IDACORP, Inc. — 2023 Form 10-K
Business context and reporting period. This combined annual filing covers IDACORP, Inc. and Idaho Power Company for the year ended December 31, 2023—not a standalone fourth-quarter report. IDACORP is a holding company whose results are driven primarily by Idaho Power, a regulated electric utility serving approximately 633,000 customers in southern Idaho and eastern Oregon.
Key financial results
Amounts below are for IDACORP consolidated unless otherwise noted; dollar amounts are in millions except per-share data.
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Operating revenue | $1,766.4 | $1,644.0 | +7.4% |
| Operating income | $313.5 | $327.2 | -4.2% |
| Net income attributable to IDACORP | $261.2 | $259.0 | +0.9% |
| Diluted earnings per share | $5.14 | $5.11 | +0.6% |
| Operating cash flow | $267.0 | $351.3 | -24.0% |
| Capital expenditures, cash basis | $591 | $419 | +$172 |
| Cash and cash equivalents at year-end | $327.4 | $177.6 | +$149.9 |
| Long-term debt, including current maturities | $2,825.6 | $2,194.1 | +$631.4 |
Operating margin declined to approximately 17.7% from 19.9%; net margin was approximately 14.8% versus 15.8%. Net income grew for a 16th consecutive year. Idaho Power’s net income was $256.8 million, up from $254.9 million.
Liquidity and financing. Operating cash flow fell despite modest earnings growth, primarily reflecting working-capital timing and other cash-flow movements. Investing cash outflow was $589.9 million; cash capital spending substantially exceeded operating cash generation. Financing cash inflow was $472.8 million. Idaho Power issued $872 million of first-mortgage bonds during 2023 and repaid $225 million of debt. At year-end, IDACORP and Idaho Power had $100 million and $400 million revolving credit facilities, respectively; neither had commercial paper outstanding. Reported debt-to-capital ratios for covenant purposes were 50% and 51%, respectively.
Material changes and drivers versus 2022
- Revenue growth reflected higher retail rates, customer growth of 2.4%, FCA revenue, and increased derivative-related revenue. Retail MWh sales declined 2%, largely because milder temperatures and greater precipitation reduced residential, commercial, and irrigation usage per customer.
- Operating income decreased as lower customer usage and higher depreciation outweighed customer growth, FCA revenue, and rate effects. Customer growth contributed $15.7 million to Idaho Power operating income; lower usage per customer reduced it by $31.3 million; and FCA revenues added $15.1 million versus 2022.
- Purchased-power expense fell $42.8 million to $501.5 million, mainly due to lower wholesale market prices. Fuel expense rose $45.2 million to $275.4 million as coal and natural-gas generation costs per MWh increased, despite lower coal generation.
- Hydropower generation rose to 6.5 million MWh from 5.3 million MWh, supported by above-normal snow accumulation. Coal generation declined to 2.5 million MWh from 3.7 million MWh; natural-gas generation increased.
- Depreciation expense increased $25.3 million, partly reflecting plant additions and the timing of accounting under the Jim Bridger regulatory order. Interest on long-term debt also increased, while higher interest and investment income partly offset the increase.
- Economic hedge settlements shifted from $68.5 million of gains in 2022 to $16.2 million of losses in 2023, contributing to higher fuel expense. Most realized power-supply cost impacts are addressed through regulatory mechanisms, but these mechanisms can defer cash recovery.
Outlook, regulation, investment and risks
- Rates: An Idaho rate-case settlement approved in December 2023 became effective January 1, 2024. It is designed to increase annual Idaho-jurisdiction retail revenue by $54.7 million, or 4.25%, net of specified PCA and energy-efficiency rider transfers; it authorizes a 9.6% Idaho ROE and a 7.247% overall rate of return on approximately $3.8 billion of rate base. Idaho Power filed an Oregon rate case requesting a $10.7 million annual increase; the outcome was pending, with new rates expected no earlier than October 2024. The company also notified the IPUC of its intent to file another Idaho rate case or limited proceeding on or after June 1, 2024.
- Capital program and resources: Management estimates up to $4.4 billion of capital expenditures from 2024 through 2028. Estimated accrual-basis expenditures are $925–975 million for 2024, $850–950 million for 2025, and $2.0–2.5 billion for 2026–2028. Management expects to fund requirements through operating cash flow, debt and equity issuance, commercial paper and credit facilities.
- Load and supply: Idaho Power’s 2023 resource plan assumes five-year annual growth of 5.5% in retail sales and 3.7% in peak demand. These are forecasts, including potential large-customer additions, and may change. The plan calls for substantial renewable and storage additions, transmission investment, and conversion of coal units to natural gas. Management estimates 2024 hydropower generation of 5.5–7.5 million MWh.
- Major projects: Boardman-to-Hemingway construction was expected to begin in 2024, with service no earlier than late 2026; Idaho Power estimates total project cost of $1.5–1.7 billion, including AFUDC. Its estimated share of Gateway West costs is $900 million–$1.1 billion, including AFUDC. Hells Canyon relicensing costs in construction work in progress were approximately $460 million, and the company expected a new FERC license in 2025 or later; the ultimate license requirements and costs remain uncertain.
- Transition and environment: Two Jim Bridger units were expected to convert from coal to natural gas in spring 2024; the resource plan includes further conversions through 2030. Environmental compliance and hydropower relicensing spending are expected to remain significant. Wildfire liability, drought and hydrology, changing environmental rules, and whether regulators allow timely cost recovery are material risks.
- Other contingencies and unusual items: Management said existing legal-contingency accruals were not material and believed existing claims would not materially adversely affect the financial statements, while noting outcomes are uncertain. Idaho Power paid a $1.1 million fine under a 2022 consent judgment concerning water-discharge permitting and was completing permit applications. Quagga mussels were detected in the Snake River in 2023; eradication remained uncertain. The $47.6 million reclamation guarantee for Bridger Coal Company was supported by a trust valued at $253.3 million.
- Reporting and controls: Deloitte issued unqualified opinions on the financial statements and internal controls for both registrants. Management reported effective disclosure controls and internal control over financial reporting. The auditor identified regulated-utility accounting as a critical audit matter because of the complexity and judgment involved in regulatory assets, liabilities and cost recovery.
Most important facts for investors to verify
- Whether forecast load growth, large-customer demand and resource procurement align with actual system needs and can be served reliably and economically.
- Whether the large capital program, including transmission, battery, generation and relicensing projects, stays within current cost and timing estimates—and whether regulators permit timely recovery.
- The outcomes and timing of the Oregon rate case and the next Idaho rate proceeding, including authorized returns and treatment of major investments.
- Cash-flow and funding needs: operating cash flow declined while capital spending rose, and debt increased materially; verify future debt, equity and liquidity capacity.
- Hydropower conditions, wildfire exposure, environmental and license requirements, and the potential effects of commodity prices and hedge results on cash flow and customer rates.