BOISE, Idaho, Aug. 2, 2018
/PRNewswire/ -- IDACORP, Inc. (NYSE: IDA) reported second
quarter 2018 net income attributable to IDACORP of $62.3 million, or $1.23 per diluted share, compared with
$49.8 million, or $0.99 per diluted share, in the second quarter of
2017. For the first six months of 2018, IDACORP reported net income
attributable to IDACORP of $98.4
million, or $1.95 per diluted
share, compared with $82.9 million,
or $1.65 per diluted share, in the
first six months of 2017.
"Continued strong customer growth combined with higher overall
usage per customer contributed to increased earnings over last
year's second quarter," said Darrel
Anderson, IDACORP's President and Chief Executive Officer.
"Constructive outcomes from several recent regulatory proceedings,
including the extension of the accumulated deferred investment tax
credit earnings support and sharing mechanism, provides greater
future earnings stability, which is good for both the company and
our customers.
"IDACORP is increasing and tightening its full year 2018
earnings guidance to the range of $4.20 to $4.30 per
diluted share, and we no longer project Idaho Power will use
additional tax credit amortization under the Idaho regulatory settlement this year."
Performance Summary
A summary of financial highlights for the periods ended
June 30, 2018 and 2017 is as follows (in thousands, except per
share amounts):
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net income
attributable to IDACORP, Inc.
|
|
$
|
62,288
|
|
|
$
|
49,831
|
|
|
$
|
98,430
|
|
|
$
|
82,933
|
|
Average outstanding
shares – diluted (000's)
|
|
50,481
|
|
|
50,407
|
|
|
50,472
|
|
|
50,402
|
|
IDACORP, Inc.
earnings per diluted share
|
|
$
|
1.23
|
|
|
$
|
0.99
|
|
|
$
|
1.95
|
|
|
$
|
1.65
|
|
The table below provides a reconciliation of net income
attributable to IDACORP for the three and six months ended
June 30, 2018, from the same periods in 2017 (items are in
millions and are before related income tax impact unless otherwise
noted).
|
|
Three months
ended
|
|
Six months
ended
|
Net income
attributable to IDACORP, Inc. - June 30, 2017
|
|
|
|
$
|
49.8
|
|
|
|
$
|
82.9
|
Increase
(decrease) in Idaho Power net income:
|
|
|
|
|
|
|
|
|
Customer growth, net
of associated power supply costs and power cost adjustment
mechanisms
|
|
1.8
|
|
|
|
4.2
|
|
|
Usage per retail
customer, net of associated power supply costs and power cost
adjustment mechanisms
|
|
4.7
|
|
|
|
(6.9)
|
|
|
Idaho fixed cost
adjustment (FCA) revenues
|
|
2.3
|
|
|
|
11.0
|
|
|
Retail revenues per
megawatt-hour (MWh), net of associated power supply costs and power
cost adjustment mechanisms
|
|
(6.8)
|
|
|
|
(9.4)
|
|
|
Transmission services
(wheeling) and other revenues
|
|
1.3
|
|
|
|
4.0
|
|
|
Other operations and
maintenance expense
|
|
(5.6)
|
|
|
|
(4.8)
|
|
|
Depreciation
expense
|
|
3.9
|
|
|
|
0.6
|
|
|
Other changes in
operating revenues and expenses, net
|
|
(0.7)
|
|
|
|
(1.1)
|
|
|
Increase (decrease)
in Idaho Power operating income
|
|
0.9
|
|
|
|
(2.4)
|
|
|
Earnings of
equity-method investments
|
|
1.0
|
|
|
|
3.9
|
|
|
Non-operating income
and expenses
|
|
0.7
|
|
|
|
1.2
|
|
|
Additional
accumulated deferred investment tax credits (ADITC)
amortization
|
|
1.4
|
|
|
|
—
|
|
|
Tax benefit from
make-whole premium for early bond redemption
|
|
1.3
|
|
|
|
1.3
|
|
|
Income tax expense
(excluding additional ADITC amortization and tax benefit from early
bond redemption)
|
|
7.0
|
|
|
|
11.6
|
|
|
Total increase in
Idaho Power net income
|
|
|
|
12.3
|
|
|
|
15.6
|
Other
IDACORP changes (net of tax)
|
|
|
|
0.2
|
|
|
|
(0.1)
|
Net income
attributable to IDACORP, Inc. - June 30, 2018
|
|
|
|
$
|
62.3
|
|
|
|
$
|
98.4
|
Net Income - Second Quarter 2018
IDACORP's net income increased $12.5
million for the second quarter of 2018 compared with the
second quarter of 2017, primarily due to higher net income at Idaho
Power.
Customer growth increased operating income by $1.8 million in the second quarter of 2018
compared with the second quarter of 2017, as the number of Idaho
Power customers grew by 2.2 percent during the twelve months ended
June 30, 2018. Sales volumes on a
per-customer basis also increased operating income by $4.7 million in the second quarter of 2018
compared with the second quarter of 2017. Precipitation in Idaho
Power's service area was near normal in the second quarter of 2018,
but was significantly less than precipitation in the second quarter
of 2017. This resulted in a 15 percent increase in usage per
agricultural irrigation customer, who use electricity to operate
irrigation pumps. The increase in sales volumes to irrigation
customers was partially offset by a decrease in usage per
residential customer as milder temperatures in the second quarter
of 2018 compared with the second quarter of 2017 caused residential
customers to use less electricity for cooling and heating. The
decrease in residential sales volumes was partially offset by the
FCA mechanism, which increased revenues by $2.3 million during the second quarter of 2018
compared with the second quarter of 2017.
The net decrease in retail revenues per MWh decreased operating
income by $6.8 million in the second
quarter of 2018 compared with the second quarter of 2017. The
settlement stipulations approved by the Idaho Public Utilities
Commission (IPUC) and Public Utility Commission of Oregon (OPUC) during the second quarter of
2018 relating to recent income tax reform, reduced revenues in the
second quarter of 2018. In the second quarter of 2017, the IPUC and
OPUC each approved settlement stipulations related to Idaho Power's
plan to end its participation in coal-fired operations at Idaho
Power's jointly-owned North Valmy coal-fired power plant (Valmy
Plant) by the end of 2025. The Valmy Plant settlement stipulations
provided for an accrual of six months of the increase in retail
revenues, depreciation expense, and associated income tax expense
in the second quarter of 2017, resulting in a decrease in these
items in the second quarter of 2018 compared with the same period
in 2017.
Other operating and maintenance (O&M) expenses were
$5.6 million higher in the second
quarter of 2018 compared with the second quarter of 2017. As
provided by the settlement stipulation approved by the IPUC related
to income tax reform, O&M expenses in the second quarter of
2018 included $1.1 million of
non-cash amortization expense of regulatory deferrals that would
otherwise be a future liability of Idaho customers. Also, transmission and
distribution asset maintenance expense increased $0.9 million in the second quarter of 2018
compared with 2017 due to higher maintenance service costs. Labor
and benefit costs increased $3.1
million, primarily related to the timing of accruals for
variable employee-related costs which resulted in earlier
recognition of expense in the second quarter of 2018 compared with
2017.
Depreciation expense was $3.9
million lower in the second quarter of 2018 compared with
the second quarter of 2017, due mostly to the effect of recognizing
six months of the accelerated depreciation during the second
quarter of 2017 as provided by the 2017 Valmy Plant settlement
stipulation described above. This decrease was partially offset by
higher depreciation expense from an increase in electric plant in
service.
Idaho Power income tax expense, excluding additional ADITC
amortization, and the $1.3 million
flow-through benefit of tax deductible make-whole premiums that
Idaho Power paid in connection with the early redemption of
long-term debt in April 2018,
decreased $7.0 million in the second
quarter of 2018 compared with the second quarter of 2017, due
primarily to the lower federal and state statutory income tax rates
resulting from income tax reform. In addition, the Valmy Plant
settlement stipulation described above increased income tax expense
in the second quarter of 2017. Idaho Power reversed $0.5 million of previously recorded additional
ADITC amortization under its Idaho
regulatory settlement stipulation during the second quarter of
2018, compared with a reversal of $1.9
million during the second quarter of 2017. Based on Idaho
Power's current expectations of full-year 2018 results, Idaho Power
does not expect to record additional ADITC amortization in
2018.
Net Income - Year-to-Date 2018
IDACORP's net income increased $15.5
million for the first half of 2018 compared with the same
period in 2017, primarily due to higher net income at Idaho Power.
Customer growth added $4.2 million to
Idaho Power operating income, compared with the first half of 2017.
Lower usage per residential customer in the first six months of
2018 reduced operating income by $6.9
million, due primarily to milder temperatures compared with
the first six months of 2017. The lower residential customer usage
was partially offset by higher usage per irrigation customer in the
second quarter of 2018, due to lower precipitation, compared with
the same period in 2017. However, due to the lower usage by
residential customers, the FCA mechanism added $11.0 million to operating income during the
first six months of 2018, compared with the first six months of
2017.
The net decrease in retail revenues per MWh decreased operating
income by $9.4 million in the first
six months of 2018 compared with the same period in 2017. The
settlement stipulations approved by the IPUC and OPUC during the
second quarter of 2018 relating to recent income tax reform reduced
revenue in the first six months of 2018.
During the first six months of 2018, Idaho Power benefited from
a $4.0 million increase in
third-party use of electric property, wheeling, and other revenue,
compared with the first six months of 2017. This change was largely
due to an increase in Idaho Power's open access transmission tariff
rates that became effective in October
2017.
Other O&M expenses were $4.8
million higher in the first six months of 2018 compared with
the first six months of 2017. As noted above, related to recent
income tax reform regulatory settlements, O&M expenses in the
first six months of 2018 included $1.1
million of non-cash amortization expense of regulatory
deferrals that would otherwise be a future liability of
Idaho customers. Also,
transmission and distribution asset maintenance expense increased
$2.0 million in the second quarter of
2018 compared with the first half of 2017 due to higher maintenance
service costs. Labor and benefit costs increased $1.7 million primarily related to the timing of
accruals for variable employee-related costs, which resulted in
earlier recognition of expense in the first six months of 2018
compared with 2017.
Idaho Power's income tax expense, excluding the $1.3 million flow-through benefit of tax
deductible make-whole premiums that Idaho Power paid in connection
with the early redemption of long-term debt in April 2018, was $11.6
million lower during the first six months of 2018 compared
with the first six months of 2017, due mostly to the lower federal
and state statutory income tax rates resulting from income tax
reform.
2018 Annual Earnings Guidance and Key Operating and Financial
Metrics
IDACORP is increasing and tightening its earnings guidance estimate
for 2018. The 2018 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)
|
|
$4.20-$4.30
|
|
$4.10-$4.25
|
Idaho Power Operating
& Maintenance Expense
|
|
No Change
|
|
$345-$355
|
Idaho Power
Additional Amortization of ADITC
|
|
None
|
|
Less than
$5
|
Idaho Power Capital
Expenditures (excluding allowance for funds used during
construction)
|
|
No Change
|
|
$280-$290
|
Idaho Power
Hydroelectric Generation (MWh)
|
|
8.0-9.0
|
|
7.5-9.5
|
(1) As of
August 2, 2018.
|
(2) As of
May 3, 2018, the date of filing IDACORP's and Idaho Power's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2018.
|
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 550,000 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, which 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 assets 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 or
new 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, authorized regulatory 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, financial soundness of counterparties and suppliers, and the
collection of receivables; (e) unseasonable or severe weather
conditions, wildfires, drought, and other natural phenomena and
natural disasters, including climate change, which affect customer
demand, hydroelectric generation levels, repair costs, liability
for damage caused by utility property, and the availability and
cost of fuel for generation plants or purchased power to serve
customers; (f) advancement of self-generation or energy efficiency
technologies that reduce loads or reduce Idaho Power's sale of
electric power; (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 resulting increased costs through rates; (i) variable
hydrological conditions and/or over-appropriation of surface and
groundwater in the Snake River Basin, which may impact the amount
of power generated by Idaho Power's hydroelectric 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 at or caused by
Idaho Power's facilities or infrastructure), explosions, and
mechanical breakdowns that may occur while operating and
maintaining Idaho Power's 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; (l) the increased 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 system that 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 capital markets, increase borrowing
costs, and would 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; (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 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 hydroelectric facilities; (v) the cost and
outcome of litigation, dispute resolution, and regulatory
proceedings, and the ability to recover those costs or the costs of
operational changes through insurance or rates, or from third
parties; (w) the failure of information systems or the failure to
secure data, failure to comply with privacy laws or regulations,
security breaches, or the direct or indirect effect on the
companies' business, operations, or reputation resulting from cyber
attacks or related litigation, terrorist incidents or the threat of
terrorist incidents, 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.
View original content with
multimedia:http://www.prnewswire.com/news-releases/idacorp-inc-announces-second-quarter-results-increases-2018-earnings-guidance-300690742.html
SOURCE IDACORP, Inc.