| Benefit Plans | BENEFIT PLANS Idaho Power sponsors defined benefit and other postretirement benefit plans that cover the majority of its employees. Idaho Power also sponsors a defined contribution 401(k) employee savings plan and provides certain post-employment benefits. Pension Plans Idaho Power has two pension plans–a noncontributory defined benefit pension plan (pension plan) and two nonqualified defined benefit pension plans for certain senior management employees called the Security Plan for Senior Management Employees I and Security Plan for Senior Management Employees II (together, SMSP). Idaho Power also has a nonqualified defined benefit pension plan for directors that was frozen in 2002. Remaining vested benefits from that plan are included with the SMSP in the disclosures below. The benefits under these plans are based on years of service and the employee's final average earnings. Idaho Power’s funding policy for the pension plan is to contribute at least the minimum required under the Employee Retirement Income Security Act of 1974 (ERISA) but not more than the maximum amount deductible for income tax purposes. In 2017 , 2016 , and 2015 Idaho Power elected to contribute more than the minimum required amounts in order to bring the pension plan to a more funded position, to reduce future required contributions, and to reduce Pension Benefit Guaranty Corporation premiums. The following table summarizes the changes in benefit obligations and plan assets of these plans (in thousands of dollars): Pension Plan SMSP 2017 2016 2017 2016 Change in projected benefit obligation: Benefit obligation at January 1 $ 895,060 $ 835,523 $ 99,570 $ 95,389 Service cost 33,742 32,019 759 1,228 Interest cost 38,957 37,813 4,315 4,275 Actuarial loss 67,758 22,640 10,635 2,933 Plan amendment — 81 — 120 Benefits paid (36,173 ) (33,016 ) (4,976 ) (4,375 ) Projected benefit obligation at December 31 999,344 895,060 110,303 99,570 Change in plan assets: Fair value at January 1 607,568 559,616 — — Actual return on plan assets 86,288 40,968 — — Employer contributions 40,000 40,000 — — Benefits paid (36,173 ) (33,016 ) — — Fair value at December 31 697,683 607,568 — — Funded status at end of year $ (301,661 ) $ (287,492 ) $ (110,303 ) $ (99,570 ) Amounts recognized in the statement of financial position consist of: Other current liabilities $ — $ — $ (5,010 ) $ (4,733 ) Noncurrent liabilities (301,661 ) (287,492 ) (105,293 ) (94,837 ) Net amount recognized $ (301,661 ) $ (287,492 ) $ (110,303 ) $ (99,570 ) Amounts recognized in accumulated other comprehensive income consist of: Net loss $ 277,052 $ 263,634 $ 41,333 $ 33,660 Prior service cost 68 96 498 625 Subtotal 277,120 263,730 41,831 34,285 Less amount recorded as regulatory asset (277,120 ) (263,730 ) — — Net amount recognized in accumulated other comprehensive income $ — $ — $ 41,831 $ 34,285 Accumulated benefit obligation $ 850,763 $ 766,367 $ 100,222 $ 91,146 As a non-qualified plan, the SMSP has no plan assets. However, Idaho Power has a Rabbi trust designated to provide funding for SMSP obligations. The Rabbi trust holds investments in marketable securities and corporate-owned life insurance. The recorded value of these investments was approximately $85.7 million and $77.8 million at December 31, 2017 and 2016 , respectively, and is reflected in Investments and in Company-owned life insurance on the consolidated balance sheets. The following table shows the components of net periodic benefit cost for these plans (in thousands of dollars). For purposes of calculating the expected return on plan assets, the market-related value of assets is equal to the fair value of the assets. Pension Plan SMSP 2017 2016 2015 2017 2016 2015 Service cost $ 33,742 $ 32,019 $ 33,164 $ 759 $ 1,228 $ 1,689 Interest cost 38,957 37,813 35,171 4,315 4,275 3,868 Expected return on assets (45,138 ) (42,081 ) (42,310 ) — — — Amortization of net loss 13,190 13,331 13,927 2,963 3,532 4,195 Amortization of prior service cost 28 59 221 127 168 185 Net periodic pension cost 40,779 41,141 40,173 8,164 9,203 9,937 Regulatory deferral of net periodic benefit cost (1) (38,699 ) (39,335 ) (38,327 ) — — — Previously deferred pension cost recognized (1) 17,154 17,154 17,154 — — — Net periodic benefit cost recognized for financial reporting (1) $ 19,234 $ 18,960 $ 19,000 $ 8,164 $ 9,203 $ 9,937 (1) Net periodic benefit costs for the pension plan are recognized for financial reporting based upon the authorization of each regulatory jurisdiction in which Idaho Power operates. Under IPUC order, the Idaho portion of net periodic benefit cost is recorded as a regulatory asset and is recognized in the income statement as those costs are recovered through rates. The following table shows the components of other comprehensive income for the plans (in thousands of dollars): Pension Plan SMSP 2017 2016 2015 2017 2016 2015 Actuarial (loss) gain during the year $ (26,608 ) $ (23,753 ) $ (3,790 ) $ (10,635 ) $ (2,933 ) $ 353 Plan amendment service cost — (81 ) — — (120 ) — Reclassification adjustments for: Amortization of net loss 13,190 13,331 13,927 2,963 3,532 4,195 Amortization of prior service cost 28 59 221 127 168 185 Adjustment for deferred tax effects 1,744 4,083 (4,050 ) 1,555 (253 ) (1,851 ) Adjustment due to the effects of regulation 11,646 6,361 (6,308 ) — — — Other comprehensive income recognized related to pension benefit plans $ — $ — $ — $ (5,990 ) $ 394 $ 2,882 In 2018 , IDACORP and Idaho Power expect to recognize as components of net periodic benefit cost $17.5 million from amortizing amounts recorded in accumulated other comprehensive income (or as a regulatory asset for the pension plan) as of December 31, 2017 , relating to the pension plan and SMSP. This amount consists of $13.6 million of amortization of net loss for the pension plan and $3.8 million of amortization of net loss and $0.1 million of amortization of prior service cost for the SMSP. The following table summarizes the expected future benefit payments of these plans (in thousands of dollars): 2018 2019 2020 2021 2022 2023-2027 Pension Plan $ 35,312 $ 37,490 $ 39,983 $ 42,438 $ 44,797 $ 257,290 SMSP 5,100 5,161 5,538 5,707 5,880 30,962 As of December 31, 2017 , IDACORP's and Idaho Power's minimum required contributions to the pension plan are estimated to be zero in 2018 . Depending on market conditions and cash flow considerations in 2018, Idaho Power could contribute up to $40 million to the pension plan during 2018 in order to help balance the regulatory collection of these expenditures with the amount and timing of contributions and to mitigate the cost of being in an underfunded position. Postretirement Benefits Idaho Power maintains a defined benefit postretirement benefit plan (consisting of health care and death benefits) that covers all employees who were enrolled in the active-employee group plan at the time of retirement as well as their spouses and qualifying dependents. Retirees hired on or after January 1, 1999, have access to the standard medical option at full cost, with no contribution by Idaho Power. Benefits for employees who retire after December 31, 2002, are limited to a fixed amount, which has limited the growth of Idaho Power’s future obligations under this plan. The following table summarizes the changes in benefit obligation and plan assets (in thousands of dollars): 2017 2016 Change in accumulated benefit obligation: Benefit obligation at January 1 $ 63,876 $ 62,393 Service cost 973 1,116 Interest cost 2,783 2,766 Actuarial loss 5,769 1,550 Benefits paid (1) (3,562 ) (3,949 ) Plan amendments 212 — Benefit obligation at December 31 70,051 63,876 Change in plan assets: Fair value of plan assets at January 1 34,999 35,566 Actual return on plan assets 5,112 2,425 Employer contributions (1) 1,745 957 Benefits paid (1) (3,562 ) (3,949 ) Fair value of plan assets at December 31 38,294 34,999 Funded status at end of year (included in noncurrent liabilities) $ (31,757 ) $ (28,877 ) (1) Contributions and benefits paid are each net of $3.4 million and $3.7 million of plan participant contributions for 2017 and 2016 , respectively. Amounts recognized in accumulated other comprehensive income consist of the following (in thousands of dollars): 2017 2016 Net gain $ 2,777 $ (55 ) Prior service cost 269 104 Subtotal 3,046 49 Less amount recognized in regulatory assets (3,046 ) (49 ) Net amount recognized in accumulated other comprehensive income $ — $ — The net periodic postretirement benefit cost was as follows (in thousands of dollars): 2017 2016 2015 Service cost $ 973 $ 1,116 $ 1,235 Interest cost 2,783 2,766 2,678 Expected return on plan assets (2,307 ) (2,474 ) (2,680 ) Amortization of prior service cost 47 26 15 Net periodic postretirement benefit cost $ 1,496 $ 1,434 $ 1,248 The following table shows the components of other comprehensive income for the plan (in thousands of dollars): 2017 2016 2015 Actuarial (loss) gain during the year $ (2,964 ) $ (1,600 ) $ 2,413 Prior service cost arising during the year (212 ) — — Reclassification adjustments for amortization of prior service cost 47 26 15 Adjustment for deferred tax effects 807 615 (949 ) Adjustment due to the effects of regulation 2,322 959 (1,479 ) Other comprehensive income related to postretirement benefit plans $ — $ — $ — The following table summarizes the expected future benefit payments of the postretirement benefit plan (in thousands of dollars): 2018 2019 2020 2021 2022 2023-2027 Expected benefit payments $ 5,051 $ 4,667 $ 4,374 $ 4,080 $ 4,070 $ 19,910 Plan Assumptions The following table sets forth the weighted-average assumptions used at the end of each year to determine benefit obligations for all Idaho Power-sponsored pension and postretirement benefits plans: Pension Plan SMSP Postretirement Benefits 2017 2016 2017 2016 2017 2016 Discount rate 3.95 % 4.45 % 3.95 % 4.45 % 3.95 % 4.45 % Rate of compensation increase (1) 4.17 % 4.11 % 4.75 % 4.75 % — — Medical trend rate — — — — 6.8 % 8.3 % Dental trend rate — — — — 4.1 % 5.0 % Measurement date 12/31/2017 12/31/2016 12/31/2017 12/31/2016 12/31/2017 12/31/2016 (1) The 2017 rate of compensation increase assumption for the pension plan includes an inflation component of 2.50% plus a 1.67% composite merit increase component that is based on employees' years of service. Merit salary increases are assumed to be 8.0% for employees in their first year of service and scale down to 0% for employees in their fortieth year of service and beyond. The following table sets forth the weighted-average assumptions used to determine net periodic benefit cost for all Idaho Power-sponsored pension and postretirement benefit plans: Pension Plan SMSP Postretirement Benefits 2017 2016 2015 2017 2016 2015 2017 2016 2015 Discount rate 4.45 % 4.60 % 4.25 % 4.45 % 4.60 % 4.20 % 4.45 % 4.60 % 4.20 % Expected long-term rate of return on assets 7.50 % 7.50 % 7.50 % — — — 6.75 % 7.25 % 7.25 % Rate of compensation increase 4.17 % 4.11 % 4.11 % 4.75 % 4.50 % 4.50 % — — % — % Medical trend rate — — — — — — 6.8 % 8.30 % 9.70 % Dental trend rate — — — — — — 4.0 % 5.00 % 5.00 % The assumed health care cost trend rate used to measure the expected cost of health benefits covered by the postretirement plan was 6.8 percent in 2017 and is assumed to decrease to 6.4 percent in 2018 , 5.9 percent in 2019, 5.4 percent in 2020 and to gradually decrease to 4.1 percent by 2074 . The assumed dental cost trend rate used to measure the expected cost of dental benefits covered by the plan was 4.0 percent , or equal to the medical trend rate if lower, for all years. A one percentage point change in the assumed health care cost trend rate would have the following effects at December 31, 2017 (in thousands of dollars): One-Percentage-Point Increase Decrease Effect on total of cost components $ 301 $ (223 ) Effect on accumulated postretirement benefit obligation 3,166 (2,459 ) Plan Assets Pension Asset Allocation Policy: The target allocation and actual allocations at December 31, 2017 , for the pension asset portfolio by asset class is set forth below: Asset Class Target Allocation Actual Allocation December 31, 2017 Debt securities 24 % 24 % Equity securities 56 % 58 % Real estate 7 % 6 % Other plan assets 13 % 12 % Total 100 % 100 % Assets are rebalanced as necessary to keep the portfolio close to target allocations. The plan’s principal investment objective is to maximize total return (defined as the sum of realized interest and dividend income and realized and unrealized gain or loss in market price) consistent with prudent parameters of risk and the liability profile of the portfolio. Emphasis is placed on preservation and growth of capital along with adequacy of cash flow sufficient to fund current and future payments to pensioners. The three major goals in Idaho Power’s asset allocation process are to: • determine if the investments have the potential to earn the rate of return assumed in the actuarial liability calculations; • match the cash flow needs of the plan. Idaho Power sets bond allocations sufficient to cover at least five years of benefit payments and cash allocations sufficient to cover the current year benefit payments. Idaho Power then utilizes growth instruments (equities, real estate, venture capital) to fund the longer-term liabilities of the plan; and • maintain a prudent risk profile consistent with ERISA fiduciary standards. Allowable plan investments include stocks and stock funds, investment-grade bonds and bond funds, real estate funds, private equity funds, and cash and cash equivalents. With the exception of real estate holdings and private equity, investments must be readily marketable so that an entire holding can be disposed of quickly with only a minor effect upon market price. Rate-of-return projections for plan assets are based on historical risk/return relationships among asset classes. The primary measure is the historical risk premium each asset class has delivered versus the yield on the Moody's AA Corporate Bond Index. This historical risk premium is then added to the current yield on the Moody's AA Corporate Bond Index. Additional analysis is performed to measure the expected range of returns, as well as worst-case and best-case scenarios. Based on the current low interest rate environment, current rate-of-return expectations are lower than the nominal returns generated over the past 20 years when interest rates were generally much higher. Idaho Power’s asset modeling process also utilizes historical market returns to measure the portfolio’s exposure to a “worst-case” market scenario, to determine how much performance could vary from the expected “average” performance over various time periods. This “worst-case” modeling, in addition to cash flow matching and diversification by asset class and investment style, provides the basis for managing the risk associated with investing portfolio assets. Fair Value of Plan Assets: Idaho Power classifies its pension plan and postretirement benefit plan investments using the three-level fair value hierarchy described in Note 15 - "Derivative Financial Instruments." The following table presents the fair value of the plans' investments by asset category (in thousands of dollars). Level 1 Level 2 Level 3 Total Assets at December 31, 2017 Cash and cash equivalents $ 20,852 $ — $ — $ 20,852 Short-term bonds 20,475 — — 20,475 Intermediate bonds 20,699 82,923 — 103,622 Long-term bonds — 40,707 — 40,707 Equity Securities: Large-Cap 95,179 — — 95,179 Equity Securities: Mid-Cap 81,127 — — 81,127 Equity Securities: Small-Cap 62,502 — — 62,502 Equity Securities: Micro-Cap 32,753 — — 32,753 Equity Securities: International 6,774 — — 6,774 Equity Securities: Emerging Markets 8,785 — — 8,785 Plan assets measured at NAV (not subject to hierarchy disclosure) Equity Securities: International 83,589 Equity Securities: Emerging Markets 36,255 Real estate 38,435 Private market investments 31,618 Commodities fund 35,010 Total $ 349,146 $ 123,630 $ — $ 697,683 Postretirement plan assets (1) $ 567 $ 37,727 $ — $ 38,294 Level 1 Level 2 Level 3 Total Assets at December 31, 2016 Cash and cash equivalents $ 28,632 $ — $ — $ 28,632 Short-term bonds 11,198 — — 11,198 Intermediate bonds 11,904 88,734 — 100,638 Long-term bonds — 20,573 — 20,573 Equity Securities: Large-Cap 80,582 — — 80,582 Equity Securities: Mid-Cap 68,634 — — 68,634 Equity Securities: Small-Cap 53,766 — — 53,766 Equity Securities: Micro-Cap 29,671 — — 29,671 Equity Securities: International 7,782 — — 7,782 Equity Securities: Emerging Markets 9,204 — — 9,204 Plan assets measured at NAV (not subject to hierarchy disclosure) Equity Securities: International 64,930 Equity Securities: Emerging Markets 24,443 Real estate 41,907 Private market investments 33,713 Commodities fund 31,895 Total $ 301,373 $ 109,307 $ — $ 607,568 Postretirement plan assets (1) $ 28 $ 34,971 $ — $ 34,999 (1) The postretirement benefits assets are primarily life insurance contracts. For the year ended December 31, 2017 and December 31, 2016 , there were no material transfers into or out of Levels 1, 2, or 3. Fair Value Measurement of Level 2 Plan assets and Plan assets measured at NAV: Level 2 Bonds : These investments represent U.S. government, agency bonds, and corporate bonds. The U.S. government and agency bonds, as well as the corporate bonds, are not traded on an exchange and are valued utilizing market prices for similar assets or liabilities in active markets. Level 2 Postretirement Asset: This asset represents an investment in a life insurance contract and is recorded at fair value, which is the cash surrender value, less any unpaid expenses. The cash surrender value of this insurance contract is contractually equal to the insurance contract's proportionate share of the market value of an associated investment account held by the insurer. The investments held by the insurer's investment account are all instruments traded on exchanges with readily determinable market prices. Commingled Funds : These funds, made up of the international, emerging markets equity securities, and commodities fund measured at NAV, are not publicly traded, and therefore no publicly quoted market price is readily available. The value of the commingled funds are presented at estimated fair value, which is determined based on the unit value of the fund. The values of these investments are calculated by the custodian for the fund company on a monthly or more frequent basis, and are based on market prices of the assets held by each of the commingled funds divided by the number of fund shares outstanding for the respective fund. The investments in commingled funds have redemption limitations that permit monthly redemption following notice requirements of 5 to 7 days. Real Estate : Real estate holdings represent investments in open-ended commingled real estate funds. As the property interests held in these real estate funds are not frequently traded, establishing the market value of the property interests held by the fund, and the resulting unit value of fund shareholders, is based on unobservable inputs including property appraisals by the fund companies, property appraisals by independent appraisal firms, analysis of the replacement cost of the property, discounted cash flows generated by property rents and changes in property values, and comparisons with sale prices of similar properties in similar markets. These open-ended real estate funds also furnish annual audited financial statements that are also used to further validate the information provided. Redemptions are generally available on a quarterly basis, with 10 to 35 days written notice, depending on the individual fund. If the fund has sufficient liquidity, the redemption will be processed at the fund NAV or the fund’s estimate of fair value at the end of the quarter. If the fund does not have sufficient liquidity to honor the full redemption, the remainder will be set for redemption the following quarter on a pro-rata basis with other redemption requests. This same process will repeat until the redemption request has been completed. To protect other fund holders, real estate funds have no duty to liquidate or encumber funds to meet redemption requests. Private Market Investments : Private market investments represent two categories: fund of hedge funds and venture capital funds. These funds are valued by the fund companies based on the estimated fair values of the underlying fund holdings divided by the fund shares outstanding or multiplied by the ownership percentages of the holder. Some hedge fund strategies utilize securities with readily available market prices, while others utilize less liquid investment vehicles that are valued based on unobservable inputs including cost, operating results, recent funding activity, or comparisons with similar investment vehicles. Redemptions are available on a quarterly basis with 70 days written notice. Redemptions will be processed at the quarterly NAV or fair value within 60 days following quarter end. In the event of a full redemption, a reserve amount of 5% to 10% of the redemption amount may be held in reserve until the audited financial statements of the fund are published. This allows the fund to adjust the redemption so that other fund holders are not adversely impacted. Venture capital fund investments are valued by the fund companies based on estimated fair value of the underlying fund holdings divided by the fund shares outstanding. Some venture capital investments have progressed to the point that they have readily available exchange-based market valuations. Early stage venture investments are valued based on unobservable inputs including cost, operating results, discounted cash flows, the price of recent funding events, or pending offers from other viable entities. These private market investments furnish annual audited financial statements that are also used to further validate the information provided. These funds are formed for a stated life of 10 to 15 years. The general partner can extend the fund life for 2 or 3 one-year periods. The fund can be further extended with the approval of the limited partners. There are generally no redemption rights associated with these funds. The limited partner must hold the fund for the life of the fund or find a third-party buyer. Employee Savings Plan Idaho Power has a defined contribution plan designed to comply with Section 401(k) of the Internal Revenue Code and that covers substantially all employees. Idaho Power matches specified percentages of employee contributions to the plan. Matching annual contributions were approximately $7.4 million , $7.5 million , and $6.9 million in 2017 , 2016 , and 2015 , respectively. Post-employment Benefits Idaho Power provides certain benefits to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement, in addition to the health care benefits required under the Consolidated Omnibus Budget Reconciliation Act. These benefits include salary continuation, health care and life insurance for those employees found to be disabled under Idaho Power’s disability plans, and health care for surviving spouses and dependents. Idaho Power accrues a liability for such benefits. The post employment benefits included in other deferred credits on both IDACORP’s and Idaho Power’s consolidated balance sheets at December 31, 2017 , 2016 , and 2015 , were approximately $2 million . |
