BOISE, Idaho, Feb. 20, 2020 /PRNewswire/ -- IDACORP, Inc.
(NYSE: IDA) reported fourth quarter 2019 net income attributable to
IDACORP of $47.1 million, or
$0.93 per diluted share, compared
with $26.1 million, or $0.52 per diluted share, in the fourth quarter of
2018. IDACORP reported 2019 net income attributable to IDACORP of
$232.9 million, or $4.61 per diluted share, compared with
$226.8 million, or $4.49 per diluted share, in 2018.
"IDACORP continued its steady financial performance, achieving
its twelfth straight year of growth in earnings per share," said
Darrel Anderson, IDACORP's President
and Chief Executive Officer. "The record fourth quarter and
full-year results were driven by strong economic activity in Idaho
Power's service area, along with solid performance across IDACORP's
other subsidiaries. New customers continue to move into the service
area, and this customer growth, along with effective cost
management, again enabled Idaho Power to preserve tax credits to
support future earnings.
"In addition to the unprecedented financial results, Idaho Power
achieved its best ever employee safety record and its highest ever
residential customer satisfaction score. Idaho Power also continued
its strong performance in system reliability, only slightly behind
2018's record result," added Anderson.
IDACORP is initiating its full year 2020 earnings guidance in
the range of $4.45 to $4.65 per diluted share, and Idaho Power does not
expect to use any of the tax credits available under the
Idaho regulatory stipulation. This
earnings guidance assumes normal weather conditions.
Performance Summary
A summary of financial highlights for the quarter ended
December 31, 2019 and 2018 is as follows (in thousands, except
per share amounts):
|
|
Three months
ended December 31,
|
Year ended
December 31,
|
|
|
2019
|
|
2018
|
2019
|
|
2018
|
Net income
attributable to IDACORP, Inc.
|
|
$
|
47,136
|
|
|
$
|
26,140
|
|
$
|
232,854
|
|
|
$
|
226,801
|
|
Average outstanding
shares – diluted (000's)
|
|
50,566
|
|
|
50,527
|
|
50,537
|
|
|
50,510
|
|
IDACORP, Inc.
earnings per diluted share
|
|
$
|
0.93
|
|
|
$
|
0.52
|
|
$
|
4.61
|
|
|
$
|
4.49
|
|
The table below provides a reconciliation of net income
attributable to IDACORP for the three and twelve months ended
December 31, 2019, from the same period in 2018 (items are in
millions and are before tax unless otherwise noted).
|
|
Three months
ended
|
|
Year
ended
|
Net income
attributable to IDACORP, Inc. - December 31, 2018
|
|
|
|
$
|
26.1
|
|
|
|
|
$
|
226.8
|
|
Increase
(decrease) in Idaho Power net income:
|
|
|
|
|
|
|
|
|
Customer growth, net
of associated power supply costs and power cost adjustment
mechanisms
|
|
4.7
|
|
|
|
|
18.8
|
|
|
|
Usage per retail
customer, net of associated power supply costs and power cost
adjustment mechanisms
|
|
(2.1)
|
|
|
|
|
(21.4)
|
|
|
|
Idaho fixed cost
adjustment revenues
|
|
(0.2)
|
|
|
|
|
1.0
|
|
|
|
Retail revenues per
megawatt-hour (MWh), net of associated power supply costs and power
cost adjustment mechanisms
|
|
1.8
|
|
|
|
|
(2.8)
|
|
|
|
Transmission
wheeling-related revenues
|
|
(2.2)
|
|
|
|
|
(5.3)
|
|
|
|
Other operations and
maintenance (O&M) expenses
|
|
1.7
|
|
|
|
|
8.7
|
|
|
|
Other changes in
operating revenues and expenses, net
|
|
(0.6)
|
|
|
|
|
(1.7)
|
|
|
|
Prior period
provision for revenue sharing with customers
|
|
3.5
|
|
|
|
|
5.0
|
|
|
|
Increase in Idaho
Power operating income
|
|
6.6
|
|
|
|
|
2.3
|
|
|
|
Non-operating income
and expenses, net
|
|
9.2
|
|
|
|
|
9.9
|
|
|
|
Income tax
expense
|
|
2.3
|
|
|
|
|
(10.1)
|
|
|
|
Total increase in
Idaho Power net income
|
|
|
|
18.1
|
|
|
|
|
2.1
|
|
Other IDACORP
changes (net of tax)
|
|
|
|
2.9
|
|
|
|
|
4.0
|
|
Net income
attributable to IDACORP, Inc. - December 31, 2019
|
|
|
|
$
|
47.1
|
|
|
|
|
$
|
232.9
|
|
Net Income - Fourth Quarter 2019
IDACORP's net income increased $21.0
million for the fourth quarter of 2019 compared with the
fourth quarter of 2018, primarily due to higher net income at Idaho
Power. Customer growth increased operating income by $4.7 million in the fourth quarter of 2019
compared with the fourth quarter of 2018, as the number of Idaho
Power customers grew by 2.5 percent during the twelve months ended
December 31, 2019. Lower sales
volumes on a per-customer basis decreased operating income by
$2.1 million in the fourth quarter of
2019 compared with the fourth quarter of 2018, primarily related to
lower per-customer industrial sales.
The net increase in retail revenues per MWh increased operating
income by $1.8 million in the fourth quarter of 2019
compared with the fourth quarter of 2018. This increase was largely
driven by changes in the customer sales mix, as volumes sold to
residential customers in the fourth quarter of 2019 made up a
greater portion of the customer sales mix compared with the fourth
quarter of 2018. Residential customers generally pay a higher
per-MWh rate than other customers.
During the fourth quarter of 2019, transmission wheeling-related
revenues decreased $2.2 million
compared with the fourth quarter of 2018. Idaho Power's open access
transmission tariff (OATT) rates decreased 13 percent in
October 2019. To a lesser extent,
lower volumes also reduced transmission wheeling-related
revenues.
Other O&M expenses were $1.7
million lower in the fourth quarter of 2019 compared with
the fourth quarter of 2018, as Idaho Power's continued focus on
managing other O&M expenses resulted in lower expenses across a
number of areas.
Under the Idaho regulatory
settlement stipulation approved in October
2014, Idaho Power recorded a $3.5
million provision against revenues for sharing of earnings
with customers during the fourth quarter of 2018, based on its
estimate of full-year 2018 return on year-end equity in the
Idaho jurisdiction (Idaho ROE).
Based on its 2019 Idaho ROE, Idaho Power recorded no additional
accumulated deferred investment tax credit (ADITC) amortization or
provision against current revenues for sharing of earnings with
customers in 2019 under the Idaho regulatory settlement stipulation
approved in October 2014.
Overall, Idaho Power operating income increased by $6.6 million for the fourth quarter of 2019
compared with the fourth quarter of 2018.
Non-operating income and expenses, net, improved $9.2 million in the fourth quarter of 2019
compared with the fourth quarter of 2018. A temporary deviation
from Idaho Power's substantive postretirement plan resulted in a
$4.2 million charge in the fourth
quarter of 2018 that did not recur in the fourth quarter of 2019.
An increase in income from Idaho Power's unconsolidated investment
in Bridger Coal Company (BCC) increased non-operating income by
$2.6 million in the fourth quarter of
2019 compared with the fourth quarter of 2018, due to lower sales
prices at BCC in the fourth quarter of 2018. Also, interest expense
on long-term debt was $1.5 million
lower during the fourth quarter of 2019 when compared with the
fourth quarter of 2018, due to the repurchase and remarketing of
the pollution control revenue bonds that was completed in the third
quarter of 2019. Finally, allowance for equity funds used during
construction increased $1.0 million
in the fourth quarter of 2019 as the average construction work in
progress balance was higher throughout the quarter compared with
the fourth quarter of 2018.
Income tax expense was $2.3
million lower during the fourth quarter of 2019 when
compared with the fourth quarter of 2018. Amortization of vintage
investment tax credits that became available in 2019 lowered income
tax expense by $3.4 million, most of
which is not expected to recur. This tax benefit was partially
offset by higher pre-tax net income in the fourth quarter of
2019.
At IDACORP Financial Services, Inc. (IFS), a $3.0 million increase in distributions from the
sale of low-income housing properties led to higher IFS net income
in the fourth quarter of 2019 compared with the fourth quarter of
2018.
Net Income – Full-Year 2019
IDACORP's net income increased $6.1
million for 2019 compared with 2018, primarily due to higher
net income at Idaho Power and IFS.
Idaho Power's customer growth of 2.5 percent added $18.8 million to Idaho Power's operating income
compared with 2018. Lower sales volumes on a per-customer basis
decreased operating income by $21.4
million in 2019 compared with 2018, primarily due to lower
irrigation sales. Greater precipitation and more moderate spring
and summer temperatures in Idaho Power's service area led
agricultural irrigation customers to use 12 percent less energy per
customer to operate irrigation pumps during 2019 compared with
2018. To a lesser extent, sales volumes on a per-customer basis in
2019 were negatively affected by lower per-customer commercial and
industrial sales.
The net decrease in retail revenues per MWh reduced operating
income by $2.8 million in 2019
compared with 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 2019 were
reduced by $7.4 million of non-cash
accruals for future amortization related to regulatory deferrals
that would otherwise be a future liability of Idaho customers, compared with a $1.5 million revenue reduction in 2018. In 2018,
a corresponding $4.0 million of
non-cash accruals were 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 the customer sales mix, as volumes sold to
residential customers in 2019 made up a greater portion of the
customer sales mix compared with 2018. Residential customers
generally pay a higher per-MWh rate than other customers.
During 2019, transmission wheeling-related revenues decreased
$5.3 million compared with 2018.
Idaho Power's OATT rates decreased 10 percent in October 2018 and 13 percent in October 2019. To a lesser extent, lower volumes
also reduced transmission wheeling-related revenues.
Other O&M expenses were $8.7
million lower in 2019 compared with 2018, as Idaho Power's
continued focus on managing other O&M expenses resulted in
lower expenses across a number of areas. Lower bad debt expense
reduced other O&M expenses by $1.1
million, due primarily to enhanced collection efforts and a
strong economy. Also, other O&M expenses in 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 2019 Idaho ROE, Idaho Power recorded no additional
ADITC amortization or provision against current revenues for
sharing of earnings with customers in 2019 under the
Idaho regulatory settlement
stipulation approved in October 2014.
In 2018, Idaho Power recorded a $5.0
million provision against revenues for sharing of earnings
with customers.
Non-operating income and expenses, net, increased $9.9 million in 2019 compared with 2018. A
temporary deviation from an Idaho Power substantive postretirement
plan resulted in a $4.2 million
charge in 2018 that did not recur in 2019. Allowance for equity
funds used during construction increased $2.8 million in 2019 as the average construction
work in progress balance was higher throughout 2019 compared with
2018. Also, investment income from the Rabbi trust associated with
Idaho Power's nonqualified defined benefit pension plans increased
$2.2 million based on stronger asset
returns in 2019 compared with 2018.
During 2018, Idaho Power recorded tax benefits for a
$5.7 million remeasurement of
deferred taxes resulting from income tax reform and $1.3 million for tax-deductible bond redemption
costs incurred in 2018. There was no such remeasurement or bond
redemption in 2019. These items, combined with higher pre-tax net
income in 2019, resulted in higher income tax expense in 2019
compared with 2018. Amortization of vintage investment tax credits
that became available in 2019 lowered income tax expense by
$3.4 million, most of which is not
expected to recur.
At IFS, a $3.0 million increase in
distributions from the sale of low-income housing properties led to
higher IFS net income in 2019 compared with 2018.
2020 Annual Earnings Guidance and Estimated Key Operating and
Financial Metrics
IDACORP is initiating its earnings guidance estimate for 2020.
The 2020 guidance incorporates all of the key operating and
financial assumptions listed in the table that follows (in
millions, except per share amounts):
|
|
2020
Estimate(1)
|
|
2019
Actual
|
IDACORP
Earnings Guidance (per share)
|
|
$ 4.45 – $
4.65
|
|
$4.61
|
Idaho Power Additional
Amortization of ADITCs
|
|
None
|
|
None
|
Idaho Power
Operating & Maintenance Expense
|
|
$ 350 – $
360
|
|
$ 356
|
Idaho Power
Capital Expenditures, Excluding Allowance for Funds Used During
Construction
|
|
$ 300 – $
310
|
|
$ 295
|
Idaho Power
Hydroelectric Generation (MWh)
|
|
6.5 – 8.5
|
|
8.3
|
(1)
|
As of
February 20, 2020.
|
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. 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. Idaho Power's goal of 100% clean
energy by 2045 builds on its long history as a clean-energy leader
providing reliable service at affordable prices. With 17 low-cost
hydropower projects at the core of its diverse energy mix, Idaho
Power's more than 570,000 residential, business, and agricultural
customers pay among the nation's lowest prices for electricity. To
learn more about IDACORP or Idaho Power, visit www.idacorpinc.com
or www.idahopower.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)
changes to or the elimination of Idaho Power's cost recovery
mechanisms; (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) abnormal or severe weather conditions,
including conditions and events associated with climate change,
wildfires, droughts, and other natural phenomena and natural
disasters, which affect customer sales, hydropower generation
levels, repair costs, service interruptions, liability for damage
caused by utility property, and the availability and cost of fuel
for generation plants or purchased power to serve customers; (e)
advancement of self-generation, energy storage, energy efficiency,
alternative energy sources, and other technologies that may affect
Idaho Power's sale or delivery of electric power or introduce
operational or cyber-security vulnerability to the power grid; (f)
acts or threats of terrorist incidents, other malicious acts, acts
of war, cyber-attacks, 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 such events and related litigation or
penalties; (g) the expense and risks associated with capital
expenditures for, and the permitting and construction of, utility
infrastructure that Idaho Power may be unable or unwilling to
complete or may not be deemed prudent by regulators; (h) unusual or
unanticipated changes in normal business operations, including
unusual maintenance or repairs, or the failure to successfully
implement new technology solutions; (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, climate change,
or a credit downgrade; (k) 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; (l) 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 company assets, operations, or reputation,
subject Idaho Power 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 Idaho
Power may have inadequate insurance coverage; (m) the increased
purchased power costs and operational challenges associated with
purchasing and integrating intermittent renewable energy sources
into Idaho Power's resource portfolio; (n) 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; (o) 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; (p) 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; (q) 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; (r) failure to comply with mandatory reliability and
security requirements, which may result in penalties, reputation's
harm, and operational changes; (s) 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; (t) the impacts of economic conditions, including
inflation, interest rates, 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;
(u) 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; (v)
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; (w) changes in the method for
determining LIBOR and the potential replacement of LIBOR and the
impact on interest rates for IDACORP's and Idaho Power's credit
facilities; (x) 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; (y) 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 companies' cash flows;
(z) the assumptions underlying the coal mine reclamation
obligations at Bridger Coal Company and related funding
requirements; (aa) the ability to continue to pay dividends based
on financial performance and in light of credit rating
considerations, contractual covenants and restrictions, and
regulatory limitations; (bb) Idaho Power's concentration in one
industry and one region and the lack of diversification, regional
economic condition and regional legislation and regulation; (cc)
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 third-party vendors, and the ability to adjust the
labor cost structure when necessary; and (dd) 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.