UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999March 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Exact name of registrants as
specified
Commission in their charters, state of I.R.S.
Employer
Commission ofFile incorporation, address of Identification
FileEmployer
Number principal executive offices, Identification
and Number telephone number Number
1-14465 IDACORP, Inc. 82-0505802
1-3198 Idaho Power Company 82-0130980
1221 W. Idaho Street
Boise, ID 83702-5627
Telephone: (208) 388-2200
State of Incorporation: Idaho
Web site: www.idacorpinc.com
None
Former name, former address and former fiscal year, if
changed since last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of shares of Common Stock outstanding as of June 30, 1999:March
31, 2000:
IDACORP, Inc.: 37,612,351
Idaho Power Company: 37,612,351 shares, all of which are held by
IDACORP,Inc.
INDEX
Page
Definitions 2
Part I. Financial Information:
Item 1. Financial Statements
IDACORP, Inc:Inc.:
Consolidated Statements of Income 3-43
Consolidated Balance Sheets 5-64-5
Consolidated Statements of Capitalization 76
Consolidated Statements of Cash Flows 7
Consolidated Statements of Comprehensive 8
Income
Notes to Consolidated Financial Statements 9-13
Independent Accountants' Report 14
Idaho Power Company:
Consolidated Statements of Income 15-1615
Consolidated Balance Sheets 17-1816-
17
Consolidated Statements of Capitalization 1918
Consolidated Statements of Cash Flows 19
Consolidated Statements of Comprehensive 20
Income
Notes to Consolidated Financial Statements 21-22
Independent Accountants' Report 23
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 24-3124-28
Part II. Other Information:
Item 4. Submission of Matters to a Vote of Security
Holders 32-33
Item 6. Exhibits and Reports on Form 8-K 34-3729-32
Signatures 38-3933-34
DEFINITIONS
FASB - Financial Accounting Standards Board
FERC - Federal EnergyRegulatoryEnergy Regulatory Commission
IPUC - Idaho Public Utilities Commission
KWhkWh - kilowatt-hour
MAF - Million Acre-Feet
MMbtu - Million British Thermal Units
MWh - Megawatt-hour
OPUC - Oregon PublicUtilitiesPublic Utility Commission
PCA - Power Cost Adjustment
PUCN - Public UtilityCommissionUtility Commission of Nevada
REA - Rural Electrification Administration
SFAS - Statement ofFinancialof Financial Accounting
Standards
FORWARD LOOKING INFORMATION
This Form 10-Q contains "forward-looking statements" intended to
qualify for safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995. Forward-
lookingForward-looking
statements should be read with the cautionary statements and
important factors included in this Form 10-Q at Part I, Item 2.
Management's Discussion and Analysis of Financial Condition and
Results Ofof Operations-Forward-Looking Information. Forward-
looking statements are all statements other than statements of
historical fact, including without limitation those that are
identified by the use of the words "anticipates," "estimates,"
"expects," "intends," "plans," "predicts," and similar
expressions and include, but are not limited to, statements
under the heading "Other Matters" concerning the outcome of
IDACORP, Inc.'s and Idaho Power Company's Year 2000 efforts.expressions.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
IDACORP, Inc.
Consolidated Statements of Income
Three Months Ended
June 30,March 31,
2000 1999 1998
(Thousands of Dollars except
for per share amounts)
REVENUES:
General business $ 129,530123,213 $ 120,997
Off-system129,692
Off system sales 29,520 38,48735,925 37,510
Other revenues 6,022 7,6487,195 6,947
Total revenues 165,072 167,132166,333 174,149
EXPENSES:
Operation:
Purchased power 22,527 25,24212,890 17,888
Fuel expense 18,854 14,30324,659 22,020
Power cost adjustment 6,192 13,8143,258 9,007
Other 41,196 38,60635,236 32,767
Maintenance 11,499 11,5259,010 7,883
Depreciation 19,404 19,04419,887 19,171
Taxes other than income taxes 5,676 5,5015,427 5,584
Total expenses 125,348 128,035110,367 114,320
INCOME FROM OPERATIONS 39,724 39,09755,966 59,829
OTHER INCOME:
Allowance for equity funds
used during construction 230 24456 157
Gain on sale of asset 14,000 -
Energy tradingmarketing activities -
Net 7,096 3,1988,523 748
Other - Net 1,893 3,5033,430 2,235
Total other income 9,219 6,72526,409 3,140
INTEREST EXPENSE AND OTHER:
Interest on long-term debt 13,758 13,06013,162 13,395
Other interest 2,200 2,0602,697 2,229
Allowance for borrowed funds
used during construction (134) (279)(487) (224)
Preferred dividends of Idaho
Power Company 1,352 1,4171,428 1,368
Total interest expense and
other 17,176 16,25816,800 16,768
INCOME BEFORE INCOME TAXES 31,767 29,56465,575 46,201
INCOME TAXES 10,525 9,21323,496 16,700
NET INCOME $ 21,242 $ 20,35142,079 29,501
AVERAGE COMMON SHARES
OUTSTANDING (000) 37,612 37,612
EARNINGS PER SHARE OF
COMMON STOCK (basic and
diluted) $ 0.561.12 $ 0.54
The accompanying notes are an integral part of these statements.
IDACORP, Inc.
Consolidated Statements of Income
Six Months Ended June 30,
1999 1998
(Thousands of Dollars
except for per share
amounts)
REVENUES:
General business $ 259,222 $ 233,220
Off-system sales 67,031 87,643
Other revenues 12,969 17,182
Total revenues 339,222 338,045
EXPENSES:
Operation:
Purchased power 40,415 52,977
Fuel expense 40,875 35,023
Power cost adjustment 15,198 14,289
Other 73,964 71,553
Maintenance 19,382 20,553
Depreciation 38,575 37,940
Taxes other than income taxes 11,259 10,844
Total expenses 239,668 243,179
INCOME FROM OPERATIONS 99,554 94,866
OTHER INCOME:
Allowance for equity funds used
during construction 387 24
Energy trading activities - Net 7,843 2,870
Other - Net 4,126 5,605
Total other income 12,356 8,499
INTEREST EXPENSE AND OTHER:
Interest on long-term debt 27,153 26,097
Other interest 4,429 4,146
Allowance for borrowed funds
used during construction (358) (440)
Preferred dividends of Idaho
Power Company 2,720 2,822
Total interest expense and
other 33,944 32,625
INCOME BEFORE INCOME TAXES 77,966 70,740
INCOME TAXES 27,224 22,338
NET INCOME $ 50,742 $ 48,402
AVERAGE COMMON SHARES OUTSTANDING
(000) 37,612 37,612
EARNINGS PER SHARE OF
COMMON STOCK (basic and diluted)$ 1.35 $ 1.290.78
The accompanying notes are an integral part of these
statements.
IDACORP, Inc.
Consolidated Balance Sheets
Assets
June 30,March 31, December 31,
2000 1999 1998
(Thousands of Dollars)
ELECTRIC PLANT:
In service (at original cost) $ 2,690,424 $ 2,659,441$2,738,386 $2,726,026
Accumulated provision for
depreciation (1,042,176) (1,009,387)(1,091,961) (1,073,722)
In service - Net 1,648,248 1,650,0541,646,425 1,652,304
Construction work in progress 75,915 59,717100,642 91,637
Held for future use 1,742 1,7381,742
Electric plant - Net 1,725,905 1,711,5091,748,809 1,745,683
INVESTMENTS AND OTHER PROPERTY 139,280 129,437154,074 146,019
CURRENT ASSETS:
Cash and cash equivalents 14,671 22,86739,693 111,338
Receivables:
Customer 81,123 81,245103,700 98,923
Allowance for uncollectible
accounts (1,397) (1,397)
Natural gas 33,120 21,426
Notes 4,679 4,6436,941 4,353
Employee notes 4,487 4,5104,298 4,105
Other 7,633 6,0596,525 7,764
Energy tradingmarketing assets 82,988 -105,800 37,398
Accrued unbilled revenues 33,586 34,61026,206 31,994
Materials and supplies (at
average cost) 31,995 30,15731,519 29,611
Fuel stock (at average cost) 9,725 7,0968,693 9,329
Prepayments 14,511 16,04217,715 16,097
Regulatory assets associated
with income taxes 2,965 2,9654,723 893
Total current assets 320,086 230,223354,416 350,408
DEFERRED DEBITS:
American Falls and Milner water
rights 31,585 31,83031,585
Company-owned life insurance 43,672 35,14939,046 40,480
Regulatory assets associated 208,341 214,782
with income taxes 201,850 201,465
Regulatory assets - other 40,495 62,01347,996 52,759
Other 50,625 49,99455,905 55,277
Total deferred debits 368,227 380,451382,873 394,883
TOTAL $ 2,553,498 $ 2,451,620$2,640,172 $2,636,993
The accompanying notes are an integral part of these
statements.
IDACORP, Inc.
Consolidated Balance Sheets
Capitalization and Liabilities
June 30,March 31, December 31,
2000 1999 1998
(Thousands of Dollars)
CAPITALIZATION:
Common stock equity:
Common stock without par
value (shares authorized
120,000,000; shares
outstanding - 37,612,351) $ 451,076451,121 $ 451,564451,343
Retained earnings 294,418 278,607324,716 300,093
Accumulated other
comprehensive income 226 2261,671 1,534
Total common stock equity 745,720 730,397777,508 752,970
Preferred stock of Idaho Power
Company 105,919 105,968105,667 105,811
Long-term debt 738,547 815,937824,142 821,558
Total capitalization 1,590,186 1,652,3021,707,317 1,680,339
CURRENT LIABILITIES:
Long-term debt due within one
year 86,193 6,0298,125 89,101
Notes payable 48,150 38,52411,929 19,757
Accounts payable 69,439 73,499
Accounts payable - natural gas 21,075 28,476127,214 145,737
Energy tradingmarketing liabilities 83,017 -98,245 33,814
Taxes accrued 27,374 24,78545,784 21,313
Interest accrued 18,445 18,36518,339 19,126
Deferred income taxes 2,965 2,9654,723 893
Other 14,973 12,27516,021 16,696
Total current liabilities 371,631 204,918330,380 346,437
DEFERRED CREDITS:
Regulatory liabilities associated
with deferred investment
tax credits 68,424 69,39667,087 67,433
Deferred income taxes 421,271 422,196423,677 430,468
Regulatory liabilities
associated with income taxes 28,075 28,07534,785 33,817
Regulatory liabilities - other 2,122 4,1613,365 3,363
Other 71,789 70,57273,561 75,136
Total deferred credits 591,681 594,400602,475 610,217
COMMITMENTS AND CONTINGENT
LIABILITIES
TOTAL $ 2,553,498 $ 2,451,620$2,640,172 $2,636,993
The accompanying notes are an integral part of these
statements.
IDACORP, Inc.
Consolidated Statements of Capitalization
June 30,March 31, December 31,
2000 % 1999 %
1998 %
(Thousands(ThousandS of Dollars)
COMMON STOCK EQUITY:
Common stock $ 451,076451,121 $ 451,564451,343
Retained earnings 294,418 278,607324,716 300,093
Accumulated other comprehensive
income 226 2261,671 1,534
Total common stock equity 745,720 47 730,397 44777,508 46 752,970 45
PREFERRED STOCK OF IDAHO POWER
COMPANY:
4% preferred stock 15,919 15,96815,667 15,811
7.68% Series, serial preferred
stock 15,000 15,000
7.07% Series, serial preferred
stock 25,000 25,000
Auction rate preferred stock 50,000 50,000
Total preferred stock 105,919 7 105,968 7105,667 6 105,811 6
LONG-TERM DEBT OF IDAHO POWER
COMPANY:DEBT:
First mortgage bonds:
8.65% Series8.65 %Series due 2000 - 80,000
80,000
6.93% Series6.93 %Series due 2001 30,000 30,000
6.85% Series6.85 %Series due 2002 27,000 27,000
6.40% Series6.40 %Series due 2003 80,000 80,000
8 % Series%Series due 2004 50,000 50,000
5.83% Series5.83 %Series due 2005 60,000 60,000
7.2 %Series due 2009 80,000 80,000
Maturing 2021 through 2031
with rates ranging
from 7.5% to 9.52% 230,000 230,000
Total first mortgage bonds 557,000 557,000637,000
Amount due within one year - (80,000) -
Net first mortgage bonds 477,000557,000 557,000
Pollution control revenue
bonds:
7 1/4%Series due 2008 4,360 4,360
8.30 % Series%Series 1984 due 2014 49,800 49,800
6.05 % Series%Series 1996A due 2026 68,100 68,100
Variable Rate Series 1996B
due 2026 24,200 24,200
Variable Rate Series 1996C
due 2026 24,000 24,000
Total pollution control
revenue bonds 170,460 170,460
REA notes 1,452 1,4891,396 1,415
Amount due within one year (75) (74)(77) (76)
Net REA notes 1,377 1,4151,319 1,339
American Falls bond guarantee 19,885 20,13019,885
Milner Dam note guarantee 11,700 11,700
Unamortized premium/discount -
Net (1,420) (1,441)
Debt related to investments in
affordable housing with
rates ranging from 6.03% -
8.77% due 2000 to 8.59%
due 1999 to 2009 65,095 62,1032010 72,782 71,183
Amount due within one year (6,118) (5,955)(8,048) (9,025)
Net affordable housing debt 58,977 56,148
Unamortized premium/discount -
Net (1,490) (1,539)
Net Idaho Power Company64,734 62,158
Other subsidiary debt 737,909 815,314
OTHER SUBSIDIARY DEBT 638 623464 457
Total long-term debt 738,547 46 815,937824,142 48 821,558 49
TOTAL CAPITALIZATION $ 1,590,186$1,707,317 100 $ 1,652,302$1,680,339 100
The accompanying notes are an integral part of these
statements.
IDACORP, Inc.
Consolidated Statements of Cash Flows
SixThree Months Ended
June 30,March 31,
2000 1999 1998
(Thousands of Dollars)
OPERATING ACTIVITIES:
Net income $ 50,74242,079 $ 48,40229,501
Adjustments to reconcile net
income to net cash provided
by operating activities:
Unrealized gains from (3,971) (3,199)
energy marketing
activities
Gain on sale of asset (14,000) -
Depreciation and amortization 47,717 43,56224,144 23,383
Deferred taxes and investment
tax credits (2,282) (2,453)182 (489)
Accrued PCA costs 15,122 14,0813,112 12,185
Change in:
Accounts receivable and
prepayments (11,628) 9,808(7,937) (26,640)
Accrued unbilled revenue 1,024 1,0015,788 7,874
Materials and supplies and
fuel stock (4,467) (1,057)(1,272) (3,029)
Accounts payable (11,461) (27,383)(18,523) (6,715)
Taxes accrued 2,589 3,23224,471 19,718
Other current assets and
liabilities 2,778 (289)(1,462) 939
Other - net (4,689) (672)(5,681) (6,408)
Net cash provided by operating
activities 85,445 88,23246,930 47,120
INVESTING ACTIVITIES:
Additions to utility plant (51,517) (43,659)(24,826) (21,637)
Investments in affordable
housing projects (10,591) (10,125)(6,817) (2,906)
Proceeds from sale of asset 17,500 -
Investments in company-ownedCompany - owned
life insurance (6,749) -183 (7,332)
Other - net (1,915) (3,961)(551) 5,317
Net cash used in investing
activities (70,772) (57,745)(14,511) (26,558)
FINANCING ACTIVITIES:
Issuance of long-termProceeds from issuance of:
Long-term debt related to 4,335 -
affordable housing projects
Retirement of:
Long-term debt related to
affordable housing projects 7,271 4,896
Retirement of long-term debt related
to affordable housing projects (4,279)(2,736) -
First mortgage bonds (80,000) -
Dividends on common stock (34,931) (34,979)
Increase (Decrease)(17,456) (17,468)
Decrease in short-term
borrowings 9,626 (4,989)(7,828) (11,812)
Other - net (556) 110(379) (1,279)
Net cash used in financing
activities (22,869) (34,962)(104,064) (30,559)
Net decrease in cash and cash
equivalents (8,196) (4,475)(71,645) (9,997)
Cash and cash equivalents at
beginning of period 111,338 22,867 6,905
Cash and cash equivalents at end
of period $ 14,67139,693 $ 2,43012,870
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period
for:
Income taxes $ 24,7842,424 $ 27,132514
Interest (net of amount
capitalized) $ 30,09516,075 $ 25,07814,844
The accompanying notes are an integral part of these
statements
IDACORP, Inc.
Consolidated Statements of Comprehensive Income
Three Months Ended
March 31,
2000 1999
(Thousands of Dollars)
NET INCOME $ 42,079 $ 29,501
OTHER COMPREHENSIVE INCOME:
Unrealized gains on securities
(net of tax of $90) 138 -
TOTAL COMPREHENSIVE INCOME $ 42,217 $ 29,501
The accompanying notes are an integral part of these statements
IDACORP, Inc.
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Business
IDACORP, Inc. (IDACORP or the Company), is a holding company
formed in 1998,whose principal operating subsidiary is the parent of Idaho Power Company
(IPC),
Ida-West Energy Company, IDACORP Energy Solutions Co.,
IDACORP Energy Services Co. and IDACORP Technologies, Inc.
On October 1, 1998 IPC's outstanding common stock was
converted on a share-for-share basis into common stock of the
Company. However, IPC's preferred stock and debt securities
outstanding were unaffected and remain with IPC.
IPC, a public utility, represents over 90% of the total
assets of the Company and is its principal operating
subsidiary.. IPC is regulated by the FERC and the state regulatory
commissions of Idaho, Oregon, Nevada and Wyoming and is engaged
in the generation, transmission, distribution, sale and purchase
of electric energy.
Financial Statements
In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary to present fairly its consolidated financial
position as of June 30, 1999,March 31, 2000, and its consolidated results
of operations for the three months ended March 31, 2000 and
1999 and cash flows for the three and six months ended June 30, 1999March 31,
2000 and 1998.1999. These financial statements do not contain
the complete detail or footnote disclosure concerning
accounting policies and other matters that would be included
in full year financial statements and therefore they should
be read in conjunction with the Company's audited
consolidated financial statements included in the Company's
Annual Report on Form 10-K for the year ended December 31,
1998.1999. The results of operations for the interim periods are
not necessarily indicative of the results to be expected for
the full year.
Principles of Consolidation
The consolidated financial statements include the accounts
of the Company and its wholly-owned or controlled
subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation. Investments
in business entities in which the Company and its
subsidiaries do not have control, but have the ability to
exercise significant influence over operating and financial
policies, are accounted for using the equity method.
Accounting for Contracts Involved in Energy Trading and Risk
Management Activities
The Company adopted Emerging Issues Task Force 98-10
"Accounting for Contracts Involved in Energy Trading
Activities," (EITF 98-10) effective January 1, 1999. The
consensus establishes standards for designating between
energy contracts and energy trading contracts and accounting
for each. Energy trading contracts are reported at fair
value as of the balance sheet date with the resulting gains
and losses reported in the income statement. The resulting
impact on net income of adoption was immaterial. Related to
the adoption of EITF 98-10, the Company has begun reporting
electricity trading activity net (netting revenues and
expenses) in "Other Income-Energy trading activities-net" on
the Consolidated Statements of Income. Prior periods have
been reclassified to conform with the current period's
presentation with no impact to net income.
Derivative Financial Instruments
The Company uses financial instruments such as commodity
futures, forwards, futures, options and swaps to hedge againstmanage exposure to
commodity price risk in the electricity and natural gas
marketsmarkets. The objective of the Company's risk management
program is to mitigate the risk associated with the purchase
and sale of electricity and natural gas as well as to
optimize its energy tradingmarketing portfolio. The accounting for
derivative financial instruments that are used to manage
risk is in accordance with the concepts established in SFAS
No. 80, "Accounting for Futures Contracts," American
Institute of Certified Public Accountants Statement of
Position 86-2, "Accounting for Options," and recently issuedEmerging Issues
Task Force (EITF) 98-10, "Accounting for Contracts Involved
in Energy Trading Activities." EITF 98-10.
Gains and losses from derivative instruments designed98-10 was adopted
effective January 1, 1999 resulting in an adjustment to hedge energynet
income that was not material.
Energy trading contracts as defined by EITF 98-10 are
recognized in incomereported at fair value on a current basis alongthe balance sheet with the
resulting gains and losses ofreported on the hedged transaction. Additionally, gains
and losses on derivative transactions not qualifying as a
hedge are recognized currently in income.income statement.
Cash flows from derivativesenergy trading contracts are recognized in
the statement of cash flows as an operating activity.
Comprehensive Income
For the six-month periods ended June 30, 1999 and 1998, the
Company's comprehensive income was not materially different
from net income. The components of comprehensive income
include net income, the Company's proportionate share of
unrealized holding gains on marketable securities held by an
equity investee, and the changes in additional minimum
liability under a deferred compensation plan for certain
senior management employees and directors.
Reclassifications
Certain items previously reported for periods prior to June 30,
1999March
31, 2000 have been reclassified to conform with the current
period's presentation. Net income was not affected by these
reclassifications.
2. INCOME TAXES:TAXES
The Company's effective tax rate for the first sixthree months
increaseddecreased from 31.636.2 percent in 19981999 to 34.935.8 percent in 1999.2000.
Reconciliations between the statutory income tax rate and
the effective rates for the six-month periods ended June 30, 1999
and 1998 are as follows:follows (in thousands of
dollars):
Three Months Ended March 31,
2000 1999 1998
Amount Rate Amount Rate
Computed income taxes based on
statutory federal income
tax rate $ 27,28822,951 35.0% $ 24,759 35.0%16,170 35.0 %
Changes in taxes resulting from:
CurrentInvestment tax credits (771) (1.2) (739) (1.6)
Repair allowance (700) (1.1) (525) (1.1)
Pension expense (479) (0.7) 21 0.1
State income taxes 2,993 4.6 2,438 5.3
Depreciation 1,693 2.6 1,360 2.9
Affordable housing tax credits (2,539) (3.9) (2,272) (4.9)
Preferred dividends of IPC 500 0.8 479 1.0
Other (152) (0.3) (232) (0.5)
Total provision for federal and
state income taxes 4,230 5.4 3,058 4.3
Net depreciation 2,662 3.4 2,677 3.8
Investment tax credits restored (1,481) (1.9) (1,462) (2.1)
Removal costs (375) (0.5) (877) (1.2)
Repair allowance (1,137) (1.5) (1,564) (2.2)
Affordable housing credits (4,222) (5.4) (3,177) (4.5)
Preferred dividends 952 1.2 988 1.4
Settlement of prior year tax returns - - (1,000) (1.4)
Other (693) (0.8) (1,064) (1.5)
Total $ 27,224 34.9%23,496 35.8% $ 22,338 31.6%16,700 36.2 %
3. PREFERRED STOCK OF IDAHO POWER COMPANY:
The number of shares of IPC preferred stock outstanding were
as follows:
June 30,March 31, December 31,
2000 1999 1998
Cumulative, $100 par value:
4% preferred stock (authorized 215,000
shares) 159,190 159,680156,674 158,112
Serial preferred stock, 7.68% Series
(authorized 150,000 shares) 150,000 150,000
Serial preferred stock, cumulative, without
Parpar value; total of 3,000,000 shares
authorized:
7.07% Series, $100 stated value,(authorized
(authorized 250,000 shares) 250,000 250,000
Auction rate preferred stock, $100,000
stated Value,value, (authorized 500 shares) 500 500
4. FINANCING:
The Company currently has a $300.0 million shelf
registration statement that can be used for the issuance of
unsecured debt securities and preferred or common stock. At
June 30, 1999,March 31, 2000, none had been issued.
On March 23, 2000, IPC currently hasfiled a $200.0 million shelf
registration statement with a balance of $83.0 million remaining to be
issued. Thisthat can be used for first mortgage
bonds (including medium term notes), unsecured debt, or
preferred stock.
On January 1, 2000, IPC redeemed at maturity, $80.0 million
8.65% First Mortgage Bonds using funds from issuance of
$80.0 million Secured Medium Term Notes, Series B, 7.20%
issued on November 23, 1999.
On April 26, 2000, IPC issued $19.9 million of variable rate
bonds due February 1, 2025. Proceeds from this issuance
were used to retire $19.9 million of the American Falls bond
guarantee debt.
5. COMMITMENTS AND CONTINGENT LIABILITIES:
Commitments under contracts and purchase orders relating to
the Company's program for construction and operation of
facilities amounted to approximately $6.6$8.8 million at June 30,
1999.March
31, 2000. The commitments are generally revocable by the
Company subject to reimbursement of manufacturers'
expenditures incurred and/or other termination charges.
The Company is party to various legal claims, actions, and
complaints, certain of which involve material amounts.
Although the Company is unable to predict with certainty
whether or not it will ultimately be successful in these
legal proceedings, or, if not, what the impact might be,
based upon the advice of legal counsel, management presently
believes that disposition of these matters will not have a
material adverse effect on the Company's financial position,
results of operation, or cash flows.
6. REGULATORY ISSUES:
PCAPower Cost Adjustment (PCA)
IPC has a PCA mechanism that provides for annual adjustments
to the rates charged to Idaho retail customers. These
adjustments, which take effect annually on May 16, are based
on forecasts of net power supply costs and the true-up of
the prior year's forecast. The difference between the
actual costs incurred and the forecasted costs is deferred,
with interest, and trued-up in the next annual rate
adjustment.
IPC has filed its request to implement its May 16, 2000 rate
adjustment, which, if approved, will increase Idaho general
business customer rates by 9.5 percent. The increase
results from projected below-average hydroelectric
generating conditions. Overall, IPC's annual general
business revenues are expected to increase by $38.0 million
during the 2000-2001 PCA rate period.
For the 1999-2000 PCA rate period, actual power supply costs
have been less than forecast, due to better than forecastactual hydroelectric
generating conditions.conditions being more favorable than forecast.
To account for these lower-than-expected costs, IPC has
recorded a reduction to regulatory assetsasset with a credit balance of $7.1$5.0
million as of June 30,
1999.
The May 16, 1999 rate adjustment reduced Idaho general
business customer rates by 9.2 percent. The decrease results
from projected above-average hydroelectric generating
conditions and the true-up of the 1998-99 rate period.
Overall, IPC's annual general business revenues are expected
to decrease by $40.4 million.March 31, 2000.
Regulatory Settlement
Under the terms of an IPUC Settlement in effect through 1999,
when earnings in IPC's Idaho jurisdiction exceed an 11.75
percent return on year-end common equity, 50 percent of the
excess is set aside for the benefit of Idaho retail
customers.
On April 7, 1999March 28, 2000 IPC submitted the 19981999 annual earnings
sharing compliance filing to the IPUC. This filing
indicated that there was almost $6.4$9.7 million in 1999
earnings before
authorized deductions, or $3.3and $2.7 million after authorized
deductions,in unused 1998 balances available
for the benefit of IPC's Idaho customers.
On June 16,December 30, 1999, IPC filed a supplementwith the IPUC to the April 7, 1999
annual earnings sharing compliance filing requesting that the
$3.3set aside
$5.4 million of remaining 1997 and 19981999 revenue sharing be
refundeddollars to its customers. On July 19, 1999continue
participation in Northwest Energy Efficiency Alliance (NEEA)
for the years 2000 - 2004. The IPUC issuedapproved the continued
participation by Order No. 2809928333, and ordered IPC to set
aside the funds in Case IPC-E-99-2, refunding $0.7 million to
special contract and large customers. The remaining balance
of $2.6 million has been deferred with interesta reserve until May
2000.payments are required.
DSM (Conservation) Expenses
IPC has obtained changes to the regulatory treatment of
previously deferred DSM expenses in both Idaho and Oregon.
In Idaho, IPC requested that the IPUC allow for the recovery
of post-1993 DSM expenses and acceleration of the recovery
of DSM expenditures authorized in the last general rate
case. In its Order No. 27660 issued on July 31, 1998, the
IPUC set a new amortization period of 12 years instead of
the 24-year period previously adopted. The IPUC order
reflects an increase in annual Idaho retail revenue
requirements of $3.1 million for 12 years.
Per Order No. 27660 issued July 31, 1998, IPC funded the 1998
annual revenue requirement with 1997 revenue sharing amounts
from July 1998 until May 16, 1999.million. A group of industrial
customers has appealed the IPUC order to the Idaho Supreme
Court. In December 1998, IPC filed withThe Idaho Supreme Court issued its opinion on April
17, 2000 affirming the IPUC order. If the Court does not
receive a request to
recover remaining deferred DSM expenditurespetition for reconsideration within 21 days of approximately
$2.1 million. The IPUC conducted a hearing on this matter in
March 1999. In the
filing IPC requested thatissuance of the amountopinion, the opinion will be applied against 1998 earnings sharing amounts. On May 11,
1999 IPC received Order No. 28041 allowing for $1.5 million
recovery of existing and future DSM expenditures to be funded
out of 1998 revenue sharing funds.final.
In Oregon, the OPUC authorized a five-year amortization of
the Oregon-allocated share of DSM expenditures incurred
through 1997. The DSM charge replaces an expiring rate
surcharge related to extraordinary power supply costs
associated with past drought conditions. IPC anticipates
that the charge will recovercommenced in 1998 and recovers
approximately $540,000 per year.
7. NEW ACCOUNTING PRONOUNCEMENT:
In June 1998 the FASB issued SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards for
derivative financial instruments and other similar
instruments and for hedging activities. It was originally
effective for fiscal years beginning after June 15, 1999.
In June 1999 the FASB issued SFAS No. 137 "Accounting for
Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Standard No. 133", which defers
the effective date of SFAS No. 133 one year. The Company is
reviewing SFAS No. 133 to determine its effects on the
Company's financial position and results of operations. The
Company expects to adopt this standard by January 1, 2001.
8. DERIVATIVE FINANCIAL INSTRUMENTS:
The following table shows a summary of the notional amountamounts
of open commodity derivative positionsthe Company's forward exposure as of June 30, 1999 was a net long electricityMarch 31, 2000. The
maximum term related to any forward position is five
years.
Gas Electricity
MMBTU's MWh's
Payable 74,176 7,834
Receivable 77,190 9,094
Swaps 80,678 -
The following table displays the fair values of 305
MWthe
Company's energy marketing assets and a net long natural gas position of 98 BCF.
The loss in fair value of commodity derivative positions
(including natural gasliabilities at March
31, 2000, and electricity forwards, futures,
options and swaps) included in income before income taxesthe average values for the six monthsquarter ended June 30, 1999 was $(2.2) million.March
31, 2000 (in thousands of dollars):
Balance at 1st Quarter
March 31, 2000 Average Balance
Assets Liabilities Assets Liabilities
Gas $ 42,414 $ 42,586 $ 23,618 $ 23,583
Electricity 63,386 55,659 45,670 39,250
Total $105,800 $ 98,245 $ 69,288 $ 62,833
Notional amounts listed above reflect the volume of energy
related to transactions with counterparties, but do not
measure exposure to market or credit risks. The maximum
term detailed above also is not indicative of likely future
cash flows as positions may be offset in the markets at any
time to meet risk management guidelines.
9. INDUSTRY SEGMENT INFORMATION:
IDACORP's dominantprincipal operating segment is the regulated
utility operations of IPC. IDACORP's non-utility operating segments
do not individually constitute more than 10% of enterprise
revenues, income or assets, nor in aggregate do they comprise
more than 25% of enterprise revenues, income or assets. IPC's primary business is the
generation, transmission, distribution, purchase and sale of
electricity. Substantially all of the Company's revenue
comes from the sale of electricity and related services,
predominately in the United States.
The Company also sellsmarkets electricity and natural gas, solar electricenergy
related products and services, clean-energy products,
including fuel cell and photovoltaic systems, control systems integrationand home
security, internet and satellite television services, for
substations and
semiconductor manufacturing,manages and other
miscellaneous services. Revenues from these operations are
not significant.develops independent power projects.
The following table summarizes theIDACORP's segment information for
IPC utility operations, with a reconciliation to total
enterprise
information:
IPC Total
Utility Other Enterprise
(Thousands of Dollars)
SixThree months ended
June 30,March 31, 2000:
Revenues $ 166,333 $ - $ 166,333
Net income 24,993 17,086 42,079
Total assets at March
31, 2000 2,317,980 322,192 2,640,172
Three months ended
March 31, 1999:
Revenues $ 339,222174,149 $ - $ 339,222174,149
Net income 46,097 4,645 50,742
Total assets at June 30,
1999 2,339,057 214,441 2,553,498
Six months ended June 30, 1998:
Revenues $ 338,045 $ - $ 338,045
Net income 46,655 1,747 48,40226,754 2,747 29,501
Total assets at
December 31,1998 2,310,322 141,298 2,451,62031, 1999 2,355,907 281,086 2,636,993
INDEPENDENT ACCOUNTANTS' REPORT
IDACORP, Inc.
Boise, Idaho
We have reviewed the accompanying consolidated balance sheet
and statement of capitalization of IDACORP, Inc. and
subsidiaries as of June 30, 1999,March 31, 2000, and the related
consolidated statements of income, for the threecomprehensive income, and six
month periods ended June 30, 1999 and 1998 and
consolidated statements of
cash flows for the six monththree-month periods ended June 30, 1999March 31, 2000
and 1998.1999. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and of making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted auditing standards,in the
United States of America, the objective of which is the
expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to such consolidated
financial statements for them to be in conformity with
accounting principles generally accepted accounting principles.in the United
States of America.
We have previously audited, in accordance with auditing
standards generally accepted auditing standards,in the United States of
America, the consolidated balance sheet and statement of
capitalization of IDACORP, Inc. and subsidiaries as of
December 31, 1998,1999, and the related consolidated statements
of income, comprehensive income, retained earnings, and cash
flows for the year then ended (not presented herein); and in
our report dated January 29, 1999,31, 2000, we expressed an
unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in
the accompanying consolidated balance sheet and statement of
capitalization as of December 31, 19981999 is fairly stated, in
all material respects, in relation to the consolidated
balance sheet and statement of capitalization from which it
has been derived.
DELOITTE & TOUCHE LLP
Boise, Idaho
July 30, 1999April 28, 2000
Idaho Power Company
Consolidated Statements of Income
Three Months Ended
June 30,March 31,
2000 1999 1998
(Thousands of Dollars)
REVENUES:
General business $ 129,530123,213 $ 120,997
Off-system129,692
Off system sales 29,520 38,48735,925 37,510
Other revenues 6,022 7,6487,195 6,947
Total revenues 165,072 167,132166,333 174,149
EXPENSES:
Operation:
Purchased power 22,527 25,24212,890 17,888
Fuel expense 18,854 14,30324,659 22,020
Power cost adjustment 6,192 13,8143,258 9,007
Other 41,196 38,60635,236 32,767
Maintenance 11,499 11,5259,010 7,883
Depreciation 19,404 19,04419,887 19,171
Taxes other than income taxes 5,676 5,5015,427 5,584
Total expenses 125,348 128,035110,367 114,320
INCOME FROM OPERATIONS 39,724 39,09755,966 59,829
OTHER INCOME:
Allowance for equity funds used
during construction 230 24456 157
Energy tradingmarketing activities -
Net 7,860 3,1987,724 726
Other - Net 788 3,5034,726 1,952
Total other income 8,878 6,72512,906 2,835
INTEREST CHARGES:
Interest on long-term debt 13,720 13,06013,132 13,360
Other interest 1,741 2,0601,478 2,162
Allowance for borrowed funds
used during construction (134) (279)(487) (224)
Total interest charges 15,327 14,84114,123 15,298
INCOME BEFORE INCOME TAXES 33,275 30,98154,749 47,366
INCOME TAXES 10,479 9,21321,024 16,582
NET INCOME 22,796 21,76833,725 30,784
Dividends on preferred stock 1,352 1,4171,428 1,368
EARNINGS ON COMMON STOCK $ 21,44432,297 $ 20,351
The accompanying notes are an integral part of these statements.
Idaho Power Company
Consolidated Statements of Income
Six Months Ended June 30,
1999 1998
(Thousands of Dollars)
REVENUES:
General business $ 259,222 $ 233,220
Off system sales 67,031 87,643
Other revenues 12,969 17,182
Total revenues 339,222 338,045
EXPENSES:
Operation:
Purchased power 40,415 52,977
Fuel expense 40,875 35,023
Power cost adjustment 15,198 14,289
Other 73,964 71,553
Maintenance 19,382 20,553
Depreciation 38,575 37,940
Taxes other than income taxes 11,259 10,844
Total expenses 239,668 243,179
INCOME FROM OPERATIONS 99,554 94,866
OTHER INCOME:
Allowance for equity funds used
during construction 387 24
Energy trading activities - Net 8,586 2,870
Other - Net 2,739 5,605
Total other income 11,712 8,499
INTEREST CHARGES:
Interest on long-term debt 27,080 26,097
Other interest 3,903 4,146
Allowance for borrowed funds
used during construction (358) (440)
Total interest charges 30,625 29,803
INCOME BEFORE INCOME TAXES 80,641 73,562
INCOME TAXES 27,061 22,338
NET INCOME 53,580 51,224
Dividends on preferred stock 2,720 2,822
EARNINGS ON COMMON STOCK $ 50,860 $ 48,40229,416
The accompanying notes are an integral part of these
statements.
Idaho Power Company
Consolidated Balance Sheets
Assets
June 30,March 31, December 31,
2000 1999 1998
(Thousands of Dollars)
ELECTRIC PLANT:
In service (at original cost) $ 2,690,424 $ 2,659,441$2,738,386 $2,726,026
Accumulated provision for
depreciation (1,042,176) (1,009,387)(1,091,961) (1,073,722)
In service - Net 1,648,248 1,650,0541,646,425 1,652,304
Construction work in progress 73,834 58,904100,629 88,348
Held for future use 1,742 1,7381,742
Electric plant - Net 1,723,824 1,710,6961,748,796 1,742,394
INVESTMENTS AND OTHER PROPERTY 110,207 105,60026,601 117,759
CURRENT ASSETS:
Cash and cash equivalents 5,508 20,0296,612 95,038
Receivables:
Customer 80,974 81,22790,813 83,412
Allowance for uncollectible accounts (1,397) (1,397)
Natural gas - 21,426accounts
Notes 361 4672,856 345
Employee notes 4,487 4,5104,298 4,105
Related parties - 195
Other (including $1,040 and
$3,164 from related parties
in 1999 and 1998
respectively) 8,657 8,5023,866 7,095
Energy tradingmarketing assets 66,459 -63,385 29,096
Accrued unbilled revenues 33,586 34,61026,206 31,994
Materials and supplies (at
average cost) 31,781 30,14327,125 28,960
Fuel stock (at average cost) 9,725 7,0968,693 9,329
Prepayments 14,440 16,01117,556 16,054
Regulatory assets associated
with income taxes 2,965 2,9654,723 893
Total current assets 257,546 225,589254,736 305,119
DEFERRED DEBITS:
American Falls and Milner water
rights 31,585 31,83031,585
Company-owned life insurance 43,672 35,14939,046 40,480
Regulatory assets associated
with income taxes 201,850 201,465208,341 214,782
Regulatory assets - other 40,495 62,01347,996 52,759
Other 50,028 49,44853,061 54,496
Total deferred debits 367,630 379,905380,029 394,102
TOTAL $ 2,459,207 $ 2,421,790$2,410,162 $2,559,374
The accompanying notes are an integral part of these
statements.
Idaho Power Company
Consolidated Balance Sheets
Capitalization and Liabilities
June 30,March 31, December 31,
2000 1999 1998
(Thousands of Dollars)
CAPITALIZATION:
Common stock equity:
Common stock, $2.50 par
value (50,000,000 shares
authorized; 37,612,351
shares outstanding) $ 94,031 $ 94,031
Premium on capital stock 362,169 362,156362,251 362,203
Capital stock expense (3,821) (3,823)(3,816) (3,819)
Retained earnings 268,017 252,137266,932 274,181
Accumulated other
comprehensive income 226 2261,671 1,534
Total common stock equity 720,622 704,727721,069 728,130
Preferred stock 105,919 105,968105,667 105,811
Long-term debt 738,547 815,937758,944 821,558
Total capitalization 1,565,088 1,626,6321,585,680 1,655,499
CURRENT LIABILITIES:
Long-term debt due within one 77 89,101
year 86,193 6,029
Notes payable 17,276 38,50810,950 19,757
Accounts payable 69,246 72,660
Accounts payable-natural gas - 28,47678,549 95,125
Notes and accounts payable to 6,555 10,076
related parties
Energy tradingmarketing liabilities 70,744 -55,660 25,594
Taxes accrued 27,406 25,16443,350 21,773
Interest accrued 18,435 18,36415,339 19,122
Deferred income taxes 2,965 2,9654,723 893
Other 14,415 12,11715,537 16,069
Total current liabilities 306,680 204,283230,740 297,510
DEFERRED CREDITS:
Regulatory liabilities
associated with deferred
investment tax credits 68,424 69,39667,087 67,433
Deferred income taxes 419,520 420,268417,208 428,923
Regulatory liabilities
associated with income taxes 28,075 28,07534,785 33,817
Regulatory liabilities - other 2,122 4,1613,365 3,363
Other 69,298 68,97571,297 72,829
Total deferred credits 587,439 590,875593,742 606,365
COMMITMENTS AND CONTINGENT
LIABILITIES
TOTAL $ 2,459,207 $ 2,421,790$2,410,162 $2,559,374
The accompanying notes are an integral part of these
statements.
Idaho Power Company
Consolidated Statements of Capitalization
June 30,March 31, December 31,
19992000 % 19981999 %
(Thousands of Dollars)
COMMON STOCK EQUITY:
Common stock $ 94,031 $ 94,031
Premium on capital stock 362,169 362,156362,251 362,203
Capital stock expense (3,821) (3,823)(3,816) (3,819)
Retained earnings 268,017 252,137266,932 274,181
Accumulated other 1,671 1,534
comprehensive income 226 226
Total common stock equity 720,622 704,727
46 43721,069 45 728,130 44
PREFERRED STOCK:
4% preferred stock 15,919 15,96815,667 15,811
7.68% Series, serial 15,000 15,000
preferred stock 15,000 15,000
7.07% Series, serial 25,000 25,000
preferred stock 25,000 25,000
Auction rate preferred stock 50,000 50,000
Total preferred stock 105,919105,667 7 105,968 7105,811 6
LONG-TERM DEBT:
First mortgage bonds:
8.65 % Series due 2000 80,000- 80,000
6.93 % Series due 2001 30,000 30,000
6.85 % Series due 2002 27,000 27,000
6.40 % Series due 2003 80,000 80,000
8 % Series due 2004 50,000 50,000
5.83 % Series due 2005 60,000 60,000
7.20 % Series due 2009 80,000 80,000
Maturing 2021 through 2031
with rates ranging
from 7.5% to 9.52% 230,000 230,000
Total first mortgage bonds 557,000 557,000637,000
Amount due within one year - (80,000) -
Net first mortgage bonds 477,000557,000 557,000
Pollution control revenue
bonds:
7 1/4% Series due 2008 4,360 4,360
8.30 % Series 1984 due 2014 49,800 49,800
6.05 % Series 1996A due 2026 68,100 68,100
Variable Rate Series 1996B 24,200 24,200
due 2026 24,200 24,200
Variable Rate Series 1996C 24,000 24,000
due 2026 24,000 24,000
Total pollution control 170,460 170,460
revenue bonds
170,460 170,460
REA notes 1,452 1,4891,396 1,415
Amount due within one year (75) (74)(77) (76)
Net REA notes 1,377 1,4151,319 1,339
American Falls bond guarantee 19,885 20,13019,885
Milner Dam note guarantee 11,700 11,700
Debt related to investments
in affordable housing with
rates ranging from 6.03%6.97% - 71,183
to 8.59%8.77% due 19992000 to 2009 65,095 62,1032010
Amount due within one year (6,118) (5,955)- (9,025)
Net affordable housing - 62,158
debt 58,977 56,148
Other subsidiary debt 638 623- 457
Unamortized premium/discount (1,420) (1,441)
- Net (1,490) (1,539)
Total long-term debt 738,547 47 815,937758,944 48 821,558 50
TOTAL CAPITALIZATION $ 1,565,088$1,585,680 100 $ 1,626,632$1,655,499 100
The accompanying notes are an integral part of these
statements.
Idaho Power Company
Consolidated Statements of Cash Flows
SixThree Months Ended
June 30,March 31,
2000 1999 1998
(Thousands of
Dollars)
OPERATING ACTIVITIES:
Net income $ 53,58033,725 $ 51,22430,784
Adjustments to reconcile net
income to net cash provided
by operating activities:cash:
Unrealized gains (losses)
from energy marketing
activities (4,223) 623
Depreciation and amortization 47,592 43,56222,638 23,339
Deferred taxes and investment
tax credits (2,105) (2,453)(34) (294)
Accrued PCA costs 15,122 14,0813,112 12,185
Change in:
Accounts receivable and
prepayments 1,798 9,808(10,435) 30,224
Accrued unbilled revenue 1,024 1,0015,788 7,874
Materials and supplies and fuel
stock (4,267) (1,057)(484) (2,955)
Accounts payable (3,414) (27,383)(14,226) (55,905)
Taxes accrued 2,242 3,23222,041 19,813
Other current assets and
liabilities 2,369 (289)(2,483) 905
Other - net (7,681) (672)(7,230) (5,416)
Net cash provided by operating
activities 106,260 91,05448,189 61,177
INVESTING ACTIVITIES:
Additions to utility plant (50,249) (43,659)(24,826) (21,057)
Investments in affordable housing
projects (10,591) (10,125)- (2,906)
Investments in companyCompany - owned
life insurance (6,749)183 (7,332)
Net cash of affiliates
transferred to parent (4,737) -
Other - net 2,803 (3,961)(222) 5,032
Net cash used in investing
activities (64,786) (57,745)(29,602) (26,263)
FINANCING ACTIVITIES:
Issuance of long-term debt related
to affordable housing projects 7,271 4,896
Retirement of long-term debt related
to affordable housing projects (4,279) -first mortgage
bonds (80,000) (877)
Dividends on common stock (34,979) (34,979)(17,456) (17,490)
Dividends on preferred stock (2,720) (2,822)(1,428) (1,368)
Decrease in short-term (8,017) (27,806)
borrowings (21,232) (4,989)
Other - net (56) 110(112) (21)
Net cash used in financing (107,013) (47,562)
activities
(55,995) (37,784)
DecreaseNet decrease in cash and cash (88,426) (12,648)
equivalents (14,521) (4,475)
Cash and cash equivalents at 95,038 20,029
beginning of period 20,029 6,905
Cash and cash equivalents at end of period $ 5,5086,612 $ 2,4307,381
period
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income taxes (including amounts
paid to parent) $ 23,8442,424 $ 27,1329
Interest (net of amount
capitalized) $ 29,46616,026 $ 25,07814,810
Net assets of affiliates
transferred to parent $ 22,090 $ -
The accompanying notes are an integral part of these
statements.
Idaho Power Company
Consolidated Statements of Comprehensive Income
Three Months Ended
March 31,
2000 1999
(Thousands of Dollars)
NET INCOME $33,725 $30,784
OTHER COMPREHENSIVE INCOME:
Unrealized gains on securities 138 -
(net of tax of $90)
TOTAL COMPREHENSIVE INCOME $33,863 $30,784
The accompanying notes are an integral part of these
statements
Idaho Power Company
Notes to the Consolidated Financial Statements
On October 1, 1998, IDACORP, Inc. (IDACORP) became the
parent of Idaho Power Company and its subsidiaries (IPC). At that timeOn
January 1, 2000 IPC's ownership interests in two
subsidiaries were transferred to IDACORP at book value.
IPC's Statementconsolidated balance sheet as of Consolidated IncomeDecember 31, 1999
included total assets of $108 million and net assets of $22
million, and the consolidated income statement for the
six months ending June 30, 1998quarter ended March 31, 1999 includes $1.8 millionnet income of net
income$315
thousand attributable to the transferred subsidiaries.
In 1999 the gas trading operations of IPC were transferred to
another subsidiary of IDACORP. The subsidiary assumed the
accounts receivable and accounts payable related to gas trading
operations, and IPC recorded the transfer as a reduction of
accounts receivable from the subsidiary. IPC's Consolidated
Balance Sheet as of December 31, 1998 included $21.4 million of
assets and $28.4 million of liabilities related to gas
operations.
Except as modified below, the Notes to the Consolidated
Financial Statements of IDACORP also contained in this Form
10-Q Report are incorporated herein by reference insofar as they
relate to IPC.
Note 1 - Summary of Significant Accounting
Policies
Note 3 - Preferred Stock of Idaho Power Company
Note 4 - Financing
Note 5 - Commitments and Contingent Liabilities
Note 6 - Regulatory Issues
Note 7 - New Accounting Pronouncement
2. INCOME TAXES:
IPC's effective tax rate for the first sixthree months
increased from 30.335.0 percent in 19981999 to 33.638.4 percent in 1999.2000.
Reconciliations between the statutory income tax rate and
the effective rates for the six-month periods ended June 30, 1999
and 1998 are as follows:follows (in thousands of
dollars):
Three Months Ended March 31,
2000 1999 1998
Amount Rate Amount Rate
Computed income taxes based on
statutory federal income tax
rate $ 28,22419,162 35.0% $ 25,747 35.0%16,578 35.0 %
Changes in taxes resulting from:
CurrentInvestment tax credits (771) (1.4) (739) (1.6)
Repair allowance (700) (1.3) (525) (1.1)
Pension expense (479) (0.9) 21 0.0
State income taxes 2,508 4.6 2,438 5.1
Depreciation 1,693 3.1 1,360 2.9
Affordable housing tax credits - - (2,272) (4.8)
Other (389) (0.7) (279) (0.5)
Total provision for federal and
state income taxes 4,230 5.2 3,058 4.2
Net depreciation 2,662 3.3 2,677 3.6
Investment tax credits
restored (1,481) (1.8) (1,462) (2.0)
Removal costs (375) (0.5) (877) (1.2)
Repair allowance (1,137) (1.4) (1,564) (2.1)
Affordable housing credits (4,222) (5.2) (3,177) (4.3)
Settlement of prior year
tax returns - - (1,000) (1.4)
Other (840) (1.0) (1,064) (1.5)
Total $ 27,061 33.6%21,024 38.4% $ 22,338 30.3%16,582 35.0 %
8. DERIVATIVE FINANCIAL INSTRUMENTS:
The following table shows a summary of the notional amountamounts
of open commodity derivative positionsIPC's forward exposure as of June 30, 1999 was a net long electricityMarch 31, 2000. The maximum
term related to any forward position of 305
MW.is five years.
Electricity
MWh's
Payable 7,834
Receivable 9,094
The loss infollowing table displays the fair value of commodity derivative positions
(including electricity forwards, futures, optionsIPC's energy
marketing assets and swaps)
included in income before income taxesliabilities (all electricity) at March
31, 2000, and the average values for the six monthsquarter ended June 30, 1999 was $(5.2) million.March
31, 2000 (in thousands of dollars):
Balance at March 31, 1st Quarter Average
2000 Balance
Assets Liabilities Assets Liabilities
$ 63,385 $ 55,660 $ 45,670 $ 39,250
9. INDUSTRY SEGMENT INFORMATION:
IPC's dominant operating segment is its regulated utilityelectric
operations. IPC's non-utility operating segments do not
individually constitute more than 10%10 percent of enterprise
revenues, net income or total assets, nor in aggregate do
they comprise more than 25%25 percent of enterprise revenues,
net income or total assets.
IPC's primary business is the generation, transmission,
distribution, purchase and sale of electricity.
Substantially all of IPC's revenue comes from the sale of
electricity and related services, predominately in the
United States. IPC subsidiaries
also sell solar electric productsmarkets electricity and systems, control systems
integration services for substations and semiconductor
manufacturing, and miscellaneousprovides
other energy-related services. These revenues,
however, are not significant.
The following table summarizes theIPC's segment information for
the regulated electric operations, with a reconciliation to
total enterprise information:
Regulated
Electric Total
Operations Other Enterprise
(Thousands of Dollars)
SixThree months ended June 30,March 31,
2000:
Revenues $ 166,333 $ - $ 166,333
Net income 26,421 7,304 33,725
Total assets at March 31, 2000 2,317,980 91,595 2,409,575
Three months ended March 31,
1999:
Revenues $ 339,222174,149 $ - $ 339,222174,149
Net income 46,097 7,483 53,580
Total assets at June 30, 1999 2,339,057 120,150 2,459,207
Six months ended June 30, 1998:
Revenues $ 338,045 $ - $ 338,045
Net income 46,655 4,569 51,22428,122 2,662 30,784
Total assets at December 31,
1998 2,312,919 108,871 2,421,7901999 2,355,907 203,467 2,559,374
INDEPENDENT ACCOUNTANTS' REPORT
Idaho Power Company
Boise, Idaho
We have reviewed the accompanying consolidated balance sheet
and statement of capitalization of Idaho Power Company and
subsidiaries as of June 30, 1999,March 31, 2000, and the related
consolidated statements of income, for the threecomprehensive income, and six month periods ended June 30, 1999 and 1998 and
consolidated statements of
cash flows for the six monththree-month periods ended June 30, 1999March 31, 2000
and 1998.1999. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and of making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted auditing standards,in the
United States of America, the objective of which is the
expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to such consolidated
financial statements for them to be in conformity with
accounting principles generally accepted accounting principles.in the United
States of America.
We have previously audited, in accordance with auditing
standards generally accepted auditing standards,in the United States of
America, the consolidated balance sheet and statement of
capitalization of Idaho Power Company and subsidiaries as of
December 31, 1998,1999, and the related consolidated statements
of income, comprehensive income, retained earnings, and cash
flows for the year then ended (not presented herein); and in
our report dated January 29, 1999,31, 2000, we expressed an
unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in
the accompanying consolidated balance sheet and statement of
capitalization as of December 31, 19981999 is fairly stated, in
all material respects, in relation to the consolidated
balance sheet and statement of capitalization from which it
has been derived.
DELOITTE & TOUCHE LLP
Boise, Idaho
July 30, 1999April 28, 2000
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONSOPERTIONS
In Management's Discussion and Analysis we explain the
general financial condition and results of operations for
IDACORP, Inc. and subsidiaries (IDACORP or the Company) and
for Idaho Power Company and subsidiaries (IPC). IPC, an
electric utility, is IDACORP's principal operating
subsidiary, accounting for over 90
percent of IDACORP's assets, revenue and net income. Unlesssubsidiary. Except where we indicate otherwise, this
discussion explains the material changes in results of
operations and the financial condition of both the Company
and IPC. This discussion should be read in conjunction with
the accompanying consolidated financial statements of both
IDACORP and IPC.
This discussion updates the discussion that we included in
our Annual Report on Form 10-K for the year ended December
31, 1998.1999. This discussion should be read in conjunction
with the discussion in the annual report.
We have reclassified our electricity trading activities from "Off-
system sales" and "Purchased power" to "Energy trading
activities - net" on the Consolidated Statements of Income for
all periods presented. This change was made to more clearly
report the results of our utility operations and our energy
trading activities.
FORWARD-LOOKING INFORMATION:
In connection with the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 (Reform Act), we
are hereby filing cautionary statements identifying
important factors that could cause our actual results to
differ materially from those projected in forward-looking
statements (as such term is defined in the Reform Act) made
by or on behalf of the Company and IPC in this quarterly
report on Form 10-Q, in presentations, in response to
questions or otherwise. Any statements that express, or
involve discussions as to expectations, beliefs, plans,
objectives, assumptions or future events or performance
(often, but not always, through the use of words or phrases
such as "anticipates", "believes", "estimates", "expects",
"intends", "plans", "predicts", "projects"projects", "will likely
result", "will continue", or similar expressions) are not
statements of historical facts and may be forward-looking.
Forward-looking statements involve estimates, assumptions,
and uncertainties and are qualified in their entirety by
reference to, and are accompanied by, the following
important factors, which are difficult to predict, contain
uncertainties, are beyond our control and may cause actual
results to differ materially from those contained in forward-lookingforward-
looking statements:
prevailing governmental policies and regulatory
actions, including those of the FERC, the IPUC, the OPUC,
and the PUCN, with respect to allowed rates of return,
industry and rate structure, acquisition and disposal of
assets and facilities, operationoperations and construction of plant
facilities, recovery of purchased power and other capital
investments, and present or prospective wholesale and retail
competition (including but not limited to retail wheeling
and transmission costs);
economic and geographic factors including political and
economic risks;
changes in and compliance with environmental and safety
laws and policies;
weather conditions;
population growth rates and demographic patterns;
competition for retail and wholesale customers;
Year 2000 issues;
pricing and transportation of commodities;
market demand, including structural market changes;
changes in tax rates or policies or in rates of
inflation;
changes in project costs;
unanticipated changes in operating expenses and capital
expenditures;
capital market conditions;
competition for new energy development opportunities;
and
legal and administrative proceedings (whether civil or
criminal) and settlements that influence the business and
profitability of the Company.
Any forward-looking statement speaks only as of the date on
which such statement is made, and we undertake no obligation
to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made
or to reflect the occurrence of unanticipated events. 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.
RESULTS OF OPERATIONS:
Earnings per Share and Book Value of IDACORP Common Stock:
Earnings per share (EPS) of IDACORP common stock (basic and
diluted) was $0.56$1.12 for the quarter ended and $1.35 per share for the six months
ended June 30, 1999, increasesMarch 31, 2000, an
increase of $0.02 (3.7 percent) from$0.34 over the same quarter last year,year. The
increase in EPS was due primarily to two factors, the sale
of the Hermiston Power Project, which increased EPS
approximately $0.22 and $0.06 (4.7 percent) for the six-month
period.improved results from energy
marketing activities, which increased EPS approximately
$0.13. These factors are discussed below in "Other Income."
At June 30, 1999,March 31, 2000, the book value per share of IDACORP
common stock was $19.83,$20.67, compared to $19.27$20.02 at the same date in
1998.December 31,
1999.
General Business Revenue
Our general business revenue is dependent on many factors,
including the number of customers we serve, the rates we
charge, and economic and weather conditions (temperature and
precipitation) in our service territory.
Compared to the same periodsperiod in 1998,1999, the number of general
business customers we served increased 3.0 percent for the second
quarter and 3.1 percent year-to-date.2.8 percent. This
increase was due primarily to economic growth in our service
territory.
Our revenue per MWh increased 1.7decreased 7.8 percent for the quarter and 5.9
percent year-to-date, compared to 1998.1999.
Changes in revenue per MWh result primarily from the annual
rate adjustments authorized by regulatory authorities.
These adjustments are discussed below in "PCA" and
"Regulatory Settlement."
TemperaturesChanges in the first half of 1999 were more extreme than in
1998, which contributed to increasedweather conditions did not significantly affect
sales of energy. Combined,
heating degree days and cooling degree days,this quarter. Heating degree-days, a common measuresmeasure
used in the utility industry to analyze demand, were above 1998below
1999 levels by 27.62.5 percent.
Sales (in MWhs) to commercial and industrial customers
increased 5.1 percent for the quarter, and 15.4 percent year-to-date.
Compareddue primarily to
1998, the average kWh's sold per general business
customer increased 2.1 percent for the quarter and 1.9 percent
year-to-date.economic factors.
The combination of these factors resulted in a decrease in
general business revenue increases of $8.5$6.5 million (7.1 percent) for the quarter
and $26.0 million (11.1 percent) year-to-date compared to 1998.
Off-System Sales1999.
Power Supply
Power supply components of income from operations include
off-system sales and purchased power, fuel, and PCA
expenses. There has been a reduction in both the off-system
sales and purchased power components of power supply,
primarily as a result of less hydro energy available for
sale, general business load growth and increases in thermal
production.
Off-system sales, are comprisedconsisting primarily of long-term sales
contracts and opportunity sales made when we haveof surplus system energy
available.
The decreases of $9.0decreased $1.6 million (23.3 percent) for the quarterfrom last year and $20.6purchased power
expenses decreased $5.0 million.
Fuel expenses increased $2.6 million, (23.5 percent) year-to-date are due primarily to decreasea 15
percent increase in MWhs sold of 14.1 percent for the quarter and 16.1
percent year-to-date. Decreased sales resulted primarily from
reduced market opportunities.
Expenses
Purchased power expenses decreased $2.7 million (10.8 percent)
for the quarter and $12.6 million (23.7 percent) year-to-date.
These decreases are due primarily to reduced system requirements
in 1999.
Fuel expenses increased $4.6 million (31.8 percent) for the
quarter and $5.9 million (16.7 percent) year-to-date. These
increases are due primarily to 37.1 percent and 15.7 percent
respective increases in MWh generated at our coal-fired power
plants to meet operating requirements.plants.
The PCA component of expenses decreased $7.6 million for the
quarter.$5.7 million. The
PCA expense component is related to our PCA regulatory
mechanism, which increases expense when actual power supply
costs are below the costs forecasted in the annual PCA
filing, and decreases expense when actual power supply costs
are above the forecast. In the second quarter ofboth 1999 and 2000, actual power
supply costs were below what had been forecast, but not to the extent
that costs were below forecast in the second quarter of 1998.
The 1998-99 forecast used to set the 1998-99 PCA rate adjustment,
anticipated near-normal streamflow conditions. Actual conditions
have been betterless than forecasted, and are discussed belowresulting in "Streamflow Conditions."PCA
expenses. We discuss the PCA in more detail below in "PCA."
The impact of these changes in net power supply costs is a
decrease in net expense in 2000 of $8.1 million.
Other expenses
Other operating expenses increased $2.6 million (6.7 percent) for
the quarter and $2.6 million (3.4 percent) year-to-date. This$2.5 million. The
increase is due primarily to increased MWh generation atincreases in payroll and
related expenses, electricity wheeling expenses, and
amortization of DSM costs, offset by a reduction in pension
costs for our coal-
fired generating facilities.
Otherdefined benefit pension plan.
Other income
IDACORP's other income increased $2.5 million (37.1 percent) for the quarter, and $3.9 million (45.4 percent) year to date, due
primarily to the sale of our interest in the Hermiston Power
Project, a 536 MW, gas-fired cogeneration project located
near Hermiston, Oregon. We recorded a pre-tax gain of $14.0
million on this transaction. This item does not affect
IPC's financial statements because Ida-West, the developer
of the Hermiston project, is a subsidiary of IDACORP, and
not IPC.
In addition, improved results from energy marketing
activities.activities increased IDACORP's other income by $7.8 million
and IPC's other income by $7.0 million. This increase is
due to an increase in volumes over last year as well as
favorable market conditions.
Income taxes
Income taxes increased $1.3 million (14.2 percent) for the quarter, and $4.9 million (21.9 percent) due primarily to increasedthe
increases in net income before taxes and the impacttaxes. IPC's effective tax
rate also increased because of a reduction of affordable
housing tax settlementcredits. On January 1, 2000, IPC transferred
its IDACORP Financial Services (IFS) subsidiary to IDACORP.
IFS invests in affordable housing projects for which reduced expenses in 1998.the tax
credits are earned.
LIQUIDITY AND CAPITAL RESOURCES:
Cash Flow
For the sixthree months ended June 30, 1999,March 31, 2000, IDACORP generated
$85.4$46.9 million in net cash from operations. After deducting
for common stock dividends, net cash generation from
operations provided approximately $50.5$29.5 million for our
construction program and other capital requirements.
Cash Expenditures
We estimate that our total cash construction expenditures
for 19992000 will be approximately $115.5$121 million. This estimate
is subject to revision in light of changing economic,
regulatory, and environmental factors. During the first
sixthree months of 1999,2000, we spent approximately $51.5$24.8 million
for construction. Our primary financial commitments and
obligations are related to contracts and purchase orders
associated with ongoing construction programs. To the
extent required, we expect to finance these commitments and
obligations by using both internally generated funds and
externally financed capital. At June 30, 1999,March 31, 2000, our short-termshort-
term borrowings totaled $48.2$11.9 million.
Financing Program
IDACORP has a $300.0 million shelf registration statement
that can be used for the issuance of unsecured debt
securities and preferred or common stock. At June 30, 1999,March 31,
2000, none had been issued.
On March 23, 2000, IPC hasfiled a $200.0 million shelf
registration statement that can be used for both First
Mortgage Bonds (including Medium Term Notes)
and, Preferred
Stock, and unsecured debt. At March 31, 2000, none had been
issued.
On April 26, 2000, IPC issued $19.9 million of which $83.0variable
rate bonds due February 1, 2025. Proceeds from this
issuance were used to retire $19.9 million remains available at
June 30, 1999.
Our objective is to maintain capitalization ratios of approximately 45 percent common equity, 5 to 10 percent preferred
stock, and the balance in long-termAmerican
Falls bond guarantee debt. For the twelve-month
period ended June 30, IDACORP's consolidated pre-tax interest
coverage was 2.89 times.
REGULATORY ISSUES:
PCAPower Cost Adjustment (PCA)
IPC has a PCA mechanism that provides for annual adjustments
to the rates we chargecharged to our Idaho retail electric customers.
These adjustments, which take effect annually on May 16, are
based on forecasts of net power supply costs, and the true-uptrue-
up of the prior year's forecast. The difference between the
actual costs incurred and the forecasted costs is deferred,
with interest, and trued-up in the next annual rate
adjustment.
For the 1999 - 2000 rate year, actual power costs have been less
than forecast, due to better than forecast hydroelectric
generating conditions. For the rate period we have recorded a
reduction to regulatory assets of $7.1 million as of June 30,
1999.
Our May 16, 1999 rate adjustment reduced Idaho general
business customer rates by 9.2 percent. The decrease results fromwas
the result of projected above-average hydroelectric
generating conditions and the true-up of the 1998-
991998-99 rate
period. Overall, IPC's annual general business revenues
were expected to decrease by $40 million during the 1999-
2000 PCA rate period.
In April 2000 we filed our proposed May 16, 2000 PCA
adjustment, which, if approved, will increase Idaho general
business customer rates by 9.5 percent. The increase
results from projected below-average hydroelectric
generating conditions (see "Streamflow Conditions" below)
and the true-up of the 1999-2000 rate period. Overall,
IPC's annual general business revenues are expected to
decreaseincrease by $40.4 million.$38 million during the 2000-2001 rate period.
For the 1999 - 2000 PCA rate year, actual power supply costs
have been less than forecast, due to actual hydroelectric
generating conditions being more favorable than forecast.
To account for these lower-than-expected costs, we have
recorded a regulatory asset with a credit balance of $5.0
million as of March 31, 2000.
Regulatory Settlement
IPC hashad a settlement agreement with the IPUC that remains in
effect throughexpired at
the end of 1999. Under the terms of the settlement, when
earnings in our Idaho jurisdiction exceedexceeded an 11.75 percent
return on year-end common equity, we set aside 50 percent of
the excess for the benefit of our Idaho retail customers.
On April 7, 1999In March 2000 we submitted our 19981999 annual earnings sharing
compliance filing to the IPUC. This filing indicated that
there was almost $6.4$9.7 million in 1999 earnings before authorized deductions,
or $3.3and $2.7
million after authorized deductions,in unused 1998 reserve balances available for the
benefit of our Idaho customers.
On June 16,In December 1999 we filed with the IPUC to set aside $5.4
million of 1999 revenue sharing dollars to continue
participation in Northwest Energy Efficiency Alliance (NEEA)
for the years 2000 - 2004. The IPUC approved the continued
participation by Order No. 28333, and ordered IPC filedto set
aside the funds in a supplementreserve until payments are required.
DSM (Conservation) Expenses
In Idaho, IPC requested that the IPUC allow for the recovery
of post-1993 DSM expenses and acceleration of the recovery
of DSM expenditures authorized in the last general rate
case. In its Order No. 27660 issued on July 31, 1998, the
IPUC set a new amortization period of 12 years instead of
the 24-year period previously adopted. The IPUC order
reflects an increase in annual Idaho retail revenue
requirements of $3.1 million. A group of industrial
customers has appealed the IPUC order to the Idaho Supreme
Court. The Idaho Supreme Court issued its opinion on April
7, 1999
annual earnings sharing compliance filing requesting that the
$3.3 million of remaining 1997 and 1998 revenue sharing be
refunded to its customers. On July 19, 199917, 2000 affirming the IPUC issued
Order No. 28099 in Case IPC-E-99-2, refunding $0.7 million to
special contract and large customers. The remaining balance
of $2.6 million has been deferred with interest until May
2000.order. If the Court does not
receive a petition for reconsideration within 21 days, the
opinion will be final.
OTHER MATTERS:
Energy Trading
EnergyMarketing
Over the last three years we have been implementing a
strategy to become a competitive energy provider throughout
the western markets. In order to compete as an energy
provider of choice we needed to build a foundation of an
effective and efficient trading activity,operation that competently
participates in the electricity, natural gas and other
related markets. In 1997 we opened natural gas trading
operations in Houston, Texas and in Boise, Idaho. We also
began to expand our electricity marketing, which, includes bothalong with
natural gas, is included in other income. We have seen
increasing positive results from our strategy. Our natural
gas marketing capability continues to expand as the
electricity and natural gas is reported on a fair value basis with gainsmarkets move toward convergence,
and losses recordedour electricity marketing efforts have resulted in
other income.
Inherentvolume and income increases each year since inception of the
strategy. While building this business capability over the
last three years, we have also been developing appropriate
controls to mitigate the operational, market and credit risks
inherent in the energy trading business are risks related to
market movements and the creditworthiness of counterparties.marketing business.
When buying and selling energy, the high volatility of
energy prices can have a significant impact on profitability
if not managed. Also, counterparty creditworthiness is key
to ensuring that transactions entered into withstand
dramatic market fluctuations. To mitigatemanage these risks while
implementing our business strategy, the Board of Directors gave approval for executive management to
formCompany has a Risk
Management Committee, comprised of Company officers, of
IDACORP and subsidiaries, to
oversee athe risk management program.program as defined in the risk
management policy. The program is intended to minimize
fluctuations in earnings while managing the volatility of
energy prices. Embedded within
the Risk Management policy and procedures is a credit policy
requiring a credit evaluation of all counterparties. The
objective of our risk management program is to mitigateprices by mitigating commodity price risk, credit
risk, and other risks related to the energy trading business.business
Streamflow Conditions
We monitor the effect of streamflow conditions on Brownlee
Reservoir, the water source for our three Hells Canyon
hydroelectric projects. In a typical year, these three
projects combine to produce about half of our generated
electricity.
Inflows into Brownlee result from a combination of
precipitation, storage, and ground water conditions. Our current projection for
April-July 1999 inflowThe
National Weather Service's projected inflows into Brownlee
Reservoir, Idaho Power's keywere 3.9 MAF for the 2000-2001 water storage facility, is 8.0 MAF,year, compared to the
70-year median of 4.9 MAF and 1998's 8.81999's 7.9 MAF.
Year 2000
Many existing computer systems use only two digits to identify a
year in the date field. These programs were designed and
developed without considering the impact of the upcoming change
in the century. Unless proper modifications are made, the
program logic in many of these systems will start to produce
erroneous results because, among other things, the systems will
read the date "01/01/00" as being January 1 of the year 1900 or
another incorrect date. In addition, the systems may fail to
detect that the year 2000 is a leap year. Similar problems could
arise prior to the year 2000 as dates in the next millennium are
entered into systems that are not Year 2000 compliant.
We recognize the Year 2000 problem as a serious threat to the
Company and our customers. Our Year 2000 effort has been
underway for over two years and is being addressed at the highest
levels within the Company. IPC's Vice President of Corporate
Services is responsible for coordinating the corporate effort.
IPC vice presidents and other IDACORP subsidiary presidents are
responsible for addressing the problem within their respective
business units and each has assigned a Year 2000 Project Leader
to execute the project plan. Each subsidiary President is
responsible for addressing the problem within their subsidiary in
coordination with the corporate effort. In addition, we have
appointed a full-time Year 2000 Project Manager to direct the
project. Additional staff has been committed to complete the
conversion and implementation needed to bring non-compliant items
into compliance. This staff consists of a mix of end users, IPC
Information Services staff and contract programmers. Currently,
there are over 20 full-time employees devoted to the project with
dozens of others involved to varying degrees. We have retained
third parties that have completed technical and legal audits of
our plan. With respect to the technical audit, we have
implemented the recommendations as recommended by the Y2K
Steering Committee. The legal audit recommendations are also
being implemented.
We originally targeted July 1999 as the date by which we expect
to be ready for the Year 2000. This means that all critical
systems are expected to be capable of handling the century
rollover and that we will be able to continue servicing our
customers without interruption. It also means that we expect to
have identified all of the less critical systems and that
contingency and/or repair plans are expected to be in place for
dealing with the change of century. At this time, all but one of
our critical systems has met this target, with the lone exception
scheduled for completion in August.
We are following a detailed project plan. The methodology is
modeled after those used by some of the top companies in the
world and has been adapted to meet our unique requirements. This
process includes all the phases and steps commonly found in such
plans, including the (I) identification and analysis of critical
systems, key manufacturers, service providers, embedded systems,
generation plants (parts of which are owned by IPC but are
operated by another electric utility), (ii) remediation and
testing, (iii) education and awareness and (iv) contingency
planning.
With respect to that key component of the methodology related to
the identification of critical systems, we have identified those
critical systems that must be Year 2000 compliant in order to
continue operations. Many are already compliant or are in the
process of vendor upgrades to become compliant. The largest of
these critical systems and their status regarding compliance are
set forth below:
System Description Status
Business The business systems include the PeopleSoft and
Systems financial and administrative functions PassPort are
common to most companies. Business both compliant
systems include accounts payable, vendor
general ledger, accounts receivable, packages.
labor entry, inventory, purchasing, Testing to
cash management, budgeting, asset verify
management, payroll, and financial compliance is
reporting. complete.
Customer This system is used to bill customers, In-house
Information log calls from customers and create system has
System service or work requests and track been repaired;
them through completion, among other testing to
things. At this time, the Company verify
uses an in-house developed, mainframe- compliance is
based Customer Information System to complete
accomplish these tasks.
Energy The most critical function the Company The packages
Management offers is the delivery of electricity comprising the
System from the source to the consumer. This EMS are fully
must be done with minimal interruption compliant with
in the midst of high demand, weather the latest
anomalies and equipment failures. To releases.
accomplish this, the Company relies on Testing and
a server-based energy management rollout are
system provided by Landis & Gyr. This over 95%
system monitors and directs the complete and
delivery of electricity throughout the will be
Company's service area. completed in
August 1999.
Metering The Company relies on several In-house code
Systems processes for metering electricity has been
usage, including some hand-held repaired and
devices with embedded chips. It is tested.
critical for metering systems to Vendor
operate without interruption so as not packages have
to jeopardize the Company's revenue been upgraded.
stream. Testing of
critical
components is
complete.
Embedded There is a category of systems on Testing is
Systems which the Company is highly reliant complete.
called embedded systems. These are
typically computer chips that provide
for automated operations within some
device other than a computer such as a
relay or a security system. The
Company is highly reliant on these
systems throughout its generation and
delivery systems to monitor and allow
manual or automatic adjustments to the
desired devices. Those devices with
chips that were not Year 2000
compliant, where the chip affected the
application of the device, were
replaced.
Other The Company also relies on a number of In various
Systems other important systems to support stages of
engineering, human resources, safety repair and
and regulatory compliance, etc. testing.
Regarding third parties, the plan methodology has required us to
identify those third parties with which we have a material
relationship. We have identified as material (1) our ownership
interest in thermal generating facilities which are operated and
maintained by third party electric utilities; (2) our fuel
suppliers for those thermal generating facilities; and (3) our
telecommunication providers. In addition, we have identified 93
key manufacturers that provide materials and supplies to us.
With respect to the thermal plants, fuel suppliers and
telecommunication providers, the plan methodology includes a
process wherein some members of the Year 2000 team meet
periodically with the third parties to assess the status of their
efforts. This is an ongoing process and will continue until such
time as the third party has completed compliance testing and
certified to us that they are compliant. Regarding the 93 key
manufacturers we have contacted all via mail and requested they
complete a survey indicating the extent and status of their Year
2000 efforts. The survey is followed up with contact by
telephone if necessary. We are over 95% complete with that
effort.
Finally, we are connected to an electric grid that connects
utilities throughout the western portion of North America. This
interconnection is essential to the reliability and operational
integrity of each connected utility. This also means that
failure of one electric utility in the interconnected grid could
cause the failure of others. In the context of the Year 2000
problem, this interconnectivity compounds the challenge faced by
the electric utility industry. Our Company could do a very
thorough and effective job of becoming Year 2000 compliant and
yet encounter difficulties supplying services and energy because
another utility in the interconnected grid failed to achieve Year
2000 compliance. In this regard, we are working closely with
other electric industry organizations concerned with reliability
issues and technical collaboration. As part of this
collaboration we participated and successfully completed our
roles in a nationwide Y2K drill for electric utilities, held on
April 9, 1999 and plan to participate in a similar drill in
September 1999.
Our estimate of the cost of our Year 2000 plan remains at
approximately $5.3 million. This includes costs incurred to date
of approximately $2.9 million and estimated costs through the
year 2000. This level of expenditure is not expected to have any
material effect on our operations or our financial position.
Funds to cover Year 2000 costs in 1999 have been budgeted by
business entity and within the Information Services Department
with approximately 10 percent of the Information Services budget
used for remediation. No information services department
projects have been deferred due to the Company's year 2000
efforts.
The Year 2000 issue poses risks to our internal operations due to
the potential inability to carry on our business activities and
from external sources due to the potential impact on the ability
of our customers to continue their business activities. The
major applications that pose the greatest risks internally are
those systems, embedded or otherwise, which impact the
generation, transmission and distribution of energy and the
metering and billing systems. The potential risks related to
these systems are electric service interruptions to customers and
associated reduction in loads and revenue and interrupted data
gathering and billing and the resultant delay in receipt of
revenues. All of this would negatively impact our relationship
with our customers that may enhance the likelihood of losing
customers in a restructured industry. Externally, those
customers that inadequately prepare for the Year 2000 issue may
be unable to continue their business activities. This would
affect us in a number of ways. Our loads and revenue would be
reduced because of the lost load from discontinued business
activities, and customers who lose jobs because of discontinued
business activities may face difficulties in paying their power
bills. The impact of this on us is dependent upon the number and
the size of those businesses that are forced to discontinue
business activities because of the Year 2000 issue.
As part of our Year 2000 plan, we have developed and are
finalizing our contingency plans, which should be completed by
the end of August 1999.
New Accounting Pronouncement
In June 1998 the FASB issued SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards for
derivative financial instruments and other similar
instruments and for hedging activities. It was originally effective for fiscal years
beginning after June 15, 1999. In June 1999 the
FASB issued SFAS No. 137 "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Standard No. 133" which defers the
effective date of SFAS No. 133 one year.until fiscal years beginning
after June 15, 2000. We are reviewing SFAS No. 133 to
determine its effects on our financial position and results
of operations. Item 4. Submission of MattersWe expect to a Vote of Security Holders
(a) Regular annual meeting of IDACORP'S stockholders,
held May 5, 1999 in Boise, Idaho.
(b) Directors elected at the meeting for a three-year
term:
Roger L. Breezley
John B. Carley
Jack K. Lemley
Evelyn Loveless
Directors elected at the meeting for a two-year
term:
Rotchford L. Barker
Robert D. Bolinder
Jon H. Miller
Robert A. Tinstman
Directors elected at the meeting for a one-year
term:
Jan B. Packwood
Peter T. Johnson
Joseph W. Marshall
Peter S. O'Neill
(c)(1)a) To elect twelve Director Nominees; and
b) To ratify the selection of Deloitte & Touche
LLP (D&T) as independent auditors for the fiscal
year ending December 31, 1999.
(2) Director Nominees
Class of Stock For Withhold Total Voted
Common 32,778,990 460,854 33,239,844
(3) Proposal to Ratify Selection of D&T as Independent
Auditors
Class of Stock For Against Abstain Total Voted
Common 32,760,864 166,853 312,127 33,239,844
(4) Election of Directors
Name Votes For Votes Withheld
Rotchford L. Barker 32,820,115 419,729
Robert D. Bolinder 32,805,195 434,649
Roger L. Breezley 32,805,773 434,071
John B. Carley 32,817,616 422,228
Peter T. Johnson 32,820,366 419,478
Jack K. Lemley 32,823,498 416,346
Evelyn Loveless 32,809,426 430,418
Jon H. Miller 32,782,809 457,035
Joseph W. Marshall 32,799,548 440,296
Peter S. O'Neill 32,784,937 454,907
Jan B. Packwood 32,820,250 419,594
Robert A. Tinstman 32,778,990 460,854
Item 4. Submission of Matters to a Vote of Security Holders
(a) Regular annual meeting of Idaho Power Company's
stockholders, held May 5, 1999 in Boise, Idaho.
(b) Directors elected at the meeting for a three-year
term:
Roger L. Breezley
John B. Carley
Jack K. Lemley
Evelyn Loveless
Continuing Directors:
Rotchford L. Barker Jan B. Packwood
Robert D. Bolinder Peter T. Johnson
Jon H. Miller Joseph W. Marshall
Robert A. Tinstman Peter S. O'Neill
(c)(1)a) To elect four Director Nominees; and
b) To ratify the selection of Deloitte & Touche
LLP (D&T) as independent auditors for the
fiscal year ending December 31, 1999.
(2) Director Nominees
Class of Stock For Withhold Total Voted
Common 37,612,351 - 37,612,351
4% Preferred 2,133,120 42,420 2,175,540
7.68% Preferred 130,555 315 130,870
Total 39,876,026 42,735 39,918,761
(3) Proposal to Ratify Selection of D&T as Independent Auditors
Class of Stock For Against Abstain Total Voted
Common 37,612,351 - - 37,612,351
4% Preferred 2,141,100 17,340 17,100 2,175,540
7.68% Preferred 130,460 200 210 130,870
Total 39,883,911 17,540 17,310 39,918,761
(4) Election of Directors
Name Votes For Votes Withheld
Roger L. Breezley 39,876,026 42,735
John B. Carley 39,876,026 42,735
Jack K. Lemley 39,876,026 42,735
Evelyn Loveless 39,876,026 42,735adopt this statement by January
1, 2001.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit File Number As
Exhibit
*2 333-48031 2 Agreement and Plan of Exchange
between IDACORP, Inc., and IPC
dated as of February 2, 1998.
*3(a) 33-00440 4(a)(xiii) Restated Articles of Incorporation
of IPC as filed with the Secretary
of State of Idaho on June 30, 1989.
*3(a)(I)(i) 33-65720 4(a)(ii) Statement of Resolution
Establishing Terms of Flexible
Auction Series A, Serial Preferred
Stock, Without Par Value
(cumulative stated value of
$100,000 per share) of IPC, as
filed with the Secretary of State
of Idaho on November 5, 1991.
*3(a)(ii) 33-65720 4(a)(iii) Statement of Resolution
Establishing Terms of 7.07% Serial
Preferred Stock, Without Par Value
(cumulative stated value of $100
per share) of IPC, as filed with
the Secretary of State of Idaho on
June 30, 1993.
*3(b) 33-41166 4(b) Waiver resolution to Restated
Articles of Incorporation of IPC
adopted by Shareholders on May 1,
1991.
*3(c) 1-3198 3(c) By-laws of IPC amended on July 8,September
Form 10-Q 9, 1999, and presently in effect.
for 9/30/99
*3(d) 33-56071 3(d) Articles of Share Exchange, of
IDACORP, Inc. as
filed with the Secretary of State
of Idaho on September 29, 1998.
*3(e) 333-64737 3.1 Articles of Incorporation of
IDACORP, Inc.
*3(f) 333-64737 3.2 Articles of Amendment to Articles
of Incorporation of IDACORP, Inc.
as filed with the Secretary of
State of Idaho on March 9, 1998.
*3(g) 333-00139 3(b) Articles of Amendment to Articles
of Incorporation of IDACORP, Inc.
creating A Series Preferred Stock,
without par value, as filed with
the Secretary of State of Idaho on
September 17, 1998.
3(h)*3(h) 1-14465 3(c) Amended Bylaws of IDACORP, Inc. as
Form 10-Q of July 8, 1999.
for 6/30/99
*4(a)(I)(i) 2-3413 B-2 Mortgage and Deed of Trust, dated
as of October 1, 1937, between IPC
and Bankers Trust Company and
R. G. Page, as Trustees.
*4(a)(ii) IPC Supplemental Indentures to
Mortgage and Deed of Trust:
IPC
Number Dated
1-MD B-2-a First July 1, 1939
2-5395 7-a-3 Second November 15, 1943
2-7237 7-a-4 Third February 1, 1947
2-7502 7-a-5 Fourth May 1, 1948
2-8398 7-a-6 Fifth November 1, 1949
2-8973 7-a-7 Sixth October 1, 1951
2-12941 2-C-8 Seventh January 1, 1957
2-13688 4-J Eighth July 15, 1957
2-13689 4-K Ninth November 15, 1957
2-14245 4-L Tenth April 1, 1958
2-14366 2-L Eleventh October 15, 1958
2-14935 4-N Twelfth May 15, 1959
2-18976 4-O Thirteenth November 15, 1960
2-18977 4-Q Fourteenth November 1, 1961
2-22988 4-B-16 Fifteenth September 15, 1964
2-24578 4-B-17 Sixteenth April 1, 1966
2-25479 4-B-18 Seventeenth October 1, 1966
2-45260 2(c) Eighteenth September 1, 1972
2-49854 2(c) Nineteenth January 15, 1974
2-51722 2(c)(I)(i) Twentieth August 1, 1974
2-51722 2(c)(ii) Twenty-first October 15, 1974
2-57374 2(c) Twenty-second November 15, 1976
2-62035 2(c) Twenty-third August 15, 1978
33-34222 4(d)(iii) Twenty-fourth September 1, 1979
33-34222 4(d)(iv) Twenty-fifth November 1, 1981
33-34222 4(d)(v) Twenty-sixth May 1, 1982
33-34222 4(d)(vi) Twenty-seventh May 1, 1986
33-00440 4(c)(iv) Twenty-eighth June 30, 1989
33-34222 4(d)(vii) Twenty-ninth January 1, 1990
33-65720 4(d)(iii) Thirtieth January 1, 1991
33-65720 4(d)(iv) Thirty-first August 15, 1991
33-65720 4(d)(v) Thirty-second March 15, 1992
33-65720 4(d)(vi) Thirty-third April 16,1, 1993
1-3198 4 Thirty-fourth December 1, 1993
Form 8-K
Dated
12/17/93
4(b)*4(b) 33-65720 10(c) Instruments relating to IPC
American Falls bond guarantee. (see
Exhibit 10(c)).
*4(c) 33-65720 4(f) Agreement of IPC to furnish certain
debt instruments.
*4(c) 33-65720 4(e) Rights*4(d) 33-00440 2(a)(iii) Agreement and Plan of Merger dated
January 11,
1990,March 10, 1989, between IPCIdaho Power
Company, a Maine Corporation, and
First Chicago
Trust Company of New York, as
Rights Agent (The Bank of New York,
successor Rights Agent).
*4(c)(I) 1-3198 4(e)(I) Amendment dated as of January 30,
Form 10-K 1998, related to agreement filed as
for 1997 Exhibit 4(c).
*4(d)Idaho Power Migrating Corporation.
*4(e) 1-14465 4 Rights Agreement, dated as of
Form 8-K September 10, 1998, between
dated IDACORP, Inc. and the Bank of New
September York as Rights Agent.
15,1998
*10(a) 2-49584 5(b) Agreements, dated September 22,
1969, between IPC and Pacific
Power & Light Company relating to
the operation, construction and
ownership of the Jim Bridger
Project.
*10(a)(i) 2-51762 5(c) Amendment, dated February 1, 1974,
relating to operation agreement
filed as Exhibit 10(a).
*10(b) 2-49584 5(c) Agreement, dated as of October 11,
1973, between IPC and Pacific
Power & Light Company.
*10(c) 33-65720 10(c) Guaranty Agreement, dated March 1,
1990, between IPC and West One
Bank, as Trustee, relating to
$21,425,000 American Falls
Replacement Dam Bonds of the
American Falls Reservoir District,
Idaho.
*10(d) 2-62034 5(r) Guaranty Agreement, dated as of
August 30, 1974, between IPC and
Pacific Power & Light Company.
*10(e) 2-56513 5(i) Letter Agreement, dated January 23,
1976, between IPC and Portland
General Electric Company.
*10(e)(i) 2-62034 5(s) Agreement for Construction,
Ownership and Operation of the
Number One Boardman Station on
Carty Reservoir, dated as of
October 15, 1998
*10(a)1976, between Portland
General Electric Company and IPC.
*10(e)(ii) 2-62034 5(t) Amendment, dated September 30,
1977, relating to agreement filed
as Exhibit 10(e).
*10(e)(iii) 2-62034 5(u) Amendment, dated October 31, 1977,
relating to agreement filed as
Exhibit 10(e).
*10(e)(iv) 2-62034 5(v) Amendment, dated January 23, 1978,
relating to agreement filed as
Exhibit 10(e).
*10(e)(v) 2-62034 5(w) Amendment, dated February 15, 1978,
relating to agreement filed as
Exhibit 10(e).
*10(e)(vi) 2-68574 5(x) Amendment, dated September 1, 1979,
relating to agreement filed as
Exhibit 10(e).
*10(f) 2-68574 5(z) Participation Agreement, dated
September 1, 1979, relating to the
sale and leaseback of coal handling
facilities at the Number One
Boardman Station on Carty
Reservoir.
*10(g) 2-64910 5(y) Agreements for the Operation,
Construction and Ownership of the
North Valmy Power Plant Project,
dated December 12, 1978, between
Sierra Pacific Power Company and
IPC.
*10(h)(i)1 1-3198 10(n)(I)(i) The Revised Security Plan for
Form 10-K Senior Management Employees - a non-
for 1994 qualified, deferred compensation
plan effective August 1, 1996.
*10(b)1996..
*10(h)(ii)1 1-3198 10(n)(ii) The Executive Annual Incentive Plan
Form 10-K for senior management employees of
for 1994 IPC effective January 1, 1995.
*10(c)*10(h)(iii)1 1-3198 10(n)(iii) The 1994 Restricted Stock Plan for
Form 10-K officers and key executives of
for 1994 IDACORP, Inc. and IPC effective
July 1, 1994.
*10(d)10(h)(iv)1 1-14465 10(h)(iv) The Revised Security Plan for Board
1-3198 of Directors - a non-qualified,
Form 10-K deferred compensation plan
Forfor 1998 effective August 1, 1996, revised
March 2, 1999.
*10(h)(v)1 14465 10(e)1 IDACORP, Inc. Non-Employee
Form 10-Q Directors Stock Compensation Plan
*10(f) 1-3198 10(y)for 6/30/99 as of May 17, 1999.
Form 10-K
for 1997*10(h)(vi) 1-3198 10(y) Executive Employment Agreement
Form 10-K dated November 20, 1996 between IPC
for 1997 and Richard R. Riazzi.
*10(h)(vii) 1-3198 10(g) ExectiveExecutive Employment Agreement
Form 10-Q dated April 12, 1999 between IPC
for 6/30/99 and Marlene Williams.
*10(h)(viii) 1-14465 10(h) Agreement between IDACORP, Inc. and
Form 10-Q Jan B. Packwood, J. LaMont Keen,
for 9/30/99 James C. Miller, Richard Riazzi,
Darrel T. Anderson, Bryan Kearney,
Cliff N. Olson, Robert W. Stahman
and Marlene K. Williams.
*10(h)(ix)1 1-14465 10(h)(ix) IDACORP, Inc. 2000 Long-Term
Form 10-K Incentive and Compensation Plan.
for 1999
*10(i) 33-65720 10(h) Framework Agreement, dated October
1, 1984, between the State of Idaho
and IPC relating to IPC's Swan
Falls and Snake River water rights.
*10(i)(i) 33-65720 10(h)(i) Agreement, dated October 25, 1984,
between the State of Idaho and IPC
relating to the agreement filed as
Exhibit 10(i).
*10(i)(ii) 33-65720 10(h)(ii) Contract to Implement, dated
October 25, 1984, between the State
of Idaho and IPC relating to the
agreement filed as Exhibit 10(i).
*10(j) 33-65720 10(m) Agreement Regarding the Ownership,
Construction, Operation and
Maintenance of the Milner
Hydroelectric Project (FERC No.
2899), dated January 22, 1990,
between IPC and the Twin Falls
Canal Company and the Northside
Canal Company Limited.
*10(j)(i) 33-65720 10(m)(i) Guaranty Agreement, dated February
10, 1992, between IPC and New York
Life Insurance Company, as Note
Purchaser, relating to $11,700,000
Guaranteed Notes due 2017 of Milner
Dam Inc.
12 Statement Re: Computation of Ratio
of Earnings to Fixed Charges.
(IDACORP, Inc.)
12(a) Statement Re: Computation of
Supplemental Ratio of Earnings to
Fixed Charges. (IDACORP, Inc.)
12(b) Statement Re: Computation of Ratio
of Earnings to Combined Fixed
Charges and Preferred Dividend
Requirements. (IDACORP, Inc.)
12(c) Statement Re: Computation of
Supplemental Ratio of Earnings to
Combined Fixed Charges and
Preferred Dividend Requirements.
(IDACORP, Inc.)
12(d) Statement Re: Computation of Ratio
of Earnings to Fixed Charges. (IPC)
12(e) Statement Re: Computation of
Supplemental Ratio of Earnings to
Fixed Charges. (IPC)
12(f) Statement Re: Computation of Ratio
of Earnings to Combined Fixed
Charges and Preferred Dividend
Requirements. (IPC)
12(g) Statement Re: Computation of
Supplemental Ratio of Earnings to
Combined Fixed Charges and
Preferred Dividend Requirements.
(IPC)
15 Letter re: Unaudited Interim
Financial Information.Independent Auditors' Consent.
21 Subsidiaries of IDACORP, Inc. and
IPC.
27(a) Financial Data Schedule for
IDACORP, Inc.
27(b) Financial Data Schedule for IPC.
1Compensatory_______________________________
1 Compensatory plan
(b) Reports on Form 8-K. No reports on Form 8-K were filed
during the three-month period ended June 30, 1999.March 31, 2000.
* Previously filed and Incorporated Hereinherein by ReferenceReference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
IDACORP, Inc.
(Registrant)
Date August 6, 1999May 5, 2000 By: /s/ J LaMont Keen
J LaMont Keen
Senior Vice President
Administration
and Chief Financial Officer
(Principal Financial Officer)
Date August 6, 1999May 5, 2000 By: /s/ Darrel T.T Anderson
Darrel T.T Anderson
Vice President Finance
and Treasurer
(Principal Accounting Officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
IDAHO POWER COMPANY
(Registrant)
Date August 6, 1999May 5, 2000 By: /s/ J LaMont Keen
J LaMont Keen
Senior Vice President
Administration
and Chief Financial Officer
(Principal Financial Officer)
Date August 6, 1999May 5, 2000 By: /s/ Darrel T.T Anderson
Darrel T.T Anderson
Vice President Finance
and Treasurer
(Principal Accounting Officer)