BOISE, Idaho, Oct. 29,
2020 /PRNewswire/ -- IDACORP, Inc. (NYSE: IDA) reported third
quarter 2020 net income attributable to IDACORP of $102.0 million, or $2.02 per diluted share, compared with
$89.9 million, or $1.78 per diluted share, in the third quarter of
2019. For the first nine months of 2020, IDACORP reported net
income attributable to IDACORP of $199.9
million, or $3.95 per diluted
share, compared with $185.7 million,
or $3.68 per diluted share, in the
first nine months of 2019.
"Strong customer growth at Idaho Power continues to be a
significant driver of IDACORP's success, increasing 2.6% over the
past twelve months. This growth, combined with higher
transmission-related revenues resulting from wholesale market
conditions, more than offset decreased commercial customer sales
related to COVID-19," said IDACORP President and Chief Executive
Officer Lisa Grow. "In addition, our
company's continued focused efforts to manage operating expenses
helped earnings this quarter. Results through the first nine months
of this year have set us up for a solid finish to a challenging
2020.
"As I stated last quarter, I am immensely proud of our
employees, who are honoring our commitment to safely provide
reliable energy to our communities in these unprecedented
times."
IDACORP tightened upward its previously reported full-year 2020
earnings guidance to the range of $4.55 to $4.65 per
diluted share and is also reaffirming that Idaho Power does not
expect to utilize any of the additional tax credits available under
its Idaho earnings support
regulatory mechanism nor to share revenue with Idaho customers in 2020. This guidance assumes
normal weather conditions over the balance of the year and includes
assumed levels of impact from COVID-19 as described in the
paragraph below, which also acknowledges circumstances could change
and impact results going forward.
Performance Summary
A summary of financial highlights for the periods ended
September 30, 2020 and 2019 is as follows (in thousands,
except per share amounts):
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
attributable to IDACORP, Inc.
|
|
$
|
102,031
|
|
|
$
|
89,876
|
|
|
$
|
199,910
|
|
|
$
|
185,718
|
|
Average outstanding
shares – diluted (000's)
|
|
50,576
|
|
|
50,558
|
|
|
50,554
|
|
|
50,528
|
|
IDACORP, Inc.
earnings per diluted share
|
|
$
|
2.02
|
|
|
$
|
1.78
|
|
|
$
|
3.95
|
|
|
$
|
3.68
|
|
The table below provides a reconciliation of net income
attributable to IDACORP for the three and nine months ended
September 30, 2020, from the same period in 2019 (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, 2019
|
|
|
|
$
|
89.9
|
|
|
|
|
$
|
185.7
|
|
Increase
(decrease) in Idaho Power net income:
|
|
|
|
|
|
|
|
|
Customer growth, net
of associated power supply costs and power cost adjustment
mechanisms
|
|
3.9
|
|
|
|
|
10.8
|
|
|
|
Usage per retail
customer, net of associated power supply costs and power cost
adjustment mechanisms
|
|
0.3
|
|
|
|
|
0.3
|
|
|
|
Idaho fixed cost
adjustment (FCA) revenues
|
|
(1.6)
|
|
|
|
|
(0.1)
|
|
|
|
Retail revenues per
megawatt-hour (MWh), net of associated power supply costs and power
cost adjustment mechanisms
|
|
(0.2)
|
|
|
|
|
(3.2)
|
|
|
|
Transmission
wheeling-related revenues
|
|
4.4
|
|
|
|
|
(2.0)
|
|
|
|
Other operations and
maintenance (O&M) expenses
|
|
4.4
|
|
|
|
|
7.3
|
|
|
|
Other changes in
operating revenues and expenses, net
|
|
(0.4)
|
|
|
|
|
(1.3)
|
|
|
|
Increase in Idaho
Power operating income
|
|
10.8
|
|
|
|
|
11.8
|
|
|
|
Non-operating income
and expenses
|
|
(0.8)
|
|
|
|
|
0.7
|
|
|
|
Income tax
expense
|
|
2.4
|
|
|
|
|
2.8
|
|
|
|
Total increase in
Idaho Power net income
|
|
|
|
12.4
|
|
|
|
|
15.3
|
|
Other IDACORP
changes (net of tax)
|
|
|
|
(0.3)
|
|
|
|
|
(1.1)
|
|
Net income
attributable to IDACORP, Inc. - September 30, 2020
|
|
|
|
$
|
102.0
|
|
|
|
|
$
|
199.9
|
|
Net Income - Third Quarter 2020
IDACORP's net income increased $12.1
million for the third quarter of 2020 compared with the
third quarter of 2019, primarily due to higher net income at Idaho
Power. Customer growth increased operating income by $3.9 million in the third quarter of 2020
compared with the third quarter of 2019, as the number of Idaho
Power customers grew by approximately 14,700, or 2.6 percent,
during the twelve months ended September 30,
2020. Higher sales volumes on a per-customer basis increased
operating income by $0.3 million in
the third quarter of 2020 compared with the third quarter of 2019,
as higher usage per residential and irrigation customer was mostly
offset by decreased usage per commercial customer. Residential
customers used more energy for cooling due to warmer weather in
Idaho Power's service area and residential customers spending more
time at home due to the COVID-19 public health crisis, which
increased usage per residential customer by 3 percent in the third
quarter of 2020 compared with the third quarter of 2019. Also, less
precipitation in Idaho Power's service area during the third
quarter of 2020 compared with the same quarter in 2019 led to a one
percent increase in usage per irrigation customer for those
periods. A decrease of 3 percent in usage per commercial customer
in the third quarter of 2020 compared with the third quarter of
2019 was largely due to the economic impacts of COVID-19. The
increase in sales volumes per residential customer was partially
offset by the FCA mechanism (applicable to residential and small
general service customers), which decreased revenues in the third
quarter of 2020 by $1.6 million as
compared with the third quarter of 2019.
During the third quarter of 2020, transmission wheeling-related
revenues increased $4.4 million
compared with the third quarter of 2019. Warmer weather in the
southwest U.S. and California led
to higher wholesale energy prices in those areas that increased
wholesale energy market activity and wheeling volumes in the third
quarter of 2020 compared with the third quarter of 2019. The
increase in wheeling volumes was partially offset by an approximate
13 percent decrease in Idaho Power's open access transmission
tariff rates during the period from October
1, 2019, to September 30,
2020, compared with the rates in effect from October 1, 2018, to September 30, 2019.
Other O&M expenses were $4.4
million lower in the third quarter of 2020 compared with the
third quarter of 2019, partially due to Idaho Power's December 2019 exit from unit 1 of its
jointly-owned North Valmy coal-fired power plant (North Valmy).
Also, other O&M expenses decreased in the third quarter of 2020
compared with the third quarter of 2019 as a result of a decrease
in labor-related costs from lower performance-based variable
compensation accruals.
The decrease in income tax expense for the third quarter of
2020, compared with the third quarter of 2019, was primarily due to
the tax deduction for bond redemption costs incurred in the third
quarter of 2020 and other plant-related income tax return
adjustments, partially offset by statutory taxes on greater 2020
pre-tax income and lower excess deferred income tax
reversal.
Net Income - Year-to-Date 2020
IDACORP's net income increased $14.2
million for the first nine months of 2020 compared with the
first nine months of 2019, primarily due to higher net income at
Idaho Power. Customer growth increased operating income by
$10.8 million in the first nine
months of 2020 compared with the first nine months of 2019. Higher
sales volumes on a per-customer basis increased operating income by
$0.3 million in the first nine months
of 2020 compared with the first nine months of 2019, as higher
usage per irrigation and residential customer was offset by lower
usage per commercial customer largely due to the impacts of the
COVID-19 health crisis. Less precipitation in the Idaho Power
service area during the first nine months of 2020 compared with the
same period in 2019 contributed to a 10 percent increase in usage
per irrigation customer. Also, usage per residential customer
increased by 1 percent during the first nine months of 2020
compared with the first nine months of 2019. Compared with the same
periods in 2019, an increase in usage by residential customer for
cooling purposes in the second and third quarters of 2020 due to
warmer weather and COVID-19 was partially offset by lower usage
from the first quarter of 2020 caused by more moderate weather,
which resulted in residential customers using less energy for
heating during that period.
The net decrease in retail revenues per MWh decreased operating
income by $3.2 million due to Idaho
Power's share of higher net power supply costs in the first nine
months of 2020 compared with the first nine months of 2019. The
Idaho-jurisdiction PCA mechanism
includes a cost or benefit ratio that allocates the deviations in
certain net power supply expenses between customers (95 percent)
and Idaho Power (5 percent). In the first nine months of 2019, net
power supply expenses were reduced by significant wholesale energy
sales. Higher wholesale energy prices during the first nine months
of 2019 led to greater wholesale energy sales by Idaho Power, of
which 95 percent benefited customers and 5 percent benefited Idaho
Power under the PCA mechanism and were the primary cause of the
variance in net retail revenues per MWh between the comparison
periods.
During the first nine months of 2020, transmission
wheeling-related revenues decreased $2.0
million compared with the first nine months of 2019, due
mostly to Idaho Power's open access transmission tariff rates
decreasing approximately 13 percent during the period from
October 1, 2019, to September 30, 2020, as compared with the rates in
effect from October 1, 2018, to
September 30, 2019, and to a lesser
extent due to lower transmission loss settlement rates in the first
nine months of 2020 compared with the first nine months of 2019.
These rate decreases were offset partially by an increase in
wheeling volumes mostly from the higher regional wholesale market
activity during the third quarter of 2020 noted above.
Other O&M expenses were $7.3
million lower in the first nine months of 2020 compared with
the first nine months of 2019, primarily due to the temporary
deferral of certain maintenance projects at Idaho Power's
jointly-owned thermal generation plants. The timing of these
projects is discretionary, and Idaho Power expects these projects
to be completed in 2021. Also, other O&M expenses decreased in
the first nine months of 2020 compared with the first nine months
of 2019 as a result of Idaho Power's December 2019 exit from participation in unit 1
of its North Valmy plant, and lower labor-related costs, as
described above. In July 2020, the
IPUC issued an order granting Idaho Power the authority to defer
unanticipated, emergency-related expenses due to the COVID-19
public health crisis, net of any cost savings, for possible
recovery through future rates. As of September 30, 2020, Idaho Power had recorded a
$0.7 million regulatory asset for its
estimate of such costs, including higher bad debt expense, net of
estimated savings in vehicle fuel, employee travel, and
training.
The decrease in income tax expense for the nine months ended
September 30, 2020, compared with the
same period in 2019, was primarily due to the tax deduction for
bond redemption costs incurred in the third quarter of 2020 and
other plant-related income tax return adjustments, partially offset
by statutory taxes on greater 2020 pre-tax income and lower excess
deferred income tax reversal.
2020 Annual Earnings Guidance and Key Operating and Financial
Metrics
IDACORP is tightening its earnings guidance estimate upward 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):
|
|
Current(1)
|
|
Previous(2)
|
IDACORP
Earnings Guidance (per share)
|
|
$ 4.55 – $
4.65
|
|
$ 4.45 – $
4.65
|
Idaho Power
Additional Amortization of ADITCs
|
|
No change
|
|
None
|
Idaho Power Revenue
Sharing with Customers
|
|
None
|
|
N/A
|
Idaho Power Operating
& Maintenance Expense
|
|
$ 345 – $
355
|
|
$ 350 – $
360
|
Idaho Power
Capital Expenditures, Excluding Allowance for Funds Used During
Construction
|
|
No change
|
|
$ 300 – $
310
|
Idaho Power Hydropower
Generation (MWh)
|
|
6.5 – 7.0
|
|
6.5 – 7.5
|
(1) As of October 29, 2020.
|
(2)
As of July 30, 2020, the date of filing IDACORP's and Idaho Power's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2020.
|
To-date, Idaho Power has not experienced significant disruption
to its business operations, critical supply
chain shortages, or major declines in customer usage related to
COVID-19, with the exception of decreases in commercial and
industrial customer usage. The Governor of the State of Idaho has been executing on the
State's plan to lift restrictions in stages since May 2020, and the government restrictions have
since been more targeted to certain counties and cities in an
effort to contain the spread of the virus. Idaho Power has taken a
number of actions to protect its employees, customers, operations,
and financial condition and liquidity in light of COVID-19.
However, if circumstances associated with COVID-19 were to
deteriorate more than Idaho Power anticipates in the company's
service area or nationally, resulting in increased or prolonged
adverse economic impacts on our customers or important suppliers,
Idaho Power could experience more substantial load declines,
increases in uncollectible accounts, and supply chain challenges,
which could affect financial projections and results and could
require Idaho Power to use additional tax credits available under
its Idaho earnings support
mechanism to achieve earnings in the range set forth above.
Although it is difficult to predict the long-term impact of
weakened and evolving economic conditions due to the pandemic on
Idaho Power's customers, and the associated potential impact to the
earnings guidance range, as of today Idaho Power does not expect to
utilize in 2020 any of the additional tax credits.
More detailed information on Idaho Power's actions in response
to COVID-19, as well as operational and financial risks associated
with COVID-19, are described in IDACORP's and Idaho Power's
Quarterly Report on Form 10-Q filed today with the U.S. Securities
and Exchange Commission, which is also available for review on
IDACORP's website at www.idacorpinc.com.
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. 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 580,000 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 regulatory cost
recovery mechanisms; (c) the impacts of the COVID-19 pandemic on
the global and regional economy and on Idaho Power's employees,
customers, contractors, and suppliers, including on loads and
revenues, uncollectible accounts, transmission revenues, and other
aspects of the economy and the companies' business; (d) 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;
(e) abnormal or severe weather conditions, including conditions and
events associated with climate change, wildfires, droughts,
earthquakes, 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; (f)
advancement of self-generation, energy storage, energy efficiency,
alternative energy sources, and other technologies that may reduce
Idaho Power's sale or delivery of electric power or create power
reliability challenges; (g) acts or threats of terrorist incidents,
other malicious acts, social unrest, acts of war, cyber-attacks,
the companies' failure to secure data or to comply with privacy
laws or regulations, security breaches, and the disruption or
damage to the companies' business, operations, or reputation
resulting from such events and related litigation or penalties; (h)
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 for cost recovery; (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 or lease transmission 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, 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, and the availability of tax credits; (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, reputational
harm, and operational changes; (s) 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; (t) 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; (u) 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; (v) 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; (w) changes in actuarial assumptions, changes in
interest rates, and the actual and projected 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; (x) the
assumptions underlying the coal mine reclamation obligations at
Bridger Coal Company and related funding requirements, and the
remediation costs associated with planned exits from participation
in Idaho Power's co-owned coal plants; (y) 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; (z) Idaho Power's
concentration in one industry and one region and the lack of
diversification, and the resulting exposure to regional economic
conditions and regional legislation and regulation; (aa) 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 (bb) 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.