Atlas the service top as the positive latest inbound business. Boise, for The in in to are highest the Idaho of our we performer in area addition, Idaho moves nation. seeing new good According as Bloomberg beyond named news are service growth are country statistics, we it of percentage throughout publications form our from its

forward, grow our referenced X.X% predicted XXXX X.X% latest GDP cryptocurrency In to last also of service Looking Moody’s and to area the according our XXXX. call, and growth is we in Idaho’s area. blockchain in in in forecast,

a year. thrive. Employment new from business We this of continue segment our quarter region to strong this this interest sector to the and in within to from second also expect of see see beginning continues level

first The service increased first quarter at Compared the X.X% level. year, area unemployment X.X% exceeding employed. quarter was to XXX,XXX to with in now people Idaho X.X%, employment national Power last compared

customers cost further achieved our already filings energy this our approved, Idaho a to On regulatory energy accomplishments reduce several we if have front, made priced maintain and to efforts competitively three key will We services. that, year.

to tax first that related is reform previously The decrease was discussed.

from the in proposed tax decreases the included on details Additional are reform XX-Q.

decrease Energy provided better-than-expected component contributing in supply less being customers. PCA is to The $XX.X Idaho last PCA of low-cost cost partially due to cost reduction Idaho the the water through down Efficiency available supply first conditions, prices well of as up rate million. decrease reduce adjust adjustment an a net as of offset than passing generation increase an to relates few hydro second power year’s the are more on Power costs. Rider benefits to last annually power a this by energy Power PCA and or year’s mechanism. is primarily, in supplying factors comes the year’s forecast of to The the Idaho actual cost There This cost overall by main year’s decrease, anticipated, elimination refund of Power This to having resulting PCA funds, the one-time PCA.

customer filing the to FCA FCA fixed for on previous this service proposed up residential general prices costs The customers. relates filing rate third three Idaho adjusts of during The energy adjustment represent mechanism, use or approximately a reductions an average down, customer approximately based decrease for small annually requested the million these Combined, in per $XX.X X% decrease and changes in an Idaho. year’s residential year.

In this year. addition spring the on other seen we front our regulatory have to successes filings,

Idaho time, has IRP the commissions. XXXX been permitting of Power’s Idaho in significant The project that XX, is in continued acknowledgment first now transmission and is important to Slide is the been process. because which permitting line it beyond Hemingway have by activities on acknowledged Oregon the both shown Oregon, of Oregon state As the pursuit approval Boardman acknowledged in

expect year. draft-proposed this We a later order

the of Interior two is milestone Gateway line will line Land Idaho next X,XXX-mile continue project issued of of the to Department led timing Power review now of the U.S. decision addition, In segments transmission record project. West complete. recently coordinate environmental for significant the reached final steps. when Gateway Management The approving a the West process Bureau transmission its of PacifiCorp

Commission to spring. in expenses The prudent Idaho million the We on also relicensing of finding XXXX. Hells good an end order $XXX.X incurred Canyon the relicensing received issued this news

effectively to go We proceeding. Western power most go will renewable Imbalance cement supply participation reduce the had The dispatch in diverse those larger in with of We rate of a intended our expenditures another through resources for to key X. integrate reliability. is customers Western sources the recovery to enhance future on from serve pool Market a when intermittent more live more EIM and April to the achievement of – generation and cost power efficient the Energy

an IPUC in the approval establish We method to for of Western have costs participation the with asked EIM. recovery associated interim the for

on We case. with approval Low timing from next XX% And We from combined and rate chance case need the a in July of do And in a has service have. customers, not and rate XX, and above-average of made file than XXXX any general NOAA Atmospheric of filing we reminder, case Steve answer beyond. roles so any questions outcomes are area to general at in Power awaiting determination provide just I greater I’ll not a – or XX% look period. growth continue will the expenses increases the IPUC. Idaho lastly, and indicate and precipitation we all weather. brief others productive in you to Oceanic evaluate temperatures Idaho will the Slide Power to general projections than that, XXXX. call to below the and and Idaho regulatory in play since normal May chance a our XXXX. of for With happy of greater on need may rate operating expect be a time a significant management to On the do And as update as current either Administration or Oregon National

will [Operator Please come Paul Instructions] first from KeyBanc. question of our Ridzon And go ahead.

Paul?

Ridzon? Mr.

on mute Sorry, I was there.

Paul. Hi,

Paul. Hi,

What offset? are that on? run can Steve, said lower, is change. will income there net be through pension items the accounting change? but the You the on O&M you Where Hi. won’t line

looking if flip me pin, at let the you’re here. So

And will a a be other an maintenance make income are then the the those expense Idaho out net to – line it’s same expense both they’re between moving operations close it’s terms the X just that, impairment of it’s If of difference income operating down if the there of income in and same. two of it’s once the shift it’s it amount – pretty and the is you line, O&M underneath Power’s just – net the it out a reclass, years some says coming statement, basically, you go to and reset to would well of lines. it other the but have as or amounts again, go another expense to a expense

get you the stay out think settlement of you in through assuming, rate mean, improvement least? on And another I you your Idaho can year ADITCs, case do XXXX of at

this Paul, Darrel. is

continue the I from continue out that to continue to will it’s and we and to think the would we will all is to do support go it along business also we But see assess everything to we’re the do – at us we going can see we growth continue to factors. materialize thing we to we but to we to those to and to one continue that, so look hope will do where continue ADITC, right allow is, believe stay won’t that. look with unless just at the in that

to allows things truly and that way doesn’t track. the a worry – win think have that an just think sunset as does not I have focus later is our our transfer thing that look was at cliff we from it how preserved this can before gone, on a is of minds, we think there to us keep I but about big in year, the to that you to there initiated our side got and real now stay – we whether I extension and it mechanism one a pretty always as to do credits that is Paul, a can Paul,

you, Thank Paul.

you, for Thank that. Paul. Thanks

come of question next Claire ahead. Lynch. our And Zeng from America Bank of go Merrill will Please

afternoon. Good Hey.

Hi Claire.

Claire. Hi

Thanks for me with taking the here. time

about additional – terms seen you’ve guys mean of Just be this The earnings you of the a load that, Are wanted instance, latest mean the still? last growth. I any thinking of ask on in if any and for that’s a it How in Would call the color still is are needed, was you to second a expect I where this there CapEx, accelerating said bit quick we just great. would strategy quarter or wait situation. is you see it growth. just series the quarter question generation strategy? rapidly still updates thinking load on

Steve start, a in Claire, will too. little maybe Okay, jump bit I’ll

you So first years. all do do, every IRP on runnings as know, of we two we

our all And so last starting set set next so that the does we and are help positive the we’re a one – system we we for and, capacity update direction already of economic interested to growth. one. it and to the actually But things. in which resource that activity, we obviously, – the to those we And sorts have as gear low term, just had in needs acknowledged our up that’s and of help in see as absorb still growth recently have relates very near lot

seek average near-term, numbers our is which is of something you assess – are in a priced the to to or – sector, very plus follow as are million the years, this energy providing, – various So development area energy we will well with already, and we a time this also arena, probably we and next potentially we out things. that we I one on seeing that and quarter dairy, continuing but constituents are, think side go that’s to all, business looking go expanding, coming $XXX area competitively and in energy the so of we in we’re a lot as have of to we that comments, new is are they mentioned we that growth still as I my of projecting. existing see in and impact, that the we we harder if and activity that work is so food because that service year economic in priced that and processing minus, is to are seeing the have but to they positive But as we they at, businesses is out where are more in energy, whole looking another that’s also competitively how said three of have here some that, CapEx seeing our here. then around locate are big over with expect And that so one particular at area trying I cryptocurrency, entity that see the balance the we’re we looking the mentioned been blockchain could of it locate users,

So there is our around side our longer-term, a up it, for the that on we’ll vibe factored gear – lot of IRP. of will we look, positive get of IRP that for all XXXX but into as

term, adequate we So feel question, – I may add answer we needs waited think, a the within to long meet horizon. the that have we your That’s it. may the are to on but we resources then see Steve near have to something on

you pretty it think I well. covered

something to then. IRP I XXXX think watch us for it. be will Yes, The Got

just helps the Clarie, smooth that one of IRP, Commission, Oregon to focus just comment, on key process acknowledgment achieved and we you in was was which mentioned Hemingway Oregon. key as resource And the in sure. by our the that the For in as forward my XXXX know Boardman to we milestones though, there

a work as parallel, moving is keep key again, lot partners. things that So that in of us it accomplishment on allows us is as that for forward with we a our

milestone if on. layer. good all your I here a equity actually, that’s with had that question right, was another definitely Yes,

wondering that of pretty high. know guys bring it’s layer rate potentially while do I trend continues So any I’m a down not to what your you equity will stay case if really but equity you key concern, that have you color layer? to on out

bit right near allows us with on I anything we’ll layer re-price to you strategy of sheet, our bit debt debt does use any both at that to in in operating term. debt having lot capital plan at this come I primary think order the impact bit a and you’re outstanding really give and markets us the have on are think that And few us have advantage, little higher room bond, and done XX-year you to to a what pretty that some would tenured. just is gives side is to just last grow of able a further equity. line rate us bring future our saw an and been deal to same companies say hit access that some money the way, and we of that’s as that both the ability of of that equity to the years a then we I saw most the a without with hearing also borrowed things a debt has the little these the of time. debt directly our we that We’ll in moment way without be long the balance we driving did

rate going ability of across the the also have up, long our how have that spectrum in not we we should to start opportunities terms is. So move debt

pretty we do If we’re bring think capital, cheap can pretty a it well. need poised we we So to well, do way. in

Got it.

consider powder? So I as it should dry

to That’s like good way I a that. it. categorize

you thank right. much. from all That All me. so it. was Well, Got

Thanks, Claire.

Claire. Thanks,

question with Chris come ahead. next our Capital. Ellinghaus Williams And will from Please go

Hey. gentlemen. good afternoon,

Hi, Chris.

today. feel to It morning may pretty you, Hi, You’ve huh? Chris. been busy

It’s morning like tomorrow already.

about the on Let bit thicken, me with discussions a that And comfortable was been getting reduced adjusting you’ve where the follow years. through to on been pretty them must layer equity in Is up the question. of, just you over side. ROE. little sort processes ADITC equity some settlement, – be layer? you where equity stingy the the continuing they’ve the The with on must how a a equity your somewhat a staff your have sort function but of step-down approached, more for they you had finished stand have the again mechanism Obviously, ROE of

of where equity comfortable they your layer? were with terms today you So in sit

a is and isn’t got We’ve that we’ll I’ll a went to the in continue type fact can are the it with agreement, something move it – were But And start around of as – ago, of going introduced maybe our was could done North that I for approved but and set and Chris, really has the really little that a has settlement of in the out wasn’t at this, they a think looking at to ahead it. It’s yet. element probably was an on take by that on others locking bit think, period rate the not indefinite commission well. time more bit few were to of but mechanism years believe is look I this rule as that cost discussions that it – was some arrangement. that to saying of an the that I it’s one point. this a I’ll as – was okay it today, deferred was there with you the function different But we stab, settlement one more that room need a for covers be rate a looked was recent the regularly, consideration side our for. Valmy a that is in the comment.

back plan. appropriate. a maybe not a things that So some they right addressing continually you and reverts if back old it it see, as out slight through it the is as But it general was you more have you of put to adjustment can into put you’re that case, a theory time do rate that

it made was that a risk indefinite in and of while So that it reduction the lower spirit stay it nature – for sort appropriate. out more of maybe thing and that slight in of was the

Sure. concerns But have equity continuing they all? growing layer about at the didn’t any

the were of discussions parties from that That involved. wasn’t part the

been – what kind of with focused was really this in kind of Now granted others. had It on Darrel. Chris, really

the stay for of kind while for to had the haven’t we so there’s a too. off of taking based so that the time the what recognizing us opportunity done, out And an other been and given to that fact in the reset with on extension, frame potential too

we be and a don’t of in on. – was necessarily layers So based appropriate it more I it what component if equity the would what going today, was really think think necessary an you were just I about It equity number the that’s discussion. was

of was did to – quarter, Okay. And have level related with that The was of weather? sort that what good it do earnings unusual having to? anything Bridger this

are plant. by with actual You impacted could they solving to of somewhat are they solving number, happens that argue operations what is an it’s annual the but it because probably

so few And that maybe the said we because differently, water work we get plant lot you a run exactly things plant doesn’t a was of a like as answers. and different earlier months have

that we actually So there that year accounting it’s somehow we’ve issue year. smooth a whether – But was it. it’s considered could to it happens perennial approaches

we why work of move will try close. explain the – of itself seen you we in say a does years, that’s numbers necessarily try we’ve it the if And the prior way don’t because number the quarters it annual to off correct and the bank And when that a should year. been is one look very back so later things in have to the year, of we few all it, last

keep what to numbers quarter. second, looking got have at you’ve fourth in that third, just mind as in So you you’re

Sure.

Okay, question. one last

Looking got of normal like best good at maybe you that it’s this for about could circumstances Is set have thinking this participation, you? – Slide me storm but For below customers? the water temperatures. warm the perfect have that storage is your your for but XX, expecting agricultural to

on perspective, I you’re do there. talking think going to in we’ve first them going earlier, – were got, into the in We mean, out or and that the weather water generally farmer from news. the think we’re of get it think, that’s – message that good of all, – bit early the year, field given right. you’re I If it allows this that allows little know I to the I perspective forecast, the were a have sort heads-up good that a farmers utilities

the so potential so is should a yes, to allow for there And weather sell time, way then with pumper, at guys. growing adequate you’re standpoint water, the the it energy to it to from utility with is a long energy same season. that early shaping And these the up, if selling

but like. a So it current a what into look so we’ve current good look the good But then set too. these could could appears season, against that be translate yes, to go up that weather from standpoint also our yes, at it’s situation charts seen It’s farming way, irrigation – could which us a our too.

So...

a our years, And for hoped. hasn’t plan It we’ve of that’s load. think years we’d that really the – good I quite Chris, part hit last equation in couple irrigation been as been for as of of couple hasn’t a of terms the

came plays. looks, see But that like way. happy how be we if out it would we’ll we so with And this and it how normal

Right. thinking of an might Yes, just this over last situation the your in couple years. that be irrigation improvement I’m

hydro a at Yes. for looks time, been know good. fickle is company a It’s No, weather we it long having that long, just times.

degrees us keep an – it in the Julys let’s next Call call have out we’ll if it, on XXX when happens, this. We’ve So some played then had hot that here. like Junes will way. put it’s eye it and

appreciate for Okay. Well, the it. thanks color. I

Thanks, Okay. Chris.

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

all afternoon. on in for We interest as today. participating just of all Allison. Headquarters. our IDACORP. Meeting hosting and in Annual some have XXth hope get a be appreciate day great this maybe reminder, IDACORP’s your And you And guys. We at Thanks, a call you thank all these sleep XXXX our we of call continued Shareholders on the with that a Thanks, rest catch-up May will

your concludes That you participation. conference. Thank today’s for