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 March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-3198
IDAHO POWER COMPANY
(Exact name of registrant as specified in its charter)
Idaho 82-0130980
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1221 W. Idaho Street, Boise, Idaho 83702-5627
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (208) 388-2200
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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Number of shares of Common Stock, $2.50 par value, outstanding as of
April 30, 1995 is 37,612,351.
IDAHO POWER COMPANY
Index
Part I. Financial Information: Page No
Item 1. Financial Statements
Consolidated Statements of Income - Three Months,
and Twelve Months Ended March 31, 1995 and 1994 3,4
Consolidated Balance Sheets - March 31, 1995
and December 31, 1994 5,6
Consolidated Statements of Cash Flows -
Three Months and Twelve Months Ended March 31,
1995 and 1994 7,8
Consolidated Statements of Capitalization -
March 31, 1995 and December 31, 1994 9
Notes to Consolidated Financial Statements 10,11
Report on Review by Independent Accountants 12
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 13-20
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K 21,22
Signatures 23
PART I - FINANCIAL INFORMATION
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Item 1. Financial Statements
Three Months Ended
March 31, Increase
1995 1994 (Decrease)
(Thousands of Dollars)
REVENUES (Notes 1 and 4) $131,336 $128,810 $ 2,526
EXPENSES (Notes 1 and 4):
Operation:
Purchased power 6,717 5,214 1,503
Fuel expense 15,492 25,487 (9,995)
Other 30,717 28,847 1,870
Maintenance 9,058 10,042 (984)
Depreciation 16,674 16,033 641
Taxes other than income taxes 6,126 5,779 347
Total expenses 84,784 91,402 (6,618)
INCOME FROM OPERATIONS 46,552 37,408 9,144
OTHER INCOME:
Allowance for equity funds used during
construction (Note 2) (2) 726 (728)
Other - Net 1,944 2,530 (586)
Total other income 1,942 3,256 (1,314)
INTEREST CHARGES:
Interest on long-term debt 12,789 12,795 (6)
Other interest 1,273 719 554
Total interest charges 14,062 13,514 548
Allowance for borrowed funds used
during construction (Note 2) (529) (516) (13)
Net interest charges 13,533 12,998 535
INCOME BEFORE INCOME TAXES 34,961 27,666 7,295
INCOME TAXES 14,234 9,406 4,828
NET INCOME 20,727 18,260 2,467
Dividends on preferred stock 2,026 1,789 237
EARNINGS ON COMMON STOCK $ 18,701 $ 16,471 $ 2,230
AVERAGE COMMON SHARES
OUTSTANDING (000) 37,612 37,249 N/A
Earnings per share of common stock $ 0.50 $ 0.44 $ 0.06
Dividends paid per share of common stock $ 0.465 $ 0.465 $ -
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED MARCH 31, 1995 AND 1994
Twelve Months Ended
March 31, Increase
1995 1994 (Decrease)
(Thousands of Dollars)
REVENUES (Notes 1 and 4) $546,184 $528,403 $ 17,781
EXPENSES (Notes 1 and 4):
Operation:
Purchased power 61,720 42,079 19,641
Fuel expense 84,893 87,358 (2,465)
Other 113,123 115,024 (1,901)
Maintenance 42,505 44,310 (1,805)
Depreciation 60,843 59,337 1,506
Taxes other than income taxes 24,292 22,420 1,872
Total expenses 387,376 370,528 16,848
INCOME FROM OPERATIONS 158,808 157,875 933
OTHER INCOME:
Allowance for equity funds used during
construction (Note 2) 951 2,991 (2,040)
Other - Net 9,896 9,678 218
Total other income 10,847 12,669 (1,822)
INTEREST CHARGES:
Interest on long-term debt 51,167 52,889 (1,722)
Other interest 3,815 3,161 654
Total interest charges 54,982 56,050 (1,068)
Allowance for borrowed funds used
during construction (Note 2) (1,795) (2,153) 358
Net interest charges 53,187 53,897 (710)
INCOME BEFORE INCOME TAXES 116,468 116,647 (179)
INCOME TAXES 39,070 35,270 3,800
NET INCOME 77,398 81,377 (3,979)
Dividends on preferred stock 7,636 6,453 1,183
EARNINGS ON COMMON STOCK $ 69,762 $ 74,924 $ (5,162)
AVERAGE COMMON SHARES
OUTSTANDING (000) 37,590 36,902 N/A
Earnings per share of common stock $ 1.86 $ 2.03 $ (0.17)
Dividends paid per share of common stock $ 1.86 $ 1.86 $ -
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1995 1994
(Thousands of Dollars)
ELECTRIC PLANT:
In service (at original cost) $2,398,297 $2,383,898
Accumulated provision for depreciation (791,203) (775,033)
In service - Net 1,607,094 1,608,865
Construction work in progress 50,014 46,628
Held for future use 1,150 1,150
Electric plant - Net 1,658,258 1,656,643
INVESTMENTS AND OTHER PROPERTY 16,313 18,034
CURRENT ASSETS:
Cash and cash equivalents 7,278 7,748
Receivables:
Customer 31,016 31,889
Allowance for uncollectible accounts (1,441) (1,377)
Notes 4,831 4,962
Employee notes receivable 5,557 5,444
Other 5,855 4,316
Accrued unbilled revenues (Note 1) 20,130 29,115
Materials and supplies (at average cost) 25,135 24,141
Fuel stock (at average cost) 13,195 11,310
Prepayments 20,091 21,398
Regulatory assets associated with income taxes 5,862 5,674
Total current assets 137,509 144,620
DEFERRED DEBITS:
American Falls and Milner water rights 32,605 32,605
Company owned life insurance 49,526 49,510
Regulatory assets associated with income taxes 177,737 179,311
Regulatory assets - other 71,252 67,713
Other 42,904 43,380
Total deferred debits 374,024 372,519
TOTAL $2,186,104 $2,191,816
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION & LIABILITIES
March 31, December 31,
1995 1994
(Thousands of Dollars)
CAPITALIZATION (See Page 9):
Common stock equity - $2.50 par value (shares
authorized 50,000,000; shares outstanding
March 31, 1995 - 37,612,351; December 31,
1994 - 37,612,351) $ 657,340 $ 673,800
Preferred stock (Note 5) 132,382 132,456
Long-term debt (Note 5) 693,213 693,206
Total capitalization 1,482,935 1,499,462
CURRENT LIABILITIES:
Long-term debt due within one year 517 517
Notes payable 47,500 55,000
Accounts payable 18,962 32,063
Taxes accrued 27,107 16,394
Interest accrued 14,238 14,755
Other 31,337 12,574
Total current liabilities 139,661 131,303
DEFERRED CREDITS:
Accumulated deferred investment tax credits 71,526 71,593
Accumulated deferred income taxes 383,392 380,926
Regulatory liabilities associated with income taxes 35,143 35,090
Regulatory liabilities - other 649 626
Other 72,798 72,816
Total deferred credits 563,508 561,051
COMMITMENTS AND CONTINGENT LIABILITIES (Note 3)
TOTAL $2,186,104 $2,191,816
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Three Months Ended
March 31,
1995 1994
(Thousands of Dollars)
OPERATING ACTIVITIES:
Cash received from operations:
Retail revenues $118,958 $112,537
Wholesale revenues 15,691 18,110
Other revenues 5,528 5,614
Fuel paid (20,659) (25,263)
Purchased power paid (11,966) (7,581)
Other operation & maintenance paid (39,096) (41,303)
Interest paid (includes long and
short-term debt only) (14,168) (13,411)
Income taxes paid (3,000) (2,030)
Taxes other than income taxes paid (2,119) (1,883)
Other operating cash receipts and payments-Net (4,001) (4,506)
Net cash provided by operating activities 45,168 40,284
FINANCING ACTIVITIES:
Common stock issued - 6,765
Short-term borrowings - Net (7,500) (2,000)
Long-term debt retirement (17) (16)
Preferred stock retirement (38) (76)
Dividends on preferred stock (2,091) (1,814)
Dividends on common stock (17,498) (17,250)
Other sources (812) -
Net cash - financing activities (27,956) (14,391)
INVESTING ACTIVITIES:
Additions to utility plant (17,246) (26,513)
Conservation (1,339) (1,384)
Other 903 (1,420)
Net cash - investing activities (17,682) (29,317)
Change in cash and cash equivalents (470) (3,424)
Cash and cash equivalents beginning of period 7,748 8,228
Cash and cash equivalents end of period $ 7,278 $ 4,804
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $ 20,727 $ 18,260
Adjustments to reconcile net income to net cash:
Depreciation 16,674 16,033
Deferred income taxes 3,920 4,032
Investment tax credit-Net (67) (177)
Allowance for funds used during construction (527) (1,242)
Postretirement benefits funding (excl pensions) (1,037) (1,336)
Changes in operating assets and liabilities:
Accounts receivable 8,841 7,451
Fuel inventory (5,167) 224
Accounts payable (5,249) (2,367)
Taxes payable 11,395 7,426
Interest payable (110) (100)
Other - Net (4,232) (7,920)
Net cash provided by operating activities $ 45,168 $ 40,284
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1995 AND 1994
Twelve Months Ended
March 31,
1995 1994
(Thousands of Dollars)
OPERATING ACTIVITIES:
Cash received from operations:
Retail revenues $463,623 $430,315
Wholesale revenues 59,691 85,957
Other revenues 23,625 23,165
Fuel paid (89,926) (86,111)
Purchased power paid (66,977) (42,664)
Other operation & maintenance paid (169,566) (166,854)
Interest paid (includes long and
short-term debt only) (53,133) (51,035)
Income taxes paid (17,488) (33,034)
Taxes other than income taxes paid (21,934) (22,347)
Other operating cash receipts and payments-Net 2,612 4,784
Net cash provided by operating activities 130,527 142,176
FINANCING ACTIVITIES:
First mortgage bonds issued - 188,136
PC bond fund requisitions/other long-term debt - 1,218
Common stock issued 6,636 26,957
Preferred stock issued - 24,781
Short-term borrowings - Net 45,500 (3,140)
Long-term debt retirement (466) (191,877)
Preferred stock retirement (129) (134)
Dividends on preferred stock (7,841) (6,343)
Dividends on common stock (69,848) (68,376)
Other sources (792) -
Net cash - financing activities (26,940) (28,778)
INVESTING ACTIVITIES:
Additions to utility plant (101,257) (119,386)
Conservation (6,785) (6,581)
Other 6,929 9,918
Net cash - investing activities (101,113) (116,049)
Change in cash and cash equivalents 2,474 (2,651)
Cash and cash equivalents beginning of period 4,804 7,455
Cash and cash equivalents end of period $ 7,278 $ 4,804
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 77,398 $ 81,377
Adjustments to reconcile net income to net cash:
Depreciation 60,843 59,337
Deferred income taxes 13,754 8,932
Investment tax credit-Net (954) (1,635)
Allowance for funds used during construction (2,746) (5,144)
Postretirement benefits funding (excl pensions) (4,884) (7,932)
Changes in operating assets and liabilities:
Accounts receivable 755 11,034
Fuel inventory (5,034) 1,247
Accounts payable (5,257) (585)
Taxes payable 11,266 (4,952)
Interest payable 1,641 3,736
Other - Net (16,255) (3,239)
Net cash provided by operating activities $130,527 $142,176
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
March 31, December 31,
1995 1994
(Thousands of Dollars)
COMMON STOCK EQUITY:
Common stock $ 94,031 $ 94,031
Premium on capital stock 362,870 363,063
Capital stock expense (4,130) (4,132)
Retained earnings 204,569 220,838
Total common stock equity 657,340 44.3% 673,800 45.0%
PREFERRED STOCK, cumulative,
($100 par or stated value):
4% preferred stock (authorized 215,000;
shares outstanding: 1995-173,823;
1994-174,556) 17,382 17,456
Serial preferred stock, authorized
150,000 shares:
7.68% Series, outstanding 150,000 shares 15,000 15,000
Serial preferred stock, without par value,
authorized 3,000,000 shares:
8.375% Series (authorized and outstanding
250,000 shares) 25,000 25,000
Auction Rate Preferred Series A
(authorized and outstanding 500
shares) 50,000 50,000
7.07% Series (authorized and outstanding
250,000 shares) 25,000 25,000
Total preferred stock 132,382 8.9 132,456 8.8
LONG-TERM DEBT (Note 5):
First mortgage bonds:
5 1/4% Series due 1996 20,000 20,000
5.33 % Series due 1998 30,000 30,000
8.65 % Series due 2000 80,000 80,000
6.40 % Series due 2003 80,000 80,000
8 % Series due 2004 50,000 50,000
9.50 % Series due 2021 75,000 75,000
7.50 % Series due 2023 80,000 80,000
8 3/4% Series due 2027 50,000 50,000
9.52 % Series due 2031 25,000 25,000
Total first mortgage bonds 490,000 490,000
Pollution control revenue bonds:
5.90 % Series due 2003 24,650* 24,650*
6 % Series due 2007 24,000 24,000
7 1/4% Series due 2008 4,360 4,360
7 5/8% Series 1983-1984 due 2013-2014 68,100 68,100
8.30 % Series 1984 due 2014 49,800 49,800
Total pollution control revenue bonds 170,910 170,910
*Amount due within one year (450) (450)
Net pollution control revenue bonds 170,460 170,460
REA Notes 1,751 1,768
Amount due within one year (67) (67)
Net REA Notes 1,684 1,701
American Falls bond guarantee 20,905 20,905
Milner Dam note guarantee 11,700 11,700
Unamortized premium/discount - Net (1,536) (1,560)
Total long-term debt 693,213 46.8 693,206 46.2
TOTAL CAPITALIZATION $1,482,935 100.0% $1,499,462 100.0%
<FN>
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES:
Financial Statements
In the opinion of the Company, the accompanying unaudited
financial statements contain all adjustments necessary to
present fairly the consolidated financial position as of
March 31, 1995 and the consolidated results of operation for the
three months and twelve months ended March 31, 1995 and 1994 and
the consolidated cash flows for the three months and twelve
months ended March 31, 1995 and 1994. These condensed financial
statements do not contain the complete detail or footnote
disclosure concerning accounting policies and other matters
which would be included in full year financial statements and,
therefore, they should be read in conjunction with the Company's
audited financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994. The
results of operation 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 subsidiaries, Idaho Energy
Resources Co (IERCo), Idaho Utility Products Company (IUPCO),
IDACORP, INC., Ida-West Energy Company (Ida-West), and Stellar
Dynamics. All significant intercompany transactions and balances
have been eliminated in consolidation.
Revenues
In order to match revenues with associated expenses, the Company
accrues unbilled revenues for electric services delivered to
customers but not yet billed at month-end.
Cash Flows
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand and highly liquid temporary investments
with original maturity dates of three months or less.
Reclassifications
Certain items previously reported for periods prior to 1995 have
been reclassified to conform with the current year's
presentation. Net income was not affected by these
reclassifications.
2. ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFDC):
The allowance, a non-cash item, represents the composite
interest costs of debt, shown as a reduction to interest
charges, and a return on equity funds, shown as an addition to
other income, used to finance construction. While cash is not
realized currently from such allowance, it is realized under the
rate making process over the service life of the related
property through increased revenues resulting from higher rate
base and higher depreciation expense. Based on the uniform
formula adopted by the Federal Energy Regulatory Commission, the
Company's weighted average monthly AFDC rate for the three
months ended March 31, 1995, was 6.1 percent and was 8.2 percent
for the entire year of 1994.
3. 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 $6,875,100 at March 31, 1995. 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 materially adverse effect on the
Company's financial position, results of operation, or cash
flow.
4. REGULATORY ISSUES:
The Company has in place, in its Idaho jurisdiction, a Power
Cost Adjustment (PCA) mechanism which allows Idaho's retail
customer rates to be adjusted annually to reflect the Idaho
share of forecasted net power supply costs. Deviations from
forecasted costs are deferred with interest and then adjusted
(trued-up) in the subsequent year. At March 31, 1995, the
Company had recorded $10.7 million of power supply costs above
those projected in the 1994 forecast. The current balance is
adjusted monthly as actual conditions are compared to the
forecasted net power supply costs.
In addition, the Company filed for temporary drought relief with
the Oregon Public Utility Commission (OPUC). As a result of this
filing, the OPUC issued an accounting order granting the Company
permission to defer, with interest, 60 percent of Oregon's share
of the Company's increased power supply costs incurred between
May 13, 1994 and December 31, 1994. The Company filed a request
on April 18, 1995 with the OPUC to recover the deferred amount
of $1.3 million.
5. FINANCING:
The Company currently has a $200,000,000 shelf registration
statement which can be used for both First Mortgage Bonds
(including Medium Term Notes) and Preferred Stock.
INDEPENDENT ACCOUNTANTS' REPORT
Idaho Power Company
Boise, Idaho
We have reviewed the accompanying consolidated balance sheets
and statements of capitalization of Idaho Power Company and
subsidiaries as of March 31, 1995 and 1994, and the related
consolidated statements of income for the three and twelve-
month periods ended March 31, 1995 and 1994 and consolidated
statements of cash flows for the three-month and twelve-month
periods ended March 31, 1995 and 1994. 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 making inquiries of persons responsible for
financial and accounting matters. It is substantially less in
scope than an audit in accordance with generally accepted
auditing standards, 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
generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet
and statement of capitalization of Idaho Power Company and
subsidiaries as of December 31, 1994, and the related
consolidated statements of income, retained earnings, and cash
flows for the year then ended (not presented herein), and in
our report dated January 31, 1995, 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, 1994 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
Portland, Oregon
April 28, 1995
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Idaho Power Company's consolidated financial statements represent the
Company and its five wholly-owned subsidiaries: Idaho Energy Resources
Company (IERCo); Ida-West Energy Company (Ida-West); IDACORP, Inc.;
Idaho Utility Products Company (IUPCo); and Stellar Dynamics. This
discussion uses the terms Idaho Power and the Company interchangeably
to refer to Idaho Power Company and its subsidiaries.
The Company is primarily a hydro-based electric utility. Operational
results, as with other utilities in the Northwest, are significantly
affected by changing weather, precipitation, and streamflow conditions.
In addition, the amount of energy used by general business consumers
varies from season to season - and from month to month within each
season - due primarily to seasonal weather. Non-firm (or off-system)
energy sales also vary, by quarter and by year, as a result of varying
hydro conditions and energy demand from other utilities. Operating
costs fluctuate during periods when reduced low-cost hydroelectric
generating capability, or a strong non-firm energy market, increases
the Company's reliance on higher cost thermal generation or purchases
of power from other utilities.
The Power Cost Adjustment (PCA) mechanism, applied in the Company's
Idaho jurisdiction, provides recovery for a major portion of those
operating expenses that have the greatest potential for variation.
With the PCA, the Company's operating and earnings per share results
are more closely aligned with general regulatory, economic, and
temperature-related weather conditions, and less dependent on variable
precipitation and streamflow conditions.
Earnings Per Share and Book Value
Earnings per share of common stock were $.50 for the quarter, an
increase of $0.06 (or 13.6 percent) from the same quarter last year.
The twelve months ended March 31, 1995 showed earnings of $1.86 per
share, a decrease of $0.17 (8.4 percent) from the twelve months ended
March 31, 1994. The twelve-month earnings represent a 10.6 percent
earned return on year-end March 31 common equity compared to the 11.5
percent earned through March 31 last year. At March 31, 1995, the book
value per share of common stock was $17.48 compared to $17.44 for the
same period a year ago.
The Idaho Public Utilities Commission (IPUC) on March 21, 1995, issued
an order denying the Company's Petition for Reconsideration as to the
return on common equity (ROE) of 11.0% which was granted on January 31,
1995, in the Company's recent general revenue requirement case. The
denial of this Petition and resulting low allowed ROE will make it very
difficult for the Company to increase retained earnings and
consequently the book value of the Company. The Company's management is
looking at all viable options, including substantial reductions in
expenditures beyond our 1995 targets, a review of customer programs, as
well as all possible regulatory options to move toward financial
recovery.
RESULTS OF OPERATIONS
Precipitation and Streamflows
The first three months of 1995 were characterized by above-normal
precipitation, along with above-normal temperatures throughout the
service territory. At April 1, 1995, for the Snake River above Brownlee
Reservoir (water source to the three-dam Hells Canyon complex which
generates about half of the electricity produced by the Company in a
normal year), the average snow water equivalent is 103 percent of the
30-year average compared to 59 percent of average last year at this
time. However, reservoir storage above Brownlee is 63 percent of
capacity and 90 percent of average this year compared to 80 percent of
capacity and 115 percent of average a year ago.
Inflows into Brownlee result from a combination of precipitation,
storage, and ground water conditions and at April 1, 1995 the Company
estimates there will be 4.4 million acre-feet (MAF) or approximately 92
percent of the 66-year median of 4.8 MAF during the April-July period.
Energy Requirements
The Company's total system energy requirements for the three month
period have been supplied from the following sources: hydro generation
54 percent, thermal generation 35 percent, and purchased power and
other interchanges 11 percent. This compares to a total system energy
requirement of 45 percent hydro, 51 percent thermal, and 4 percent from
purchase power and other interchanges for the same period of 1994.
With precipitation above average and reservoir carryover storage below
average, the Company estimates that 49 percent of its 1995 energy
requirements will come from hydro generation, 41 percent from thermal
generation, and 10 percent from purchased power and other interchanges.
Under normal conditions, the Company's hydro system would contribute
approximately 58 percent, with thermal generation accounting for
approximately 33 percent, and the remaining 9 percent from purchased
power and other interchanges.
Regulatory Issues
The Company presently contemplates filing a general revenue requirement
case in Oregon, during the second quarter, using the same information
prepared for its recently completed general revenue requirement
proceeding before the IPUC.
The Company's PCA mechanism applies only to its Idaho jurisdiction. As
a result of 1994's high power supply costs, the Company also filed for
temporary drought relief with the Oregon Public Utilities Commission
(OPUC). The OPUC issued an accounting order granting the Company
permission to defer with interest 60 percent of Oregon's share of the
Company's increased power supply costs incurred between May 13, 1994
and December 31, 1994. The amount deferred at December 31, 1994 was
$1.3 million. The Company filed an application with the OPUC on
April 18, 1995, seeking authorization to continue a July 1, 1993,
surcharge in Oregon until the Company's 1994 deferred power costs are
recovered. The Company anticipates receiving this order from the OPUC
prior to July 1, 1995.
Power Cost Adjustment
Since 1993, the Company has been permitted a PCA mechanism in its Idaho
jurisdiction. The PCA enables the Company to collect or refund a
portion of the difference between net power supply costs actually
incurred and those allowed in the base rates of the Company. The
current balance is adjusted monthly as actual conditions are compared
to the PCA forecasted net power supply costs. At March 31, 1995, the
Company had recorded $10.7 million of power supply costs above those
projected in the 1994 PCA forecast which were included in the true-up
portion of the 1995 PCA filing. Effective February 1, 1995, with the
completion of the Company's most recent Idaho jurisdiction revenue
requirements case, 90 percent of the net power supply cost deviations
from normalized rates are included in the PCA. The Company filed its
1995 PCA application on April 14, 1995, requesting a decrease in the
Idaho jurisdiction PCA rate. The decrease from last year's PCA
adjustment is approximately $7.3 million or 1.6 percent, including last
year's true-up.
Revenues
General business revenues were up for both the quarter ($6.5 million or
6.4 percent) and twelve months ending March 31, 1995 ($46.2 million or
11.1 percent). The quarterly increases reflect an increase in the
number of new customers and the recent rate increase granted by the
IPUC. These increases were partially offset by above-normal winter
temperatures which reduced demand in weather sensitive (residential and
small commercial) customer classes. The number of heating degree days
were down 16.6 percent from normal and 9.0 percent from the same period
in 1994.
The quarterly increase also reflects revenue increases in all customer
classes over those achieved in first-quarter of 1994. Residential
revenues increased $2.2 million (4.3 percent); small commercial sales
increased $0.7 million (3.2 percent); and large commercial sales rose
$3.4 million (14.1 percent).
The increase for the twelve month period represents strong economic
growth in the Company's service territory, increases in new customers,
energy usage patterns, and the recent rate increase in the Idaho
jurisdiction. The total number of general business customers served
rose by 11,619, a 3.6 percent increase over the same period last year.
Total sales for resale were down $4.1 million during the first quarter
and $29.4 million for the twelve month period. The decreases reflect
improved hydro-generation conditions throughout the Northwest, which
lowered the price received from such sales, and the above normal
temperatures which have reduced demand from weather sensitive
customers.
Total operating revenues increased $2.5 million (2.0 percent) for the
first three months of 1995 and improved $17.8 million (3.4 percent) for
the twelve months ended March 31, 1995, when compared to the
corresponding periods a year ago.
Expenses
Total operating expenses were down $6.6 million (7.2 percent) for the
quarter and $16.8 million (4.5 percent) for the twelve months ended
March 31, 1995.
Purchased power expenses were up for the quarter by $1.5 million due to
economy purchases made while the market for off-system sales was soft
and purchases could be made below the cost of the Company's own thermal
production. For the twelve month period ended March 31, 1995 purchased
power expenses were up by $19.6 million primarily because of the
drought conditions of 1994. Fuel expenses were lower for both the three
and twelve month periods, $10.0 million and $2.5 million respectively,
again reflecting good hydroelectric conditions and the reduced demand
due to warmer weather, these costs were further affected by economy
purchases of power during the quarter and high fuel costs during 1994
due to drought conditions.
All other operation and maintenance expenses were up $0.9 million for
the three months, but decreased $3.7 million for the twelve months
ended March 31, 1995. The quarterly increase reflects increased
accruals for post-retirement expenses, pension expense, and
conservation program amortization, all due to the outcome of the recent
Idaho revenue requirements case. The decrease for the twelve months is
due to the accounting for the PCA (see Note 4 of Notes to Consolidated
Financial Statements), reduced regulatory commission expense, and
reduced thermal operation and maintenance expense.
Total interest costs increased slightly for the three month period
reflecting an increase in the amount of short term borrowings and
decreased for the twelve months reflecting the interest expense
recorded last year associated with income tax settlements with the
Internal Revenue Service. Income taxes increased for both periods due
to changes in pre-tax income, prior year adjustments and the Wiley
project write-off in 1994 and increased deferred taxes in 1995 as a
result of 1994 plant additions.
Ida-West Energy Company
Ida-West Energy Company, a wholly-owned subsidiary of the Company, owns
through various partnerships 50 percent of five Idaho Hydroelectric
projects with a total generating capacity of approximately 34
megawatts. Third parties unaffiliated with Ida-West own the remaining
50 percent of these projects, thus satisfying "qualifying facility"
status under PURPA guidelines. The partnerships have obtained project
financing (non-recourse to the Company) for each of these facilities.
As a part of its Resource Contingency Program, the Bonneville Power
Administration (BPA) requested proposals to provide up to 800 average
megawatts of energy options. Ida-West, along with two partners,
submitted a proposal for a 227 megawatt gas-fired cogeneration project
to be located near Hermiston, Oregon. On June 4, 1993, BPA selected
three projects - including that of the partnership - for participation
in the program. The partnership and BPA signed an option development
agreement granting BPA an option to acquire energy and capacity from
the project any time during a five-year option hold period after all
option development period tasks, including permitting, have been
completed. The option also entitles the partnership to BPA
reimbursement for certain development costs, based on achievement of
certain milestones. This option includes an exclusive right to acquire
energy and capacity from a second 233 megawatt unit at the site during
the same five-year option hold period. In March 1994, BPA and the
partnership reached an additional agreement on the power purchase
contract, setting forth the terms and conditions on which BPA will
purchase energy and capacity from the project upon exercise of the
option. The partnership expects to complete development period tasks by
year-end 1995. Project financing for construction costs would be non-
recourse to the Company.
The Company has invested $20 million in Ida-West. Ida-West continues an
active search for new projects.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
Net cash generation from operations for the three months ended March
31, 1995 amounted to $45.2 million. After deducting for both common and
preferred dividends, net cash generation from operating activities
provided approximately $25.5 million (a 20.4 percent increase from the
same period of 1994) for the Company's construction program and other
capital requirements.
Cash Expenditures
The Company's cash construction program for 1995 is presently estimated
to require cash funds of approximately $94.8 million. Generating
facilities comprise approximately 30 percent of the total required cash
funds, transmission is 14 percent, distribution is 40 percent, with the
balance for general plant and equipment. This estimate is subject to
revision in light of changing economic, regulatory, and environmental
factors and conservation policies. Approximately $17.2 million was
expended during the first three months for construction.
The Company's primary financial commitments and obligations are related
to contracts and purchase orders associated with the ongoing
construction program and are expected to be financed using both
internally generated funds and externally financed capital to the
extent required. Although the Company has regulatory approval to incur
up to $150 million of bank borrowings, it presently maintains lines of
credit aggregating $90 million with various banks which may be used to
finance a portion of the construction program on an interim basis. At
March 31, 1995, the Company had short-term borrowings of $47.5 million.
Financing Program
The Company has on file a shelf registration statement for the issuance
of first mortgage bonds and/or preferred stock with a total aggregate
principal amount not to exceed $200 million.
The Company's current objective is to maintain capitalization ratios of
approximately 45 percent common equity, 8 to 10 percent preferred
stock, and the balance in long-term debt. The Company's strategy is to
achieve this target structure through accumulated earnings and issuance
of new equity. For the twelve month period ended March 31, 1995, the
Company's consolidated pre-tax interest coverage was 3.12 times.
Construction Program
Expansion of the Twin Falls Project continues with completion estimated
for mid-1995. Total cash expenditures for the Twin Falls expansion are
currently estimated at $38.1 million, with total construction costs at
$41.9 million, including an allowance for funds used during
construction. When completed, this project will add 43 MW of new
capacity to the Company's generation system.
In addition, the Company continues to explore the economic feasibility
of constructing the Southwest Intertie Project (SWIP). The Bureau of
Land Management (BLM) completed the Final Environmental Impact
Statement/Proposed Plan Amendment for the SWIP with a Record of
Decision and Right of Way issued in December 1994. The utility and BLM
will begin to prepare a detailed site-specific construction, operation,
and maintenance plan aimed at mitigating the environmental impact of
the project. Detailed engineering work could begin in 1995. The Company
has received preliminary commitments from various utility and non-
utility entities for financial participation in the project. The
Company intends to retain up to a 20 percent ownership in the line.
Salmon Recovery Plan
Work continues on the development of a comprehensive and scientifically
credible plan to ensure the long-term survival of anadromous fish runs
on the Columbia and Lower Snake Rivers. The Company fully supports and
actively participates in this regional effort.
In mid-August 1994, the federal government changed its designation of
the Snake River Fall Chinook Salmon from Threatened to Endangered. The
Company does not anticipate that the new designation will have any
additional effects on its operations. In September 1991, the Company
modified operations at its three-dam Hells Canyon Hydroelectric Complex
to protect the Fall Chinook downstream during spawning and juvenile
emergence.
Pursuant to a Ninth Circuit Court's decision, which determined the
Northwest Power Planning Council's (NWPPC) 1993 strategy for salmon was
in violation of the 1980 Northwest Power Planning Act, the NWPPC
adopted amendments to its Strategy for Salmon on December 15, 1994. The
amended Strategy calls for a substantial increase in water from the
Snake River to aid juvenile fish in their downstream migration to the
sea. The Plan requires the Bureau of Reclamation to acquire 500,000
acre-feet of additional water by 1996 and another 500,000 acre-feet by
1998 for a total of 1,000,000 acre-feet in addition to the present
contribution of 427,000 acre-feet. This water is to be acquired from
willing sellers and could have a material impact on the Company's power
supply costs. The Plan also calls for an additional 237,000 acre-foot
contribution from the Company's Brownlee Reservoir for which the
Company is to be reimbursed by the BPA.
Pending completion of a final recovery plan by the National Marine
Fisheries Service (NMFS), the U.S. Army Corps of Engineers and other
governmental agencies operating federally-owned dams and reservoirs on
the Snake and Columbia Rivers have consulted the NMFS each year
regarding federal system operations. The NMFS released its "Proposed
Recovery Plan for Snake River Salmon" (Recovery Plan) on March 20,
1995. They will accept comments on the proposed Recovery Plan through
June of 1995. The Company is reviewing the proposed Recovery Plan and,
if appropriate, will make comments. Included in the Recovery Plan is
the 1995 Biological Opinion which provides for the same 427,000 acre-
feet water budget from the Upper Snake and 237,000 acre-feet of water
from Brownlee, as does the NWPPC Amended Plan.
Relicensing of Hydroelectric Projects
The Company is vigorously pursuing the relicensing of its hydroelectric
projects, a process that will continue for the next 10 to 15 years. The
Company will submit applications for license renewal to the Federal
Energy Regulatory Commission in December 1995. These applications will
seek renewal of the Company's licenses for its Bliss, Upper Salmon
Falls, and Lower Salmon Falls Hydroelectric Projects. Although various
federal requirements and issues must be resolved through the
relicensing process, the Company anticipates that its efforts will be
successful. At this point, however, the Company cannot predict what
type of environmental or operational requirements it may face, nor can
it estimate the eventual cost of relicensing.
Company Vision
The future of the electric utility industry will be characterized by
competition - the right of customers to choose their own electric
service provider. To remain successful, the Company must continue to
provide value to our shareholders in the face of this new competitive
environment. This value will be derived from different sources:
selective and efficient use of capital, customer orientation, and
innovative, efficient operations. Because prices for power will be
determined by market forces, not administered by regulators, the
Company must be very selective and efficient in the use and allocation
of capital. Such capital will be invested for the purposes of improving
and expanding the core business, developing new opportunities beyond
the current service territory, and the continued development of non-
regulated opportunities consistent with core competencies. When
customers have a choice of electric suppliers, value is created through
customer-orientation and maintenance of a customer-friendly
environment. The Company's current asset-based cost advantage must be
complemented with a knowledge- and skill-based competitive advantage,
which requires innovative and efficient operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
File
Exhibit Number As Exhibit
*4 (a) 2-3413 B-2 - Mortgage and Deed of Trust, dated
as of October 1, 1937, between
the Company and Bankers Trust
Company and R. G. Page, as
Trustees.
*4 (b) - Supplemental Indentures to
Mortgage and Deed of Trust:
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
2-51762 2(c)(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 1, 1993
1-3198 4 Thirty-fourth December 1, 1993
Form 8-K
Dated
12/17/93
12 - Ratio of Earnings to Fixed
Charges.
12(a) - Supplemental Ratio of Earnings to
Fixed Charges.
12(b) - Ratio of Earnings to Combined
Fixed Charges and Preferred
Dividend Requirements.
12(c) - Supplemental Ratio of Earnings to
Combined Fixed Charges and
Preferred Dividend Requirements.
15 - Letter re: unaudited interim
financial information.
27 - Financial Data Schedule
(b) Reports on Form 8-K. The following reports on Form 8-K
were filed for the three months ended March 31, 1995.
1. Item 5. Other Events -
A report on Form 8-K dated February 10, 1995 was filed
by the Company concerning the Idaho Public Utilities
Commission Order No. 25880 which established an Idaho
jurisdictional revenue deficiency for the Company of
$17.2 million.
A report on Form 8-K dated March 24, 1995 was filed by
the Company concerning the Idaho Public Utilities
Commission order denying the Company's request for
reconsideration of the Return on Common Equity.
*Previously Filed and Incorporated Herein By Reference.
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 May 5, 1995 By: /s/ J LaMont Keen
J LaMont Keen
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date May 5, 1995 By: /s/ Harold J Hochhalter
Harold J Hochhalter
Controller
(Principal Accounting Officer)