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, 1996
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 July 31, 1996 is 37,612,351.
IDAHO POWER COMPANY
Index
Part I. Financial Information: Page No
Item 1. Financial Statements
Consolidated Statements of Income - Three Months,
Six Months and Twelve Months Ended June 30, 1996
and 1995 3-5
Consolidated Balance Sheets - June 30, 1996
and December 31, 1995 6, 7
Consolidated Statements of Cash Flows -
Six Months and Twelve Months Ended June 30,
1996 and 1995 8, 9
Consolidated Statements of Capitalization -
June 30, 1996 and December 31, 1995 10
Notes to Consolidated Financial Statements 11-13
Independent Accountants' Report 14
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 15-25
Part II. Other Information:
Item 1. Legal Proceedings 26
Item 4. Submission of Matters to a Vote of Security
Holders 27
Item 6. Exhibits and Reports on Form 8-K 28-35
Signatures 36
PART I - FINANCIAL INFORMATION
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
Item 1. Financial Statements
Three Months Ended
June 30, Increase/
1996 1995 (Decrease)
(Thousands of Dollars)
REVENUES (Notes 1 and 3) $140,384 $130,254 $ 10,130
EXPENSES (Notes 1 and 3):
Operation:
Purchased power 16,431 10,675 5,756
Fuel expense 7,399 7,619 (220)
Power cost adjustment 5,462 8,716 (3,254)
Other 32,148 31,867 281
Maintenance 10,310 9,942 368
Depreciation 17,177 16,436 741
Taxes other than income taxes 4,716 6,318 (1,602)
Total expenses 93,643 91,573 2,070
INCOME FROM OPERATIONS 46,741 38,681 8,060
OTHER INCOME:
Allowance for equity funds used during
construction (1) 9 (10)
Other - Net 3,115 3,374 (259)
Total other income 3,114 3,383 (269)
INTEREST CHARGES:
Interest on long-term debt 12,703 12,789 (86)
Other interest 1,404 1,339 65
Total interest charges 14,107 14,128 (21)
Allowance for borrowed funds used
during construction (113) (603) 490
Net interest charges 13,994 13,525 469
INCOME BEFORE INCOME TAXES 35,861 28,539 7,322
INCOME TAXES 12,828 10,951 1,877
NET INCOME 23,033 17,588 5,445
Dividends on preferred stock 1,927 2,006 (79)
EARNINGS ON COMMON STOCK $ 21,106 $ 15,582 $ 5,524
AVERAGE COMMON SHARES
OUTSTANDING (000) 37,612 37,612 N/A
Earnings per share of common stock $ 0.56 $ 0.41 $ 0.15
Dividends paid per share of common stock $ 0.465 $ 0.465 $ -
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Six Months Ended
June 30, Increase/
1996 1995 (Decrease)
(Thousands of Dollars)
REVENUES (Notes 1 and 3) $287,013 $261,590 $ 25,423
EXPENSES (Notes 1 and 3):
Operation:
Purchased power 24,646 17,392 7,254
Fuel expense 15,931 23,110 (7,179)
Power cost adjustment 12,314 7,011 5,303
Other 65,358 64,291 1,067
Maintenance 19,115 19,000 115
Depreciation 34,572 33,110 1,462
Taxes other than income taxes 9,846 12,444 (2,598)
Total expenses 181,782 176,358 5,424
INCOME FROM OPERATIONS 105,231 85,232 19,999
OTHER INCOME:
Allowance for equity funds used during
construction (3) 7 (10)
Other - Net 6,457 5,318 1,139
Total other income 6,454 5,325 1,129
INTEREST CHARGES:
Interest on long-term debt 25,666 25,578 88
Other interest 2,646 2,612 34
Total interest charges 28,312 28,190 122
Allowance for borrowed funds used
during construction (164) (1,132) 968
Net interest charges 28,148 27,058 1,090
INCOME BEFORE INCOME TAXES 83,537 63,499 20,038
INCOME TAXES (Note 5) 30,294 25,184 5,110
NET INCOME 53,243 38,315 14,928
Dividends on preferred stock 3,878 4,032 (154)
EARNINGS ON COMMON STOCK $ 49,365 $ 34,283 $ 15,082
AVERAGE COMMON SHARES
OUTSTANDING (000) 37,612 37,612 N/A
Earnings per share of common stock $ 1.31 $ 0.91 $ 0.40
Dividends paid per share of common stock $ 0.93 $ 0.93 $ -
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED JUNE 30, 1996 AND 1995
Twelve Months Ended
June 30, Increase/
1996 1995 (Decrease)
(Thousands of Dollars)
REVENUES (Notes 1 and 3) $571,044 $547,898 $ 23,146
EXPENSES (Notes 1 and 3):
Operation:
Purchased power 61,840 52,468 9,372
Fuel expense 47,511 75,924 (28,413)
Power cost adjustment 12,595 3,448 9,147
Other 127,782 125,092 2,690
Maintenance 36,068 40,696 (4,628)
Depreciation 68,877 61,751 7,126
Taxes other than income taxes 20,381 25,014 (4,633)
Total expenses 375,054 384,393 (9,339)
INCOME FROM OPERATIONS 195,990 163,505 32,485
OTHER INCOME:
Allowance for equity funds used during
construction (26) 572 (598)
Other - Net 15,511 11,011 4,500
Total other income 15,485 11,583 3,902
INTEREST CHARGES:
Interest on long-term debt 51,234 51,160 74
Other interest 5,344 4,584 760
Total interest charges 56,578 55,744 834
Allowance for borrowed funds used
during construction (474) (2,079) 1,605
Net interest charges 56,104 53,665 2,439
INCOME BEFORE INCOME TAXES 155,371 121,423 33,948
INCOME TAXES 53,522 43,467 10,055
NET INCOME 101,849 77,956 23,893
Dividends on preferred stock 7,837 7,823 14
EARNINGS ON COMMON STOCK $ 94,012 $ 70,133 $ 23,879
AVERAGE COMMON SHARES
OUTSTANDING (000) 37,612 37,612 N/A
Earnings per share of common stock $ 2.50 $ 1.86 $ 0.64
Dividends paid per share of common stock $ 1.86 $ 1.86 $ -
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1996 1995
(Thousands of Dollars)
ELECTRIC PLANT:
In service (at original cost) $2,507,970 $2,481,830
Accumulated provision for depreciation (861,074) (830,615)
In service - Net 1,646,896 1,651,215
Construction work in progress 29,437 20,564
Held for future use 1,106 1,106
Electric plant - Net 1,677,439 1,672,885
INVESTMENTS AND OTHER PROPERTY 31,258 16,826
CURRENT ASSETS:
Cash and cash equivalents 7,491 8,468
Receivables:
Customer 36,357 33,357
Allowance for uncollectible accounts (1,397) (1,397)
Notes 5,334 5,134
Employee notes receivable 4,542 4,648
Other 8,173 10,771
Accrued unbilled revenues (Note 1) 26,818 25,025
Materials and supplies (at average cost) 26,268 25,937
Fuel stock (at average cost) 18,321 13,063
Prepayments 17,982 20,778
Regulatory assets associated with income taxes 5,160 5,777
Total current assets 155,049 151,561
DEFERRED DEBITS:
American Falls and Milner water rights 32,440 32,440
Company owned life insurance 56,166 56,066
Regulatory assets associated with income taxes 200,707 200,379
Regulatory assets - other 58,796 68,348
Other 42,038 43,248
Total deferred debits 390,147 400,481
TOTAL $2,253,893 $2,241,753
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION & LIABILITIES
June 30, December 31,
1996 1995
(Thousands of Dollars)
CAPITALIZATION (See Page 10):
Common stock equity - $2.50 par value (shares
authorized 50,000,000; shares outstanding
June 30, 1996 - 37,612,351; December 31,
1995 - 37,612,351) $ 696,898 $ 682,775
Preferred stock (Note 4) 132,110 132,181
Long-term debt (Note 4) 681,630 672,618
Total capitalization 1,510,638 1,487,574
CURRENT LIABILITIES:
Long-term debt due within one year 517 20,517
Notes payable 65,116 53,020
Accounts payable 27,958 40,483
Taxes accrued 25,360 15,409
Interest accrued 14,635 14,785
Accumulated deferred income taxes 5,160 5,777
Other 14,038 12,867
Total current liabilities 152,784 162,858
DEFERRED CREDITS:
Regulatory liabilities associated with accumulated
deferred investment tax credits 69,795 70,507
Accumulated deferred income taxes 406,685 408,394
Regulatory liabilities associated with income taxes 34,180 34,554
Regulatory liabilities - other 670 789
Other 79,141 77,077
Total deferred credits 590,471 591,321
COMMITMENTS AND CONTINGENT LIABILITIES (Note 2)
TOTAL $2,253,893 $2,241,753
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Six Months Ended
June 30,
1996 1995
OPERATING ACTIVITIES: (Thousands of Dollars)
Cash received from operations:
Retail revenues $239,284 $228,900
Wholesale revenues 33,158 33,566
Other revenues 11,562 10,772
Fuel paid (22,054) (33,944)
Purchased power paid (24,387) (18,905)
Other operation & maintenance paid (84,749) (77,813)
Interest paid (includes long and short-term
debt only) (27,173) (27,335)
Income taxes paid (22,961) (23,494)
Taxes other than income taxes paid (9,279) (10,241)
Other operating cash receipts and payments-Net (20) (5,280)
Net cash provided by operating activities 93,381 76,226
FINANCING ACTIVITIES:
PC bond fund requisitions/other long-term debt 9,000 -
Short-term borrowings - Net 12,100 7,100
Long-term debt retirement (20,034) (34)
Preferred stock retirement (39) (66)
Dividends on preferred stock (3,984) (3,831)
Dividends on common stock (34,962) (34,992)
Other sources/(uses) (1,289) (809)
Net cash used in financing activities (39,208) (32,632)
INVESTING ACTIVITIES:
Additions to utility plant (40,062) (41,154)
Conservation (200) (3,472)
Increase in investments (14,525) -
Other (363) 1,361
Net cash used in investing activities (55,150) (43,265)
Change in cash and cash equivalents (977) 329
Cash and cash equivalents beginning of period 8,468 7,748
Cash and cash equivalents end of period $ 7,491 $ 8,077
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $ 53,243 $ 38,315
Adjustments to reconcile net income to net cash:
Depreciation 34,572 33,110
Deferred income taxes (2,486) 2,577
Investment tax credit-Net (712) (85)
Allowance for funds used during construction (161) (1,139)
Postretirement benefits funding (excl pensions) 288 (495)
Changes in operating assets and liabilities:
Accounts receivable (3,009) 11,647
Fuel inventory (6,123) (10,834)
Accounts payable 259 (1,513)
Taxes payable 11,113 1,419
Interest payable 1,121 833
Other - Net 5,276 2,391
Net cash provided by operating activities $ 93,381 $ 76,226
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED JUNE 30, 1996 AND 1995
Twelve Months Ended
June 30,
1996 1995
OPERATING ACTIVITIES: (Thousands of Dollars)
Cash received from operations:
Retail revenues $ 479,205 $ 466,577
Wholesale revenues 58,852 62,509
Other revenues 23,615 23,207
Fuel paid (49,851) (83,897)
Purchased power paid (58,008) (64,011)
Other operation & maintenance paid (161,144) (162,375)
Interest paid (includes long and short-term
debt only) (54,141) (53,851)
Income taxes paid (39,870) (28,262)
Taxes other than income taxes paid (21,977) (23,123)
Other operating cash receipts and payments-Net 8,904 3,430
Net cash provided by operating activities 185,585 140,204
FINANCING ACTIVITIES:
PC bond fund requisitions/other long-term debt 9,000 -
Common stock issued - 4
Short-term borrowings - Net 3,000 42,100
Long-term debt retirement (20,520) (467)
Preferred stock retirement (124) (111)
Dividends on preferred stock (8,041) (7,737)
Dividends on common stock (69,937) (69,977)
Other sources/(uses) (1,260) (789)
Net cash used in financing activities (87,882) (36,977)
INVESTING ACTIVITIES:
Additions to utility plant (82,873) (97,616)
Conservation (2,416) (7,322)
Increase in investments (14,525) -
Other 1,525 4,128
Net cash used in investing activities (98,289) (100,810)
Change in cash and cash equivalents (586) 2,417
Cash and cash equivalents beginning of period 8,077 5,660
Cash and cash equivalents end of period $ 7,491 $ 8,077
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $ 101,849 $ 77,956
Adjustments to reconcile net income to net cash:
Depreciation 68,877 61,751
Deferred income taxes 6,635 9,541
Investment tax credit-Net (1,713) (30)
Allowance for funds used during construction (448) (2,651)
Postretirement benefits funding (excl pensions) (2,074) (4,398)
Changes in operating assets and liabilities:
Accounts receivable (9,372) 4,395
Fuel inventory (2,340) (7,973)
Accounts payable 3,832 (11,543)
Taxes payable 7,176 7,710
Interest payable 2,388 1,694
Other - Net 10,775 3,752
Net cash provided by operating activities $ 185,585 $ 140,204
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
June 30, December 31,
1996 1995
(Thousands of Dollars)
COMMON STOCK EQUITY:
Common stock $ 94,031 $ 94,031
Premium on capital stock 362,785 363,044
Capital stock expense (4,149) (4,127)
Retained earnings 244,231 229,827
Total common stock equity 696,898 46.1% 682,775 45.9%
PREFERRED STOCK, cumulative, ($100 par
or stated value) (Note 4):
4% preferred stock (authorized
215,000; shares outstanding:
1996-171,098; 1995-171,813) 17,110 17,181
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 132,110 8.8 132,181 8.9
LONG-TERM DEBT (Note 4):
First mortgage bonds:
5 1/4% Series due 1996 - 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 470,000 490,000
*Amount due within one year - (20,000)
Net first mortgage bonds 470,000 470,000
Pollution control revenue bonds:
5.90 % Series due 2003 24,200* 24,200*
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 170,460 170,460
*Amount due within one year (450) (450)
Net pollution control revenue
bonds 170,010 170,010
REA Notes 1,666 1,700
Amount due within one year (67) (67)
Net REA Notes 1,599 1,633
IdaWest Notes 9,000 -
American Falls bond guarantee 20,740 20,740
Milner Dam note guarantee 11,700 11,700
Unamortized premium/discount - Net (1,419) (1,465)
Total long-term debt 681,630 45.1 672,618 45.2
TOTAL CAPITALIZATION $1,510,638 100.0% $1,487,574 100.0%
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
consolidated financial statements contain all adjustments
necessary to present fairly the consolidated financial
position as of June 30, 1996 and the consolidated results
of operation for the three months, six months and twelve
months ended June 30, 1996 and 1995 and the consolidated
cash flows for the six months and twelve months ended June
30, 1996 and 1995. These 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, 1995. 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);
Stellar Dynamics (Stellar); and Idaho Power Resources Corp.
(IPRC). 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 and Cash Equivalents
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.
Management Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Reclassifications
Certain items previously reported for years prior to 1996
have been reclassified to conform with the current year's
presentation. Net income was not affected by these
reclassifications.
2. 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 $2.7 million at June
30, 1996. 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 flow.
3. 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.
Changes due to better water conditions and milder weather
have resulted in the Company currently recording a PCA
credit of $4.1 million at June 30, 1996. The current
balance is adjusted monthly as actual conditions are
compared to the forecasted net power supply costs.
The Company filed its 1996 PCA application on April 15,
1996, requesting a decrease in the Idaho jurisdiction PCA
rate. On May 16th the Company received a ruling from the
Idaho Public Utility Commission reducing Idaho rates by
$25.7 million (5.9 percent), including the true-up for
1995. The 1996 PCA forecast reflects costs below the base
rates established for PCA expenses.
4. 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. On
July 29, 1996, the Company issued $30,000,000 principal
amount of Secured Medium Term Notes, Series B, 6.93% Series
Due 2001. The net proceeds were used for repayment of
commercial paper issued in connection with the Company's
ongoing construction program.
5. INCOME TAXES:
The effective tax rate for the first six months decreased
from 39.7% in 1995 to 36.3% in 1996. A reconciliation
between the statutory federal income tax rate and the
effective rate for the six months ended June 30, 1996 is as
follows:
Amount Rate
Computed income taxes based on
statutory federal income tax rate $29,238 35.0 %
Changes in taxes resulting from:
Current state income taxes. 3,760 4.5
Depreciation 2,015 2.4
Investment tax credits restored (1,409) (1.7)
Repair allowance (1,720) (2.0)
Other (1,590) (1.9)
$30,294 36.3%
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, 1996, and the related consolidated
statements of income for the three-, six- and twelve-month
periods ended June 30, 1996 and 1995 and consolidated
statements of cash flows for the six- and twelve-month periods
ended June 30, 1996 and 1995. 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 conducted 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, 1995, 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, 1996, 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, 1995 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
July 31, 1996
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Idaho Power Company's consolidated financial statements represent the
Company and its six wholly-owned subsidiaries: Idaho Energy Resources
Company (IERCo); Ida-West Energy Company (Ida-West); IDACORP, Inc.;
Idaho Utility Products Company (IUPCo); Stellar Dynamics (Stellar); and
Idaho Power Resources Corp. (IPRC). 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. Therefore,
its operational results, like those of other utilities in the Pacific
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 - primarily because of
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 the
periods due to water and market conditions tempered by the operation of
the Power Cost Adjustment (PCA) mechanism in Idaho, its primary
jurisdiction.
The PCA provides recovery for a major portion of those operating
expenses that have the greatest potential for variation. With the PCA,
the Company's operating results and earnings per share are more closely
aligned with general regulatory, economic, and temperature-related
weather conditions, and are less dependent on variable precipitation
and streamflow conditions.
Earnings Per Share and Book Value
Earnings per share of common stock were $0.56 for the quarter, an
increase of $0.15 (36.6 percent) from the same quarter last year. Year-
to-date earnings per share were $1.31, an increase of $0.40 (44.0
percent). The twelve months ended June 30, 1996 yielded earnings of
$2.50 per share, an increase of $0.64 (34.4 percent) from the twelve
months ended June 30, 1995. The twelve-month earnings represent a 13.5
percent earned return on year-end common equity, compared to the 10.4
percent earned through June 30 last year. At June 30, 1996, the book
value per share of common stock was $18.53, compared to $17.89 for the
same period a year ago.
At the July meeting, the Company's Board of Directors maintained the
quarterly dividend at $0.465 per share or $1.86 annually.
RESULTS OF OPERATIONS
Precipitation and Streamflows
Idaho Power monitors precipitation and streamflow conditions based on
their effect on Brownlee Reservoir, water source for the three Hells
Canyon hydroelectric projects. In a typical year, these three projects
combine to produce about half of the Company's generated electricity.
Precipitation in the Company's service territory was above normal for
the first six months of 1996. At June 1, 1996, reservoir storage above
Brownlee was 85 percent of capacity, compared to 86 percent last year
and average capacity of 110 percent for the same period. The snow
water equivalent for the Snake River drainage above Brownlee was 158
percent of the 30 year average, compared to 155 percent last year.
Inflows into Brownlee result from a combination of precipitation,
storage, and ground water conditions. At June 1, 1996, the Company
estimated that 7.9 million acre-feet (MAF) of water would flow into
Brownlee Reservoir during the April-July runoff period, compared to 6.6
(MAF) a year ago. This figure represents approximately 165 percent of
the 68-year median of 4.8 MAF.
Energy Requirements
For the first six months of 1996, the Company met its total system
energy requirements from the following sources: hydro generation (72
percent), thermal generation (13 percent), and purchased power and
other interchanges (15 percent). For the same period of 1995, these
figures were 67 percent hydro, 25 percent thermal, and 8 percent
purchased power and other interchanges.
With precipitation, streamflows, and reservoir storage above average,
the Company estimates that 61 percent of its 1996 energy requirements
will come from hydro generation, 24 percent from thermal generation,
and 15 percent from purchased power and other interchanges. Under
normal conditions, Idaho Power's hydro system would contribute
approximately 57 percent of the Company's total system energy
requirements, with thermal generation accounting for approximately 34
percent, and the remaining 9 percent coming from purchased power and
other interchanges.
Economy
Over the last seven years, Idaho's economy has consistently ranked
among the fastest growing in the U.S. The annual compound rate of
growth over the 1989-1994 period averaged 5.1 percent. Recently, this
growth rate has slackened, but remains strong. In 1995, Idaho
experienced a 3.1 percent rate of growth in non-agricultural
employment. This figure compares to 5.7 percent in 1993 and 6.1
percent in 1994. Current economic forecasts estimate that Idaho's
employment growth for 1996 and 1997 will be in the range of 2.7 percent
to 3.0 percent respectively. In addition, Idaho's population growth is
expected to be more moderate in the near-term as the rate of job
creation in the state slows. Still, Idaho will likely maintain a rate
of population growth that is nearly twice that of the national average.
Currently, employment growth in the state is maintaining a 3.0 percent
annual rate through the first four months of 1996.
Power Cost Adjustment
Since 1993, the Idaho Public Utilities Commission (IPUC) has permitted
Idaho Power to use a PCA mechanism in its Idaho jurisdiction. The PCA
enables the Company to collect or to refund a portion of the difference
between net power supply costs actually incurred and those allowed in
the Company's base rates. The current balance is adjusted monthly as
actual conditions are compared to the PCA forecasted net power supply
costs. At June 30, 1996, the Company had recorded a PCA credit of $4.1
million reflecting actual power supply costs being less than those
forecasted. The Company on May 16, 1996 received approved tariffs from
the IPUC, reducing Idaho jurisdictional PCA rates by $25.7 million (5.9
percent), including the true-up for 1995. The reduction reflects
anticipated lower power supply costs in the coming year due to above-
average hydroelectric generating conditions. The 1996 PCA forecast
reflects costs below those established for PCA expenses in the
Company's last general rate proceedings.
The PCA is an annual adjustment to that portion of customers' rates
linked to the cost of producing power. Major influences on each year's
PCA include the outlook for hydro production in the coming year, and
adjustments to reflect differences between the previous year's
projected and actual hydro conditions and the price of power purchased
on the wholesale market.
Revenues
General business revenues were up $9.7 million (8.9 percent) for the
quarter, $20.5 million (9.4 percent) for the year-to-date, and $21.2
million (4.6 percent) for the twelve months ended June 30, 1996.
Quarter and year-to-date revenue increases reflect increased usage per
customer as a result of more normal weather conditions, additional
customers and rate relief granted in 1995. For the quarter, the
Company posted gains in all customer classes. Residential sales
increased $1.0 million (2.3 percent); industrial sales rose $1.1
million (4.1 percent); commercial sales increased $2.1 million (9.0
percent); and irrigation rose $5.5 million (30.7 percent).
The increase for the twelve-month period represents the continuing
strength of economic growth in the Company's service territory,
increases in new customers, energy usage patterns, and rate increases
in the Idaho and Oregon jurisdictions. Idaho Power added 10,997 new
general business customers, a 3.3 percent increase over the total
number of customers served at this time last year.
Total surplus sales decreased $1.4 million (19.9 percent) during the
second quarter, but increased $1.7 million (17.6 percent) for six
months ended and $2.6 million (23.1 percent) for the twelve-month
period. The increases reflect improved hydroelectric generating
conditions in 1995 and 1996 while the decrease reflects increased
general business demand and lower market prices for surplus sales.
Firm sales increased $0.9 million (13.3 percent) during the second
quarter and $1.3 million (6.2 percent) for year-to-date 1996 but
decreased for the twelve-month period by $2.7 million (5.4 percent).
When compared to the corresponding periods a year ago, total operating
revenues increased $10.1 million (7.8 percent) for the second quarter
of 1996, $25.4 million (9.7 percent) year-to-date and $23.1 million
(4.2 percent) for the twelve months ended June 30, 1996.
Expenses
Total operation and maintenance expenses were up $2.9 million (4.3
percent) for the quarter, $6.6 million (5.0 percent) year-to-date but
down $11.8 million (4.0 percent) for the twelve months ended June 30,
1996.
Purchased power expenses were up for the three-, six- and twelve-month
periods by $5.8 million (53.9 percent) $7.3 million (41.7 percent) and
$9.4 million (17.9 percent) respectively. These increases reflect
economy purchases made to take advantage of low market prices this year
as a result of the abundance of hydro generation in the West, which
displaced the Company's thermal facilities, and increased purchases
from CSPP projects also experiencing strong hydroelectric generating
conditions.
Fuel expenses were lower for all three periods: $0.2 million (2.9
percent) $7.2 million (31.1 percent) and $28.4 million (37.4 percent)
respectively. Again, these decreases reflect good hydroelectric
generating conditions.
PCA expenses were down for the three-month period by $3.3 million, but
were up $5.3 million and $9.1 million for the six- and twelve-month
periods respectively. The PCA mechanism reduces expenses when power
supply costs are above forecast, and increases them when power supply
costs are below forecast.
All other operation and maintenance expenses were up $0.6 million for
the second quarter and $1.2 million year-to-date but down $1.9 million
for the twelve months ended June 30, 1996. The flat operating expenses
reflect reduced thermal operation and maintenance expenses and the
successful efforts of the Company's employees to reduce operating
costs.
Total interest costs decreased slightly for the quarter, but increased
$0.1 million and $0.8 million for the six- and twelve-month periods
respectively. These increases are the result of varying levels of
short-term borrowings and interest costs throughout the reported
periods.
Ida-West Energy Company
This wholly owned subsidiary of the Company holds investments in eight
operating hydroelectric plants with a total generating capacity of
60.8 megawatts (MW).
In January 1996, Ida-West purchased all of the outstanding bonds
(approximately $33 million) that were issued to finance three
hydroelectric plants known collectively as the Friant Power Project.
This project is located at the U.S. Bureau of Reclamation's Friant Dam
on the headwaters of the San Joaquin River in Madera and Fresno
Counties, California. It has an aggregate generating capacity of 27.4
MW. The project is owned and operated by Friant Power Authority, a
quasi-governmental entity consisting of six irrigation districts, a
water district, and a municipal utility district.
In addition, Ida-West owns, together with two other equal partners, the
Hermiston Power Project, a 460 MW gas-fired cogeneration project to be
located near Hermiston, Oregon. The Bonneville Power Administration
(BPA) selected the project to be a part of its Resource Contingency
Program. In 1993, the partnership and the BPA signed an option
development agreement granting the 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 agreement also entitles the partnership to
reimbursement from the BPA for certain development costs, based on the
achievement of certain milestones. Ida-West has been responsible for
managing all permitting and development activities relating to the
project since its inception. In March 1996, the Oregon Energy Facility
Siting Council issued a site certificate for the project, the last
major permit necessary for construction and operation of the project.
Therefore, the partnership has completed all of its option development
responsibilities and has entered the option hold period, which expires
on June 30, 2000. The partnership and the BPA are exploring various
alternatives for marketing the project's output. Project financing for
construction costs would be non-recourse to Idaho Power.
To date, the Company has invested $20 million in Ida-West. Ida-West
continues an active search for new projects.
IDACORP, Inc.
Through this wholly-owned subsidiary, Idaho Power is participating in
five affordable housing programs. These investments provide a return
to IDACORP by reducing federal income taxes and by assuring a return on
the investment through tax credits and tax depreciation benefits.
Stellar Dynamics
During the second quarter of 1996, Idaho Power increased its investment
from $1.0 million to $1.5 million in Stellar. As Stellar's capital
requirements increase, the Company has approved additional equity
investments up to a total of $3.0 million. Stellar's core business is
to provide products and services to control, protect, and monitor
utility and industry processes and equipment. Stellar offers design
and integration of high-quality modular process control systems backed
with field support, training, documentation, and customer service.
Idaho Power Resources Corp.
IPRC, a wholly-owned subsidiary, was formed in July 1996 to provide
guidance, resources and long-term strategic planning to projects or
business proposals that would be established outside regulation by the
FERC and the state regulatory commissions. IPRC is designed to ensure
that these efforts create growth for shareowners of Idaho Power
Company. IPRC will establish, acquire and expand business operations
that have the potential to become world leaders in sustainable
infrastructure technology and services including energy, water, waste
disposal, telecommunications and information systems.
IPRC has a Memorandum of Understanding signed by Idaho Power and
representatives from the government of Indonesia on March 6, 1996 that
clears the way to conduct a detailed feasibility study on using solar
photovoltaic (PV) technology, micro hydroelectric systems, and other
renewable energy systems to provide electricity to various locations
throughout Indonesia's complex of islands . A feasibility study and
business plan was completed in July of this year, with final approvals
expected in September. If the project is deemed workable and receives
the required approvals, IPRC would likely begin to develop services in
1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
For the six months ended June 30, 1996, the Company generated $93.4
million in net cash from operations. After deducting for both common
and preferred dividends, net cash generation from operations provided
approximately $54.4 million for the Company's construction program and
other capital requirements. This is a 45.5 percent increase over the
same period in 1995.
Cash Expenditures
Idaho Power estimates that its cash construction program for 1996 will
require approximately $88.0 million. This estimate is subject to
revision in light of changing economic, regulatory, environmental, and
conservation factors. During the first six months of 1996, the Company
expended approximately $40.1 million for construction.
Idaho Power's primary financial commitments and obligations are related
to contracts and purchase orders associated with its ongoing
construction program. The Company expects to finance these commitments
and obligations by 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 with various banks aggregating $85
million. The Company may use these lines of credit to finance a
portion of its construction program on an interim basis. At June 30,
1996, the Company's short-term borrowings totaled $65.1 million.
Financing Program
Idaho Power 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. On July 29, 1996, the
Company issued $30,000,000 principal amount of Secured Medium Term
Notes, Series B, 6.93% Series Due 2001. The net proceeds will be used
for repayment of commercial paper issued in connection with the
Company's ongoing construction program.
Idaho Power's 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. For the twelve-month period
ended June 30, 1996, the Company's consolidated pre-tax interest
coverage was 3.75 times.
Southwest Intertie Project
The Company has put the Southwest Intertie Project (SWIP) on hold,
pending an order from the Public Service Commission of Nevada allowing
Nevada Power to participate in the project.
The Company's SWIP proposal calls for a 500-mile, 500 kilovolt (kV)
transmission line that would serve as a major north-south transmission
artery, interconnecting the Company's system with those of utilities in
California and the Southwest. The U.S. Bureau of Land Management has
issued a favorable record of decision on the Company's environmental
impact statement and granted the project a right-of-way across public
lands in Idaho, Nevada, and Utah.
The Company and the interested parties have completed ownership
allocation and negotiations for the execution of the Memorandum of
Agreement (MOA). When the MOA is executed, the Company will require
each party to pay its share of the approximately $8.5 million expended
for environmental permitting, right-of-way acquisition, and related
development activities. The SWIP owners will then form an Executive
Committee, with voting rights proportional to each share of the
project. The Executive Committee will oversee development activities
for the SWIP and related projects.
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. Idaho Power fully supports and
actively participates in this regional effort.
In March of 1995, the National Marine Fisheries Service (NMFS) released
a Proposed Recovery Plan for the listed Snake River Salmon. The NMFS
accepted public comment on the Plan through December of 1995. As
drafted, the Plan would not require any changes to the Company's
current operations for salmon. Pending completion of a final recovery
plan by the NMFS, the U.S. Army Corps of Engineers and other
governmental agencies operating federally-owned dams and reservoirs on
the Snake and Columbia Rivers will continue to consult with the NMFS
regarding ongoing system operations. The Company does not expect these
interim operations to change its current operations for salmon.
Idaho Power has negotiated a 5-year contract with the BPA to replace
lost energy and capacity resulting from recovery plans that impact the
Company's power supply costs.
Nez Perce Lawsuit
Idaho Power's Board of Directors and the Nez Perce Tribe have approved
an Agreement in Principle between the Company and the Tribe, which
tentatively resolves a four-and-a-half year-old lawsuit regarding
alleged damages to the Tribe's treaty-reserved fishing rights.
The suit arose from the construction, maintenance, and operation of
Idaho Power's three-dam Hells Canyon Complex and the project's alleged
impact both on fish and the Tribe's treaty-reserved fishing rights.
The Agreement requires the approval of the United States government
acting in its capacity as trustee for the Tribe. In addition, the
Idaho and Oregon public utility commissions must issue orders
authorizing specific accounting measures for the Agreement.
On July 12, 1996 the IPUC issued Order No. 26513, approving
capitalization of the Company's Idaho Jurisdiction share of the $11.5
million, upon the signing of the definitive agreement between the Tribe
and Idaho Power. Approval from the OPUC is still pending.
Under the terms of the proposed agreement, Idaho Power would pay the
tax Nez Perce Tribe $11.5 million in the following manner:
- $5 million in 1996. At the time of the payment of the initial $5
million, the Nez Perce would move for the dismissal of, with prejudice,
their legal action against the Company.
- $1,625,000 each year for the next four years beginning in 1997.
In connection with settling the litigation, the Company and the Tribe
also reached a provisional settlement regarding the relicensing of the
Hells Canyon Complex. In return for the Tribe's support of the
Company's application to relicense the project, the Company will place
$5 million, the majority of which the Tribe has agreed to dedicate to
implementable fisheries restoration efforts, in an escrow account on
August 3, 2003, the date by which the Company must file its relicense
application. The Tribe will be entitled to earnings from investments
on this account until the Company accepts or rejects a new federal
license for the project. If the Company accepts the new federal
license, the Tribe will take ownership of the money in the account. If
the Company rejects the license, the money will be returned to the
Company. This settlement is provisional because the Tribe retains the
right to opt out of this relicensing settlement at any time prior to
the Company's acceptance of a new federal license.
All payments under the Agreement in Principle will be made in 1996
dollars, which allows for adjusted future inflation within a minimum
range of 3 percent and a maximum of 7 percent.
Company Transformation and Regulatory Initiative
On August 3, 1995, Idaho Power filed a regulatory proposal with the
IPUC to support the Company's organizational redesign and corporate
vision. In response to the Company's proposal, the IPUC approved a
Settlement Stipulation that provides for a general rate freeze through
the end of 1999 and allows, as necessary, for the accelerated
amortization of regulatory liabilities associated with accumulated
deferred investment tax credits (ADITCs) to provide a minimum 11.50
percent return on actual year-end common equity for the Idaho
jurisdiction. The new freeze and the accelerated amortization of
regulatory liabilities associated with ADITCs gives the Company time to
pursue and to implement its efficiency and growth initiatives with the
assurance of at least a reasonable level of financial performance apart
from the need to change customer prices.
On November 22, 1995, the Idaho State Tax Commission approved the
accounting treatment for the Idaho ADITCs; the Internal Revenue Service
granted its approval on March 5, 1996.
Under Order No. 26216, when the Company's actual earnings in the Idaho
jurisdiction in a given year exceed an 11.75 percent return on year-end
common equity, the Company will refund 50 percent of the excess when it
makes its next PCA adjustment. The Company has provided a reserve for
possible rate refunds to customers as a result of this Order. The
reserve is being established in the event the Company's earnings
continue to exceed the 11.75 percent threshold through 1996.
Marketing Business Unit
To accommodate its customers and allow it to compete in the rapidly
evolving competitive market, the Company is forming a Market Business
Unit. This new business unit will be responsible for all purchases and
sales of electric energy, both retail and wholesale. It will be
responsible for all market research, planning and implementation of
marketing strategies and sales to all Idaho Power customers.
The formation of this business unit will occur over the next six months
with a target of January 1, 1997, to be fully operational. Company
employees presently engaged in any marketing activities will continue
to operate in their present structure until notified to migrate to the
new unit. Jan Packwood has been named Executive Vice President and
assigned the responsibility of forming the executive and senior
management team for the Marketing Business Unit. In conjunction with
the newly formed marketing management team, he will lead the Company's
effort to establish a customer-driven marketing unit that will bring
value to employees, customers and stockholders alike.
To assist the Marketing Business Unit in bringing value to the Company,
the Board of Directors gave approval for executive management to form a
Risk Management Committee, comprised of executives and senior managers,
to oversee a new risk management program. The program is intended to
minimize fluctuations in earnings and cash flow while controlling the
volatility of the Company's energy prices to its customers. The
objectives of the program will include setting and achieving commodity
price targets, locking in commodity prices related to specific
contracts for the sale of electricity and managing commodity price risk
for customers.
The Company plans to appoint risk managers to conduct transactions to
manage commodity price risk and capital market risk. The transactions
will include over-the-counter or exchange-traded futures, options,
swaps or combinations of the three.
IPUC Workshops Regarding Industry Changes
The IPUC has completed a series of workshops addressing changes in the
electric utility industry and their possible effects on the state of
Idaho. Participants in the workshops included commissioners and
commission staff; customers and customer group representatives;
electric cooperatives; investor-owned utilities (including the
Company); and the public interest groups. The workshop participants
discussed a number of issues including the effect of competition on
service, the potential customer benefits, and the economic transitional
issues. As a result of the workshops, a draft document was compiled
which set forth regulatory and legal issues that might arise during a
transition to a more competitive environment. The IPUC is considering
what action or recommendation it should make as a result of this draft
document.
FERC Order Nos. 888 and 889
On April 24, 1996, the FERC issued its Order Nos. 888 and 889 dealing
with Open-Access Non-Discriminatory Transmission Services by Public and
Transmitting Utilities, and standards of conduct regarding the same.
These orders require public utilities owning transmission lines to file
open access tariffs available to buyers and sellers of wholesale
electricity, require utilities to use the tariffs for their own
wholesale sales and purchases, and allow utilities to recover stranded
costs, subject to certain conditions. Public utilities owning
transmission lines were required to file compliance tariffs by July 9,
1996.
Idaho Power has long had an informal open-access transmission policy,
and is experienced in providing reliable, high-quality, economical
transmission service. The Company provides various firm and non-firm
wheeling services for several surrounding utilities. In November of
1995, the Company filed with the FERC open-access tariffs for Point-to-
Point and Network transmission service. The Company requested and
received permission to implement these tariffs beginning February 1,
1996.
The substance of these tariffs was to offer the same quality and
character of transmission services to anyone seeking them as those the
Company uses in its own operations. A settlement was reached as filed
on the rate for services under these tariffs and the settlement has
been certified for approval to the FERC by the administrative law
judge.
On July 8, 1996, the Company filed a new open access transmission
tariff to replace the 1995 tariffs. This provides full compliance with
Final Order 888. This new filing did not include a rate change.
Independent Grid Operator
A group of seven Northwest electric companies, including Idaho Power,
have signed a memorandum of understanding that will create an
independent transmission grid operator called "IndeGO". It will ensure
non-discriminatory, open access to electricity transmission facilities
in compliance with recent FERC rulings. The group plans to file the
IndeGO proposal with FERC by December 31 and anticipates operation
would commence by July 4, 1997. This memorandum of understanding
creates a mechanism to help facilitate the operation of an evolving
competitive electric power market. The seven utility companies will be
able to increase the efficiency of transmission operations and provide
improved access for all users of the regional transmission system.
IndeGo is independent and will not be controlled by any individual
market participant or class of participants involved in marketing
electricity. Also, IndeGO will likely operate as a single control area
and will ensure reliable and secure operations that are in compliance
with the accepted operating criteria. Pricing for use of the
transmission grid will be based on a single zonal tariff and will be
applied equally to all users including the participating companies.
IndeGO will be responsible for the operation of main transmission grid
facilities carrying 230 kilovolts (KV) or more that are owned or
directly controlled by the seven utilities. The area encompassed by
the seven companies has approximately 11,000 miles of transmission
lines and comprises nearly four million customer accounts.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On February 16, 1994, an action for declaratory relief and breach of
contract entitled Idaho Power Company vs. Underwriters at Lloyd's,
London, et al., was filed by the Company in Federal District Court in
Pocatello, Idaho, against its solvent liability insurers in the period
of 1969 to 1974, arising out of the insurer's denial of coverage for
the Company's environmental remediation of a hazardous waste site in
Pocatello. The action seeks a declaratory judgment that the policies
cover the Company's cost of defending claims related to the site and
costs of site remediation, and damages for the insurers' breach of the
insurance contracts based on the insurers' failure to pay such costs.
Due to a case backlog in the Idaho District, the case was assigned to a
Federal Judge in the Eastern District of Washington. In the action,
the Company sought reimbursement for approximately $6.1 million in
indemnity and defense costs associated with remediation, together with
prejudgment interest and attorney fees and costs for the action.
The Company successfully settled its claim for coverage with the
Liquidation Trustee for the first layer insurer (which insurer is now
in liquidation) on several of the policies at issue, resulting in a one-
time payment of $827,500 to the Company in the fall of 1994. In late
1995, the Company reached agreements with two of the insurers to settle
the claim against them on terms favorable to the Company. In the
spring of 1996, the Company entered into an agreement with the
remaining insurers to settle its claim with them on terms favorable to
the Company. The Company has now settled with and received payment
from all insurers against whom the Company filed claims (with the
exception of those insurers who are in liquidation and were not part of
the settlement with the Liquidation Trustee).
This matter has been previously reported in Forms 10-K dated March 9,
1995, and March 14, 1996, and other reports filed with the Commission.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Regular annual meeting of the Company's
stockholders, held May 1, 1996 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:
Joseph W. Marshall Peter S. O'Neill
Larry R. Gunnoe Jon H. Miller
Peter T. Johnson Phil Soulen
Gene C. Rose Robert D. Bolinder
(c) (1) a) To elect four Director Nominees; and
b) To ratify the selection of Deloitte
& Touche (D&T) as independent auditors for the
fiscal year ending December 31, 1996; and
c) Shareholder proposal to extend
confidential voting to proxy contests.
(2) Director Nominees
Class of Stock For Withhold Total Voted
Common 31,560,608 979,983 32,540,591
4% Preferred 2,484,160 100,700 2,584,860
7.68% Preferred 136,566 390 136,956
Tota 34,181,334 1,081,073 35,262,407
Proposal to Ratify Selection of D&T as Independent
Auditors
Class of Stock For Against Abstain Total Voted
Common 31,941,680 245,010 353,901 32,540,591
4% Preferred 2,475,400 39,000 70,460 2,584,860
7.68% Preferred 136,371 100 485 136,956
Total 34,553,451 284,110 424,846 35,262,407
Shareholder proposal to extend confidential voting
Class of Stock For Against Abstain Total Voted
Common 473,460 2,900,343 62,567 3,436,370
4% Preferred 93,040 541,760 33,820 668,620
Total 566,500 3,442,103 96,387 4,104,990
(3) Election of Directors
Name Votes For Votes Withheld
Roger L. Breezley 34,226,109 1,036,298
John B. Carley 34,573,456 688,951
Jack K. Lemley 34,640,715 621,692
Evelyn Loveless 34,502,299 760,108
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
File As
Exhibit Number Exhibit
*3(a) 33-00440 4(a)(xiii) Restated Articles of
Incorporation of the Company as
filed with the Secretary of State
of Idaho on June 30, 1989.
*3(a)(i) 33-65720 4(a)(i) Statement of Resolution
Establishing Terms of 8.375%
Serial Preferred Stock, Without
Par Value (cumulative stated
value of $100 per share), as
filed with the Secretary of State
of Idaho on September 23, 1991.
*3(a)(ii) 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), 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), 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 adopted
by Shareholders on May 1, 1991.
*3(c) 33-00440 4(a)(xiv) By-laws of the Company amended on
June 30, 1989, and presently in
effect.
*4(a)(i) 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(a)(ii) 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
2-51722 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 16, 1993
1-3198 4 Thirty-fourth December 1, 1993
Form 8-K
Dated
12/17/93
*4(b) Instruments relating to
American Falls bond guarantee.
(see Exhibits 10(f) and
10(f)(i)).
*4(c) 33-65720 4(f) Agreement to furnish certain
debt instruments.
*4(d) 33-00440 2(a)(iii) Agreement and Plan of Merger
dated March 10, 1989, between
Idaho Power Company, a Maine
Corporation, and Idaho Power
Migrating Corporation.
*4(e) 33-65720 4(e) Rights Agreement dated
January 11, 1990, between the
Company and First Chicago
Trust Company of New York, as
Rights Agent (The Bank of New
York, successor Rights Agent).
*10(a) 2-51762 5(a) Agreement, dated April 20,
1973, between the Company and
FMC Corporation.
*10(a)(i) 2-57374 5(b) Letter Agreement, dated
October 22, 1975, relating to
agreement filed as Exhibit
10(a).
*10(a)(ii) 2-62034 5(b)(i) Letter Agreement, dated
December 22, 1976, relating to
agreement filed as Exhibit
10(a).
*10(a)(iii) 33-65720 10(a) Letter Agreement, dated
December 11, 1981, relating to
agreement filed as Exhibit
10(a).
*10(b) 2-49584 5(b) Agreements, dated
September 22, 1969, between
the Company and Pacific
Power & Light Company relating
to the operation, construction
and ownership of the Jim
Bridger Project.
*10(b)(i) 2-51762 5(c) Amendment, dated February 1,
1974, relating to operation
agreement filed as Exhibit
10(b).
*10(c) 2-49584 5(c) Agreement, dated as of
October 11, 1973, between the
Company and Pacific Power &
Light Company.
*10(d) 2-49584 5(d) Agreement, dated as of
October 24, 1973, between the
Company and Utah Power & Light
Company.
*10(d)(i) 2-62034 5(f)(i) Amendment, dated January 25,
1978, relating to agreement
filed as Exhibit 10(d).
*10(e) 33-65720 10(b) Coal Purchase Contract, dated
as of June 19, 1986, among the
Company, Sierra Pacific Power
Company and Black Butte Coal
Company.
*10(f) 2-57374 5(k) Contract, dated March 31,
1976, between the United
States of America and American
Falls Reservoir District, and
related Exhibits.
*10(f)(i) 33-65720 10(c) Guaranty Agreement, dated
March 1, 1990, between the
Company and West One Bank, as
Trustee, relating to
$21,425,000 American Falls
Replacement Dam Bonds of the
American Falls Reservoir
District, Idaho.
*10(g) 2-57374 5(m) Agreement, effective April 15,
1975, between the Company and
The Washington Water Power
Company.
*10(h) 2-62034 5(p) Bridger Coal Company
Agreement, dated February 1,
1974, between Pacific
Minerals, Inc., and Idaho
Energy Resources Co.
*10(i) 2-62034 5(q) Coal Sales Agreement, dated
February 1, 1974, between
Bridger Coal Company and
Pacific Power & Light Company
and the Company.
*10(i)(i) 33-65720 10(d) Second Restated and Amended
Coal Sales Agreement, dated
March 7, 1988, among Bridger
Coal Company and PacifiCorp
(dba Pacific Power & Light
Company) and the Company.
*10(i)(ii) 1-3198 10(i)(ii) Third Restated and Amended
Form 10-Q Coal Sales Agreement, dated
for 3/31/96 January 1, 1996, among Bridger
Coal Company and PacifiCorp
(dba Pacific Power & Light
Company) and the Company.
*10(j) 2-62034 5(r) Guaranty Agreement, dated as
of August 30, 1974, with
Pacific Power & Light Company.
*10(k) 2-56513 5(i) Letter Agreement, dated
January 23, 1976, between the
Company and Portland General
Electric Company.
*10(k)(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, 1976, between
Portland General Electric
Company and the Company.
*10(k)(ii) 2-62034 5(t) Amendment, dated September 30,
1977, relating to agreement
filed as Exhibit 10(k).
*10(k)(iii) 2-62034 5(u) Amendment, dated October 31,
1977, relating to agreement
filed as Exhibit 10(k).
*10(k)(iv) 2-62034 5(v) Amendment, dated January 23,
1978, relating to agreement
filed as Exhibit 10(k).
*10(k)(v) 2-62034 5(w) Amendment, dated February 15,
1978, relating to agreement
filed as Exhibit 10(k).
*10(k)(vi) 2-68574 5(x) Amendment, dated September 1,
1979, relating to agreement
filed as Exhibit 10(k).
*10(l) 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(m) 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 the Company.
*10(n)(i)1 1-3198 10(n)(i) The Revised Security Plans for
Form 10-K Senior Management Employees
for 1994 and for Directors-a non-
qualified, deferred
compensation plan effective
November 30, 1994.
*10(n)(ii)1 1-3198 10(n)(ii) The Executive Annual Incentive
Form 10-K Plan for senior management
for 1994 employees effective January 1,
1995.
*10(n)(iii)1 1-3198 10(n)(iii) The 1994 Restricted Stock
Form 10-K Plan for officers and key
for 1994 executives effective July 1,
1994.
*10(o) 33-65720 10(f) Residential Purchase and Sale
Agreement, dated August 22,
1981, among the United Stated
of American Department of
Energy acting by and through
the Bonneville Power
Administration, and the
Company.
*10(p) 33-65720 10(g) Power Sales Contact, dated
August 25, 1981, including
amendments, among the United
States of America Department
of Energy acting by and
through the Bonneville Power
Administration, and the
Company.
*10(q) 33-65720 10(h) Framework Agreement, dated
October 1, 1984, between the
State of Idaho and the
Company relating to the
Company's Swan Falls and
Snake River water rights.
1 Compensatory Plan
*10(q)(i) 33-65720 10(h)(i) Agreement, dated October 25,
1984, between the State of
Idaho and the Company
relating to the agreement
filed as Exhibit 10(q).
*10(q)(ii) 33-65720 10(h)(ii) Contract to Implement, dated
October 25, 1984, between the
State of Idaho and the
Company relating to the
agreement filed as Exhibit
10(q).
*10(r) 33-65720 10(i) Agreement for Supply of Power
and Energy, dated
February 10, 1988, between
the Utah Associated Municipal
Power Systems and the
Company.
*10(s) 33-65720 10(j) Agreement Respecting
Transmission Facilities and
Services, dated March 21,
1988 among PC/UP&L Merging
Corp. and the Company
including a Settlement
Agreement between PacifiCorp
and the Company.
*10(s)(i) 33-65720 10(j)(i) Restated Transmission
Services Agreement, dated
February 6, 1992, between
Idaho Power Company and
PacifiCorp.
*10(t) 33-65720 10(k) Agreement for Supply of Power
and Energy, dated
February 23, 1989, between
Sierra Pacific Power Company
and the Company.
*10(u) 33-65720 10(l) Transmission Services
Agreement, dated May 18,
1989, between the Company and
the Bonneville Power
Administration.
*10(v) 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 the Company and the
Twin Falls Canal Company and
the Northside Canal Company
Limited.
*10(v)(i) 33-65720 10(m)(i) Guaranty Agreement, dated
February 10, 1992, between
the Company and New York Life
Insurance Company, as Note
Purchaser, relating to
$11,700,000 Guaranteed Notes
due 2017 of Milner Dam Inc.
*10(w) 33-65720 10(n) Agreement for the Purchase
and Sale of Power and Energy,
dated October 16, 1990,
between the Company and The
Montana Power Company.
*10(x) 1-3198 10(x) Agreement for design of
Form 10-Q substation dated October 4,
for 9/30/95 1995, between the Company and
Micron Technology, Inc.
12 Statement Re: Computation of
Ratio of Earnings to Fixed
Charges.
12(a) Statement Re: Computation of
Supplemental Ratio of
Earnings to Fixed Charges.
12(b) Statement Re: Computation of
Ratio of Earnings to Combined
Fixed Charges and Preferred
Dividend Requirements.
12(c) Statement Re: Computation of
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. No reports on Form 8-K were
filed for the three months ended June 30, 1996.
*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 August 2, 1996 By: /s/ J LaMont Keen
J LaMont Keen
Vice President, Chief Financial
Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)