10-Q: IDACORP and Idaho Power Report Third Quarter 2024 Results, Highlighted by Customer Growth and Regulatory Updates

IDACORP and Idaho Power's third quarter results show increased net income driven by customer growth, rate adjustments, and regulatory settlements, alongside rising operating expenses.

Summary

• IDACORP's net income for the third quarter of 2024 increased to $113.6 million, up from $105.3 million in the same period last year.
• This increase was primarily driven by Idaho Power's improved performance, which saw a rise in net income to $111.1 million from $103 million.
• The growth in retail revenues per MWh, net of power supply costs, contributed significantly, increasing operating income by $19.3 million.
• Customer growth also played a role, adding $7.4 million to operating income, with a 2.6% increase in customers over the past year.
• Usage per retail customer increased operating income by $3.1 million due to higher temperatures and lower precipitation.
• However, total other operations and maintenance expenses rose by $20.3 million, partially due to increased pension and wildfire mitigation costs.
• Depreciation expense also increased by $5.6 million due to more plant-in-service.
• Non-operating expenses decreased by $2.4 million due to higher AFUDC and interest income, offset by increased interest expense and decreased earnings from the BCC investment.
• Additional ADITC amortization of $2.5 million was recorded, based on the company's estimate of full-year 2024 Idaho ROE.
• For the first nine months of 2024, IDACORP's net income reached $251.3 million, compared to $229.9 million in the same period of 2023.
• Idaho Power's net income for the first nine months of 2024 was $245.8 million, up from $225.8 million in 2023.
• The company's capital expenditure estimates for 2024-2028 have increased to a range of $5.4 billion to $6.1 billion.
• Idaho Power's preliminary load forecast for its 2025 IRP includes a 7.7% annual growth rate in retail sales volumes over the 2025-2029 period.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with strong customer growth and increased earnings, but also highlights significant challenges and risks related to regulatory approvals, environmental compliance, and capital expenditures. The sentiment is cautiously optimistic.

Positives

• Net income for both IDACORP and Idaho Power increased in the third quarter and first nine months of 2024.
• Retail revenues per MWh increased, boosting operating income.
• Customer growth continues to be strong, contributing to increased revenues.
• Usage per customer increased due to weather conditions, further driving revenue growth.
• Non-operating expenses decreased due to higher AFUDC and interest income.
• The company is actively managing its capital structure and liquidity.
• The company has secured new power purchase agreements and is investing in battery storage and renewable energy.

Negatives

• Total other O&M expenses increased significantly due to higher pension and wildfire mitigation costs.
• Depreciation expense increased due to more plant-in-service.
• Earnings from the BCC investment decreased.
• Transmission wheeling-related revenues decreased due to lower power prices.
• The company faces potential challenges related to regulatory approvals and environmental compliance.

Risks

• Regulatory decisions by the IPUC, OPUC, and FERC could impact cost recovery and return on investment.
• Changes to regulatory cost recovery mechanisms could affect financial performance.
• Capital expenditures for infrastructure projects may be delayed or deemed imprudent by regulators.
• Supplier and contractor delays could impact project timelines and costs.
• Rapid addition of new industrial and commercial load could strain power supply.
• Economic conditions, including inflation and interest rates, could impact operations and investments.
• Changes in laws, regulations, and policies could increase compliance costs.
• Severe weather conditions, wildfires, and droughts could affect customer sales and power generation.
• Advancement of self-generation and alternative energy sources could reduce electricity sales.
• Variable hydrological conditions could impact hydropower generation.
• Disruptions to generation or transmission systems could increase costs and reduce revenues.
• Acts of terrorism, cyber attacks, and other malicious acts could disrupt operations.
• Changes in tax laws could affect financial performance.
• Inability to obtain required governmental permits and approvals could delay projects.
• Difficulty in obtaining debt and equity financing on satisfactory terms could impact capital structure.
• Changes in accounting policies and principles could affect financial reporting.
• Changing market dynamics due to the emergence of day ahead or other energy and transmission markets in the western United States.

Future Outlook

Idaho Power expects continued customer growth and load growth, and is planning for significant capital expenditures to meet future energy and capacity needs. The company is also focused on timely cost recovery through regulatory filings and innovative mechanisms.

Management Comments

• Management's outlook and strategy remain consistent with the 2023 Annual Report, with updates reflecting recent developments.
• Idaho Power continues to focus on timely recovery of costs and earning a reasonable return on investment.
• The company expects positive customer growth in its service area.
• Idaho Power is preparing its 2025 IRP, which includes a preliminary 7.7% annual growth rate in retail sales volumes over the 2025-2029 time period.
• The board of directors approved an increase in the regular quarterly cash dividend on IDACORP's common stock from $0.83 per share to $0.86 per share.

Industry Context

The report reflects the ongoing trends in the utility industry, including the need for significant infrastructure investments to meet growing demand, the increasing focus on renewable energy and battery storage, and the challenges of managing costs and regulatory compliance. The company's focus on customer growth and load management aligns with industry trends.

Comparison to Industry Standards

• The company's customer growth rate of 2.6% is strong compared to the national average for utilities.
• The company's capital expenditure plans are significant, reflecting the industry-wide need for infrastructure upgrades and renewable energy investments.
• The company's focus on regulatory mechanisms and cost recovery is consistent with industry best practices.
• The company's reliance on hydropower is a unique characteristic compared to other utilities that rely more heavily on fossil fuels.
• The company's efforts to manage wildfire risk are in line with the increasing focus on this issue in the western United States.
• The company's financial performance is generally in line with other regulated utilities, with a focus on stable earnings and dividend payouts.

Stakeholder Impact

• Shareholders will benefit from increased earnings and dividends.
• Customers may experience rate adjustments due to regulatory proceedings and power cost adjustments.
• Employees may be affected by changes in pension and benefit plans.
• Suppliers and contractors may be impacted by changes in capital expenditure plans.
• Creditors may be affected by changes in the company's debt and credit ratings.

Next Steps

• Idaho Power will continue to pursue regulatory approvals for its rate cases and infrastructure projects.
• The company will continue to monitor and manage its power supply costs and hedging programs.
• Idaho Power will continue to work on its 2025 IRP and resource procurement filings.
• The company will continue to work on the relicensing of its hydropower facilities.
• Idaho Power will continue to implement its wildfire mitigation plan.
• The company will continue to monitor and manage its financial performance and capital structure.

Key Dates

Keywords

Idaho Power, IDACORP, Utilities, Energy, Power Generation, Rate Case, Regulatory, Financial Results, Capital Expenditures, Renewable Energy, Transmission, Hydropower, Customer Growth, Operating Expenses, Net Income, Earnings Per Share, Power Cost Adjustment, Wildfire Mitigation, Pension Costs, AFUDC, ADITC