IDACORP, Inc. — Q1 2024 Form 10-Q
Business context and reporting period. The unaudited quarter ended March 31, 2024. IDACORP is a holding company whose principal subsidiary, Idaho Power, is a regulated electric utility serving southern Idaho and eastern Oregon. Results are seasonal and the first quarter is not necessarily indicative of full-year performance. Deloitte & Touche reviewed the interim financial statements; this was not an audit.
Key financial results
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Operating revenue | $448.9 million | $429.7 million |
| Operating income | $49.6 million | $68.1 million |
| Net income attributable to IDACORP | $48.2 million | $56.1 million |
| Diluted earnings per share | $0.95 | $1.11 |
| Operating cash flow | $109.7 million | $(90.4) million |
| Cash and cash equivalents at quarter-end | $157.6 million | $357.8 million at March 31, 2023 |
- Operating margin was approximately 11.0%, compared with 15.8% a year earlier; net income attributable to IDACORP fell about 14% despite higher revenue.
- At March 31, IDACORP had $2.826 billion of long-term debt, including current maturities, and $2.922 billion of equity. Its covenant-defined capital structure was 49% debt and 51% equity. Idaho Power’s was 50% debt and 50% equity.
- Available revolving credit was $100 million for IDACORP and $380.1 million for Idaho Power after amounts identified for other use. Neither had credit-facility borrowings at quarter-end; on April 26, Idaho Power had $10 million of commercial paper outstanding.
- Cash used in investing was $234.7 million, primarily for utility construction; capital expenditures on property, plant and equipment were $260.0 million. Cash used in financing was $44.9 million, including $42.7 million of dividends.
Material changes and drivers
- Revenue rose 4.5%, while net income attributable to IDACORP declined from $56.1 million to $48.2 million. Customer growth and January Idaho rate increases helped, but were outweighed by lower usage per customer, higher O&M and depreciation, and higher interest expense.
- Customer count grew 2.5% year over year to 636,116, but retail sales volume fell 2%, mainly because milder winter temperatures reduced residential heating demand. The company set a winter peak of 2,719 MW on January 16.
- Purchased-power expense decreased $59.2 million as average cost per MWh fell 27% and generation increased. Fuel expense rose $3.2 million; Q1 2024 included $24.1 million of realized gas-hedging losses, compared with $23.5 million of gains in Q1 2023. Most power-supply cost variation is addressed through regulatory mechanisms, although recovery timing affects cash flow.
- Other O&M increased $13.8 million, including approximately $4 million of higher pension-related expense and $8 million of higher wildfire-mitigation and insurance expense. Depreciation increased $8.6 million, primarily with more plant in service.
- Operating cash flow improved by approximately $200 million year over year, principally reflecting changes in regulatory balances and working capital; it should not be read as a comparable increase in underlying earnings. Cash declined $169.8 million during the quarter.
Outlook, regulation, and risks
- Management expects 2024 hydropower generation of 6.5–8.0 million MWh, versus 6.5 million MWh in 2023 and a 30-year average of approximately 7.6 million MWh. The filing gives no company-wide earnings-per-share guidance in the supplied text.
- Estimated Idaho Power capital expenditures, excluding AFUDC, are $925–$975 million in 2024, $850–$950 million in 2025, and $2.0–$2.5 billion in 2026–2028. Management says funding needs are expected to be met through operating cash flow, debt and equity markets, credit facilities, commercial paper, and other available sources.
- Idaho Power gave notice of its intent to file a limited-issue Idaho rate case on or after May 31, 2024. Its Oregon general rate case requested a $10.7 million annual increase; the company reported a settlement in principle, still subject to final stipulation and OPUC approval.
- Pending rate adjustments include a requested $35.7 million Idaho PCA revenue decrease, an $11.7 million Idaho FCA increase, and a proposed $6.9 million Oregon annual power-cost update decrease. These requests were not yet approved as of the report date; PCA and APCU changes generally have offsetting power-cost effects.
- To address projected resource needs, Idaho Power is pursuing battery storage, solar and market-purchase resources, and further procurement. The B2H transmission project is expected to begin construction no sooner than late 2024 and enter service no earlier than 2027; permitting and right-of-way delays remain. Large capital programs carry cost, schedule, supply-chain, permitting and regulatory-recovery risks.
- In April 2024, Moody’s changed the outlook for IDACORP and Idaho Power to negative; issuer ratings were Baa2 and Baa1, respectively, both investment grade. A rating downgrade could increase financing costs or collateral requirements. Idaho Power had posted $27.1 million of derivative collateral at quarter-end; disclosed potential additional collateral under certain downgrade scenarios varies by exposure and could be material to liquidity planning.
- Other notable uncertainties include hydrology and water rights, wildfire claims and mitigation costs, Hells Canyon and American Falls relicensing, environmental compliance, and coal-to-gas conversion plans. Newly finalized EPA rules could adversely affect fossil-fuel plant operating costs and future gas-plant construction; outcomes and financial impacts were not clear. Existing loss-contingency accruals were not material, but future accruals could be.
Most important facts for investors to verify
- Progress and final outcomes of Idaho and Oregon rate cases, including approval and timing of requested rate changes.
- Whether customer growth and peak-load forecasts translate into durable earnings, and how weather and usage trends affect retail sales.
- Actual capital spending, project schedules and costs—especially B2H, GWW, storage additions and hydropower relicensing—and their recovery in customer rates.
- Liquidity, debt issuance needs, credit-rating outlook, and collateral exposure under commodity contracts.
- Hydropower generation and power-cost adjustment balances, including whether forecast conditions support the requested PCA decrease.
- Developments in wildfire exposure, environmental rules, water permits, and Hells Canyon and American Falls licensing.