SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
-------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 23, 2001
IDACORP, Inc.
Idaho Power Company
(Exact name of registrant as specified in its charter)
Idaho 1-14465 82-0505802
1-3198 82-0130980
(State or other (Commission (I.R.S.Employer
jurisdiction of incorporation) File Number) Identification No.)
1221 West Idaho Street
Boise, Idaho 83702-5627
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (208) 388-2200
-------------------
Former name or address, if changed since last report.
Items 1 through 4, Item 6 and Items 8 and 9 are inapplicable and have been
omitted herefrom.
ITEM 5. OTHER EVENTS AND FD DISCLOSURE
Idaho Power Company's (IPC) utility operations are being affected by the
electricity market conditions in the western United States. The tremendous
increase in prices for purchased power, along with increasing demand and reduced
hydroelectric generation, have combined to produce substantial increases in
costs to supply power.
The current mountain snowpack above Brownlee Reservoir, IPC's main storage pool
for its Hells Canyon hydro facilities, was at 55 percent of normal in February
2001. This indicates that hydroelectric generation could be appreciably
diminished in 2001.
In May 2001, IPC will implement the annual Power Cost Adjustment (PCA) in Idaho
to recover up to 90% of the costs to supply power in the Idaho jurisdiction. The
cost recovery mechanism is based on the forecast for the May 2001-May 2002
period and a true-up for the preceding year. Because the resulting rate
increases are expected to be large, the Company is exploring an alternative
method of cost recovery with the Idaho Public Utilities Commission and the
legislature. This method, if approved and implemented, would enable the Company
to recover the costs up front but spread the impact on our customers out over a
longer period of time.
IPC is also proposing a number of programs to decrease its reliance on expensive
wholesale power. The programs are designed to reduce overall energy usage,
decrease peak-demand levels and increase generation within our service
territory.
With regard to non-utility energy trading in the state of California, IPC in
January 1999 entered into a Participation Agreement with the California Power
Exchange (CalPX), a California non-profit public benefit corporation. The CalPX
operates a wholesale electricity market in California by acting as a
clearinghouse through which electricity is bought and sold. Pursuant to the
Participation Agreement, IPC could sell power to the CalPX under the terms and
conditions of the CalPX Tariff.
On January 18, 2001, the CalPX sent IPC an invoice for $2.2 million - a "default
share invoice" - as a result of an alleged Southern California Edison (SCE)
payment default of $214.5 million for power purchases. IPC made this payment. On
January 24, 2001, IPC terminated its Participation Agreement with the CalPX. On
February 8, 2001, the CalPX sent a further default share invoice for $5.2
million, due February 20, 2001, as a result of alleged payment defaults by SCE
and Pacific Gas and Electric Company (PG&E), and others. However, as of February
9, 2001 the CalPX owes IPC $4.2 million, for power sold to the CalPX prior to
December 2000. IPC will be entitled to receive an additional $7.1 million from
the CalPX as of March 6, 2001 for December 2000 deliveries to the CalPX. IPC did
not pay the February 8 invoice.
The CalPX allocated the defaults of, among others, SCE and PG&E to the remaining
participants based upon the level of trading activity of each participant during
the preceding three-month period. IPC believes that the default invoices were
not proper and that it owes no further amounts to the CalPX. IPC intends to
pursue all available remedies in its efforts to collect amounts owed to it by
the CalPX.
In addition to the amounts due IPC from the CalPX, IPC is currently owed
approximately $750,000 from the Cal ISO for sales in November and an additional
$36.6 million will come due to IPC from the Cal ISO March 6, 2001 for sales in
December.
On February 20, IPC filed a petition with the Federal Energy Regulatory
Commission (FERC) to intervene in a proceeding which requests the FERC to
suspend the use of the CalPX charge back methodology and provides for further
FERC oversight in the CalPX's implementation of its default mitigation
procedures.
Also a preliminary injunction has been granted by a Federal Judge in the Federal
District Court for the Central District of California enjoining the CalPX from
declaring any CalPX participant in default under the terms of the CalPX Tariff.
We are unable to predict the outcome of these situations. In California, IPC
believes that it has credit exposure in the range of $30-$40 million. The
Company continues to manage this exposure in accordance with the established
credit policies.
FORWARD-LOOKING INFORMATION
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), we are hereby filing cautionary
statements identifying important factors that could cause our actual results to
differ materially from those projected in forward-looking statements (as such
term is defined in the Reform Act) made by or on behalf of the Company in this
Current Report on Form 8-K, in presentations, in response to questions or
otherwise. Any statements that express, or involve discussions as to
expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of words or phrases such as
"anticipates", "believes", "estimates", "expects", "intends", "plans",
"predicts", "projects", "will likely result", "will continue", or similar
expressions) are not statements of historical facts and may be forward-looking.
Forward-looking statements involve estimates, assumptions, and uncertainties and
are qualified in their entirety by reference to, and are accompanied by, the
following important factors, which are difficult to predict, contain
uncertainties, are beyond our control and may cause actual results to differ
materially from those contained in forward-looking statements:
o prevailing governmental policies and regulatory actions, including those of
the Federal Energy Regulatory Commission (FERC), the Idaho Public Utilities
Commission (IPUC), the Oregon Public Utilities Commission (OPUC), and the
Public Utilities Commission of Nevada (PUNC), with respect to allowed rates
of return, industry and rate structure, acquisition and disposal of assets
and facilities, operation and construction of plant facilities, recovery of
purchased power and other capital investments, and present or prospective
wholesale and retail competition (including but not limited to retail
wheeling and transmission costs);
o the current energy situation in the western United States;
o economic and geographic factors including political and economic risks;
o changes in and compliance with environmental and safety laws and policies;
o weather conditions;
o population growth rates and demographic patterns;
o competition for retail and wholesale customers;
o pricing and transportation of commodities;
o market demand, including structural market changes;
o changes in tax rates or policies or in rates of inflation;
o changes in project costs;
o unanticipated changes in operating expenses and capital expenditures;
o capital market conditions;
o competition for new energy development opportunities; and
o legal and administrative proceedings (whether civil or criminal) and
settlements that influence the business and profitability of the Company.
Any forward-looking statement speaks only as of the date on which such statement
is made, and we undertake no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which such statement is
made or to reflect the occurrence of unanticipated events. New factors emerge
from time to time and it is not possible for management to predict all such
factors, nor can it assess the impact of any such factor on the business or the
extent to which any factor, or combination of factors, may cause results to
differ materially from those contained in any forward-looking statement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements -
(i) IDACORP, Inc.
Consolidated Statements of Income for the Years Ended December 31, 2000, 1999
and 1998
Consolidated Balance Sheets as of December 31, 2000, 1999 and 1998
Consolidated Statements of Capitalization as of December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000,
1999 and 1998
Consolidated Statements of Retained Earnings and Consolidated Statements of
Comprehensive Income for the Years Ended December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
Independent Auditors' Report
(ii) Idaho Power Company
Consolidated Statements of Income for the Years Ended December 31, 2000, 1999
and 1998
Consolidated Balance Sheets as of December 31, 2000, 1999 and 1998
Consolidated Statements of Capitalization as of December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000,
1999 and 1998
Consolidated Statements of Retained Earnings and Consolidated Statements of
Comprehensive Income for the Years Ended December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
Independent Auditors' Report
(b) Exhibits -
12 Statement Re: Computation of Ratio of Earnings to Fixed Charges (IDACORP,
Inc.)
12(a) Statement Re: Computation of Supplemental Ratio of Earnings to Fixed
Charges (IDACORP, Inc.)
12(b) Statement Re: Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Dividend Requirements (IDACORP, Inc.)
12(c) Statement Re: Computation of Supplemental Ratio of Earnings to Combined
Fixed Charges and Preferred Dividend Requirements (IDACORP, Inc.)
12(d) Statement Re: Computation of Ratio of Earnings to Fixed Charges (Idaho
Power Company)
12(e) Statement Re: Computation of Supplemental Ratio of Earnings to Fixed
Charges (Idaho Power Company)
12(f) Statement Re: Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Dividend Requirements (Idaho Power Company)
12(g) Statement Re: Computation of Supplemental Ratio of Earnings to Combined
Fixed Charges and Preferred Dividend Requirements (Idaho Power Company)
23 Consent of Deloitte & Touche LLP
IDACORP, Inc.
Consolidated Statements of Income
Year Ended December 31,
-----------------------------------------------------------
2000 1999 1998
-----------------------------------------------------------
(Thousands of Dollars Except for Per Share Amounts)
OPERATING REVENUES:
Electric Utility:
General business............................ $ 565,357 $ 516,148 $ 514,856
Off system sales............................ 229,986 119,785 214,418
Other revenues.............................. 40,319 22,403 27,136
------------------ ----------------- ----------------
Total electric utility revenues........... 835,662 658,336 756,410
------------------ ----------------- ----------------
Diversified Operations:
Energy marketing............................ 145,400 31,368 10,745
Other....................................... 24,004 29,426 15,443
------------------ ----------------- ----------------
Total diversified operations.............. 169,404 60,794 26,188
------------------ ----------------- ----------------
Earnings of unconsolidated partnerships, joint
ventures and subsidiaries................... 14,287 12,022 12,489
------------------ ----------------- ----------------
Total operating revenues.................. 1,019,353 731,152 795,087
------------------ ----------------- ----------------
OPERATING EXPENSES:
Electric Utility:
Purchased power............................. 398,649 106,344 185,271
Fuel expense................................ 94,215 86,617 86,237
Power cost adjustment....................... (120,688) (502) 21,866
Other operations and maintenance............ 193,397 193,867 187,246
Depreciation................................ 80,287 77,833 74,481
Taxes other than income taxes............... 20,166 21,719 20,725
------------------ ----------------- ----------------
Total electric utility expenses........... 666,026 485,878 575,826
------------------ ----------------- ----------------
Diversified Operations:
Energy marketing............................ 50,811 9,684 2,782
Other....................................... 40,853 36,540 23,056
------------------ ----------------- ----------------
Total diversified operations.............. 91,664 46,224 25,838
------------------ ----------------- ----------------
Total operating expenses.................. 757,690 532,120 601,664
------------------ ----------------- ----------------
OPERATING INCOME............................... 261,663 199,050 193,423
------------------ ----------------- ----------------
OTHER INCOME:
Allowance for equity funds used during
construction.............................. 2,565 1,667 300
Gain on sale of asset....................... 14,000 - -
Other - net................................. (605) 3,459 5,518
------------------ ----------------- ----------------
Total other income........................ 15,960 5,126 5,818
------------------ ----------------- ----------------
INTEREST EXPENSE AND OTHER:
Interest on long-term debt.................. 53,356 54,294 52,270
Other interest.............................. 9,983 8,681 8,407
Allowance for borrowed funds
used during construction.................. (2,346) (1,392) (900)
Preferred dividends of Idaho Power Company.. 5,929 5,572 5,658
------------------ ----------------- ----------------
Total interest expense and other.......... 66,922 67,155 65,435
------------------ ----------------- ----------------
INCOME BEFORE INCOME TAXES..................... 210,701 137,021 133,806
INCOME TAXES................................... 70,818 45,672 44,630
------------------ ----------------- ----------------
NET INCOME..................................... $ 139,883 $ 91,349 $ 89,176
================== ================= ================
AVERAGE COMMON SHARES
OUTSTANDING (000's)....................... 37,556 37,612 37,612
EARNINGS PER SHARE OF COMMON
STOCK (basic and diluted).................. $ 3.72 $ 2.43 $ 2.37
The accompanying notes are an integral part of these statements.
IDACORP, Inc.
Consolidated Balance Sheets
December 31,
-----------------------------------------------------------
2000 1999 1998
------------------ ----------------- ----------------
(Thousands of Dollars)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................... $ 106,795 $ 111,338 $ 22,867
Receivables:
Customer.................................. 243,647 98,923 102,671
Allowance for uncollectible accounts...... (1,397) (1,397) (1,397)
Employee notes............................ 4,742 4,105 4,510
Other..................................... 15,611 12,117 10,702
Energy marketing assets..................... 1,681,554 37,398 -
Accrued unbilled revenues................... 44,825 31,994 34,610
Materials and supplies (at average cost).... 29,731 29,611 30,157
Fuel stock (at average cost)................ 5,105 9,329 7,096
Prepayments................................. 24,575 16,097 16,042
Regulatory assets associated with income taxes 8,672 893 2,965
------------------ ----------------- ----------------
Total current assets...................... 2,163,860 350,408 230,223
------------------ ----------------- ----------------
INVESTMENTS AND OTHER ASSETS................... 157,068 139,091 124,021
------------------ ----------------- ----------------
PROPERTY, PLANT AND EQUIPMENT
Utility plant in service.................... 2,799,874 2,726,026 2,659,441
Accumulated provision for depreciation...... (1,142,572) (1,073,722) (1,009,387)
------------------ ----------------- ----------------
Utility plant in service - net.............. 1,657,302 1,652,304 1,650,054
Construction work in progress............... 136,388 91,637 59,717
Utility plant held for future use........... 2,167 1,742 1,738
Other property, net of accumulated depreciation 9,179 6,928 5,416
------------------ ----------------- ----------------
Property, plant and equipment - net....... 1,805,036 1,752,611 1,716,925
------------------ ----------------- ----------------
DEFERRED DEBITS:
American Falls and Milner water rights...... 31,585 31,585 31,830
Company-owned life insurance................ 39,554 40,480 35,149
Regulatory assets associated with income taxes 204,880 214,782 201,465
Regulatory assets - PCA..................... 119,905 - -
Regulatory assets - other................... 45,750 56,137 67,212
Other....................................... 71,620 55,277 49,994
------------------ ----------------- ----------------
Total deferred debits..................... 513,294 398,261 385,650
------------------ ----------------- ----------------
TOTAL................................... $ 4,639,258 $ 2,640,371 $ 2,456,819
================== ================= ================
The accompanying notes are an integral part of these statements.
IDACORP, Inc
Consolidated Balance Sheets
December 31,
-----------------------------------------------------------
2000 1999 1998
------------------ ----------------- ----------------
(Thousands of Dollars)
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES:
Current maturities of long-term debt........ $ 39,774 $ 89,101 $ 6,029
Notes payable............................... 120,600 19,757 38,524
Accounts payable............................ 272,376 145,737 101,975
Energy marketing liabilities................ 1,706,501 33,814 -
Taxes accrued............................... 15,631 21,313 24,785
Interest accrued............................ 16,985 19,126 18,365
Deferred income taxes....................... 8,672 893 2,965
Other....................................... 28,104 16,696 12,275
------------------ ----------------- ----------------
Total current liabilities................. 2,208,643 346,437 204,918
------------------ ----------------- ----------------
DEFERRED CREDITS:
Deferred income taxes....................... 460,464 430,468 422,196
Regulatory liabilities associated with deferred
investment tax credits.................... 66,050 67,433 69,396
Regulatory liabilities associated with income
taxes..................................... 40,230 33,817 28,075
Regulatory liabilities - PCA................ - 3,378 5,199
Regulatory liabilities - other.............. 4,621 3,363 4,161
Other....................................... 69,259 75,136 70,572
------------------ ----------------- ----------------
Total deferred credits.................... 640,624 613,595 599,599
------------------ ----------------- ----------------
LONG-TERM DEBT................................. 864,114 821,558 815,937
------------------ ----------------- ----------------
COMMITMENTS AND CONTINGENT
LIABILITIES
PREFERRED STOCK OF IDAHO POWER
COMPANY..................................... 105,066 105,811 105,968
------------------ ----------------- ----------------
COMMON STOCK EQUITY:
Common stock, no par value (shares authorized
120,000,000; 37,612,351 shares issued)... 453,102 451,343 451,564
Retained earnings........................... 370,126 300,093 278,607
Accumulated other comprehensive income (loss) (921) 1,534 226
Treasury stock (44,425 shares at cost)...... (1,496) - -
------------------ ----------------- ----------------
Total common stock equity................. 820,811 752,970 730,397
------------------ ----------------- ----------------
TOTAL................................... $ 4,639,258 $ 2,640,371 $ 2,456,819
================== ================= ================
The accompanying notes are an integral part of these statements.
IDACORP, Inc.
Consolidated Statements of Capitalization
December 31,
--------------------------------------------------------------
2000 % 1999 % 1998 %
---- --- ---- --- ---- ---
(Thousands of Dollars)
COMMON STOCK EQUITY:
Common stock......................................... $ 453,102 $ 451,343 $ 451,564
Retained earnings.................................... 370,126 300,093 278,607
Accumulated other comprehensive income (loss)........ (921) 1,534 226
Treasury stock....................................... (1,496) - -
------------ ------------ ------------
Total common stock equity........................ 820,811 46 752,970 45 730,397 44
------------ ------------ ------------
PREFERRED STOCK OF IDAHO POWER COMPANY:
4% preferred stock................................... 15,066 15,811 15,968
7.68% Series, serial preferred stock................. 15,000 15,000 15,000
7.07% Series, serial preferred stock................. 25,000 25,000 25,000
Auction rate preferred stock......................... 50,000 50,000 50,000
------------ ------------ ------------
Total preferred stock............................ 105,066 6 105,811 6 105,968 7
------------ ------------ ------------
LONG-TERM DEBT:
First mortgage bonds:
8.65% Series due 2000............................ - 80,000 80,000
6.93% Series due 2001............................ 30,000 30,000 30,000
6.85% Series due 2002............................ 27,000 27,000 27,000
6.40% Series due 2003............................ 80,000 80,000 80,000
8 % Series due 2004............................ 50,000 50,000 50,000
5.83% Series due 2005............................ 60,000 60,000 60,000
7.38% Series due 2007............................ 80,000 - -
7.20% Series due 2009............................ 80,000 80,000 -
Maturing 2021 through 2031 with rates ranging
from 7.5% to 9.52%................................ 230,000 230,000 230,000
------------ ------------ ------------
Total first mortgage bonds....................... 637,000 637,000 557,000
Amount due within one year........................... (30,000) (80,000) -
------------ ------------ ------------
Net first mortgage bonds......................... 607,000 557,000 557,000
------------ ------------ ------------
Pollution control revenue bonds:
7 1/4 % Series due 2008........................... - 4,360 4,360
8.30 % Series 1984 due 2014...................... 49,800 49,800 49,800
6.05 % Series 1996A due 2026..................... 68,100 68,100 68,100
Variable Rate Series 1996B due 2026................ 24,200 24,200 24,200
Variable Rate Series 1996C due 2026................ 24,000 24,000 24,000
Variable Rate Series 2000 due 2027................. 4,360 - -
------------ ------------ ------------
Total pollution control revenue bonds............ 170,460 170,460 170,460
------------ ------------ ------------
REA notes............................................ 1,339 1,415 1,489
Amount due within one year......................... (77) (76) (74)
------------ ------------ ------------
Net REA notes.................................... 1,262 1,339 1,415
------------ ------------ ------------
American Falls bond guarantee........................ 19,885 19,885 20,130
------------ ------------ ------------
Milner Dam note guarantee............................ 11,700 11,700 11,700
------------ ------------ ------------
Unamortized premium/discount - net................... (1,330) (1,441) (1,539)
------------ ------------ ------------
Debt related to investments in affordable housing with
rates ranging from 6.03% to 8.59% due 2000 to 2011 64,063 71,183 62,103
Amount due within one year......................... (9,697) (9,025) (5,955)
------------ ------------ ------------
Net affordable housing debt...................... 54,366 62,158 56,148
------------ ------------ ------------
Other subsidiary debt................................ 771 457 623
------------ ------------ ------------
Total long-term debt............................. 864,114 48 821,558 49 815,937 49
------------ ----- ------------ ----- ------------ ----
TOTAL CAPITALIZATION................................... $1,789,991 100 $1,680,339 100 $1,652,302 100
============ ===== ============ ===== ============ ====
The accompanying notes are an integral part of these statements.
IDACORP, Inc.
Consolidated Statements of Cash Flows
Year Ended December 31,
-------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
OPERATING ACTIVITIES:
Net income........................................... $ 139,883 $ 91,349 $ 89,176
Adjustments to reconcile net income to net cash
provided by operating activities:
Unrealized (gains) losses from energy marketing
activities....................................... 28,531 (3,584) -
Gain on sale of asset.............................. (14,000) - -
Depreciation and amortization...................... 103,971 95,436 87,143
Deferred taxes and investment tax credits.......... 46,718 (1,820) (10,182)
Accrued PCA costs.................................. (122,353) (891) 21,658
Change in:
Receivables and prepayments...................... (157,182) 2,683 4,883
Accrued unbilled revenues........................ (12,831) 2,616 (1,298)
Materials and supplies and fuel stock............ 4,104 (1,687) (925)
Accounts payable................................. 125,704 43,762 (9,963)
Taxes accrued.................................... (5,682) (3,472) 489
Other current assets and liabilities............. 4,917 5,182 (825)
Other - net........................................ (8,145) 1,014 (10,269)
---------- ---------- ---------
Net cash provided by operating activities....... 133,635 230,588 169,887
---------- ---------- ---------
INVESTING ACTIVITIES:
Additions to property, plant and equipment........... (140,302) (110,974) (89,184)
Investments in affordable housing projects........... (29,166) (19,554) (19,139)
Proceeds from sale of asset.......................... 17,500 - -
Investments in company-owned life insurance.......... - (5,862) -
Other - net.......................................... (642) (5,060) 3,206
---------- ---------- ---------
Net cash used in investing activities.............. (152,610) (141,450) (105,117)
---------- ---------- ---------
FINANCING ACTIVITIES:
Proceeds from issuance of:
First mortgage bonds............................... 80,000 80,000 60,000
Long-term debt related to affordable housing projects 10,021 18,730 20,556
Pollution control revenue bonds.................... 4,360 - -
Retirement of:
Subsidiary debt.................................... (926) (165) (4,316)
Long-term debt related to affordable housing projects (17,141) (9,650) (4,838)
First mortgage bonds............................... (80,000) - (30,000)
Pollution control revenue bonds.................... (4,360) - -
Dividends on common stock............................ (69,850) (69,863) (69,868)
Increase (decrease) in short-term borrowings......... 100,843 (18,767) (18,992)
Acquisition of treasury stock........................ (8,014) - -
Other - net.......................................... (501) (952) (1,350)
---------- ---------- ---------
Net cash provided by (used in) financing activities 14,432 (667) (48,808)
---------- ---------- ---------
Net increase (decrease) in cash and cash equivalents... (4,543) 88,471 15,962
Cash and cash equivalents beginning of period.......... 111,338 22,867 6,905
---------- ---------- ---------
Cash and cash equivalents at end of period............. $ 106,795 $111,338 $ 22,867
========== ========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Income taxes....................................... $29,830 $ 51,750 $ 55,527
Interest (net of amount capitalized)............... $61,825 $ 56,295 $ 53,806
The accompanying notes are an integral part of these statements.
IDACORP, Inc.
Consolidated Statements of Retained Earnings
Year Ended December 31,
------------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
RETAINED EARNINGS, BEGINNING OF YEAR....................... $ 300,093 $ 278,607 $ 259,299
NET INCOME................................................. 139,883 91,349 89,176
------------- ------------ -------------
Total.................................................... 439,976 369,956 348,475
COMMON STOCK DIVIDENDS..................................... (69,850) (69,863) (69,868)
------------- ------------ -------------
RETAINED EARNINGS, END OF YEAR............................. $ 370,126 $ 300,093 $ 278,607
============= ============ =============
The accompanying notes are an integral part of these statements.
Consolidated Statements of Comprehensive Income
Year Ended December 31,
------------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
NET INCOME................................................. $139,883 $ 91,349 $ 89,176
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gains (losses) on securities (net of tax of
($1,713), $677, and $2,185)............................ (2,335) 1,017 3,385
Minimum pension liability adjustment (net of tax of
($78), $189 and ($2,054))............................ (119) 291 (3,159)
------------- ------------ -------------
TOTAL COMPREHENSIVE INCOME................................. $137,429 $ 92,657 $ 89,402
============= ============ =============
The accompanying notes are an integral part of these statements
IDACORP, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nature of Business
IDACORP, Inc. (IDACORP or the Company) is a holding company whose principal
operating subsidiary is Idaho Power Company (IPC). IPC is regulated by the FERC
and the state regulatory commissions of Idaho, Oregon, Nevada and Wyoming, and
is engaged in the generation, transmission, distribution, sale and purchase of
electric energy. IPC is the parent of Idaho Energy Resources Co., a joint
venturer in Bridger Coal Company, which supplies coal to IPC's Jim Bridger
generating plant.
IDACORP's other significant subsidiaries are:
o IDACORP Energy Services - natural gas marketing
o Ida-West Energy - independent power projects development and management
o IdaTech - developer of integrated fuel cell systems
o IDACORP Financial Services - affordable housing and other real estate
investments
o Rocky Mountain Communications - commercial and residential Internet service
provider
o IDACOMM - provider of telecommunications services
o IDACORP Services - energy related products and services
o Applied Power Company - supplier of photovoltaic systems (sold January
2001).
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned or controlled subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation. Investments in
business entities in which the Company and its subsidiaries do not have control,
but have the ability to exercise significant influence over operating and
financial policies, are accounted for using the equity method.
System of Accounts
The accounting records of IPC conform to the Uniform System of Accounts
prescribed by the FERC and adopted by the public utility commissions of Idaho,
Oregon, Nevada and Wyoming.
Property, Plant and Equipment
The cost of additions to utility plant in service represents the original cost
of contracted services, direct labor and material, allowance for funds used
during construction and indirect charges for engineering, supervision and
similar overhead items. Maintenance and repairs of property and replacements and
renewals of items determined to be less than units of property are charged to
operations. For property replaced or renewed the original cost plus removal cost
less salvage is charged to accumulated provision for depreciation while the cost
of related replacements and renewals is added to property, plant and equipment.
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 FERC, IPC's weighted-average monthly AFDC rates
for 2000, 1999 and 1998 were 8.3 percent, 7.8 percent, and 6.0 percent
respectively.
Revenues
In order to match revenues with associated expenses, IPC accrues unbilled
revenues for electric services delivered to customers but not yet billed at
month-end.
IPC had a regulatory settlement with the Idaho Public Utilities Commission
(IPUC) that expired in 1999. Under terms of the settlement, when earnings in the
Idaho jurisdiction exceeded an 11.75 percent return on year-end common equity,
50 percent of the excess was set aside for the benefit of IPC's Idaho retail
customers.
In March 2000 IPC submitted a 1999 annual earnings sharing compliance filing to
the IPUC. This filing indicated that there was almost $9.6 million in 1999
earnings and $2.7 million in unused 1998 reserve balances available for the
benefit of IPC's Idaho customers. In April 2000 the IPUC ordered that $6.9
million of the revenue sharing balance be refunded to Idaho customers through
rate reductions effective May 16, 2000. The IPUC also approved IPC's continuing
participation in the Northwest Energy Efficiency Alliance (NEEA) through 2004,
ordering IPC to set aside the remaining $5.4 million of revenue sharing dollars
to fund that participation.
Power Cost Adjustment
IPC has a Power Cost Adjustment (PCA) mechanism that provides for annual
adjustments to the rates charged to Idaho retail customers. These adjustments
are based on forecasts of net power supply costs, and take effect annually on
May 16. The difference between the actual costs incurred and the forecasted
costs are deferred, with interest, and trued-up in future annual rate
adjustments.
Depreciation
All utility plant in service is depreciated using the straight-line method at
rates approved by regulatory authorities. Annual depreciation provisions as a
percent of average depreciable utility plant in service approximated 2.94
percent in 2000, 2.94 percent in 1999 and 2.87 percent in 1998.
Income Taxes
The Company follows the liability method of computing deferred taxes on all
temporary differences between the book and tax basis of assets and liabilities
and adjusts deferred tax assets and liabilities for enacted changes in tax laws
or rates. Consistent with orders and directives of the IPUC, the regulatory
authority having principal jurisdiction, IPC's deferred income taxes (commonly
referred to as normalized accounting) are provided for the difference between
income tax depreciation and straight-line depreciation computed using book lives
on coal-fired generation facilities and properties acquired after 1980. On other
facilities, deferred income taxes are provided for the difference between
accelerated income tax depreciation and straight-line depreciation using tax
guideline lives on assets acquired prior to 1981. Deferred income taxes are not
provided for those income tax timing differences where the prescribed regulatory
accounting methods do not provide for current recovery in rates. Regulated
enterprises are required to recognize such adjustments as regulatory assets or
liabilities if it is probable that such amounts will be recovered from or
returned to customers in future rates (see Note 2).
The State of Idaho allows a three-percent investment tax credit (ITC) upon
certain qualifying plant additions. ITC earned on regulated assets are deferred
and amortized to income over the estimated service lives of the related
properties. Credits earned on non-regulated assets or investments are recognized
in the year earned.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand and highly liquid temporary investments with maturity dates at date of
acquisition of three months or less.
Management Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America, 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.
Regulation of Utility Operations
Electric utilities have historically been recognized as natural monopolies and
have operated in a highly regulated environment in which they have an obligation
to provide electric service to their customers in return for an exclusive
franchise within their service territory with an opportunity to earn a regulated
rate of return. This regulatory environment is changing. The generation sector
has experienced competition from non-utility power and market producers, and the
FERC is requiring utilities, including IPC, to provide wholesale open-access
transmission service to others. Transmission services may soon be provided by
Regional Transmission Organizations rather than utilities.
Some state regulatory authorities are in the process of changing utility
regulations in response to federal and state statutory changes and evolving
competitive markets. These statutory and conforming regulations may result in
increased wholesale and retail competition. In 1997, the Idaho Legislature
appointed a committee to study restructuring of the electric utility industry.
Although the committee will continue studying a variety of restructuring ideas,
it has not recommended any restructuring legislation and is not expected to in
the foreseeable future. In 1999, the Oregon legislature passed legislation
restructuring the electric utility industry, but exempted IPC's service
territory. Due to IPC's low cost structure, it is well positioned to compete in
the evolving utility market place. However, the Company is unable to predict
what financial impact or effect the adoption of any such legislation would have
on IPC's operations.
IPC follows Statement of Financial Accounting Standards (SFAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation," and its financial
statements reflect the effects of the different rate making principles followed
by the various jurisdictions regulating IPC. Pursuant to SFAS 71 IPC
capitalizes, as deferred regulatory assets, incurred costs that are expected to
be recovered in future utility rates. IPC also records as deferred regulatory
liabilities the current recovery in utility rates of costs that are expected to
be paid in the future.
The following is a breakdown of IPC's regulatory assets and liabilities for the
years 2000, 1999 and 1998:
2000 1999 1998
----------------------- ---------------------- ---------------------
Assets Liabilities Assets Liabilities Assets Liabilities
------- ------------ ------- ----------- -------- -----------
(Millions of Dollars)
Income taxes....................... $213.6 $ 40.2 $215.7 $33.8 $204.4 $ 28.1
Conservation....................... 32.3 - 37.5 - 43.3 -
Employee benefits.................. 3.7 - 4.7 - 5.6 -
PCA deferral and amortization...... 119.9 - - 3.4 - 5.2
Other.............................. 9.7 4.7 13.9 3.4 18.3 4.1
Deferred investment tax credits.... - 66.0 - 67.4 - 69.4
------- -------- ------- ------- -------- --------
Total.................. $379.2 $110.9 $271.8 $108.0 $271.6 $106.8
======= ======== ======= ======= ======== ========
At December 31, 2000, IPC had $5.5 million of regulatory assets that were not
earning a return on investment, excluding the $213.6 million that relates to
income taxes.
In the event that recovery of costs through rates becomes unlikely or uncertain,
SFAS 71 would no longer apply. If the Company were to discontinue application of
SFAS 71 for some or all of IPC's operations, then these items may represent
stranded investments. If the Company is not allowed recovery of these
investments, it would be required to write off the applicable portion of
regulatory assets and the financial effects could be significant.
Derivative Financial Instruments
The Company uses financial instruments such as commodity futures, forwards,
options and swaps to manage exposure to commodity price risk in the electricity
and natural gas markets. The objective of the Company's risk management program
is to mitigate the risk associated with the purchase and sale of natural gas and
electricity as well as to optimize its energy marketing portfolio. The
accounting for derivative financial instruments that are used to manage risk is
in accordance with the concepts established in SFAS No. 80, "Accounting for
Futures Contracts," American Institute of Certified Public Accountants Statement
of Position 86-2, "Accounting for Options," and Emerging Issues Task Force
(EITF) 98-10, "Accounting for Contracts Involved in Energy Trading Activities".
EITF 98-10 was adopted effective January 1, 1999 resulting in an adjustment to
net income that was not material.
Energy trading contracts as defined by EITF 98-10 are reported at fair value on
the balance sheet with the resulting gains and losses reported on the income
statement. The fair value of positions recorded on the balance sheet is
dependant on the prices and volatility of the energy markets. As such, these
items on the balance sheet can fluctuate greatly without large changes in
volumes or positions. Cash flows from energy trading contracts are recognized in
the statement of cash flows as an operating activity.
The following table shows a summary of the notional amounts of the Company's
forward exposure (including both sales and purchases) as of December 31, 2000
and 1999. The maximum term related to any forward position is ten years.
December 31, 2000 December 31, 1999
----------------------------- -----------------------------
Gas Electricity Gas Electricity
MMbtu's MWh's MMbtu's MWh's
------------- ------------ ----------- -------------
Total gross notional volume........ 190,777 34,453 112,513 10,818
The following table displays the fair values of the Company's energy marketing
assets and liabilities at December 31, 2000 and 1999, and the average values for
the twelve months ended December 31, 2000 (in thousands of dollars):
Balance at December 31, 2000 Twelve Months Average Balance Balance at December 31, 1999
--------------------------- ------------------------------- ------------------------------
Assets Liabilities Assets Liabilities Assets Liabilities
----------- ----------- ------------ ------------- ------------ -------------
Gas............$ 108,935 $ 115,537 $ 67,263 $ 69,742 $ 8,302 $ 8,220
Electricity.... 1,572,619 1,590,964 401,956 397,914 29,096 25,594
----------- ----------- ------------ ------------- ------------ -------------
Total..........$1,681,554 $1,706,501 $ 469,219 $ 467,656 $ 37,398 $ 33,814
=========== =========== ============ ============= ============ =============
The gain in fair value of energy trading contract positions (including
electricity and natural gas forwards, futures, options and swaps) included in
income before income taxes for the years ended December 31, 2000 and 1999 were
$145.4 million and $31.4 million respectively.
Notional amounts listed above reflect the volume of energy related to
transactions with counterparties, but do not measure exposure to market or
credit risks. The maximum term detailed above also is not indicative of likely
future cash flows as positions may be offset in the markets at any time to meet
risk management guidelines.
Comprehensive Income
Components of the Company's comprehensive income include net income, unrealized
holding gains on marketable securities, the Company's proportionate share of
unrealized holding gains on marketable securities held by an equity investee,
and the changes in additional minimum liability under a deferred compensation
plan for certain senior management employees and directors.
New Accounting Pronouncements
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities." In June 2000, the FASB issued SFAS No. 138 "Accounting
for Certain Derivative Instruments and Certain Hedging Activities", which
amended certain provisions of SFAS 133. The Derivative Implementation Group
(DIG), a task force created by the FASB, is continuing to identify and resolve
implementation questions related to SFAS 133 and SFAS 138.
SFAS 133, as amended by SFAS 138, was effective as of January 1, 2001. As of
January 1, 2001 contracts company-wide have been evaluated based upon the SFAS
133 derivative definition and requirements. Most of the Company's identified
derivatives consist of energy trading contracts that are currently reported at
fair value under the provisions of EITF 98-10. The remaining derivatives are IPC
electricity purchase and sales contracts that are subject to regulatory
processes. As a result, the adoption of SFAS 133, as amended, did not have a
material effect on the Company's financial position, results of operations, or
cash flows.
Other Accounting Policies
Debt discount, expense and premium are being amortized over the terms of the
respective debt issues.
Reclassifications
Certain items previously reported for years prior to 2000 have been reclassified
to conform to the current year's presentation.
2. INCOME TAXES:
IPC has settled Federal and Idaho tax liabilities on all open years through the
1996 tax year except for amounts related to a partnership which have been, in
management's opinion, adequately accrued.
A reconciliation between the statutory federal income tax rate and the effective
rate is as follows:
2000 1999 1998
------------ ------------ ------------
(Thousands of Dollars)
Computed income taxes based on statutory
federal income tax rate.................... $ 73,746 $ 47,957 $46,832
Change in taxes resulting from:
AFDC (1,719) (1,071) (420)
Investment tax credits (3,083) (3,032) (2,934)
Repair allowance........................... (4,550) (2,800) (2,800)
Settlement of prior years tax returns...... 161 (380) (1,965)
State income taxes (net of federal reduction). 9,793 6,250 7,574
Depreciation............................... 8,243 7,292 5,237
Affordable housing and historic tax credits (net
of related deferred taxes)............... (12,962) (8,934) (6,504)
Preferred dividends of IPC................. 2,075 1,950 1,980
Other...................................... (886) (1,560) (2,370)
----------- ----------- -----------
Total provision for federal and state income taxes $ 70,818 $ 45,672 $44,630
=========== =========== ===========
Effective tax rate......................... 33.6% 33.3% 33.4%
The provision for income taxes consists of the following:
2000 1999 1998
----------- ----------- -----------
(Thousands of Dollars)
Income taxes currently payable:
Federal.................................. $ 18,984 $ 38,165 $ 45,606
State.................................... 5,169 9,327 9,206
----------- ----------- -----------
Total.................................. 24,153 47,492 54,812
----------- ----------- -----------
Income taxes deferred - net of amortization:
Federal.................................. 40,641 2,174 (8,006)
State.................................... 7,407 (2,031) (1,376)
----------- ----------- -----------
Total.................................. 48,048 143 (9,382)
Investment tax credits:
Deferred................................. 1,700 1,069 2,134
Restored................................. (3,083) (3,032) (2,934)
----------- ----------- -----------
Total.................................. (1,383) (1,963) (800)
----------- ----------- -----------
Total provision for income taxes........... $ 70,818 $ 45,672 $ 44,630
=========== =========== ===========
The tax effects of significant items comprising the Company's net deferred tax
liability are as follows:
2000 1999 1998
------------ ------------ ------------
(Thousands of Dollars)
Deferred tax assets:
Regulatory liabilities................... $ 40,230 $ 33,817 $ 28,075
Advances for construction................ 9,224 9,646 10,401
Other.................................... 22,488 18,586 20,512
------------ ------------ ------------
Total.................................. 71,942 62,049 58,988
------------ ------------ ------------
Deferred tax liabilities:
Utility plant............................ 249,546 249,597 247,270
Regulatory assets........................ 213,552 215,675 204,430
Conservation programs.................... 13,561 17,396 16,866
PCA...................................... 47,189 (1,826) (2,543)
Other.................................... 17,230 12,568 18,126
------------ ------------ ------------
Total.................................. 541,078 493,410 484,149
------------ ------------ ------------
Net deferred tax liabilities............... $469,136 $431,361 $425,161
============ ============ ============
3. COMMON STOCK:
Changes in shares of IDACORP common stock and treasury stock for 2000, 1999 and
1998 were as follows (in thousands of dollars):
COMMON STOCK TREASURY STOCK
Shares Amount Shares Amount
------------ ---------------- ------------- ------------
Balance at December 31, 1997..................... 37,612,351 $ 452,519 - $ -
Other - net...................................... - (955) - -
------------ ---------------- ------------- ------------
Balance at December 31, 1998..................... 37,612,351 451,564 - -
Other - net...................................... - (221) - -
------------ ---------------- ------------- ------------
Balance at December 31, 1999..................... 37,612,351 451,343 - -
Treasury shares:
Acquired..................................... - - 198,925 8,014
Issued....................................... - - (154,500) (6,518)
Other - net...................................... - 1,759 - -
------------ ---------------- ------------- ------------
Balance at December 31, 2000..................... 37,612,351 $ 453,102 44,425 $ 1,496
============ ================ ============= ============
As of December 31, 2000 there were 3,791,321 shares of authorized but unissued
shares of IDACORP common stock were reserved for future issuance under the
Company's Dividend Reinvestment and Stock Purchase Plan and IPC's Employee
Savings Plan. In addition, 314,114 shares are reserved for the Restricted Stock
Plan and 750,000 shares for the Long-Term Incentive and Compensation Plan
(LTICP) (see Note 9).
The Company has a Shareholder Rights Plan (Plan) designed to ensure that all
shareholders receive fair and equal treatment in the event of any proposal to
acquire control of the Company. Under the Plan, the Company declared a
distribution of one Preferred Share Purchase Right (Right) for each of the
Company's outstanding Common Shares held on October 1, 1998 or issued
thereafter. The Rights are currently not exercisable and will be exercisable
only if a person or group (Acquiring Person) either acquires ownership of 20
percent or more of the Company's Voting Stock or commences a tender offer that
would result in ownership of 20 percent or more of such stock. The Company may
redeem all but not less than all of the Rights at a price of $0.01 per Right or
exchange the Rights for cash, securities (including Common Shares of the
Company) or other assets at any time prior to the close of business on the 10th
day after acquisition by an Acquiring Person of a 20 percent or greater
position.
Additionally, the IDACORP Board created the A Series Preferred Stock, without
par value, and reserved 1,200,000 shares for issuance upon exercise of the
Rights.
Following the acquisition of a 20 percent or greater position, each Right will
entitle its holder to purchase for $95 that number of shares of Common Stock or
Preferred Stock having a market value of $190.
If after the Rights become exercisable, the Company is acquired in a merger or
other business combination, 50 percent or more of its consolidated assets or
earnings power are sold, or the Acquiring Person engages in certain acts of
self-dealing, each Right entitles the holder to purchase for $95, shares of the
acquiring company's common stock having a market value of $190.
Any Rights that are or were held by an Acquiring Person become void if any of
these events occurs. The Rights expire on September 30, 2008.
The Rights themselves do not give any voting or other rights as shareholders to
their holders. The terms of the Rights may be amended without the approval of
any holders of the Rights until an Acquiring Person obtains a 20 percent or
greater position, and then may be amended as long as the amendment is not
adverse to the interests of the holders of the Rights.
In 2000, IDACORP's Board of Directors approved the repurchase of up to 350,000
shares of outstanding common stock for distribution to shareholders of an
acquired entity as partial payment for the acquisition. As of December 31, 2000,
156,300 shares had been acquired (at a cost of $6.6 million) and 154,500 shares
had been issued under this plan. In January 2001, the Company repurchased an
additional 150,000 shares (at a cost of $6.2 million) for distribution to
shareholders of the acquired entity.
4. PREFERRED STOCK OF IDAHO POWER COMPANY:
The number of shares of IPC preferred stock outstanding at December 31, 2000,
1999 and 1998 were as follows:
Shares Outstanding at December 31,
--------------------------------------- Call Price
2000 1999 1998 Per Share
---- ---- ---- -----------------------
Preferred stock:
Cumulative, $100 par value:
4% preferred stock (authorized
215,000 shares)........................... 150,656 158,112 159,680 $104.00
Serial preferred stock, 7.68% Series
(authorized 150,000 shares)............... 150,000 150,000 150,000 $102.97
Serial preferred stock, cumulative, without
par value; total of 3,000,000 shares
authorized:
7.07% Series, $100 stated value,
(authorized 250,000 shares)(a)........... 250,000 250,000 250,000 $103.535 to $100.354
Auction rate preferred stock, $100,000
stated value, (authorized 500 shares)(b). 500 500 500 $100,000.00
-------- -------- ---------
Total....................................... 551,156 558,612 560,180
======== ======== =========
(a) The preferred stock is not redeemable prior to July 1, 2003.
(b) Dividend rate at December 31, 2000 was 4.95% and ranged between 4.28% and
5.00% during the year.
During 2000, 1999 and 1998 IPC reacquired and retired 7,456 shares, 1,568 shares
and 7,292 shares of 4% preferred stock. As of December 31, 2000, the overall
effective cost of all outstanding preferred stock was 6.02 percent.
5. LONG-TERM DEBT:
The Company currently has a $300.0 million shelf registration statement that can
be used for the issuance of unsecured debt securities and preferred or common
stock. At December 31, 2000, none had been issued.
On March 23, 2000, IPC filed a $200.0 million shelf registration statement that
can be used for first mortgage bonds (including medium term notes), unsecured
debt, or preferred stock. On December 1, 2000, $80.0 million principal amount of
Secured Medium Term Notes, Series C, 7.38% Series due 2007 were issued and
proceeds from this issuance were used for the early redemption in January 2001
of the $75.0 million First Mortgage Bonds 9.50%, Series due 2021. At December
31, 2000, $120.0 million of the total remained to be issued.
The amount of first mortgage bonds issuable by IPC is limited to a maximum of
$900.0 million and by property, earnings and other provisions of the mortgage
and supplemental indentures thereto. Substantially all of the electric utility
plant is subject to the lien of the indenture.
Pollution Control Revenue Bonds, Series 1984, due December 1, 2014, are secured
by First Mortgage Bonds, Pollution Control Series A, which were issued by IPC
and are held by a Trustee for the benefit of the bondholders.
First mortgage bonds maturing during the five-year period ending 2005 are $30.0
million in 2001, $27.0 million in 2002, $80.0 million in 2003, $50.0 million in
2004 and $60.0 million in 2005. On September 9, 1998, $60.0 million principal
amount of Secured Medium Term Notes, Series B, 5.83% Series due 2005 were issued
by IPC. Proceeds from this issuance were used to redeem at maturity, the $30.0
million First Mortgage Bonds 5.33% Series B due September 1998, with the balance
used for repayment of commercial paper issued in connection with IPC's ongoing
business.
On November 23, 1999, $80.0 million principal amount of Secured Medium Term
Notes, Series B, 7.20% Series due 2009 were issued by IPC. Proceeds from this
issuance were used to redeem at maturity, the $80.0 million First Mortgage Bonds
8.65% Series due January 2000.
On April 26, 2000, at the request of IPC, the American Falls Reservoir District
issued its American Falls Refunding Replacement Dam Bonds, Series 2000, in the
aggregate principal amount of $19.9 million for the purpose of refunding on
April 26, 2000 a like amount of its bonds dated May 1, 1990. IPC has guaranteed
repayment of these bonds.
On May 17, 2000, tax exempt Pollution Control Revenue Refunding Bonds Series
2000 in the aggregate principal amount of $4.4 million were issued by Port of
Morrow, Oregon for the purpose of refunding on August 1, 2000, a like amount of
its Pollution Control Revenue Bonds, Series 1978.
At December 31, 2000, 1999 and 1998 the overall effective cost of all
outstanding first mortgage bonds and pollution control revenue bonds was 7.52
percent, 7.62 percent and 7.69 percent, respectively.
At December 31, 2000, IDACORP Financial Services, Inc., a wholly owned
subsidiary of the Company, has $64.1 million of debt with interest rates ranging
from 6.03 percent to 8.59 percent. This debt is collateralized by investments in
affordable housing projects with a book value of $101.7 million at December 31,
2000. Principal amounts maturing during the five-year period ending 2005 are
$9.7 million in 2001, $9.5 million in 2002, $9.2 million in 2003, $9.3 million
in 2004 and $8.3 million in 2005.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair value of the Company's financial instruments has been
determined by the Company using available market information and appropriate
valuation methodologies. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Cash and cash equivalents, customer and other receivables, notes payable,
accounts payable, interest accrued, and taxes accrued are reported at their
carrying value as these are a reasonable estimate of their fair value. The
estimated fair values for long-term debt and investments are based upon quoted
market prices of the same or similar issues or discounted cash flow analyses as
appropriate.
The total estimated fair value of the Company's debt was approximately $933.6
million in 2000, $898.1 million in 1999 and $877.4 million in 1998. Included in
investments and other property were financial instruments totaling $20.6 million
in 2000, $24.0 million in 1999 and $14.2 million in 1998. Estimated fair value
of these instruments was $26.0 million in 2000, $30.6 million in 1999 and $20.3
million in 1998.
7. NOTES PAYABLE:
At December 31, 2000, IDACORP had a $50 million three-year credit facility that
expires in December 2001, and a $100 million 364-day credit facility that
expires in February 2001. Under these facilities the Company pays a facility fee
on the commitment, quarterly in arrears, based on IPC's First Mortgage Bond
Rating. Commercial paper may be issued up to the amounts supported by the bank
credit facilities.
Balances and interest rates of short-term borrowings for IDACORP were as
follows:
Year Ended December 31,
--------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
Balance at end of year.............................. $60,900 - -
Effective annual interest rate at end of year....... 7.8 % - -
At December 31, 2000, IPC had regulatory authority to incur up to $200 million
of short-term indebtedness. IPC has a $120 million multi-year revolving credit
facility expiring in December 2001. Under this facility IPC pays a facility fee
on the commitment, quarterly in arrears, based on IPC's First Mortgage Bond
rating. Commercial paper may be issued subject to the regulatory maximum, and is
supported by bank lines of credit of an equal amount.
Balances and interest rates of short-term borrowings for IPC were as follows:
Year Ended December 31,
--------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
Balance at end of year.............................. $59,700 $19,757 $38,524
Effective annual interest rate at end of year....... 6.8% 6.1% 6.0%
8. COMMITMENTS AND CONTINGENT LIABILITIES:
Commitments under contracts and purchase orders relating to IPC's program for
construction and operation of facilities amounted to approximately $8.3 million
at December 31, 2000. Additionally Ida-West Energy has commitments totaling
$33.1 million. The commitments are generally revocable, subject to reimbursement
of manufacturers' expenditures incurred and/or other termination charges.
IPC is currently purchasing energy from 66 on-line cogeneration and small power
production facilities with contracts ranging from 1 to 30 years. Under these
contracts IPC is required to purchase all of the output from these facilities.
During the fiscal year ended December 31, 2000, IPC purchased 862,313 MWh at a
cost of $53.7 million.
The Company is party to various legal claims, actions, and complaints, certain
of which involve material amounts. Although 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
operations or cash flows.
9. STOCK-BASED COMPENSATION
IDACORP has two stock-based compensation plans that align employee and
shareholder objectives related to the long-term growth of the Company.
In 1995, SFAS No. 123, "Accounting for Stock-Based Compensation" was issued. It
encourages a fair-value based method of accounting for stock-based compensation.
As permitted by SFAS 123, the Company adopted its disclosure-only requirements
and continues to account for stock-based compensation in accordance with the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" (APB 25).
The Company adopted the 2000 Long-Term Incentive and Compensation Plan (LTICP)
for officers, key employees and directors. The LTICP permits the grant of
nonqualified stock options, incentive stock options, stock appreciation rights,
restricted stock, restricted stock units, performance units, performance shares,
and other awards.
The maximum number of shares available under the LTICP is 750,000. In 2000,
IDACORP issued 220,000 stock options with an exercise price equal to the market
price of the Company's stock on the date of grant. The maximum term of the
options is ten years, and they vest over a five-year period. In accordance with
APB 25, no compensation costs have been recognized for the option awards in
2000.
Stock option transactions in 2000 are summarized as follows. There were no stock
option transactions in 1999 and 1998:
Weighted
Number of average exercise
shares price
--------------- ----------------
Beginning of year.......... - -
Options granted........ 220,000 $35.8125
Options exercised...... - -
Options cancelled...... - -
--------------- ----------------
End of year................ 220,000 $35.8125
=============== ================
Exercisable................ - -
IDACORP has a restricted stock plan for certain key employees. Each grant made
under this plan has a three-year restricted period, and the final award amounts
depend on the attainment of cumulative earnings per share performance goals. At
December 31, 2000 there were 265,766 remaining shares available under this plan.
Restricted stock awards are compensatory awards and the Company accrues
compensation expense (which is charged to operations) based upon the market
value of the granted shares. For the years 2000, 1999 and 1998, total
compensation accrued under the plan was $1.5 million, $0.5 million and $0.6
million respectively.
The following table summarizes restricted stock activity for the years 2000,
1999 and 1998:
2000 1999 1998
--------- --------- ---------
Shares outstanding - beginning of year............. 43,615 43,063 38,365
Shares granted..................................... 34,649 23,497 21,361
Shares forfeited................................... - (9,585) (4,063)
Shares issued...................................... (24,709) (13,360) (12,600)
--------- --------- ---------
Shares outstanding - end of year................... 53,555 43,615 43,063
========= ========= =========
Weighted average fair value of current year
stock grants on grant date..................... $ 34.44 $ 32.88 $ 37.00
========= ========= =========
Had compensation cost for the stock-based compensation plans been determined on
the basis of fair value pursuant to the provisions of SFAS 123, net income and
earnings per share would have been as follows:
2000 1999 1998
----------------- ----------------- ---------------
Net income..............................
As reported......................... $ 139,883 $ 91,349 $ 89,176
Pro forma........................... 140,186 91,145 89,155
Basic and diluted earnings per share....
As reported......................... 3.72 2.43 2.37
Pro forma........................... 3.73 2.43 2.37
For purposes of the pro forma calculations above, the estimated fair value of
the options and restricted stock are amortized to expense over the vesting
period. The fair value of the restricted stock is the market price of the stock
on the date of grant. The fair value of each option granted in 2000 was
estimated at the date of grant using the Binomial option-pricing model with the
following assumptions:
Stock dividend yield............... 5.19%
Expected stock price volatility.... 27%
Risk-free interest rate............ 6.15%
Expected option lives.............. 7 years
Fair value of options granted...... $8.42
10. BENEFIT PLANS:
Pension Plans
IDACORP has a noncontributory defined benefit pension plan covering most
employees. The benefits under the plan are based on years of service and the
employee's final average earnings. The Company's policy is to fund with an
independent corporate trustee at least the minimum required under the Employee
Retirement Income Security Act of 1974 but not more than the maximum amount
deductible for income tax purposes. The Company was not required to contribute
to the plan in 2000, 1999 and 1998. The trustee invests the plan's assets
primarily in listed stocks (both U.S. and foreign), fixed income securities and
investment grade real estate.
IDACORP has a nonqualified, deferred compensation plan for certain senior
management employees and directors. The Company financed this plan by purchasing
life insurance policies and investments in marketable securities, all of which
are held by a trustee. The cash value of the policies and investments exceed the
projected benefit obligation of the plan but do not qualify as plan assets in
the actuarial computation of the funded status.
The following table shows the components of net periodic benefit cost for these
plans (in thousands of dollars):
Pension Plan Deferred Compensation Plan
-------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
Service cost...................... $ 7,442 $ 8,389 $ 7,133 $ 574 $ 744 $ 572
Interest cost..................... 16,718 16,402 15,458 1,965 1,797 1,747
Expected return on assets......... (30,095) (25,240) (22,724) - - -
Recognized net actuarial (gain) loss (4,503) (344) (111) 242 279 255
Amortization of prior service cost 708 708 424 (353) (325) (332)
Amortization of transition asset.. (263) (263) (263) 613 613 613
---------- ---------- ---------- ---------- ---------- ----------
Net periodic pension cost......... $(9,993) $ (348) $ (83) $3,041 $3,108 $2,855
========== ========== ========== ========== ========== ==========
The following table summarizes the changes in benefit obligation and plan assets
of these plans (in thousands of dollars):
Pension Plan Deferred Compensation Plan
----------------------------------- -------------------------------------
2000 1999 1998 2000 1999 1998
---------- ----------- ---------- ---------- ----------- -----------
Change in projected benefit obligation:
Benefit obligation at January 1...... $229,042 $253,729 $224,073 $ 26,925 $ 27,029 $ 25,067
Service cost......................... 7,442 8,389 7,133 574 744 572
Interest cost........................ 16,718 16,402 15,458 1,965 1,797 1,747
Actuarial loss (gain)................ 455 (33,014) 14,139 840 (489) 1,297
Benefits paid........................ (12,376) (16,464) (11,774) (2,516) (2,201) (2,049)
Plan amendments...................... - - 4,700 88 45 395
---------- ----------- ---------- ----------- ---------- -----------
Benefit obligation at December 31.... 241,281 229,042 253,729 27,876 26,925 27,029
---------- ----------- ---------- ----------- ---------- -----------
Change in plan assets:
Fair value at January 1.............. 340,521 290,080 256,893 - - -
Actual return on plan assets......... 12,644 66,905 44,961 - - -
Employer contributions............... - - - - - -
Benefit payments..................... (12,376) (16,464) (11,774) - - -
---------- ----------- ---------- ----------- ---------- -----------
Fair value at December 31............ 340,789 340,521 290,080 - - -
---------- ----------- ---------- ----------- ---------- -----------
Funded status............................. 99,508 111,479 36,351 (27,876) (26,925) (27,029)
Unrecognized actuarial loss (gain)........ (85,648) (108,057) (33,722) 6,442 5,844 6,612
Unrecognized prior service cost........... 7,954 8,662 9,370 (355) (796) (1,166)
Unrecognized net transition liability..... (1,178) (1,441) (1,704) 2,762 3,375 3,988
Net amount recognized..................... $ 20,636 $ 10,643 $ 10,295 $(19,027) $ (18,502) $ (17,595)
Amounts recognized in the statement of
financial position consist of:
Prepaid (accrued) pension cost............ $ 20,636 $ 10,643 $ 10,295 $(26,365) $ (25,815) $ (25,631)
Intangible asset.......................... - - - 2,407 2,579 2,822
Accumulated other comprehensive income.... - - - 4,931 4,734 5,214
Net amount recognized..................... $ 20,636 $ 10,643 $ 10,295 $(19,027) $ (18,502) $ (17,595)
The following table sets forth the assumptions used at the end of each year for
all IPC-sponsored pension and postretirement benefit plans:
Pension Benefits Postretirement Benefits
--------------------------------- -----------------------------------
2000 1999 1998 2000 1999 1998
--------- -------- ---------- --------- ---------- ----------
Discount rate............................... 7.5% 7.5% 6.75% 7.5% 7.5% 6.75%
Expected long-term rate of return on assets. 9.0 9.0 9.0 9.0 9.0 9.0
Annual salary increases..................... 4.5 4.5 4.5 - - -
Savings Plan
IDACORP has an Employee Savings Plan which complies with Section 401(k) of the
Internal Revenue Code and covers substantially all employees. The Company
matches specified percentages of employee contributions to the plan. Matching
contributions amounted to $3.4 million in 2000, $3.1 million in 1999 and $3.0
million in 1998.
Postretirement Benefits
The Company maintains a defined benefit postretirement plan (consisting of
health care and death benefits) that covers all employees who were enrolled in
the active group plan at the time of retirement, their spouses and qualifying
dependents.
The net periodic postretirement benefit cost was as follows (in thousands of
dollars):
2000 1999 1998
------------ ---------- -----------
Service cost........................................... $ 851 $ 895 $ 720
Interest cost.......................................... 3,374 2,867 2,913
Expected return on plan assets......................... (2,522) (2,230) (1,761)
Amortization of unrecognized transition obligation..... 2,040 2,040 2,040
Amortization of prior service cost..................... (691) (691) (280)
Amortization of unrecognized net gains................. - - (220)
------------ ---------- -----------
Net periodic post-retirement benefit cost.............. $ 3,052 $ 2,882 $ 3,412
============ ========== ===========
The following table summarizes the changes in benefit obligation and plan assets
(in thousands of dollars):
2000 1999 1998
----------- ----------- -----------
Change in accumulated benefit obligation:
Benefit obligation at January 1........................ $ 41,139 $ 38,615 $ 43,459
Service cost........................................... 851 896 720
Interest cost.......................................... 3,374 2,867 2,913
Plan amendments........................................ 1,200 - (9,071)
Actuarial loss......................................... 5,635 1,859 3,483
Benefits paid.......................................... (3,393) (3,098) (2,889)
----------- ----------- -----------
Benefit obligation at December 31...................... 48,806 41,139 38,615
----------- ----------- -----------
Change in plan assets:
Fair value of plan assets at January 1................. 26,805 24,346 19,493
Actual (loss) return on plan assets.................... (760) 2,389 4,853
Employer contributions................................. 3,108 2,845 2,789
Benefits paid.......................................... (3,082) (2,775) (2,789)
----------- ----------- -----------
Fair value of plan assets at December 31............... 26,071 26,805 24,346
----------- ----------- -----------
Funded status............................................... (22,735) (14,334) (14,269)
Unrecognized prior service cost............................. (7,336) (9,227) (9,918)
Unrecognized actuarial loss (gain).......................... 3,361 (5,556) (7,256)
Unrecognized transition obligation.......................... 24,480 26,520 28,560
----------- ----------- -----------
Accrued benefit obligations
included with other deferred credits.................... $ (2,230) $ (2,597) $ (2,883)
=========== =========== ===========
The assumed health care cost trend rate used to measure the expected cost of
benefits covered by the plan is 6.75%. A one-percentage point change in the
assumed health care cost trend rate would have the following effect (in
thousands of dollars):
1-Percentage-Point 1-Percentage-Point
increase decrease
--------------------- -------------------
Effect on total of service and interest cost components..... $ 320 $ (263)
Effect on accumulated postretirement benefit obligation..... $ 2,876 $ (2,452)
Postemployment Benefits
The Company provides certain benefits to former or inactive employees, their
beneficiaries, and covered dependents after employment but before retirement.
These benefits include salary continuation, health care and life insurance for
those employees found to be disabled under our disability plans, and health care
for surviving spouses and dependents. The Company accrues a liability for such
benefits. In accordance with an IPUC order, the portion of the liability
attributable to regulated activities in Idaho as of December 31, 1993, was
deferred as a regulatory asset, and is being amortized over ten years. The
following table summarizes postemployment benefit amounts included in the
Company's consolidated balance sheet (in thousands of dollars):
2000 1999 1998
------------- -------------- ------------
Included with regulatory assets - other........ $ 1,517 $ 1,889 $ 2,260
Included with other deferred credits........... $ (3,040) $ (3,282) $ (3,372)
11. UTILITY PLANT IN SERVICE AND JOINTLY-OWNED PROJECTS:
The following table sets out the major classifications of the IPC's utility
plant in service, accumulated provision for depreciation and annual depreciation
provisions as a percent of average depreciable balance for the years 2000, 1999
and 1998 (in thousands of dollars):
2000 1999 1998
---- ---- ----
Balance Avg Rate Balance Avg Rate Balance Avg Rate
------------ ---------- ------------- ----------- ------------ ----------
Production....................... $1,360,409 2.60% $1,348,531 2.60% $1,344,526 2.60%
Transmission..................... 410,315 2.30 403,010 2.30 389,011 2.30
Distribution..................... 811,604 3.34 786,488 3.37 736,527 3.15
General and Other................ 217,546 5.42 187,997 5.46 189,377 5.45
------------ ---------- ------------- ----------- ------------ ----------
Total in service............. 2,799,874 2.94% 2,726,026 2.94% 2,659,441 2.87%
Accumulated provision
for depreciation............. (1,142,572) (1,073,722) (1,009,387)
------------ ------------- ------------
In service - net......... $1,657,302 $1,652,304 $1,650,054
============ ============= ============
IPC is involved in the ownership and operation of three jointly-owned generating
facilities. The Consolidated Statements of Income include IPC's proportionate
share of direct operation and maintenance expenses applicable to the projects.
Each facility and extent of IPC participation as of December 31, 2000 are as
follows:
Company Ownership
---------------------------------------------------
Accumulated
Utility Plant In Provision for
Name of Plant Location Service Depreciation % MW
- ---------------------------- --------------------------- ----------------- ----------------- --- -----
(Thousands of Dollars)
Jim Bridger Units 1-4...... Rock Springs, WY $ 393,786 $ 209,986 33 707
Boardman................... Boardman, OR 62,382 36,022 10 55
Valmy Units 1 and 2........ Winnemucca, NV 300,852 148,115 50 261
IPC's wholly owned subsidiary, Idaho Energy Resources Company, is a joint
venturer in Bridger Coal Company, which operates the mine supplying coal for the
Jim Bridger steam generation plant. Coal purchased by IPC from the joint venture
amounted to $43.7 million in 2000, $41.9 million in 1999 and $46.2 million in
1998.
IPC has contracts to purchase the energy from four PURPA Qualified Facilities
that are 50 percent owned by Ida-West Energy Company, a wholly owned subsidiary
of the Company. Power purchased from these facilities amounted to $8.1 million
in 2000, $8.8 million in 1999 and $8.7 million in 1998.
12. INDUSTRY SEGMENT INFORMATION:
The Company has identified two reportable operating segments, Utility Operations
and Energy Marketing.
The Utility Operations segment has two primary sources of revenue, the regulated
operations of IPC and income from Bridger Coal Company, an unconsolidated joint
venture also subject to regulation. IPC's regulated operations include the
generation, transmission, distribution, purchase and sale of electricity.
Energy marketing consists of IPC's unregulated electricity marketing and IDACORP
Energy's natural gas marketing operations.
IDACORP's other operations include:
o Ida-West Energy Company - a developer and manager of independent power
projects;
o IdaTech, LLC - a developer of integrated fuel cell systems;
o IDACORP Financial Services - an investor in affordable housing and other
real estate;
o Rocky Mountain Communications, Inc. - provider of energy related products
and services, home security, satellite television, and other services;
o Applied Power Company - manufacturer, supplier and distributor of solar
photovoltaic systems (sold January 2001).
The following table summarizes the segment information for the Company's utility
and energy marketing segments and the total of all other segments, and
reconciles this information to total enterprise amounts.
Utility Energy Consolidated
Operations Marketing Other Eliminations Total
----------- ----------- ------------ --------------- ---------------
(Thousands of Dollars)
2000
- ----
Operating revenues................... $ 849,522 $ 145,400 $ 24,431 $ - $ 1,019,353
Operating income..................... 182,020 94,589 (14,946) - 261,663
Other income........................ 3,858 3,370 11,847 (3,115) 15,960
Interest expense .................... 63,660 161 6,216 (3,115) 66,922
Income before income taxes........... 122,218 97,798 (9,315) - 210,701
Income taxes......................... 48,174 38,355 (15,711) - 70,818
Net income........................... 74,044 59,443 6,396 - 139,883
Total assets......................... 2,530,312 1,911,597 197,349 - 4,639,258
Expenditures for long-lived assets... 131,782 1,520 37,961 - 171,263
1999
- ----
Operating revenues................... $ 669,761 $ 31,368 $ 30,023 $ - $ 731,152
Operating income..................... 181,248 21,684 (3,882) - 199,050
Other income........................ 5,586 121 490 (1,071) 5,126
Interest expense..................... 62,250 518 5,458 (1,071) 67,155
Income before income taxes........... 124,584 21,287 (8,850) - 137,021
Income taxes......................... 49,507 8,478 (12,313) - 45,672
Net income........................... 75,077 12,809 3,463 - 91,349
Total assets......................... 2,379,571 128,160 132,640 - 2,640,371
Expenditures for long-lived assets... 112,772 312 26,880 - 139,964
1998
Operating revenues................... $ 768,506 $ 10,745 $ 15,836 $ - $ 795,087
Operating income..................... 186,723 7,963 (1,263) - 193,423
Other income......................... 5,757 - 369 (308) 5,818
Interest expense..................... 62,304 - 3,439 (308) 65,435
Income before income taxes........... 130,176 7,963 (4,333) - 133,806
Income taxes......................... 49,893 2,787 (8,050) - 44,630
Net income........................... 80,283 5,176 3,717 - 89,176
Total assets......................... 2,253,277 72,023 131,519 - 2,456,819
Expenditures for long-lived assets... 91,803 - 19,205 - 111,008
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareowners of IDACORP, Inc.:
Boise, Idaho
We have audited the accompanying consolidated balance sheets and statements of
capitalization of IDACORP, Inc. and its subsidiaries as of December 31, 2000,
1999 and 1998, and the related consolidated statements of income, cash flows,
retained earnings and comprehensive income for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of IDACORP, Inc. and subsidiaries at
December 31, 2000, 1999 and 1998, and the results of their operations and their
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boise, Idaho
February 1, 2001
Idaho Power Company
Consolidated Statements of Income
Year Ended December 31,
----------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
REVENUES:
General business..................................... $565,357 $516,148 $514,856
Off system sales..................................... 229,986 119,785 214,418
Other revenues....................................... 40,319 22,403 27,136
------------ ------------ -----------
Total revenues..................................... 835,662 658,336 756,410
------------ ------------ -----------
EXPENSES:
Operation:
Purchased power.................................... 398,649 106,344 185,271
Fuel expense....................................... 94,215 86,617 86,237
Power cost adjustment.............................. (120,688) (502) 21,866
Other.............................................. 146,424 151,800 145,374
Maintenance.......................................... 46,973 42,067 41,872
Depreciation......................................... 80,287 77,833 74,481
Taxes other than income taxes........................ 20,166 21,719 20,725
------------ ------------ -----------
Total expenses................................... 666,026 485,878 575,826
------------ ------------ -----------
INCOME FROM OPERATIONS................................. 169,636 172,458 180,584
------------ ------------ -----------
OTHER INCOME:
Allowance for equity funds used during construction.. 2,565 1,667 300
Energy marketing activities - net.................... 92,637 23,206 7,429
Other - net.......................................... 13,669 6,369 12,364
------------ ------------ -----------
Total other income............................... 108,871 31,242 20,093
------------ ------------ -----------
INTEREST CHARGES:
Interest on long-term debt........................... 53,253 54,150 52,270
Other interest....................................... 4,544 7,864 8,323
Allowance for borrowed funds used during
construction..................................... (2,346) (1,392) (900)
------------ ------------ -----------
Total interest charges........................... 55,451 60,622 59,693
------------ ------------ -----------
INCOME BEFORE INCOME TAXES............................. 223,056 143,078 140,984
INCOME TAXES........................................... 85,568 45,550 45,065
------------ ------------ -----------
NET INCOME ............................................ 137,488 97,528 95,919
Dividends on preferred stock......................... 5,929 5,572 5,658
------------ ------------ -----------
EARNINGS ON COMMON STOCK............................... $131,559 $ 91,956 $ 90,261
============ ============ ===========
The accompanying notes are an integral part of these statements.
Idaho Power Company
Consolidated Balance Sheets
Assets
December 31,
--------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
ELECTRIC PLANT:
In service (at original cost)........................ $2,799,874 $2,726,026 $2,659,441
Accumulated provision for depreciation............... (1,142,572) (1,073,722) (1,009,387)
----------- ------------ -----------
In service - Net................................... 1,657,302 1,652,304 1,650,054
Construction work in progress........................ 131,214 88,348 58,904
Held for future use.................................. 2,167 1,742 1,738
----------- ------------ -----------
Electric plant - Net............................. 1,790,683 1,742,394 1,710,696
----------- ------------ -----------
INVESTMENTS AND OTHER PROPERTY......................... 21,884 117,759 105,600
----------- ------------ -----------
CURRENT ASSETS:
Cash and cash equivalents............................ 83,494 95,038 20,029
Receivables:
Customer........................................... 215,358 83,412 102,653
Allowance for uncollectible accounts............... (1,397) (1,397) (1,397)
Notes.............................................. 2,945 345 467
Employee notes..................................... 4,742 4,105 4,510
Related parties.................................... 311 195 3,164
Other.............................................. 4,943 7,095 5,338
Energy marketing assets.............................. 1,572,619 29,096 -
Accrued unbilled revenues............................ 44,825 31,994 34,610
Materials and supplies (at average cost)............. 24,685 28,960 30,143
Fuel stock (at average cost)......................... 5,105 9,329 7,096
Prepayments.......................................... 24,145 16,054 16,011
Regulatory assets associated with income taxes....... 8,672 893 2,965
----------- ------------ -----------
Total current assets............................. 1,990,447 305,119 225,589
----------- ------------ -----------
DEFERRED DEBITS:
American Falls and Milner water rights............... 31,585 31,585 31,830
Company-owned life insurance......................... 39,554 40,480 35,149
Regulatory assets associated with income taxes....... 204,880 214,782 201,465
Regulatory assets - PCA.............................. 119,905 - -
Regulatory assets - other............................ 45,750 56,137 67,212
Other................................................ 50,410 54,496 49,448
----------- ------------ -----------
Total deferred debits............................ 492,084 397,480 385,104
----------- ------------ -----------
TOTAL............................................ $4,295,098 $2,562,752 $2,426,989
=========== ============ ===========
The accompanying notes are an integral part of these statements.
Idaho Power Company
Consolidated Balance Sheets
Capitalization and Liabilities
December 31,
---------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
CAPITALIZATION:
Common stock equity:
Common stock, $2.50 par value (50,000,000
shares authorized; 37,612,351 shares outstanding). $ 94,031 $ 94,031 $ 94,031
Premium on capital stock............................ 362,430 362,203 362,156
Capital stock expense............................... (4,024) (3,819) (3,823)
Retained earnings................................... 313,800 274,181 252,137
Accumulated other comprehensive income (loss)....... (921) 1,534 226
------------ ------------ -----------
Total common stock equity......................... 765,316 728,130 704,727
Preferred stock....................................... 105,066 105,811 105,968
Long-term debt........................................ 808,977 821,558 815,937
------------ ------------ -----------
Total capitalization.............................. 1,679,359 1,655,499 1,626,632
------------ ------------ -----------
CURRENT LIABILITIES:
Long-term debt due within one year.................... 30,077 89,101 6,029
Notes payable......................................... 59,700 19,757 38,508
Accounts payable...................................... 250,673 95,125 101,108
Notes and accounts payable to related parties....... 4,212 10,076 28
Energy marketing liabilities.......................... 1,590,964 25,594 -
Taxes accrued......................................... 12,983 21,773 25,164
Interest accrued...................................... 15,002 19,122 18,364
Deferred income taxes................................. 8,672 893 2,965
Other................................................. 19,066 16,069 12,117
------------ ------------ -----------
Total current liabilities......................... 1,991,349 297,510 204,283
------------ ------------ -----------
DEFERRED CREDITS:
Deferred income taxes................................. 452,404 428,923 420,268
Regulatory liabilities associated with deferred
investment tax credits.............................. 66,050 67,433 69,396
Regulatory liabilities associated with income taxes... 40,230 33,817 28,075
Regulatory liabilities - PCA.......................... - 3,378 5,199
Regulatory liabilities - other........................ 4,621 3,363 4,161
Other................................................. 61,085 72,829 68,975
------------ ------------ -----------
Total deferred credits............................ 624,390 609,743 596,074
------------ ------------ -----------
COMMITMENTS AND CONTINGENT
LIABILITIES
TOTAL............................................. $4,295,098 $2,562,752 $2,426,989
============ ============ ===========
The accompanying notes are an integral part of these statements.
Idaho Power Company
Consolidated Statements of Capitalization
December 31,
--------------------------------------------------------------------
2000 % 1999 % 1998 %
---- --- ---- --- ---- ---
(Thousands of Dollars)
COMMON STOCK EQUITY:
Common stock....................................... $ 94,031 $ 94,031 $ 94,031
Premium on capital stock........................... 362,430 362,203 362,156
Capital stock expense.............................. (4,024) (3,819) (3,823)
Retained earnings.................................. 313,800 274,181 252,137
Accumulated other comprehensive income (loss)...... (921) 1,534 226
----------- ----------- ------------
Total common stock equity...................... 765,316 46 728,130 44 704,727 43
----------- ----------- ------------
PREFERRED STOCK:
4% preferred stock................................. 15,066 15,811 15,968
7.68% Series, serial preferred stock............... 15,000 15,000 15,000
7.07% Series, serial preferred stock............... 25,000 25,000 25,000
Auction rate preferred stock....................... 50,000 50,000 50,000
----------- ------------
-----------
Total preferred stock.......................... 105,066 6 105,811 6 105,968 7
----------- ----------- ------------
LONG-TERM DEBT:
First mortgage bonds:
8.65% Series due 2000........................... - 80,000 80,000
6.93% Series due 2001........................... 30,000 30,000 30,000
6.85% Series due 2002........................... 27,000 27,000 27,000
6.40% Series due 2003........................... 80,000 80,000 80,000
8 % Series due 2004........................... 50,000 50,000 50,000
5.83% Series due 2005........................... 60,000 60,000 60,000
7.38% Series due 2007........................... 80,000 - -
7.20% Series due 2009........................... 80,000 80,000 -
Maturing 2021 through 2031 with rates ranging
from 7.5% to 9.52%............................. 230,000 230,000 230,000
----------- ----------- ------------
Total first mortgage bonds..................... 637,000 637,000 557,000
Amount due within one year......................... (30,000) (80,000) -
----------- ----------- ------------
Net first mortgage bonds....................... 607,000 557,000 557,000
----------- ----------- ------------
Pollution control revenue bonds:
7 1/4 % Series due 2008......................... - 4,360 4,360
8.30 % Series 1984 due 2014.................... 49,800 49,800 49,800
6.05 % Series 1996A due 2026................... 68,100 68,100 68,100
Variable Rate Series 1996B due 2026.............. 24,200 24,200 24,200
Variable Rate Series 1996C due 2026.............. 24,000 24,000 24,000
Variable Rate Series 2000 due 2007............... 4,360 - -
----------- ----------- ------------
Total pollution control revenue bonds.......... 170,460 170,460 170,460
----------- ----------- ------------
REA notes.......................................... 1,339 1,415 1,489
Amount due within one year....................... (77) (76) (74)
----------- ----------- ------------
Net REA notes.................................. 1,262 1,339 1,415
----------- ----------- ------------
American Falls bond guarantee...................... 19,885 19,885 20,130
----------- ----------- ------------
Milner Dam note guarantee.......................... 11,700 11,700 11,700
----------- ----------- ------------
Debt related to investments in affordable housing
with rates ranging from 6.03% to 8.77%
due 2000 to 2010 - 71,183 62,103
Amount due within one year....................... - (9,025) (5,955)
----------- ----------- ------------
Net affordable housing debt.................... - 62,158 56,148
Other subsidiary debt.............................. - 457 623
Unamortized premium/discount - Net................. (1,330) (1,441) (1,539)
----------- ----------- ------------
Total long-term debt........................... 808,977 48 821,558 50 815,937 50
----------- ---- ----------- ----- ------------ -----
TOTAL CAPITALIZATION................................. $1,679,359 100 $1,655,499 100 $1,626,632 100
=========== ==== =========== ===== ============ =====
The accompanying notes are an integral part of these statements.
Idaho Power Company
Consolidated Statements of Cash Flows
Year Ended December 31,
-----------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
OPERATING ACTIVITIES:
Net income................................................... $137,488 $ 97,528 $ 95,919
Adjustments to reconcile net income to net cash:
Unrealized (loss) gains from energy marketing activities.. 21,847 (3,502) -
Depreciation and amortization.............................. 92,677 95,154 87,044
Deferred taxes and investment tax credits.................. 44,911 (1,747) (10,127)
Accrued PCA costs.......................................... (122,353) (891) 21,658
Change in:
Receivables and prepayments.............................. (144,077) (489) 1,985
Accrued unbilled revenue................................. (12,831) 2,616 (1,298)
Materials and supplies and fuel stock.................... 5,544 (1,050) (911)
Accounts payable......................................... 156,932 28,397 (10,658)
Taxes accrued............................................ (8,326) (3,391) 1,312
Other current assets and liabilities..................... (3,572) 4,710 (857)
Other - net................................................ (6,843) (3,490) (10,340)
----------- ----------- ----------
Net cash provided by operating activities.................... 161,397 213,845 173,727
----------- ----------- ----------
INVESTING ACTIVITIES:
Additions to utility plant................................... (131,711) (108,498) (89,644)
Investments in affordable housing projects................... - (19,554) (19,139)
Investments in company - owned life insurance................ - (5,862) -
Net cash of affiliates transferred to parent................. (4,737) - -
Other - net.................................................. 838 (3,066) 867
----------- ----------- ----------
Net cash used in investing activities...................... (135,610) (136,980) (107,916)
----------- ----------- ----------
FINANCING ACTIVITIES:
Proceeds from issuance of:
First mortgage bonds....................................... 80,000 80,000 60,000
Pollution control revenue bonds............................ 4,360 - -
Long-term debt related to affordable housing projects...... - 18,730 20,556
Retirement of:
First mortgage bonds....................................... (80,000) - (30,000)
Pollution control revenue bonds............................ (4,360) - -
Long-term debt related to affordable housing projects...... - (9,650) (4,838)
Subsidiary debt............................................ - (165) (3,316)
Dividends on common stock.................................... (69,850) (69,912) (69,889)
Dividends on preferred stock................................. (5,929) (5,572) (5,658)
Increase (decrease) in short-term borrowings................. 39,943 (14,607) (18,992)
Other - net.................................................. (1,495) (680) (550)
----------- ----------- ----------
Net cash used in financing activities...................... (37,331) (1,856) (52,687)
----------- ----------- ----------
Net increase (decrease) in cash and cash equivalents........... (11,544) 75,009 13,124
Cash and cash equivalents at beginning of period............... 95,038 20,029 6,905
----------- ----------- ----------
Cash and cash equivalents at end of period..................... $ 83,494 $ 95,038 $ 20,029
=========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes............................................... $ 47,732 $ 50,532 $ 55,527
Interest (net of amount capitalized)....................... $ 58,090 $ 55,186 $ 53,806
Net non-cash assets of affiliates transferred to parent...... $ 17,353 - $ 27,534
The accompanying notes are an integral part of these statements.
Idaho Power Company
Consolidated Statements of Retained Earnings
Year Ended December 31,
----------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
RETAINED EARNINGS, BEGINNING OF YEAR................... $274,181 $252,137 $259,299
NET INCOME............................................. 137,488 97,528 95,919
------------- -------------- -------------
Total................................................ 411,669 349,665 355,218
DIVIDENDS:
Common stock ($1.86 per share)....................... (69,850) (69,912) (69,889)
Preferred stock...................................... (5,929) (5,572) (5,658)
TRANSFER TO IDACORP, INC............................... (22,090) - (27,534)
------------- -------------- -------------
RETAINED EARNINGS, END OF YEAR......................... $313,800 $274,181 $252,137
============= ============== =============
The accompanying notes are an integral part of these statements.
Consolidated Statements of Comprehensive Income
Year Ended December 31,
----------------------------------------------
2000 1999 1998
---- ---- ----
(Thousands of Dollars)
NET INCOME...................................................... $ 137,488 $ 97,528 $ 95,919
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gains on securities (net of tax of ($1,713), $677
and $2,185)............................................... (2,335) 1,017 3,385
Minimum pension liability adjustment (net of tax of ($78),
$189 and ( $2,054)).............................. (119) 291 (3,159)
------------- ------------- -------------
TOTAL COMPREHENSIVE INCOME............................. $ 135,034 $ 98,836 $ 96,145
============= ============= =============
The accompanying notes are an integral part of these statements.
Idaho Power Company
Notes to the Consolidated Financial Statements
On October 1, 1998, IDACORP, Inc. (IDACORP) became the parent of Idaho Power
Company and subsidiaries (IPC). At that time ownership interests in two of IPC's
subsidiaries were transferred to IDACORP at book value. IPC's financial
statements include $3.0 million of net income attributable to the transferred
subsidiaries for the year ended December 31, 1998.
On January 1, 2000 IPC's ownership interests in two additional subsidiaries were
transferred to IDACORP at book value. IPC's financial statements include the
following amounts attributable to these transferred subsidiaries for the periods
prior to January 1, 2000:
As of/Year Ended December 31,
1999 1998
---------------- ------------
Total assets........................... $ 107,996 $ 90,029
Net assets............................. 22,090 19,706
Net income............................. 2,385 2,216
Except as modified below, the Notes to the Consolidated Financial Statements of
IDACORP included in this Current Report on Form 8-K are incorporated herein by
reference insofar as they relate to Idaho Power Company.
Note 1 - Summary of Significant Accounting Policies
Note 3 - Common Stock
Note 4 - Preferred Stock of Idaho Power Company
Note 5 - Long-Term Debt
Note 7 - Notes Payable
Note 8 - Commitments and Contingent Liabilities
Note 9 - Stock-Based Compensation
Note 10 - Benefit Plans
Note 11 - Utility Plant in Service and Jointly-Owned Projects
Note 1 - Derivative Financial Instruments
The following table shows a summary of the notional amounts of IPC's forward
exposure (including both sales and purchases) as of December 31, 2000 and 1999.
The maximum term related to any forward position is ten years.
December 31, 2000 December 31, 1999
-----------------------------------------------------
Electricity MWh's
-----------------------------------------------------
Total gross notional volume............ 34,453 10,818
The following table displays the fair value of IPC's energy marketing assets and
liabilities (all electricity) at December 31, 2000 and 1999 and the average
values for the twelve months ended December 31, 2000 (in thousands of dollars):
Balance at December 31, 2000 Twelve Months Average Balance Balance at December 31, 1999
---------------------------- ----------------------------- ----------------------------
Assets Liabilities Assets Liabilities Assets Liabilities
------ ----------- ------ ----------- ------ -----------
$1,572,619 $1,590,964 $ 401,956 $ 397,914 $ 29,096 $ 25,594
The gain in fair value of energy trading contract positions (including
electricity forwards, futures, options and swaps) included in the income before
income taxes for the years ended December 31, 2000 and 1999 were $140.3 million
and $29.7 million respectively.
Note 2 - Income Taxes
IPC has settled Federal and Idaho tax liabilities on all open years through the
1996 tax year except for amounts related to a partnership which have been, in
management's opinion, adequately accrued.
A reconciliation between the statutory federal income tax rate and the effective
rate is as follows:
2000 1999 1998
------------- ------------- -------------
(Thousands of Dollars)
Computed income taxes based on statutory federal
income tax rate................................. 78,070 50,077 $ 49,344
Change in taxes resulting from:
AFDC............................................ (1,719) (1,071) (420)
Investment tax credits.......................... (3,083) (3,032) (2,934)
Repair allowance................................ (4,550) (2,800) (2,800)
Settlement of prior years tax returns........... 2 (478) (1,965)
State income taxes (net of Federal reduction)... 10,060 6,070 7,630
Depreciation.................................... 8,243 7,292 5,237
Affordable housing tax credits.................. - (8,934) (6,504)
Other........................................... (1,455) (1,574) (2,523)
------------- ------------- -------------
Total provision for federal and state income taxes $ 85,568 $ 45,550 $ 45,065
============= ============= =============
Effective tax rate................................ 38.4% 31.8% 32.0%
The provision for income taxes consists of the following:
2000 1999 1998
------------- ------------- -------------
(Thousand of Dollars)
Income taxes currently payable:
Federal......................................... $ 35,259 $ 38,169 $ 45,909
State........................................... 5,398 9,128 9,283
------------- ------------- -------------
Total......................................... 40,657 47,297 55,192
------------- ------------- -------------
Income taxes deferred - Net of amortization:
Federal......................................... 38,887 2,246 (8,006)
State........................................... 7,407 (2,030) (1,321)
------------- ------------- -------------
Total......................................... 46,294 216 (9,327)
------------- ------------- -------------
Investment tax credits:
Deferred........................................ 1,700 1,069 2,134
Restored........................................ (3,083) (3,032) (2,934)
------------- ------------- -------------
Total......................................... (1,383) (1,963) (800)
------------- ------------- -------------
Total provision for income taxes.................. $ 85,568 $ 45,550 $ 45,065
============= ============= =============
The tax effects of significant items comprising the Company's net deferred tax
liability are as follows:
2000 1999 1998
--------------- -------------- --------------
(Thousands of Dollars)
Deferred tax assets:
Regulatory liabilities.......................... $ 40,230 $33,817 $28,075
Advances for construction....................... 9,224 9,646 10,401
Other........................................... 22,273 18,456 20,457
--------------- -------------- --------------
Total......................................... 71,727 61,919 58,933
--------------- -------------- --------------
Deferred tax liabilities:
Electric plant.................................. 249,546 249,597 247,270
Regulatory assets............................... 213,552 215,675 204,430
Conservation programs........................... 13,561 17,396 16,866
PCA............................................. 47,189 (1,826) (2,543)
Other........................................... 8,954 10,893 16,143
--------------- -------------- --------------
Total......................................... 532,802 491,735 482,166
--------------- -------------- --------------
Net deferred tax liabilities...................... $461,075 $429,816 $423,233
=============== ============== ==============
Note 6 - Fair Value of Financial Instruments
The estimated fair value of the Company's financial instruments has been
determined by the Company using available market information and appropriate
valuation methodologies. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Cash and cash equivalents, customer and other receivables, notes payable,
accounts payable, interest accrued, and taxes accrued are reported at their
carrying value as these are a reasonable estimate of their fair value. The
estimated fair values for long-term debt and investments are based upon quoted
market prices of the same or similar issues or discounted cash flow analyses as
appropriate.
The total estimated fair value of the Company's debt was approximately $866.3
million in 2000, $898.1 million in 1999, and $877.4 million in 1998.
Note 12- Industry Segment Information
The Company has identified two reportable operating segments, Utility Operations
and Energy Marketing. The Utility Operations segment has two primary sources of
income, the regulated operations of IPC and income from Bridger Coal Company, an
unconsolidated joint venture also subject to regulation. IPC's regulated
operations include the generation, transmission, distribution purchase and sale
of electricity. Energy marketing consists of the Company's unregulated
electricity marketing operations and, through December 1998, natural gas
marketing.
The Company's other operations include:
o Ida-West Energy Company - a developer and manager of independent power
projects (ownership transferred to parent October 1998);
o IDACORP Financial Services - an investor in affordable housing (ownership
transferred to parent January 2000);
o Applied Power Company - manufacturer, supplier and distributor of solar
photovoltaic systems (ownership transferred to parent January 2000).
The following table summarizes IPC's segment information and reconciles this
information to total enterprise amounts:
Utility Energy Consolidated
Operations Marketing Other Eliminations Total
------------ ----------- ------------ ------------ -------------
(Thousands of Dollars)
2000
- ----
Revenues............................$ 835,662 $ - $ - $ - $ 835,662
Income from operations.............. 169,636 - - - 169,636
Other income........................ 16,242 94,917 (8) (2,280) 108,871
Interest expense ................... 57,731 - - (2,280) 55,451
Income before income taxes.......... 128,147 94,917 (8) - 223,056
Income taxes........................ 48,174 37,397 (3) - 85,568
Net income.......................... 79,973 57,520 (5) - 137,488
Total assets........................ 2,530,312 1,761,611 3,175 - 4,295,098
Expenditures for long-lived assets.. 131,782 - 299 - 132,081
1999
- ----
Revenues............................$ 658,336 $ - $ - $ - $ 658,336
Income from operations.............. 172,458 - - - 172,458
Other income........................ 14,377 23,206 (6,341) - 31,242
Interest expense.................... 56,679 - 3,943 - 60,622
Income before income taxes.......... 130,156 23,206 (10,284) - 143,078
Income taxes........................ 49,507 9,143 (13,100) - 45,550
Net income.......................... 80,649 14,063 2,816 - 97,528
Total assets........................ 2,379,571 72,023 111,158 - 2,562,752
Expenditures for long-lived assets.. 112,772 - 22,685 - 135,457
1998
- ----
Revenues............................$ 756,410 $ - $ - $ - $ 756,410
Income from operations.............. 180,584 - - - 180,584
Other income........................ 11,897 7,963 233 - 20,093
Interest expense.................... 56,646 - 3,047 - 59,693
Income before income taxes.......... 135,835 7,963 (2,814) - 140,984
Income taxes........................ 49,893 2,787 (7,615) - 45,065
Net income.......................... 85,942 5,176 4,801 - 95,919
Total assets........................ 2,266,055 59,245 101,689 - 2,426,989
Expenditures for long-lived assets.. 91,803 - 19,197 - 111,000
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Shareowner of
Idaho Power Company
Boise, Idaho
We have audited the accompanying consolidated balance sheets and statements of
capitalization of Idaho Power Company and its subsidiaries as of December 31,
2000, 1999 and 1998, and the related consolidated statements of income, cash
flows, retained earnings, and comprehensive income for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Idaho Power Company and
subsidiaries at December 31, 2000, 1999 and 1998, and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boise, Idaho
February 1, 2001
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 hereunto duly authorized.
IDACORP, Inc. IDAHO POWER COMPANY
By:s/ J. LaMont Keen By:s/ J. LaMont Keen
-------------------- --------------------
J. LaMont Keen J. LaMont Keen
Senior Vice President-Administration Senior Vice President-Administration
and Chief Financial Officer and Chief Financial Officer
By:s/ Darrel T. Anderson By:s/ Darrel T. Anderson
----------------------- -----------------------
Darrel T. Anderson Darrel T. Anderson
Vice President and Treasurer Vice President and Treasurer
Dated: February 23, 2001