SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) June 15, 2004
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Exact name of registrants as specified in
Commission their charters, address of principal executive IRS Employer
File Number offices and registrants' telephone number Identification Number
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1-14465 IDACORP, Inc. 82-0505802
1-3198 Idaho Power Company 82-0130980
1221 W. Idaho Street
Boise, ID 83702-5627
(208) 388-2200
State or Other Jurisdiction of Incorporation: Idaho
None
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Former name or former address, if changed since last report.
IDACORP, Inc.
IDAHO POWER COMPANY
Form 8-K
Item 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
Standard & Poor's Places Ratings of IDACORP and IPC on CreditWatch with Negative
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Implications
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On June 15, 2004, Standard & Poor's Ratings Services (Standard & Poor's)
announced that it has placed the corporate credit rating and long-term ratings
of IDACORP, Inc. and Idaho Power Company (IPC) on CreditWatch with negative
implications. The companies' commercial paper rating was affirmed at A-2. Any
downgrade would be expected to increase the cost of new debt and other issued
securities going forward.
Standard & Poor's stated that its decision was prompted by the Idaho Public
Utilities Commission (IPUC) order issued May 25, 2004 authorizing only a $25.3
million (5.2 percent) increase in base rates. In Standard & Poor's view, the
IPUC order gives rise to the following credit issues: 1) the order likely
reflects pressure on the IPUC to moderate rate increases given the rate hikes of
the past few years and the weak regional economic conditions, 2) IPC will have
to rely more on external debt funding for its $640 million in planned capital
expenditures in the 2004-06 period, 3) the drought in the region continues for
the fifth consecutive year, raising costs for customers, 4) income tax issues
related to the order could potentially lead to issues with deferred federal
taxes because of violation of accelerated depreciation rules since the IPUC
ordered the benefit of tax refunds to go to ratepayers and 5) the order, coupled
with large planned capital expenditures, will weaken IDACORP's consolidated
financial profile, with forecast funds from operations coverage of debt below 20
percent and total debt to capitalization at about 55 percent or higher.
Standard & Poor's stated that it would resolve its CreditWatch listing following
the IPUC's response to IPC's petition for reconsideration of this ruling and
that IDACORP would also have the opportunity to put in place cost reductions or
make other changes to its financial plan to mitigate the impact of the ruling.
The following outlines the current Standard & Poor's, Moody's Investors Service
(Moody's) and Fitch Inc. (Fitch) ratings of IDACORP's and IPC's securities, with
the ratings currently under review by Standard & Poor's and Moody's marked with
an asterisk:
- ------------------- -------------------------------- -------------------------------- --------------------------------
Standard and Poor's Moody's Fitch
- ------------------- -------------------------------- -------------------------------- --------------------------------
IPC IDACORP IPC IDACORP IPC IDACORP
- ------------------- --------------- ---------------- --------------- ---------------- ---------------- ---------------
Corporate Credit A-* A-* A3* Baa1* None None
Rating
- ------------------- --------------- ---------------- --------------- ---------------- ---------------- ---------------
Senior Secured A* None A2* None A None
Debt
- ------------------- --------------- ---------------- --------------- ---------------- ---------------- ---------------
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- ------------------- --------------- ---------------- --------------- ---------------- ---------------- ---------------
Senior Unsecured BBB+* BBB+* A3* Baa1* A- BBB+
Debt
- ------------------- --------------- ---------------- --------------- ---------------- ---------------- ---------------
Preferred Stock BBB* None Baa2* None BBB+ None
- ------------------- --------------- ---------------- --------------- ---------------- ---------------- ---------------
Trust Preferred None BBB* None Baa2* None BBB
Stock
- ------------------- --------------- ---------------- --------------- ---------------- ---------------- ---------------
Short-Term BBB+/A-2 None A3/ None None None
Tax-Exempt Debt VMIG-1*
- ------------------- --------------- ---------------- --------------- ---------------- ---------------- ---------------
Commercial Paper A-2 A-2 P-1* P-2 F-1 F-2
- ------------------- --------------- ---------------- --------------- ---------------- ---------------- ---------------
Rating Outlook Stable Stable Negative Negative Stable Stable
- ------------------- --------------- ---------------- --------------- ---------------- ---------------- ---------------
These security ratings reflect the views of the rating agencies. An explanation
of the significance of these ratings may be obtained from each rating agency.
Such ratings are not a recommendation to buy, sell or hold securities. Any
rating can be revised upward or downward or withdrawn at any time by a rating
agency if it decides that the circumstances warrant the change. Each rating
should be evaluated independently of any other rating.
IPC Files Petition for Reconsideration in General Rate Case
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On June 15, 2004, IPC filed with the IPUC a petition for reconsideration of
portions of the order issued May 25, 2004 relating to IPC's general rate case.
The two primary matters raised in the petition are issues related to income tax
and computational errors.
IPC stated in its petition that the IPUC used a five-year average income tax
rate to compute IPC's income tax rather than the historically used tax
calculation methods, which resulted in retroactive ratemaking and places IPC's
ability to use accelerated income tax depreciation in jeopardy. The income tax
issue represents approximately $11.5 million.
IPC requested that computational errors of approximately $2.7 million contained
in the order be corrected. The IPUC has 28 days to respond to the petition.
Certain statements contained in this current report on Form 8-K, including
statements with respect to future earnings, ongoing operations, and financial
conditions, are "forward-looking statements" within the meaning of federal
securities laws. Although IDACORP and Idaho Power believe that the expectations
and assumptions reflected in these forward-looking statements are reasonable,
these statements involve a number of risks and uncertainties, and actual results
may differ materially from the results discussed in the statements. Important
factors that could cause actual results to differ materially from the
forward-looking statements include: changes in governmental policies and
regulatory actions, including those of the Federal Energy Regulatory Commission,
the Idaho Public Utilities Commission and the Oregon Public Utility Commission,
with respect to allowed rates of return, industry and rate structure,
acquisition and disposal of assets and facilities, operation and construction of
plant facilities, relicensing of hydroelectric
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projects, recovery of purchased power, recovery of other capital investments,
and present or prospective wholesale and retail competition (including but not
limited to retail wheeling and transmission costs) and other refund proceedings;
litigation resulting from the energy situation in the western United States;
economic, geographic and political factors and risks; changes in and compliance
with environmental and safety laws and policies; weather variations affecting
customer energy usage; operating performance of plants and other facilities;
system conditions and operating costs; population growth rates and demographic
patterns; pricing and transportation of commodities; market demand and prices
for energy, including structural market changes; changes in capacity and fuel
availability and prices; changes in tax rates or policies, interest rates or
rates of inflation; changes in actuarial assumptions; adoption of or changes in
critical accounting policies or estimates; exposure to operational, market and
credit risk; changes in operating expenses and capital expenditures; capital
market conditions; rating actions by Moody's, Standard & Poor's and Fitch;
competition for new energy development opportunities; results of financing
efforts, including the ability to obtain financing on favorable terms, which can
be affected by various factors, including credit ratings and general economic
conditions; natural disasters, acts of war or terrorism; increasing health care
costs and the resulting effect on health insurance premiums paid for employees
and on the obligation to provide post retirement health care benefits;
increasing costs of insurance, changes in coverage terms and the ability to
obtain insurance; technological developments that could affect the operation and
prospects of our subsidiaries or their competitors; legal and administrative
proceedings (whether civil or criminal) and settlements that influence business
and profitability; and new accounting or Securities and Exchange Commission
requirements, or new interpretation or application of existing requirements. Any
such forward-looking statements should be considered in light of such factors
and others noted in the companies' Form 10-K for the year 2003, the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2004 and other reports on
file with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
Dated: June 16, 2004
IDACORP, Inc.
By:/s/Robert W. Stahman
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Robert W. Stahman
Vice President, General Counsel and
Secretary
IDAHO POWER COMPANY
By:/s/Robert W. Stahman
-----------------------
Robert W. Stahman
Vice President, General Counsel and
Secretary
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