BOISE, Idaho, Nov. 1, 2018
/PRNewswire/ -- IDACORP, Inc. (NYSE: IDA) reported third quarter
2018 net income attributable to IDACORP of $102.2 million, or $2.02 per diluted share, compared with
$90.6 million, or $1.80 per diluted share, in the third quarter of
2017. For the first nine months of 2018, IDACORP reported net
income attributable to IDACORP of $200.7
million, or $3.97 per diluted
share, compared with $173.6 million,
or $3.44 per diluted share, in the
first nine months of 2017.
"Improved third quarter performance at Idaho Power Company,
IDACORP's principal subsidiary, was driven by continued growth in
customers, increased irrigation sales due to lower than normal
precipitation, and the impacts of tax reform," said Darrel Anderson, IDACORP's President and Chief
Executive Officer. "New customers continue to move to our service
area, which helped drive 2.2 percent customer growth over the last
twelve months.
"Based on strong results through the third quarter, IDACORP is
increasing its full-year 2018 earnings guidance to the range of
$4.40 to $4.50 per diluted share. With the improved
earnings outlook, Idaho Power is now expected to share $2 million of revenues for 2018 with Idaho customers through the sharing mechanism
according to the Idaho regulatory
stipulation."
Performance Summary
A summary of financial highlights for the periods ended
September 30, 2018 and 2017 is as follows (in thousands,
except per share amounts):
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net income
attributable to IDACORP, Inc.
|
|
$
|
102,231
|
|
|
$
|
90,634
|
|
|
$
|
200,661
|
|
|
$
|
173,567
|
|
Average outstanding
shares – diluted (000's)
|
|
50,565
|
|
|
50,421
|
|
|
50,503
|
|
|
50,408
|
|
IDACORP, Inc.
earnings per diluted share
|
|
$
|
2.02
|
|
|
$
|
1.80
|
|
|
$
|
3.97
|
|
|
$
|
3.44
|
|
The table below provides a reconciliation of net income
attributable to IDACORP for the three and nine months ended
September 30, 2018, from the same periods in 2017 (items are
in millions and are before related income tax impact unless
otherwise noted).
|
|
Three months
ended
|
|
Nine months
ended
|
Net income
attributable to IDACORP, Inc. - September 30, 2017
|
|
|
|
$
|
90.6
|
|
|
|
|
$
|
173.6
|
|
Increase
(decrease) in Idaho Power net income:
|
|
|
|
|
|
|
|
|
Customer growth, net
of associated power supply costs and
power cost adjustment
mechanisms
|
|
2.9
|
|
|
|
7.1
|
|
|
Usage per retail
customer, net of associated power supply costs
and power cost adjustment
mechanisms
|
|
(2.0)
|
|
|
|
(8.9)
|
|
|
Idaho fixed cost
adjustment (FCA) revenues
|
|
5.1
|
|
|
|
16.1
|
|
|
Retail revenues per
megawatt-hour (MWh), net of associated
power supply costs and power cost
adjustment mechanisms
|
|
(10.2)
|
|
|
|
(20.4)
|
|
|
Transmission services
(wheeling) and other revenues
|
|
7.0
|
|
|
|
11.6
|
|
|
Non-cash amortization
of regulatory deferrals (related to tax
reform)
|
|
(2.9)
|
|
|
|
(4.0)
|
|
|
Other operations and
maintenance (O&M) expenses (excluding
non-cash amortization of regulatory
deferrals)
|
|
(5.2)
|
|
|
|
(8.9)
|
|
|
Depreciation
expense
|
|
(1.4)
|
|
|
|
(0.8)
|
|
|
Other changes in
operating revenues and expenses, net
|
|
(0.1)
|
|
|
|
(1.0)
|
|
|
Revenue sharing with
customers
|
|
(1.5)
|
|
|
|
(1.5)
|
|
|
Decrease in Idaho
Power operating income
|
|
(8.3)
|
|
|
|
(10.7)
|
|
|
Earnings of
equity-method investments
|
|
1.4
|
|
|
|
5.3
|
|
|
Non-operating income
and expenses
|
|
—
|
|
|
|
1.2
|
|
|
Tax benefit from
remeasurement of deferred taxes and make-
whole premium for early bond
redemption
|
|
5.7
|
|
|
|
7.0
|
|
|
Income tax expense
(excluding tax benefit from remeasurement
of deferred taxes and early bond
redemption)
|
|
13.1
|
|
|
|
24.7
|
|
|
Total increase
in Idaho Power net income
|
|
|
|
11.9
|
|
|
|
|
27.5
|
|
Other IDACORP
changes (net of tax)
|
|
|
|
(0.3)
|
|
|
|
|
(0.4)
|
|
Net income
attributable to IDACORP, Inc. - September 30, 2018
|
|
|
|
$
|
102.2
|
|
|
|
|
$
|
200.7
|
|
Net Income - Third Quarter 2018
IDACORP's net income increased $11.6
million for the third quarter of 2018 compared with the
third quarter of 2017, primarily due to higher net income at Idaho
Power.
Customer growth increased operating income by $2.9 million in the third quarter of 2018
compared with the third quarter of 2017, as the number of Idaho
Power customers grew by 2.2 percent during the twelve months ended
September 30, 2018. Sales volumes on
a per-customer basis decreased operating income by $2.0 million in the third quarter of 2018
compared with the third quarter of 2017. A decrease in sales
volumes to residential customers was partially offset by an
increase in usage per irrigation customer. Milder temperatures in
the third quarter of 2018 compared with the third quarter of 2017
caused residential customers to use 7 percent less electricity per
customer for cooling and heating, while decreased precipitation led
agricultural irrigation customers to use 6 percent more electricity
per customer to operate irrigation pumps. The decrease in
residential sales volumes was partially offset by the FCA mechanism
(applicable to residential and small commercial customers), which
increased revenues by $5.1 million
during the third quarter of 2018 compared with the third quarter of
2017.
The net decrease in retail revenues per MWh reduced operating
income by $10.2 million in the third
quarter of 2018 compared with the third quarter of 2017. The
settlement stipulations approved by the Idaho Public Utilities
Commission (IPUC) and Public Utility Commission of Oregon (OPUC) during the second quarter of
2018 relating to recent income tax reform reduced revenues by
approximately $7 million in the third
quarter of 2018 compared with the third quarter of 2017. The timing
of the revenue reductions may not align with decreases in income
tax expense in any given period due to the method and timing of
customer rate reductions provided for in the settlement
stipulations, the nature and timing of income tax accruals, and
discrete and other items. Also, a change in customer sales mix
reduced the retail revenues per MWh as volumes sold to residential
customers made up a smaller portion of the customer sales mix.
Residential customers generally pay higher rates than other
customers.
During the third quarter of 2018, Idaho Power benefited from a
$7.0 million increase in transmission
services (wheeling) and other revenue, compared with the third
quarter of 2017. This change was largely due to an increase in
Idaho Power's open access transmission tariff (OATT) rates that
became effective in October 2017 and
an increase in wheeling volumes.
Other O&M expenses included $2.9
million of non-cash amortization expense of regulatory
deferrals that would otherwise be a future liability of
Idaho customers, as provided by
the settlement stipulation approved by the IPUC related to income
tax reform. Excluding the non-cash amortization of regulatory
deferrals, other O&M expenses were $5.2
million higher in the third quarter of 2018 compared with
the third quarter of 2017. In the third quarter of 2018 compared
with the third quarter of 2017, transmission and distribution asset
maintenance expense increased $1.4
million due to higher maintenance service costs and labor
and benefit costs increased $3.8
million primarily related to higher variable
employee-related costs.
Depreciation expense was $1.4
million higher in the third quarter of 2018 compared with
the third quarter of 2017, due to an increase in
plant-in-service.
During the third quarter of 2018, Idaho Power recorded
$1.5 million as a provision against
current revenues to be refunded to customers through a future rate
reduction, based on its estimate of full-year 2018 return on
year-end equity in the Idaho
jurisdiction (Idaho ROE). In 2018, Idaho Power did not record any
provision for sharing with customers prior to the third quarter or
in any periods during 2017. This revenue sharing arrangement, which
requires Idaho Power to share with Idaho customers a portion of Idaho-jurisdiction earnings exceeding a 10.0
percent Idaho ROE, is related to a December
2011 settlement stipulation with the IPUC, which was
extended and modified in October 2014
(October 2014 Idaho Earnings Support
and Sharing Settlement Stipulation).
Due to the recent federal and Idaho income tax rate changes, Idaho Power
remeasured deferred taxes on the adjustment of temporary
differences related to IDACORP's 2017 consolidated income tax
return filings, which decreased Idaho Power income tax expense by
$5.7 million in the third quarter of
2018, compared with the same period in 2017. Excluding the
remeasurement, Idaho Power income tax expense decreased
$13.1 million in the third quarter of
2018 compared with the third quarter of 2017, due primarily to the
lower federal and state statutory income tax rates.
Net Income - Year-to-Date 2018
IDACORP's net income increased $27.1
million for the first nine months of 2018 compared with the
same period in 2017, primarily due to higher net income at Idaho
Power. Customer growth added $7.1
million to Idaho Power operating income, compared with the
first nine months of 2017. Sales volumes on a per-customer basis
decreased operating income by $8.9
million in the first nine months of 2018 compared with the
same period in 2017. A decrease in sales volumes to residential
customers was partially offset by an increase in usage per
irrigation customer. Milder temperatures in the first nine months
of 2018 compared with the same period of 2017 caused residential
customers to use 7 percent less electricity per customer for
cooling and heating, while decreased precipitation led agricultural
irrigation customers to use 9 percent more electricity per customer
to operate irrigation pumps. However, due to the lower usage by
residential customers, the FCA mechanism added $16.1 million to operating income during the
first nine months of 2018, compared with the first nine months of
2017.
The net decrease in retail revenues per MWh reduced operating
income by $20.4 million in the first
nine months of 2018 compared with the same period in 2017. The
settlement stipulations approved by the IPUC and OPUC during the
second quarter of 2018 relating to recent income tax reform reduced
revenues by approximately $14 million
in the first nine months of 2018. The timing of the revenue
reductions may not align with decreases in income tax expense in
any given period due to the method and timing of customer rate
reductions provided for in the settlement stipulations, the nature
and timing of income tax accruals, and discrete and other items.
Also, a change in customer sales mix reduced the retail revenues
per MWh as volumes sold to residential customers made up a smaller
portion of the customer sales mix. Residential customers generally
pay higher rates than other customers.
During the first nine months of 2018, Idaho Power benefited from
an $11.6 million increase in
transmission services (wheeling) and other revenues, compared with
the first nine months of 2017. This change was largely due to an
increase in Idaho Power's OATT rates that became effective in
October 2017 and, to a lesser extent,
an increase in wheeling volumes.
Other O&M expenses included $4.0
million of non-cash amortization expense of regulatory
deferrals that would otherwise be a future liability of
Idaho customers, as provided by
the settlement stipulation approved by the IPUC related to income
tax reform. Excluding the non-cash amortization of regulatory
deferrals, other O&M expenses were $8.9
million higher in the first nine months of 2018 compared
with the first nine months of 2017. In the first nine months of
2018, compared with the same period in 2017, transmission and
distribution asset maintenance expense increased $3.4 million due to higher maintenance service
costs and labor and benefit costs increased $5.6 million primarily related to higher variable
employee-related costs.
As noted above, during the first nine months of 2018, Idaho
Power recorded $1.5 million as a
provision against current revenues to be refunded to customers
through a future rate reduction pursuant to the October 2014 Idaho Earnings Support and Sharing
Settlement Stipulation.
An increase in income from Idaho Power's unconsolidated
investment in Bridger Coal Company (BCC) increased non-operating
income by $5.3 million in the first
nine months of 2018 compared with the first nine months in 2017,
primarily due to an increase in coal sales prices and lower
expenses at BCC. Idaho Power anticipates that projected coal sales
prices and coal delivery volumes to the Jim Bridger plant in the
fourth quarter of 2018 will result in lower revenues, and
therefore, will decrease income from BCC in the fourth quarter of
2018 compared with the fourth quarter of 2017. Idaho Power expects
income from BCC for the full-year 2018 to be comparable with the
income from BCC in 2017.
Idaho Power's $5.7 million
remeasurement of deferred taxes resulting from the federal and
Idaho income tax rate change on
the adjustment of temporary differences related to IDACORP's 2017
consolidated income tax return filings and the $1.3 million flow-through benefit of tax
deductible make-whole premiums that Idaho Power paid in connection
with the early redemption of long-term debt in April 2018, decreased Idaho Power income tax
expense by $7.0 million during the
first nine months of 2018, compared with the first nine months of
2017. Excluding these items, Idaho Power income tax expense was
$24.7 million lower during the first
nine months of 2018 compared with the first nine months of 2017,
due mostly to the lower federal and state statutory income tax
rates resulting from income tax reform.
2018 Annual Earnings Guidance and Key Operating and Financial
Metrics
IDACORP is increasing its earnings guidance estimate for 2018.
The 2018 guidance incorporates all the key operating and financial
assumptions listed in the table that follows (in millions, except
per share amounts):
|
|
Current(1)
|
|
Previous(2)
|
IDACORP
Earnings Guidance (per share)
|
|
$ 4.40 – $
4.50
|
|
$ 4.20 – $
4.30
|
Idaho Power Operating
& Maintenance Expense
|
|
No Change
|
|
$ 345 – $
355
|
Idaho Power
Additional Amortization of Accumulated Deferred
Investment Tax
Credits
|
|
No Change
|
|
None
|
Idaho Power Revenue
Sharing with Customers
|
|
$ 2
|
|
N/A
|
Idaho Power Capital
Expenditures (excluding allowance for funds used
during construction)
|
|
No Change
|
|
$ 280 – $
290
|
Idaho Power
Hydroelectric Generation (MWh)
|
|
8.5 – 9.0
|
|
8.0 – 9.0
|
(1)
As of November 1, 2018.
|
(2)
As of August 2, 2018, the date of filing IDACORP's and Idaho
Power's Quarterly Report on Form 10-Q for the quarter ended June
30,
2018.
|
More detailed financial information is provided in IDACORP's
Quarterly Report on Form 10-Q filed today with the U.S. Securities
and Exchange Commission and posted to the IDACORP Web site at
www.idacorpinc.com.
Web Cast / Conference Call
IDACORP will hold an analyst conference call today at
2:30 p.m. Mountain Time (4:30 p.m. Eastern Time). All parties interested
in listening may do so through a live webcast on the company's
website (www.idacorpinc.com), or by calling (800) 242-0681 for
listen-only mode. There is no passcode required; simply request to
be connected to the "IDACORP, Inc." call. The conference call
logistics are also posted on the company's website and will be
included in the company's earnings news release. Slides will be
included during the conference call. To access the slide deck,
register for the event just prior to the call at
www.idacorpinc.com/investor-relations/earnings-center/conference-calls.
A replay of the conference call will be available on the company's
website for a period of 12 months and will be available shortly
after the call.
Background Information
IDACORP, Inc. (NYSE: IDA), Boise,
Idaho-based and formed in 1998, is a holding company
comprised of Idaho Power, a regulated electric utility; IDACORP
Financial, a holder of affordable housing projects and other real
estate investments; and Ida-West Energy, an operator of small
hydroelectric generation projects that satisfy the requirements of
the Public Utility Regulatory Policies Act of 1978. Idaho Power
began operations in 1916 and employs approximately 2,000 people to
serve a 24,000-square-mile service area in southern Idaho and eastern Oregon. With 17 low-cost hydroelectric
projects as the core of its generation portfolio, Idaho Power's
nearly 555,000 residential, business and agricultural customers pay
some of the nation's lowest prices for electricity. To learn more
about Idaho Power or IDACORP, visit www.idahopower.com or
www.idacorpinc.com.
Forward-Looking Statements
In addition to the historical information contained in this
press release, this press release contains (and oral communications
made by IDACORP, Inc. and Idaho Power Company may contain)
statements, including, without limitation, earnings guidance and
estimated key operating and financial metrics, that relate to
future events and expectations and, as such, constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statements that
express, or involve discussions as to, expectations, beliefs,
plans, objectives, outlook, assumptions, or future events or
performance, often, but not always, through the use of words or
phrases such as "anticipates," "believes," "continues," "could,"
"estimates," "expects," "guidance," "intends," "potential,"
"plans," "predicts," "projects," "targets," or similar expressions,
are not statements of historical facts and may be
forward-looking. Forward-looking statements are not
guarantees of future performance and involve estimates,
assumptions, risks, and uncertainties. Actual results,
performance, or outcomes may differ materially from the results
discussed in the statements. In addition to any assumptions
and other factors and matters referred to specifically in
connection with such forward-looking statements, factors that could
cause actual results or outcomes to differ materially from those
contained in forward-looking statements include the following: (a)
the effect of decisions by the Idaho and Oregon public utilities commissions and the
Federal Energy Regulatory Commission, which impact Idaho Power's
ability to recover costs and earn a return on investments; (b) the
expense and risks associated with capital expenditures for utility
infrastructure, and the timing and availability of cost recovery
for such expenditures through customer rates, including the
potential for the write-down or write-off of assets if not deemed
prudent by regulators; (c) changes in residential, commercial, and
industrial growth and demographic patterns within Idaho Power's
service area, the loss or change in the business of significant or
new customers, or the addition of new customers, and their
associated impacts on loads and load growth, and the availability
of regulatory mechanisms that allow for timely cost recovery
through customer rates in the event of those changes; (d) the
impacts of economic conditions, including inflation, interest
rates, authorized regulatory returns on equity, supply costs,
population growth or decline in Idaho Power's service area, changes
in customer demand for electricity, revenue from sales of excess
power, financial soundness of counterparties and suppliers, and the
collection of receivables; (e) unseasonable or severe weather
conditions, wildfires, drought, and other natural phenomena and
natural disasters, including climate change, which affect customer
demand, hydroelectric generation levels, repair costs, liability
for damage caused by utility property, and the availability and
cost of fuel for generation plants or purchased power to serve
customers; (f) advancement of self-generation and storage, and
energy efficiency technologies that may affect Idaho Power's sale
or delivery of electric power; (g) changes in tax laws or related
regulations or new interpretations of applicable laws by federal,
state, or local taxing jurisdictions, the availability of tax
credits, and the tax rates payable by IDACORP shareholders on
common stock dividends; (h) adoption of, changes in, and costs of
compliance with laws, regulations, and policies relating to the
environment, natural resources, and threatened and endangered
species, and the ability to recover resulting increased costs
through rates; (i) variable hydrological conditions and/or
over-appropriation of surface and groundwater in the Snake River
Basin, which may impact the amount of power generated by Idaho
Power's hydroelectric facilities; (j) the ability to acquire fuel,
power, and transmission capacity under reasonable terms,
particularly in the event of unanticipated power demands, lack of
physical availability, transportation constraints, or a credit
downgrade; (k) accidents, fires (either at or caused by Idaho
Power's facilities or infrastructure), explosions, and mechanical
breakdowns that may occur while operating and maintaining Idaho
Power's assets, which can cause unplanned outages, reduce
generating output, damage the companies' assets, operations, or
reputation, subject the companies to third-party claims for
property damage, personal injury, or loss of life, or result in the
imposition of civil, criminal, and regulatory fines and penalties,
for which the companies may have inadequate insurance coverage; (l)
the increased costs and operational challenges associated with
purchasing and integrating intermittent renewable energy sources
into Idaho Power's resource portfolio; (m) disruptions or outages
of Idaho Power's generation or transmission systems or of any
interconnected transmission system that cause Idaho Power to incur
repair costs and purchase replacement power at increased costs; (n)
the ability to obtain debt and equity financing or refinance
existing debt when necessary and on favorable terms, which can be
affected by factors such as credit ratings, volatility or
disruptions in the financial markets, interest rate fluctuations,
decisions by the Idaho or Oregon public utility commissions, and
the companies' past or projected financial performance; (o)
reductions in credit ratings, which could adversely impact access
to debt and equity markets, increase borrowing costs, and would
require the posting of additional collateral to counterparties
pursuant to credit and contractual arrangements; (p) the ability to
enter into financial and physical commodity hedges with
creditworthy counterparties to manage price and commodity risk, and
the failure of any such risk management and hedging strategies to
work as intended; (q) changes in actuarial assumptions, changes in
interest rates, and the return on plan assets for pension and other
post-retirement plans, which can affect future pension and other
postretirement plan funding obligations, costs, and liabilities;
(r) the ability to continue to pay dividends based on financial
performance and in light of contractual covenants and restrictions
and regulatory limitations; (s) employee workforce factors,
including the operational and financial costs of unionization or
the attempt to unionize all or part of the companies' workforce,
the impact of an aging workforce and retirements, the cost and
ability to attract and retain skilled workers, and the ability to
adjust the labor cost structure when necessary; (t) failure to
comply with state and federal laws, regulations, and orders,
including new interpretations and enforcement initiatives by
regulatory and oversight bodies, which may result in penalties and
fines and increase the cost of compliance, the nature and extent of
investigations and audits, and the cost of remediation; (u) the
inability to obtain or cost of obtaining and complying with
required governmental permits and approvals, licenses,
rights-of-way, and siting for transmission and generation projects
and hydroelectric facilities; (v) the cost and outcome of
litigation, dispute resolution, and regulatory proceedings, and the
ability to recover those costs or the costs of operational changes
through insurance or rates, or from third parties; (w) the failure
of information systems or the failure to secure data, failure to
comply with privacy laws or regulations, security breaches, or the
direct or indirect effect on the companies' business, operations,
or reputation resulting from cyber-attacks or related litigation,
terrorist incidents or the threat of terrorist incidents, and acts
of war; (x) unusual or unanticipated changes in normal business
operations, including unusual maintenance or repairs, or the
failure to successfully implement new technology solutions; and (y)
adoption of or changes in accounting policies and principles,
changes in accounting estimates, and new U.S. Securities and
Exchange Commission or New York Stock Exchange requirements, or new
interpretations of existing requirements. Any forward-looking
statement speaks only as of the date on which such statement is
made. New factors emerge from time to time and it is not
possible for management to predict all such factors, nor can it
assess the impact of any such factor on the business or the extent
to which any factor, or combination of factors, may cause results
to differ materially from those contained in any forward-looking
statement. Readers should also review the risks and
uncertainties listed in IDACORP, Inc.'s and Idaho Power Company's
most recent Annual Report on Form 10-K and other reports the
companies file with the U.S. Securities and Exchange Commission,
including (but not limited to) Part I, Item 1A - "Risk Factors" in
the Form 10-K and Management's Discussion and Analysis of Financial
Condition and Results of Operations and the risks described therein
from time to time. IDACORP and Idaho Power disclaim any
obligation to update publicly any forward-looking information,
whether in response to new information, future events, or
otherwise, except as required by applicable law.
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SOURCE IDACORP, Inc.