BOISE, Idaho, Oct. 31, 2019 /PRNewswire/ -- IDACORP, Inc.
(NYSE: IDA) reported third quarter 2019 net income attributable to
IDACORP of $89.9 million, or
$1.78 per diluted share, compared
with $102.2 million, or $2.02 per diluted share, in the third quarter of
2018. For the first nine months of 2019, IDACORP reported net
income attributable to IDACORP of $185.7
million, or $3.68 per diluted
share, compared with $200.7 million,
or $3.97 per diluted share, in the
first nine months of 2018.
"The benefits of continued strong customer growth during the
third quarter were offset by mild and rainy weather, which led to
reduced irrigation sales and lower transmission revenues when
compared with last year's third quarter," said Darrel Anderson, IDACORP's President and Chief
Executive Officer. "As expected, last year's tax reform-related
benefits did not recur. Despite all of these headwinds, the
sustained diligence of our employees in managing costs kept our
operating income relatively flat year-over-year and enables us to
reduce our 2019 guidance range for O&M expenses. Year-to-date
IDACORP earnings are the second highest achieved in its history
exceeded only by last year's record results.
"With year-to-date results largely in line with internal
expectations, we are tightening IDACORP's full-year 2019 earnings
guidance to be in the range of $4.40
to $4.50 per diluted share. We
continue to expect Idaho Power to preserve all authorized tax
credits under its Idaho-jurisdiction earnings support mechanism,
and to achieve full-year 2019 return on equity of at least 9.5
percent in Idaho," concluded
Anderson.
Performance Summary
A summary of financial highlights for the quarter ended
September 30, 2019 and 2018 is as follows (in thousands,
except per share amounts):
|
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
|
|
2019
|
|
2018
|
2019
|
|
2018
|
Net income
attributable to IDACORP, Inc.
|
|
$
|
89,876
|
|
|
$
|
102,231
|
|
$
|
185,718
|
|
|
$
|
200,661
|
|
Average outstanding
shares – diluted (000's)
|
|
50,558
|
|
|
50,565
|
|
50,528
|
|
|
50,503
|
|
IDACORP, Inc.
earnings per diluted share
|
|
$
|
1.78
|
|
|
$
|
2.02
|
|
$
|
3.68
|
|
|
$
|
3.97
|
|
The table below provides a reconciliation of net income
attributable to IDACORP for the three and nine months ended
September 30, 2019, from the same period in 2018 (items are in
millions and are before related income tax impact unless otherwise
noted).
|
|
Three months
ended
|
|
Nine months
ended
|
Net income
attributable to IDACORP, Inc. - September 30, 2018
|
|
|
|
$
|
102.2
|
|
|
|
|
$
|
200.7
|
|
Increase (decrease)
in Idaho Power net income:
|
|
|
|
|
|
|
|
|
Customer growth, net
of associated power supply costs and power cost adjustment
mechanisms
|
|
5.5
|
|
|
|
|
14.1
|
|
|
|
Usage per retail
customer, net of associated power supply costs and power cost
adjustment mechanisms
|
|
(8.6)
|
|
|
|
|
(19.4)
|
|
|
|
Idaho fixed cost
adjustment (FCA) revenues
|
|
1.7
|
|
|
|
|
1.2
|
|
|
|
Retail revenues per
megawatt-hour (MWh), net of associated power supply costs and power
cost adjustment mechanisms
|
|
(1.0)
|
|
|
|
|
(1.6)
|
|
|
|
Transmission
wheeling-related revenues
|
|
(5.1)
|
|
|
|
|
(3.1)
|
|
|
|
Other operations and
maintenance (O&M) expenses
|
|
4.4
|
|
|
|
|
7.0
|
|
|
|
Depreciation
expense
|
|
(0.9)
|
|
|
|
|
(2.9)
|
|
|
|
Other changes in
operating revenues and expenses, net
|
|
1.5
|
|
|
|
|
(1.1)
|
|
|
|
Prior period
provision for revenue sharing with customers
|
|
1.5
|
|
|
|
|
1.5
|
|
|
|
Decrease in Idaho
Power operating income
|
|
(1.0)
|
|
|
|
|
(4.3)
|
|
|
|
Earnings of
equity-method investments
|
|
(2.5)
|
|
|
|
|
(3.0)
|
|
|
|
Non-operating income
and expenses
|
|
2.2
|
|
|
|
|
3.8
|
|
|
|
Prior period tax
benefits from remeasurement of deferred taxes and early bond
redemption
|
|
(5.7)
|
|
|
|
|
(7.0)
|
|
|
|
Income tax expense
(excluding prior period tax benefits from remeasurement of deferred
taxes and early bond redemption)
|
|
(5.2)
|
|
|
|
|
(5.4)
|
|
|
|
Total decrease in
Idaho Power net income
|
|
|
|
(12.2)
|
|
|
|
|
(15.9)
|
|
Other IDACORP
changes (net of tax)
|
|
|
|
(0.1)
|
|
|
|
|
0.9
|
|
Net income
attributable to IDACORP, Inc. - September 30, 2019
|
|
|
|
$
|
89.9
|
|
|
|
|
$
|
185.7
|
|
Net Income - Third Quarter 2019
IDACORP's net income decreased $12.3
million for the third quarter of 2019 compared with the
third quarter of 2018, primarily due to lower net income at Idaho
Power. Customer growth increased operating income by $5.5 million in the third quarter of 2019
compared with the third quarter of 2018, as the number of Idaho
Power customers grew by approximately 14,250, or 2.6 percent,
during the twelve months ended September 30,
2019. Lower sales volumes on a per-customer basis decreased
operating income by $8.6 million in
the third quarter of 2019 compared with the third quarter of 2018,
as greater precipitation in Idaho Power's service area led
agricultural irrigation customers to use 6 percent less energy per
customer to operate irrigation pumps. Also, residential and
commercial customers used less energy per customer for air
conditioning purposes, primarily due to more moderate temperatures
in the third quarter of 2019 compared with the third quarter of
2018. The decrease in residential sales volumes per customer was
partially offset by the FCA mechanism (applicable to residential
and small general service customers), which increased revenues in
the third quarter by $1.7
million.
The net decrease in retail revenues per MWh decreased operating
income by $1.0 million in the third quarter of 2019
compared with the third quarter of 2018. As provided by the
settlement stipulation approved by the Idaho Public Utilities
Commission (IPUC) in 2018 related to income tax reform, retail
revenues per MWh in the third quarter of 2019 were reduced by
$2.9 million of non-cash accruals for
future amortization related to regulatory deferrals that would
otherwise be a future liability of Idaho customers. In the third quarter of 2018,
the corresponding $2.9 million was
recorded as other O&M expense for the amortization of specified
deferrals. The decrease in retail revenues per MWh from these
non-cash accruals was partially offset by changes in customer mix,
as volumes sold to residential customers in the third quarter of
2019 made up a greater portion of the customer sales mix compared
with the third quarter of 2018. Residential customers generally pay
a higher per-MWh rate than other customers.
During the third quarter of 2019, transmission wheeling-related
revenues decreased $5.1 million
compared with the third quarter of 2018. Lower hydropower
generation by other utilities in the Pacific Northwest and more
moderate summer temperatures throughout the region led to lower
wheeling volumes during the third quarter of 2019. Also, Idaho
Power's open access transmission tariff (OATT) rates decreased in
October 2018.
Other O&M expenses were $4.4
million lower in the third quarter of 2019 compared with the
third quarter of 2018, due to a $1.6
million decrease in labor and benefit costs and the
$2.9 million of non-cash amortization
expense of regulatory deferrals recorded in the third quarter of
2018 pursuant to the settlement stipulation approved by the IPUC in
2018 related to income tax reform.
Under the Idaho regulatory
settlement stipulation approved in October
2014, Idaho Power recorded a $1.5
million provision against revenues for sharing of earnings
with customers during the third quarter of 2018, based on its
estimate of full-year 2018 return on year-end equity in the
Idaho jurisdiction (Idaho ROE). No
such provision was recorded in the third quarter of 2019.
Overall, Idaho Power operating income decreased by $1.0 million for the third quarter of 2019
compared with the third quarter of 2018.
Based on its estimate of full-year 2019 Idaho ROE, in the third
quarter of 2019 Idaho Power recorded no additional accumulated
deferred investment tax credits (ADITC) amortization for 2019 under
the Idaho regulatory settlement
stipulation approved in October
2014.
During the third quarter of 2018, Idaho Power recorded tax
benefits for a $5.7 million
remeasurement of deferred taxes resulting from income tax reform.
There was no such remeasurement in the third quarter of 2019. Also,
the third quarter of 2018 included a benefit from plant-related
income tax return adjustments, which are generally recorded during
the third quarter each year upon completion of the prior year tax
return, which reduced Idaho Power's income tax expense in the third
quarter of 2018. These items, combined with lower excess deferred
income tax reversal amounts, resulted in higher income tax expense
in the third quarter of 2019 compared with the third quarter of
2018.
Net Income - Year-to-Date 2019
IDACORP's net income decreased $15.0
million for the first nine months of 2019 compared with the
same period of 2018, primarily due to lower net income at Idaho
Power. Customer growth increased operating income by $14.1 million in the first nine months of 2019
compared with the first nine months of 2018. Lower sales volumes on
a per-customer basis decreased operating income by $19.4 million in the first nine months of 2019
compared with the first nine months of 2018, primarily due to lower
irrigation, residential, and commercial revenues in the second and
third quarters of 2019. Greater precipitation in Idaho Power's
service area led agricultural irrigation customers to use 12
percent less energy per customer to operate irrigation pumps during
the first nine months of 2019. Also, residential and commercial
customers used less energy per customer for air conditioning
purposes during the second and third quarters of 2019, primarily
due to more moderate temperatures. The lower sales volumes on a
per-customer basis in the second and third quarters of 2019 were
partially offset by a 3 percent increase in sales volumes per
residential customer in the first quarter of 2019 compared with the
first quarter of 2018, as colder temperatures led residential
customers to use more energy for heating. The decrease in
residential sales volumes per customer was partially offset by the
FCA mechanism (applicable to residential and small general service
customers), which increased revenues by $1.2 million.
The net decrease in retail revenues per MWh decreased operating
income by $1.6 million in the first nine months of 2019
compared with the same period of 2018. As provided by the
settlement stipulation approved by the IPUC in 2018 related to
income tax reform, retail revenues per MWh in the first nine months
of 2019 were reduced by $5.8 million
of non-cash accruals for future amortization related to regulatory
deferrals that would otherwise be a future liability of
Idaho customers. In the first nine
months of 2018, a corresponding $4.0
million of non-cash accruals were appropriately recorded as
other O&M expense for the amortization of specified deferrals.
The decrease in retail revenues per MWh from these non-cash
accruals was partially offset by changes in customer mix, as
volumes sold to residential customers in the first nine months of
2019 made up a greater portion of the customer sales mix compared
with the first nine months of 2018. Residential customers generally
pay a higher per-MWh rate than other customers.
During the first nine months of 2019, transmission
wheeling-related revenue decreased $3.1
million compared with the first nine months of 2018. Lower
hydropower generation by other utilities in the Pacific Northwest
and more moderate summer temperatures throughout the region during
the third quarter of 2019, offset partially by greater regional
market activity in early 2019, led to lower wheeling volumes during
the first nine months of 2019 compared with the first nine months
of 2018. Also, Idaho Power's OATT rates decreased in October 2018.
Other O&M expenses were $7.0
million lower in the first nine months of 2019 compared with
the first nine months of 2018. Other O&M expenses related to
Idaho Power's hydropower generation decreased $2.0 million, due primarily to fewer maintenance
projects at hydropower locations in the first nine months of 2019.
Also, labor and benefit costs decreased $1.9
million. Other O&M expenses in the first nine months of
2018 included $4.0 million of
non-cash amortization expense of regulatory deferrals pursuant to
the settlement stipulation approved by the IPUC in 2018 related to
income tax reform.
Based on its estimate of full-year 2019 Idaho ROE, in the first
nine months of 2019 Idaho Power recorded no additional ADITC
amortization or provision against current revenues for sharing of
earnings with customers for 2019 under the Idaho regulatory settlement stipulation
approved in October 2014. Idaho Power
recorded a $1.5 million provision
against revenues for sharing of earnings with customers during
the first nine months of 2018, based on its estimate of full-year
2018 Idaho ROE.
During the first nine months of 2018, Idaho Power recorded tax
benefits for a $5.7 million
remeasurement of deferred taxes resulting from income tax reform
and the $1.3 million tax deduction for bond redemption costs
incurred in the first nine months of 2018. There was no such
remeasurement or bond redemption in the same period of 2019. Also,
the first nine months of 2018 included a benefit from plant-related
income tax return adjustments, which are generally recorded during
the third quarter each year upon completion of the prior year tax
return, which reduced Idaho Power income tax expense in the first
nine months of 2018. These items, combined with lower excess
deferred income tax reversal amounts, resulted in higher income tax
expense in the first nine months of 2019 compared with the same
period of 2018.
2019 Annual Earnings Guidance and Key Operating and Financial
Metrics
IDACORP is tightening its earnings guidance estimate for 2019.
The 2019 guidance incorporates all of the key operating and
financial assumptions listed in the table that follows (in
millions, except per share amounts):
|
|
Current(1)
|
|
Previous(2)
|
IDACORP Earnings
Guidance (per share)
|
|
$ 4.40 – $
4.50
|
|
$ 4.35 – $
4.50
|
Idaho Power
Additional Amortization of Accumulated Deferred Investment Tax
Credits
|
|
No Change
|
|
None
|
Idaho Power Operating
& Maintenance Expense
|
|
$ 345 – $
355
|
|
$ 350 – $
360
|
Idaho Power Capital
Expenditures, Excluding Allowance for Funds Used During
Construction
|
|
No Change
|
|
$ 280 – $
290
|
Idaho Power
Hydroelectric Generation (MWh)
|
|
8.0 – 8.5
|
|
8.0 – 9.0
|
(1) As of
October 31, 2019.
|
(2) As of
August 1, 2019, the date of filing IDACORP's and Idaho Power's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2019.
|
More detailed financial information is provided in IDACORP's
Quarterly Report on Form 10-Q filed today with the U.S. Securities
and Exchange Commission and posted to the IDACORP Web site at
www.idacorpinc.com.
Web Cast / Conference Call
IDACORP will hold an analyst conference call today at
2:30 p.m. Mountain Time (4:30 p.m. Eastern Time). All parties interested
in listening may do so through a live webcast on the company's
website (www.idacorpinc.com), or by calling (800) 242-0681 for
listen-only mode. There is no passcode required; simply request to
be connected to the "IDACORP, Inc." call. The conference call
logistics are also posted on the company's website and will be
included in the company's earnings news release. Slides will be
included during the conference call. To access the slide deck,
register for the event just prior to the call at
www.idacorpinc.com/investor-relations/earnings-center/conference-calls.
A replay of the conference call will be available on the company's
website for a period of 12 months and will be available shortly
after the call.
Background Information
IDACORP, Inc. (NYSE: IDA), Boise,
Idaho-based and formed in 1998, is a holding company
comprised of Idaho Power, a regulated electric utility; IDACORP
Financial, a holder of affordable housing projects and other real
estate investments; and Ida-West Energy, an operator of small
hydroelectric generation projects that satisfy the requirements of
the Public Utility Regulatory Policies Act of 1978. Idaho Power
began operations in 1916 and employs approximately 2,000 people to
serve a 24,000-square-mile service area in southern Idaho and eastern Oregon. With 17 low-cost hydroelectric
projects as the core of its generation portfolio, Idaho Power's
more than 560,000 residential, business and agricultural customers
pay some of the nation's lowest prices for electricity. To learn
more about Idaho Power or IDACORP, visit www.idahopower.com or
www.idacorpinc.com.
Forward-Looking Statements
In addition to the historical information contained in this
press release, this press release contains (and oral communications
made by IDACORP, Inc. and Idaho Power Company may contain)
statements, including, without limitation, earnings guidance and
estimated key operating and financial metrics, that relate to
future events and expectations and, as such, constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statements that
express, or involve discussions as to, expectations, beliefs,
plans, objectives, outlook, assumptions, or future events or
performance, often, but not always, through the use of words or
phrases such as "anticipates," "believes," "continues," "could,"
"estimates," "expects," "guidance," "intends," "potential,"
"plans," "predicts," "projects," "targets," or similar expressions,
are not statements of historical facts and may be
forward-looking. Forward-looking statements are not
guarantees of future performance and involve estimates,
assumptions, risks, and uncertainties. Actual results,
performance, or outcomes may differ materially from the results
discussed in the statements. In addition to any assumptions
and other factors and matters referred to specifically in
connection with such forward-looking statements, factors that could
cause actual results or outcomes to differ materially from those
contained in forward-looking statements include the following: (a)
the effect of decisions by the Idaho and Oregon public utilities commissions and the
Federal Energy Regulatory Commission that impact Idaho Power's
ability to recover costs and earn a return on investments; (b) the
expense and risks associated with capital expenditures for utility
infrastructure, and the timing and availability of cost recovery
for such expenditures through customer rates, including the
potential for the write-down or write-off of expenditures if not
deemed prudent by regulators; (c) changes in residential,
commercial, and industrial growth and demographic patterns within
Idaho Power's service area, the loss or change in the business of
significant customers, or the addition of new customers, and their
associated impacts on loads and load growth, and the availability
of regulatory mechanisms that allow for timely cost recovery
through customer rates in the event of those changes; (d) the
impacts of economic conditions, including inflation, interest
rates, regulatory authorized returns on equity, supply costs,
population growth or decline in Idaho Power's service area, changes
in customer demand for electricity, revenue from sales of excess
power, credit quality of counterparties and suppliers, and the
collection of receivables; (e) unseasonable or severe weather
conditions, wildfires, droughts, and other natural phenomena and
natural disasters, including conditions and events associated with
climate change, which affect customer demand, hydropower generation
levels, repair costs, liability for damage caused by utility
property, including from wildfires, and the availability and cost
of fuel for generation plants or purchased power to serve
customers; (f) advancement of self-generation, energy storage, and
energy efficiency technologies that may affect Idaho Power's sale
or delivery of electric power or introduce new cyber security
risks; (g) changes in tax laws or related regulations or new
interpretations of applicable laws by federal, state, or local
taxing jurisdictions, the availability of tax credits, and the tax
rates payable by IDACORP shareholders on common stock dividends;
(h) adoption of, changes in, and costs of compliance with laws,
regulations, and policies relating to the environment, natural
resources, and threatened and endangered species, and the ability
to recover associated increased costs through rates; (i) variable
hydrological conditions and over-appropriation of surface and
groundwater in the Snake River Basin, which may impact the amount
of power generated by Idaho Power's hydropower facilities; (j) the
ability to acquire fuel, power, and transmission capacity under
reasonable terms, particularly in the event of unanticipated power
demands, lack of physical availability, transportation constraints,
or a credit downgrade; (k) accidents, fires (either affecting or
caused by Idaho Power facilities or infrastructure), explosions,
and mechanical breakdowns that may occur while operating and
maintaining Idaho Power assets, which can cause unplanned outages,
reduce generating output, damage the companies' assets, operations,
or reputation, subject the companies to third-party claims for
property damage, personal injury, or loss of life, or result in the
imposition of civil, criminal, and regulatory fines and penalties,
for which the companies may have inadequate insurance coverage; (l)
the increased purchased power costs and operational challenges
associated with purchasing and integrating intermittent renewable
energy sources into Idaho Power's resource portfolio; (m)
disruptions or outages of Idaho Power's generation or transmission
systems or of any interconnected transmission systems may constrain
resources or cause Idaho Power to incur repair costs and purchase
replacement power at increased costs; (n) the ability to obtain
debt and equity financing or refinance existing debt when necessary
and on favorable terms, which can be affected by factors such as
credit ratings, volatility or disruptions in the financial markets,
interest rate fluctuations, decisions by the Idaho or Oregon public
utility commissions, and the companies' past or projected financial
performance; (o) reductions in credit ratings, which could
adversely impact access to debt and equity markets, increase
borrowing costs, and require the posting of additional collateral
to counterparties pursuant to credit and contractual arrangements;
(p) the ability to enter into financial and physical commodity
hedges with creditworthy counterparties to manage price and
commodity risk, and the failure of any such risk management and
hedging strategies to work as intended; (q) changes in actuarial
assumptions, changes in interest rates, and the return on plan
assets for pension and other post-retirement plans, which can
affect future pension and other postretirement plan funding
obligations, costs, and liabilities and the company's cash flows;
(r) the ability to continue to pay dividends based on financial
performance and in light of contractual covenants and restrictions
and regulatory limitations; (s) employee workforce factors,
including the operational and financial costs of unionization or
the attempt to unionize all or part of the companies' workforce,
the impact of an aging workforce and retirements, the cost and
ability to attract and retain skilled workers, and the ability to
adjust the labor cost structure when necessary; (t) failure to
comply with state and federal laws, regulations, and orders,
including new interpretations and enforcement initiatives by
regulatory and oversight bodies, which may result in penalties
and fines and increase the cost of compliance, the nature and
extent of investigations and audits, and the cost of remediation;
(u) the inability to obtain or cost of obtaining and complying with
required governmental permits and approvals, licenses,
rights-of-way, and siting for transmission and generation projects
and hydropower facilities; (v) the cost and outcome of litigation,
dispute resolution, and regulatory proceedings, and the ability to
recover those costs or the costs of resulting operational changes
through insurance or rates, or from third parties; (w) the
companies' failure to secure data or to comply with privacy laws or
regulations, security breaches, or the disruption or damage to the
companies' business, operations, or reputation resulting from
cyber-attacks and related litigation or penalties, terrorist
incidents or the threat of terrorist incidents, or other malicious
acts, and acts of war; (x) unusual or unanticipated changes in
normal business operations, including unusual maintenance or
repairs, or the failure to successfully implement new technology
solutions; and (y) adoption of or changes in accounting policies
and principles, changes in accounting estimates, and new U.S.
Securities and Exchange Commission or New York Stock Exchange
requirements, or new interpretations of existing requirements. Any
forward-looking statement speaks only as of the date on which such
statement is made. 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. Readers should also review the
risks and uncertainties listed in IDACORP, Inc.'s and Idaho Power
Company's most recent Annual Report on Form 10-K and other reports
the companies file with the U.S. Securities and Exchange
Commission, including (but not limited to) Part I, Item 1A - "Risk
Factors" in the Form 10-K and Management's Discussion and Analysis
of Financial Condition and Results of Operations and the risks
described therein from time to time. IDACORP and Idaho Power
disclaim any obligation to update publicly any forward-looking
information, whether in response to new information, future events,
or otherwise, except as required by applicable law.
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SOURCE IDACORP, Inc.