10-Q: Idaho Power Q1 2026 Earnings Up on Rate Increases

Idaho Power Company reported increased net income for the first quarter of 2026 compared to the prior year, driven by higher retail revenues and customer growth, despite a decrease in energy sales volume.

Summary

• Idaho Power Company's net income for the first quarter of 2026 was $66.7 million, an increase from $58.1 million in the same period of 2025.
• IDACORP, Inc.'s net income attributable to the company was $68.0 million, up from $59.6 million in the prior year's first quarter.
• Earnings per diluted share for IDACORP, Inc. were $1.21, an increase from $1.10 in the first quarter of 2025.
• Total operating revenues for IDACORP, Inc. were $403.4 million, down from $432.5 million in Q1 2025, primarily due to lower electric utility revenues.
• Idaho Power's retail revenues increased by $6.5 million, driven by rate increases effective January 1, 2026, and customer growth of 2.3% over the past twelve months.
• However, retail sales volumes decreased by 3% due to more moderate temperatures, impacting heating and cooling energy usage.
• Purchased power expense decreased by $9.0 million due to a 12% reduction in MWh purchased.
• Fuel expense decreased by $5.7 million, largely due to a 37% decrease in jointly-owned thermal generation.
• The company is advancing several key infrastructure projects, including solar and natural gas-fueled generating facilities, and transmission line projects like GWW and B2H.
• Idaho Power is also proceeding with the sale of its Oregon electric distribution business and certain transmission assets to OTEC, which is expected to close within one year.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, with increased net income and earnings per share driven by expected rate adjustments and customer growth, despite some weather-related headwinds in sales volume.

Positives

• Net income increased by $8.4 million for IDACORP, Inc. and $8.5 million for Idaho Power in Q1 2026 compared to Q1 2025.
• Retail revenues increased by $6.5 million due to rate increases effective January 1, 2026, following the 2025 Settlement Stipulation.
• Customer growth of 2.3% over the twelve months ended March 31, 2026, contributed $7.5 million to retail revenues.
• Significant progress on key projects, including IPUC approval for an 80 MW solar facility and a 167 MW natural gas-fueled generating capacity.
• The company continues to manage its capital structure, with leverage ratios for IDACORP and Idaho Power at 54% and 53% respectively, well within covenant limits.
• Available short-term borrowing liquidity remains strong with $100 million for IDACORP and $400 million for Idaho Power under their revolving credit facilities.

Negatives

• Total operating revenues decreased by $29.0 million to $403.4 million in Q1 2026 compared to $432.5 million in Q1 2025.
• Retail energy sales volumes decreased by 3% in Q1 2026 compared to Q1 2025, primarily due to milder weather conditions.
• Wholesale energy revenues decreased by $14.7 million due to lower volumes and prices.
• Usage per retail customer decreased operating income by $10.7 million due to more moderate temperatures reducing heating energy consumption.
• Other O&M expenses increased by $13.1 million, primarily due to wildfire mitigation program expenses and amortization of deferred costs for the Jim Bridger plant conversion.
• The company recorded losses on financial gas hedges of $26.5 million in Q1 2026, compared to $12.2 million in Q1 2025, which are largely passed through to customers via power cost adjustment mechanisms.

Risks

• Decisions or actions by the Idaho and Oregon public utilities commissions and the FERC that impact Idaho Power's ability to recover costs and earn a return on investment.
• Changes to or the elimination of Idaho Power's regulatory cost recovery mechanisms.
• Expenses and risks associated with capital expenditures and contractual obligations for utility infrastructure projects that may be delayed or experience cost increases.
• Supplier and contractor delays and failure to satisfy project quality and performance standards.
• The rapid addition of new industrial customer load and uncertainty of forecasted power usage ramp rates or volumes.
• Impacts of economic conditions, including inflation, recessionary environments, and interest rates.
• Changes in residential, commercial, irrigation, and industrial growth and demographic patterns.
• Employee workforce factors, including costs of unionization and the ability to attract and retain skilled workers.
• Changes in, failure to comply with, and costs of compliance with laws, regulations, policies, orders, federal grants, and licenses.
• Abnormal or severe weather conditions, wildfires, droughts, earthquakes, and other natural phenomena.
• Advancement and adoption of self-generation, energy storage, energy efficiency, and alternative energy sources.
• Variable hydrological conditions and over-appropriation of surface and groundwater in the Snake River Basin.
• Ability to acquire equipment, materials, fuel, power, and transmission capacity on reasonable terms and prices.
• Inability to timely obtain and the cost of obtaining and complying with required governmental permits and approvals.
• Disruptions or outages of Idaho Power's generation or transmission systems.
• Accidents, fires, explosions, infrastructure failures, and other unplanned events.
• Acts or threats of terrorism, acts of war, social unrest, cyber or physical security attacks.
• Idaho Power's concentration in one region, and the resulting exposure to regional economic conditions and legislation.
• Unaligned goals and positions with co-owners of generation and transmission assets.
• Changes in tax laws or related regulations or interpretations.
• Ability to obtain debt and equity financing or refinance existing debt when necessary and on satisfactory terms.
• Ability to enter into financial and physical commodity hedges and the failure of such strategies to work as intended.
• Changes in actuarial assumptions, interest rates, and the return on plan assets for pension and other postretirement plans.
• Remediation costs associated with planned cessation of coal-fired operations.
• Ability to continue to pay dividends and achieve target dividend payout ratios.
• Adoption of or changes in accounting policies and principles, changes in accounting estimates, and new SEC or New York Stock Exchange requirements.

Future Outlook

The company expects continued customer growth and is pursuing significant infrastructure investments to meet future energy and capacity needs. Key projects include new solar and natural gas-fueled generating facilities and transmission line expansions. The sale of the Oregon electric distribution business is expected to close within one year, subject to regulatory approvals. Management believes they have sufficient liquidity to meet capital and debt service requirements for at least the next twelve months and beyond.

Management Comments

• Management's outlook and strategy remain consistent with previous discussions, with notable developments including positive customer growth and milestones for key projects.
• The company is actively discussing and negotiating terms for potential service agreements with several additional large load customers.
• Idaho Power expects its number of customers and, to a greater extent its load, to increase in the foreseeable future.
• Management believes that existing and sustained growth in customers, load, and peak demand, along with transmission constraints, require increased investment in capacity resources, transmission, and distribution infrastructure.
• The company believes it will be able to meet capital and debt service requirements and fund corporate expenses with a combination of existing cash, operating cash flows, credit facilities, commercial paper, debt markets, and equity issuances.

Industry Context

StockSavvy.ai notes that Idaho Power's Q1 2026 results reflect typical utility sector dynamics, with revenue growth driven by regulatory rate adjustments and customer expansion, partially offset by weather-related demand fluctuations. The company's strategic investments in new generation and transmission infrastructure align with industry trends towards modernizing the grid and meeting growing energy demands, while also navigating regulatory landscapes and environmental considerations.

Comparison to Industry Standards

• Idaho Power's customer growth rate of 2.3% over the twelve months ended March 31, 2026, is a positive indicator compared to many established utilities, though specific industry benchmarks for growth vary by region and utility type.
• The company's leverage ratios of 54% (IDACORP) and 53% (Idaho Power) are within typical ranges for regulated utilities, generally considered healthy and indicative of a stable capital structure.
• The company's focus on renewable energy integration (solar facility approval) and natural gas generation aligns with the broader utility industry's transition towards a more diverse energy portfolio, balancing reliability with environmental goals.
• The ongoing investments in transmission infrastructure, such as the B2H and GWW projects, are critical for grid modernization and reliability, a common theme across the utility sector facing increased demand and distributed generation.

Legal Proceedings

• Three parties have filed complaints in the Baker County and Union County Circuit Courts challenging the OPUC's decision to uphold the B2H CPCN.
• Two parties filed complaints in Morrow County Circuit Court alleging improper processing of modifications to the Fire Protection and Suppression Plan for the GWW project; the court granted a motion to dismiss these complaints.
• Idaho Power is involved in various claims, controversies, disputes, and other contingent matters, including litigation and regulatory proceedings, in the ordinary course of business. As of the report date, the companies believe the resolution of existing claims will not have a material adverse effect on their financial statements.

Stakeholder Impact

• Shareholders: Increased net income and EPS are positive for shareholders, indicating improved profitability.
• Customers: Rate increases effective January 1, 2026, will impact customer bills, though these are tied to cost recovery and infrastructure investments. Power cost adjustment mechanisms aim to balance actual costs with customer rates.
• Employees: Continued investment in infrastructure and projects may lead to job creation and stability. Pension plan contributions are being managed to balance regulatory collection and funding obligations.
• Suppliers and Contractors: Ongoing infrastructure projects will create demand for goods and services.
• Creditors: The company's strong liquidity and manageable leverage ratios suggest continued ability to meet debt obligations.

Next Steps

• Continue to operate the Oregon electric distribution business and applicable transmission assets in the ordinary course of business until the sale to OTEC closes.
• Provide certain transition services to OTEC for a limited post-closing period.
• Continue to advance key infrastructure projects, including solar and natural gas-fueled generating facilities, and transmission line projects.
• Prepare for and file the 2027 Integrated Resource Plan (IRP) in the summer of 2027.
• Continue to monitor and comply with environmental regulations and EPA proposals.
• Seek regulatory approval for pending rate and revenue change applications, including PCA and FCA updates.
• Complete the relicensing of the Hells Canyon Complex (HCC) and American Falls hydropower facilities.
• Potentially use original issuances of shares for the IDACORP, Inc. Dividend Reinvestment and Stock Purchase Plan and the Idaho Power Company Employee Savings Plan.

Key Dates

Recommendation

The filing shows expected performance with increased net income driven by rate adjustments and customer growth, which is positive. However, the decrease in energy sales volume due to weather and increased O&M expenses present some headwinds. The company's significant capital expenditure plans and ongoing regulatory processes warrant a 'hold' recommendation, suggesting investors should monitor future developments and regulatory outcomes before making a stronger conviction decision.

Keywords

Idaho Power, IDACORP, Form 10-Q, Quarterly Report, Financial Statements, Electric Utility, Regulatory Matters, Rate Case, Power Cost Adjustment, Capital Expenditures, Customer Growth, Energy Sales, Wildfire Mitigation, Transmission Projects, Oregon Sale