UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-3198
IDAHO POWER COMPANY
(Exact name of registrant as specified in its charter)
Idaho 82-0130980
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1221 W. Idaho Street, Boise, Idaho 83702-5627
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (208) 388-2200
None
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that the registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each
of the issuer's classes of common stock, as of the
latest practicable date.
Number of shares of Common Stock, $2.50 par value,
outstanding as of June 30, 1998 is 37,612,351.
IDAHO POWER COMPANY
Index
Page No
Definitions 2
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Statements of Income 3-4
Consolidated Balance Sheets 5-6
Consolidated Statements of Cash Flows 7
Consolidated Statements of Capitalization 8
Notes to Consolidated Financial Statements 9-12
Independent Accountants' Report 13
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations 14-18
Part II. Other Information:
Item 1. Legal Proceedings 19
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 22-26
Signatures 27
DEFINITIONS
AFDC Allowance For Funds Used During Construction
BPA Bonneville Power Administration
CSPP Cogeneration and Small Power Production
DSM Demand Side Management
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
IPUC Idaho Public Utilities Commission
kWh kilowatt-hour
MAF Million Acre-Feet
MMbtu Million British Thermal Units
MOU Memorandum of Understanding
MWH Megawatt-Hour
OPUC Oregon Public Utilities Commission
PCA Power Cost Adjustment
REA Rural Electrification Administration
SFAS Statement of Financial Accounting Standards
FORWARD LOOKING INFORMATION
This Form 10-Q contains "forward-looking statements" intended to
qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements should be read with the cautionary statements and
important factors included in this Form 10-Q at Part I, Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations - Forward-Looking Information. Forward-
looking statements are all statements other than statements of
historical fact, including without limitation those that are
identified by the use of the words "anticipates," "estimates,"
"expects," "intends," "plans," "predicts," and similar expressions.
PART I - FINANCIAL INFORMATION
IDAHO POWER COMPANY
Consolidated Statements of Income
Three Months Ended
June 30,
1998 1997
(Thousands of Dollars)
REVENUES:
Total general business $120,997 $125,129
Off system sales 92,977 35,438
Other 7,648 6,408
Total Revenues 221,622 166,975
EXPENSES:
Operation:
Purchased power 76,046 37,067
Fuel expense 14,303 10,789
Power cost adjustment 13,814 2,175
Other 38,606 38,000
Maintenance 11,525 13,568
Depreciation 19,044 18,042
Taxes other than income taxes 5,501 5,556
Total expenses 178,839 125,197
INCOME FROM OPERATIONS 42,783 41,778
OTHER INCOME:
Allowance for equity funds used during construction 24 (2)
Gas trading activities - Net (908) (139)
Other - Net 3,923 2,395
Total other income 3,039 2,254
INTEREST CHARGES:
Interest on long-term debt 13,060 13,158
Other interest 2,060 1,833
Total interest charges 15,120 14,991
Allowance for borrowed funds used during construction (279) (127)
Net interest charges 14,841 14,864
INCOME BEFORE INCOME TAXES 30,981 29,168
INCOME TAXES 9,213 9,126
NET INCOME 21,768 20,042
Dividends on preferred stock 1,417 665
EARNINGS ON COMMON STOCK $20,351 $19,377
AVERAGE COMMON SHARES OUTSTANDING (000) 37,612 37,612
Earnings per share of common stock (basic and diluted) 0.54 0.52
Dividends paid per share of common stock 0.465 0.465
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
Consolidated Statements of Income
Six Months Ended
June 30,
1998 1997
(Thousands of Dollars)
REVENUES:
Total general business $233,220 $238,090
Off system sales 209,390 70,277
Other 17,182 14,055
Total Revenues 459,792 322,422
EXPENSES:
Operation:
Purchased power 170,252 56,627
Fuel expense 35,023 25,273
Power cost adjustment 14,289 932
Other 71,553 67,917
Maintenance 20,553 23,872
Depreciation 37,940 35,564
Taxes other than income taxes 10,844 11,388
Total expenses 360,454 221,573
INCOME FROM OPERATIONS 99,338 100,849
OTHER INCOME:
Allowance for equity funds used during construction 25 (2)
Gas trading activities - Net (1,626) (139)
Other - Net 5,628 5,784
Total other income 4,027 5,643
INTEREST CHARGES:
Interest on long-term debt 26,097 26,963
Other interest 4,146 3,881
Total interest charges 30,243 30,844
Allowance for borrowed funds used during construction (440) (259)
Net interest charges 29,803 30,585
INCOME BEFORE INCOME TAXES 73,562 75,907
INCOME TAXES 22,338 25,487
NET INCOME 51,224 50,420
Dividends on preferred stock 2,822 2,059
EARNINGS ON COMMON STOCK $ 48,402 $ 48,361
AVERAGE COMMON SHARES OUTSTANDING (000) 37,612 37,612
Earnings per share of common stock (basic and diluted) 1.29 1.29
Dividends paid per share of common stock 0.930 0.930
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
Consolidated Balance Sheets
ASSETS
June 30, December 31,
1998 1997
(Thousands of Dollars)
ELECTRIC PLANT:
In service (at original cost) $2,630,643 $2,605,697
Accumulated provision for depreciation (980,170) (942,400)
In service - Net 1,650,473 1,663,297
Construction work in progress 67,856 51,892
Held for future use 1,738 1,738
Electric plant - Net 1,720,067 1,716,927
INVESTMENTS AND OTHER PROPERTY 113,831 97,065
CURRENT ASSETS:
Cash and cash equivalents 2,430 6,905
Receivables:
Customer 62,176 63,076
Allowance for uncollectible accounts (1,397) (1,397)
Gas operations 33,460 42,128
Notes 4,996 4,613
Employee notes receivable 4,571 4,757
Other 9,921 8,854
Accrued unbilled revenue 32,311 33,312
Materials and supplies (at average cost) 29,944 29,156
Fuel stock (at average cost) 7,440 7,172
Prepayments 13,877 15,381
Regulatory assets associated with income taxes 3,090 3,164
Total current assets 202,819 217,121
DEFERRED DEBITS:
American Falls and Milner water rights 32,055 32,055
Company-owned life insurance 48,631 51,915
Regulatory assets associated with income taxes 200,199 198,521
Regulatory assets - other 73,817 90,239
Other 47,266 47,973
Total deferred debits 401,968 420,703
TOTAL $2,438,685 $2,451,816
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
Consolidated Balance Sheets
CAPITALIZATION & LIABILITIES
June 30, December 31,
1998 1997
(Thousands of Dollars)
CAPITALIZATION:
Common stock equity - $2.50 par value (shares authorized
50,000,000; shares outstanding - 37,612,351) $ 724,974 $ 711,818
Preferred stock 106,556 106,697
Long-term debt 749,876 746,142
Total capitalization 1,581,406 1,564,657
CURRENT LIABILITIES:
Long-term debt due within one year 35,167 33,998
Notes payable 52,527 57,516
Accounts payable 51,514 69,064
Accounts payable gas operations 33,041 42,874
Taxes accrued 27,527 24,295
Interest accrued 17,005 17,918
Deferred income taxes 3,090 3,164
Other 14,327 13,703
Total current liabilities 234,198 262,532
DEFERRED CREDITS:
Regulatory liabilities associated with
deferred investment tax credits 70,014 70,196
Deferred income taxes 429,473 423,736
Regulatory liabilities associated with income taxes 27,741 34,072
Regulatory liabilities - other 456 509
Other 95,397 96,114
Total deferred credits 623,081 624,627
COMMITMENTS AND CONTINGENT LIABILITIES
TOTAL $2,438,685 $2,451,816
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
Consolidated Statements Of Cash Flows
Six Months Ended
June 30,
1998 1997
(Thousands of Dollars)
OPERATING ACTIVITIES:
Net income $ 51,224 $ 50,420
Adjustments to reconcile net income to net cash:
Depreciation & amortization 43,562 39,321
Deferred taxes and investment tax credits (2,453) 28
Accrued PCA costs 14,081 737
Change in:
Accounts receivable and prepayments 9,808 (22,172)
Accrued unbilled revenue 1,001 (4,304)
Materials & supplies and fuel stock (1,057) (6,161)
Accounts payable (27,383) 14,026
Taxes payable 3,232 6,000
Other current assets and liabilities (289) 5,676
Other - net (672) (4,182)
Net cash provided by operating activities 91,054 79,389
INVESTING ACTIVITIES:
Additions to utility plant (43,659) (47,125)
Investments in affordable housing (10,125) (9,856)
Other (3,961) 889
Net cash used in investing activities (57,745) (56,092)
FINANCING ACTIVITIES:
Proceeds from issuance of:
Long-term debt related to affordable housing 4,896 6,119
Dividends on common stock (34,979) (34,944)
Dividends on preferred stock (2,822) (2,620)
Increase (decrease) in short-term borrowings (4,989) 8,074
Other - net 110 (81)
Net cash provided by (used in) financing
activities (37,784) (23,452)
Net increase (decrease) in cash and cash equivalents (4,475) (155)
Cash and cash equivalents at beginning of period 6,905 7,928
Cash and cash equivalents at end of period $ 2,430 $ 7,773
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ 27,132 $ 23,470
Interest (net of amount capitalized) 25,078 26,435
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
Consolidated Statements Of Capitalization
June 30, December 31,
1998 1997
(Thousands of Dollars)
COMMON STOCK EQUITY:
Common stock $ 94,031 $ 94,031
Premium on capital stock 362,058 362,328
Capital stock expense (3,836) (3,840)
Retained earnings 272,721 259,299
Total common stock equity 724,974 45.9% 711,818 45.5%
PREFERRED STOCK:
4% preferred stock 16,556 16,697
7.68% Series, serial preferred stock 15,000 15,000
7.07% Series, serial preferred stock 25,000 25,000
Auction rate preferred stock 50,000 50,000
Total preferred stock 106,556 6.7 106,697 6.8
LONG-TERM DEBT:
Utility:
First mortgage bonds:
5.33 % Series due 1998 30,000 30,000
8.65 % Series due 2000 80,000 80,000
6.93 % Series due 2001 30,000 30,000
6.85 % Series due 2002 27,000 27,000
6.40 % Series due 2003 80,000 80,000
8 % Series due 2004 50,000 50,000
Maturing 2021 through 2031 with rates from
7.5% to 9.52% 230,000 230,000
Total first mortgage bonds 527,000 527,000
Amount due within one year (30,000) (30,000)
Net first mortgage bonds 497,000 497,000
Pollution control revenue bonds:
7 1/4% Series due 2008 4,360 4,360
8.30 % Series 1984 due 2014 49,800 49,800
6.05 % Series 1996A due 2026 68,100 68,100
Variable Rate Series 1996 B and C due 2026 48,200 48,200
Total pollution control revenue bonds 170,460 170,460
REA Notes 1,525 1,561
Amount due within one year (73) (72)
Net REA Notes 1,452 1,489
American Falls bond guarantee 20,355 20,355
Milner Dam note guarantee 11,700 11,700
Unamortized premium/discount - Net (1,588) (1,637)
Net utility debt 699,379 699,367
Subsidiaries:
Debt related to investments in affordable
housing with rates ranging from 6.97% to
8.59% due 1998 to 2009 51,281 46,385
Other subsidiary debt 4,310 4,316
Total subsidiary debt 55,591 50,701
Amount due within one year (5,094) (3,926)
Net subsidiary debt 50,497 46,775
Total long-term debt 749,876 47.4 746,142 47.7
TOTAL CAPITALIZATION $1,581,406 100.0% $1,564,657 100.0%
The accompanying notes are an integral part of these statements.
IDAHO POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES:
Financial Statements
In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary to present fairly the consolidated financial
position as of June 30, 1998 and the consolidated results
of operations for the three and six months ended June 30,
1998 and 1997 and the consolidated cash flows for the six
months ended June 30, 1998 and 1997. These financial
statements do not contain the complete detail or footnote
disclosure concerning accounting policies and other
matters which would be included in full year financial
statements and, therefore, they should be read in
conjunction with the Company's audited financial
statements included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997. The results of
operations for the interim periods are not necessarily
indicative of the results to be expected for the full
year.
Principles of Consolidation
The consolidated financial statements include the accounts
of the Company and its wholly-owned or controlled
subsidiaries. All significant intercompany transactions
and balances have been eliminated in consolidation.
Investments in business entities in which the Company and
its subsidiaries do not have control, but have the ability
to exercise significant influence over operating and
financial policies, are accounted for using the equity
method.
Revenues
In order to match revenues with associated expenses, the
Company accrues unbilled revenues for electric services
delivered to customers but not yet billed at month-end.
Comprehensive Income
The Company adopted SFAS 130, Reporting Comprehensive
Income, on January 1, 1998. The statement establishes
standards for the reporting and displaying of
comprehensive income and its components in the Company's
financial statements.
For the three and six months ended June 30, 1998, the
Company's total comprehensive income was not materially
different from net income. The components of total
comprehensive income include net income, the Company's
proportionate share of unrealized holding gains on
marketable securities held by an equity investee, and the
changes in the Company's additional minimum liability
under a deferred compensation plan for certain senior
management employees and directors.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash
equivalents include cash on hand and highly liquid
temporary investments with original maturity dates of
three months or less. The Company has changed the
presentation of operating activities in its statement of
cash flows from the direct to the indirect method
effective for all periods reported in 1998. Previous
year's presentation has been reclassified to conform with
the new presentation.
Management Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Gas Operations
The Company intends to be a competitive energy provider,
including both electricity and gas. In April 1997 the
Company opened a gas trading office in Houston, Texas to
serve the southern and eastern United States gas markets
and a Boise, Idaho office that serves the Northwest and
Canadian markets. The following table shows gas trading
activities for the three and six month periods ended June
30, 1998 (thousands of dollars):
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Gas revenues $ 83,395 $ 9,461 $180,479 $ 9,461
Cost of gas (83,584) (9,434) (180,717) (9,434)
Administrative and
General expenses (719) (166) (1,388) (166)
Gas trading activities-Net $ (908) $ (139) $ (1,626) $ (139)
Reclassifications
Certain items previously reported for periods prior to
June 30, 1998 have been reclassified to conform with the
current period's presentation. Net income was not
affected by these reclassifications.
2. COMMITMENTS AND CONTINGENT LIABILITIES:
Commitments under contracts and purchase orders relating
to the Company's program for construction and operation of
facilities amounted to approximately $2.8 million at June
30, 1998. The commitments are generally revocable by the
Company subject to reimbursement of manufacturers'
expenditures incurred and/or other termination charges.
The Company is party to various legal claims, actions, and
complaints, certain of which involve material amounts.
Although the Company is unable to predict with certainty
whether or not it will ultimately be successful in these
legal proceedings, or, if not, what the impact might be,
based upon the advice of legal counsel, management
presently believes that disposition of these matters will
not have a material adverse effect on the Company's
financial position, results of operation, or cash flow.
3. REGULATORY ISSUES:
The Company has a PCA mechanism that provides for annual
adjustments to the rates charged to Idaho retail customers.
These adjustments are based on forecasts of net power supply
costs, and take effect annually on May 16. The difference
between the actual costs incurred and the forecasted costs
are deferred, with interest, and trued-up in the next annual
rate adjustment.
The May 16, 1998 adjustment increased rates $34.0 million
over the 1997 rates and $17.3 million over base rates. The
increase was due primarily to the forecasted return to more
normal streamflow conditions from the near-record conditions
experienced in 1997, and rising costs associated with
mandatory purchases from CSPP projects.
Good water conditions and mild weather since the forecast
date have resulted in the Company currently recording a true-
up credit of $10.3 million at June 30, 1998. The credit
reflects power supply costs below those projected for the
1998 PCA forecast. Any additional variance that exists at
the end of the current rate period will be trued-up in the
next annual PCA adjustment.
Under IPUC Order No. 26216, when the Company's actual
earnings in the Idaho jurisdiction in a given year exceed
an 11.75 percent return on year-end common equity through
1999, the Company will refund 50 percent of the excess.
In 1997, the Company set aside an estimated $8.7 million
of revenue for the benefit of its Idaho customers.
Subsequently, this amount was revised to $7.6 million,
based on actual data. The Company requested that this
revised amount be applied against the balance of demand-side
conservation expenditures which are currently recorded as a
regulatory asset. The IPUC has ordered that approximately
$5.0 million be applied against the balance of demand-side
conservation expenditures in order to defer any rate increase
associated with conservation recovery until May 16, 1999,
the same time as the next PCA adjustment to rates. The
Commission will determine how to apply the remaining $2.6
million by that time.
The Company has sought changes to the regulatory treatment
of previously deferred DSM (conservation) expenses in both
Idaho and Oregon. In Idaho the Company requested in Case
No. IPC-E-97-12 that the IPUC authorize recovery of post-
1993 DSM expenses and an acceleration of the recovery of
DSM expenditures authorized in the last general rate case.
The Company requested a five year amortization with a
carrying charge of 9.199 percent instead of the 24 year
period previously adopted. In its Order No. 27660 issued
on July 31, 1998, the Commission set a new amortization
period of 12 years with a carrying charge of 7.25 percent.
The Company contines to believe that a five year
amortization with a 9.199 percent carrying charge is more
reflective of other regulatory treatment of these types of
expenses. The Company is in the process of reviewing this
order to determine if it will file a petition for
reconsideration. It is anticipated that the Company's
companion DSM filing to the OPUC (Case No. UE 107) will be
decided by the end of September. The IPUC order reflects
an increase in annual revenue requirement of $3.1 for
twelve years. The requested increase in annual revenue
requirement in Oregon is $540,000 for five year.
4. FINANCING:
The Company currently has a $200,000,000 shelf
registration statement that can be used for both First
Mortgage Bonds (including Medium Term Notes) and Preferred
Stock of which $143 million remains available at June 30,
1998.
5. INCOME TAXES:
The effective tax rate for the first six months decreased
from 33.6 percent in 1997 to 30.3 percent in 1998. A
reconciliation between the statutory income tax rate and
the effective rate for the six months ended June 30 is as
follows:
1998 1997
Amount Rate Amount Rate
Computed income taxes based on
statutory federal income tax rate $25,747 35.0% $26,567 35.0%
Changes in taxes resulting from:
Current state income taxes 3,058 4.2 3,179 4.2
Settlement of prior year tax returns (1,000) (1.4) 0 0.0
Net depreciation 2,677 3.6 2,937 3.9
Investment tax credits restored (1,462) (2.0) (1,439) (1.9)
Removal costs (877) (1.2) (578) (0.8)
Repair allowance (1,564) (2.1) (1,564) (2.1)
Affordable housing credit (3,177) (4.3) (2,242) (3.0)
Other (1,064) (1.5) (1,373) (1.7)
$22,338 30.3% $25,487 33.6%
6. PREFERRED STOCK:
The number of shares of preferred stock
outstanding were as follows:
June 30, December 31,
1998 1997
Cumulative, $100 par value:
4% preferred stock (authorized 215,000 165,556 166,972
shares)
Serial preferred stock, 7.68% Series 150,000 150,000
(authorized 150,000 shares)
Serial preferred stock, cumulative,
without par value; total of 3,000,000 shares
authorized:
7.07% Series, $100 stated value, 250,000 250,000
(authorized 250,000 shares)
Auction rate preferred stock, $100,000
stated value,(authorized 500 shares) 500 500
7. NEW ACCOUNTING PRONOUNCEMENTS:
In June 1998 the FASB issued SFAS No. 133 Accounting for
Derivative Instruments and Hedging Transactions. This
statement establishes accounting and reporting standards
for derivative financial instruments and other similar
financial instruments and for hedging actiities. It is
effective for fiscal years beginning after June 15, 1999.
The Company is reviewing this statement to determine its
effects on the accounting and reporting requirements.
INDEPENDENT ACCOUNTANTS' REPORT
Idaho Power Company
Boise, Idaho
We have reviewed the accompanying consolidated balance sheet
and statement of capitalization of Idaho Power Company and
subsidiaries as of June 30, 1998, and the related
consolidated statements of income for the three and six month
periods ended June 30, 1998 and 1997 and consolidated
statements of cash flows for the six month periods ended June
30, 1998 and 1997. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such consolidated
financial statements for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet
and statement of capitalization of Idaho Power Company and
subsidiaries as of December 31, 1997, and the related
consolidated statements of income, retained earnings, and
cash flows for the year then ended (not presented herein);
and in our report dated January 30, 1998, we expressed an
unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet and statement of
capitalization as of December 31, 1997 is fairly stated, in
all material respects, in relation to the consolidated
balance sheet and statement of capitalization from which it
has been derived.
DELOITTE & TOUCHE LLP
Boise, Idaho
August 3, 1998
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
In Management's Discussion and Analysis we explain the general
financial condition and results of operations for Idaho Power and
its diversified business subsidiaries. As you read Management's
Discussion and Analysis, it may be helpful to refer to our
Consolidated Statements of Income which present the results of
our operations for the three and six month periods ended June 30,
1998 and 1997. In our discussion we explain the quarterly and
year-to-date changes in the specific line items in the
Consolidated Statements of Income.
This discussion updates the discussion which was included in our
1997 Annual Report on Form 10-K for the year ended December 31,
1997, and should be read in conjunction with it.
FORWARD-LOOKING INFORMATION
Certain matters that we discuss in this report are "forward-
looking statements" intended to qualify for the safe harbor from
liability established by the Private Securities Litigation Reform
Act of 1995. Such statements address future plans, objectives,
expectations, and events or conditions concerning various matters
such as capital expenditures, earnings, litigation, rate and
other regulatory matters, liquidity and capital resources, and
accounting matters. Actual results in each case could differ
materially from those currently anticipated in such statements,
by reason of factors including without limitations, electric
utility restructuring, including ongoing state and federal
activities; future economic conditions; legislation; regulation;
competition; and other circumstances affecting anticipated rates,
revenues and costs. Any forward-looking statement speaks only as
of the date on which such statement is made, and we undertake no
obligation to update any forward-looking statement.
RESULTS OF OPERATIONS
Earnings Per Share and Book Value
Earnings per share of common stock (basic and diluted) was $0.54
for the quarter ended June 30, 1998, an increase of $0.02 (3.8
percent) from the same quarter last year. Earnings per share
(basic and diluted) was $1.29 for the six months ended June 30,
1998, the same as last year.
At June 30, 1998, the book value per share of common stock was
$19.27, compared to $18.81 at the same date in 1997.
General Business Revenue
Our general business revenue is dependent on many factors,
including the number of customers we serve, the rates we charge,
and weather conditions (temperature and precipitation) in our
service territory.
Compared to 1997, the number of general business customers we
served increased 2.9 percent for the quarter and for the six
months ended June 30, 1998. This increase was due primarily to
economic growth in our service territory.
Our revenue per MWH increased 2.6 percent for the quarter ended
and 0.4 percent for the six months ended June 30, 1998, compared
to 1997. Revenue per MWH changes as a result of the annual rate
adjustments discussed below in "Power Cost Adjustment."
Precipitation during the growing season decreased the amount of
energy we sold to our irrigation customers. Rainfall in the
service territory was 46.6 percent greater than in the second
quarter of 1997 and 105.1 percent above normal, resulting in a
$6.0 million (22.2 percent) decrease in sales to these customers
for the quarter and $5.9 million (21.4 percent) decrease year-to-
date.
The combination of the factors just discussed resulted in a $4.1
million (3.3 percent) decrease in general business revenue for
the quarter and a $4.9 million (2.0 percent) decrease year-to-
date, compared to 1997.
Off system sales
Off-system sales are comprised of trading in the wholesale
electricity markets, long-term sales contracts, and opportunity
sales made when we have surplus energy available. The increases
in off-system revenue are due primarily to 109.3 percent and
133.4 percent increases in MWH sold in the second quarter and
year-to-date. These sales were primarily from increased trading
in the wholesale electricity markets. We discuss our energy
trading activity in more detail below in "Other Matters."
Expenses
Purchased power expenses increased $39.0 million (105.2 percent)
for the quarter and $113.6 million (200.7 percent) year-to-date.
These increases are due primarily to 77.5 percent and 163.8
percent increases in MWHs purchased for the second quarter and
year-to-date, primarily from increased trading in the wholesale
electricity markets.
Fuel expenses increased $3.5 million (32.6 percent) for the
quarter and $9.7 million (38.6 percent) year-to-date, due
primarily to 48.5 percent and 49.5 percent increases in MWHs
generated by our coal-fired power plants for the quarter and year-
to-date. Generation by these plants was increased to take
advantage of off-system sales opportunities.
The PCA (power cost adjustment) component of expenses increased
$11.6 million for the quarter and $13.4 million year-to-date.
The PCA increases expenses when actual power supply costs are
below the costs forecasted in the annual PCA filing and decreases
expenses when actual power supply costs are above the forecast.
In the second quarter of 1998, actual power supply costs were
significantly below what had been forecast, while in 1997 actual
power supply costs were only slightly below the forecast. Our
1998 forecast anticipated near-normal streamflow conditions.
Actual conditions have been better than forecasted. We discuss
the PCA and streamflow conditions in more detail below in "Other
Matters."
Other operation expenses increased $3.6 million (5.4 percent)
year-to-date. These increases were due primarily to an increase
in administrative labor expenses and increased operation of our
steam generation facilities.
Maintenance expenses decreased $2.0 million (15.1 percent) for
the quarter and $3.3 million (13.9 percent) year-to-date. These
decreases are due primarily to decreased expenses at the Jim
Bridger plant and reduced maintenance on overhead lines. During
the first half of 1997 extensive maintenance was performed at the
Bridger plant and on transmission lines.
Other
Other income decreased $1.6 million (28.6 percent) year-to-date,
due primarily to a $1.5 million increase in losses on gas trading
activities. We began trading natural gas in the second quarter
of 1997. Since then, trading volumes and related administrative
costs have increased significantly. The loss is attributable to
a $238 thousand trading loss with the remaining loss due to an
increase in administrative costs related to building a natural
gas sales force. We discuss our energy trading activities in
more detail below in "Other Matters."
Income taxes decreased $3.1 million (12.4 percent) year-to-date
primarily from increased affordable housing tax credits and from
adjustments associated with the settlement of prior year tax
returns.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
For the six months ended June 30, 1998, we generated $91.1
million in net cash from operations. After deducting for both
common and preferred dividends, net cash generation from
operations provided approximately $53.3 million for our
construction program and other capital requirements.
Cash Expenditures
We estimate that our cash construction program for 1998 will
require approximately $100.0 million. This estimate is subject
to revision in light of changing economic, regulatory,
environmental, and conservation factors. During the first six
months of 1998, we spent approximately $43.7 million for
construction. Our primary financial commitments and obligations
are related to contracts and purchase orders associated with
ongoing construction programs. To the extent required, we expect
to finance these commitments and obligations by using both
internally generated funds and externally financed capital. At
June 30, 1998, our short-term borrowings totaled $52.5 million.
Financing Program
We currently have a $200,000,000 shelf registration statement
that can be used for both First Mortgage Bonds (including Medium
Term Notes) and Preferred Stock of which $143 million remains
available at June 30, 1998. Our objective is to maintain
capitalization ratios of approximately 45 percent common equity,
5 to 10 percent preferred stock, and the balance in long-term
debt. For the twelve-month period ended June 30, our
consolidated pre-tax interest coverage was 3.27 times.
OTHER MATTERS
Power Cost Adjustment
We have a PCA mechanism that provides for annual adjustments to
the rates we charge to our Idaho retail customers. These
adjustments, which take effect annually on May 16, are based on
forecasts of net power supply costs. The difference between the
actual costs incurred and the forecasted costs is deferred, with
interest, and trued-up in the next annual rate adjustment.
The May 16, 1998 adjustment increased rates $34.0 million over
the 1997 rates and $17.3 million over base rates. The increase
is due primarily to the forecasted return to more normal
streamflow conditions from the near-record conditions experienced
in 1997, and rising costs associated with mandatory purchases
from CSPP projects The IPUC has requested that we discuss how
the mandatory purchases from certain CSPP projects can be
included in the forecast to avoid a large true-up which was a
major factor in causing the increase in 1998.
Regulatory Settlement
Under the terms of an IPUC Settlement in effect though 1999, when
our earnings in the Idaho jurisdiction exceed an 11.75 percent
return on year-end common equity, we refund 50 percent of the
excess to our Idaho retail ratepayers. For 1997, we set aside an
estimated $8.7 million of revenue for the benefit of these
customers. In April 1998, we revised this amount to $7.6
million, based on updated information, and filed a request with
the IPUC to apply the entire amount against the balance of demand-
side conservation expenditures that we currently have recorded as
regulatory assets. The IPUC has ordered that approximately $5.0
million be applied against the balance of demand-side
conservation expenditures in order to defer any rate increase
associated with conservation recovery until May 16, 1999, the
same time as the next PCA adjustment to rates. The Commission
will determine how to apply the remaining $2.6 million by that
time.
Demand-Side Management Expenses
We are seeking changes to the regulatory treatment of previously
deferred demand-side management (DSM) expenses in both Idaho and
Oregon.
In Idaho, we requested that the IPUC authorize recovery of post-
1993 DSM expenses and acceleration of the recovery of DSM
expenditures authorized in the last general rate case. We
requested a five-year amortization with a 9.199 percent carrying
charge instead of the 24-year period previously adopted. In its
Order No. 27660 issued on July 31, 1998, the Commission set a new
amortization period of 12 years with a 7.25 percent carrying
charge. We continue to believe that a five-year amortization at
9.199 percent is more reflective of other regulatory treatment of
these types of expenses. We are reviewing this order to
determine if we will file a petition for reconsideration.
We anticipate that our companion DSM filing to the OPUC (Case No.
UE 107) will be decided by the end of September.
Energy Trading
We intend to be a competitive energy provider, including both
electricity and natural gas. In 1997, we opened gas trading
offices in Houston, Texas, to serve the southern and eastern
United States and in Boise, Idaho to serve the Northwest and
Canadian markets. We also actively participate in the wholesale
electricity markets, the results of which are included in off-
system revenue and purchased power expense. (see "Off-system
sales" and "Expenses"). Results of our gas trading activity are
included in other income (see "Other").
Inherent in the energy trading business are risks related to
market movements and the creditworthiness of counterparties.
When buying and selling energy, the high volatility of energy
prices can have a significant impact on profitability if not
managed. Also, counterparty creditworthiness is key to ensuring
that deals that are made withstand dramatic market fluctuations.
To mitigate these risks while implementing our business strategy,
the Board of Directors gave approval for executive management to
form a Risk Management Committee, comprised of company officers,
to oversee a new risk management program. The program is
intended to minimize fluctuations in earnings while controlling
the volatility of energy prices. Embedded within the Risk
Management policy and procedures is a credit policy requiring a
credit evaluation of all counterparties before doing business
with them. The objectives of our risk management program include
setting and achieving commodity price targets, locking in
commodity prices related to specific contracts for the sale of
electricity and gas, and managing the commodity price risk for
customers while mitigating commodity price risk, credit risk, and
other risks related to the energy trading business.
Streamflow Conditions
We monitor the effect of streamflow conditions on Brownlee
Reservoir, the water source for our three Hells Canyon
hydroelectric projects. In a typical year, these three projects
combine to produce about half of our generated electricity.
Inflows into Brownlee result from a combination of precipitation,
storage, and ground water conditions. Independent forecasters
have projected that inflow into Brownlee Reservoir during the
April-July runoff period will be 8.4 million acre-feet (MAF),
compared to the 70-year median of 4.9 MAF and 1997's 9.8 MAF.
Holding Company
At the May 6, 1998 annual shareholders meeting, our shareholders
approved the establishment of a holding company to be called
IDACORP, Inc. We have also received approval from the state
regulatory commissions in Idaho, Oregon, Nevada and Wyoming and
the FERC.
Our purpose in forming a holding company is to position us to
respond to the changing business environment in the electric
utility industry.
Under the plan approved by the shareholders, existing shares of
Idaho Power common stock will be exchanged for IDACORP, Inc.
stock on a share-for-share basis. Idaho Power, along with Ida-
West Energy Company (currently a subsidiary of Idaho Power), will
become wholly-owned subsidiaries of IDACORP, Inc. In the future
the Company may seek to convert one or more of its other
subsidiaries to subsidiaries of the holding company.
We expect the holding company transition to take place in the
second half of 1998.
Year 2000 Costs
The Year 2000 issue is the result of potential problems with
computer systems or any equipment with computer chips that use
dates where the year has been stored as just two characters (e.g.
97 for 1997). These systems may incorrectly evaluate dates
beyond the year 1999, potentially causing system failure and
disruption of operations which could materially affect our
ability to conduct business. These systems must be identified
and either modified or replaced with systems that correctly
recognize dates beyond 1999.
We have developed and are implementing a Year 2000 Compliance
Plan that addresses traditional hardware and software systems,
embedded systems, and service providers. The plan also includes
identification of and coordination with all external interfacing
systems. We expect all of our critical systems to be compliant
by mid-1999.
Idaho Power is connected to an electric grid that connects
utilities throughout the western portion of North America. This
interconnection is essential to the reliability and operational
integrity of each connected utility. This also means that
failure of one electric utility in the interconnected grid could
cause the failure of others. In the context of the Year 2000
computer problem, this interconnectivity compounds the challenge
faced by the electric utility industry. Our company could do a
very thorough and effective job of becoming Year 2000 compliant
and yet encounter difficulties supplying services and energy
because another utility in the interconnected grid failed to
achieve Year 2000 compliance. In this regard, we are working
closely with other electric industry organizations concerned with
reliability issues and technical collaboration.
We estimate that our expenses related to this issue will total
approximately $5.3 million between 1998 and 2000. We do not
expect these expenditures to have a material effect on our
financial position or results of operations.
New Accounting Pronouncements
In June 1998 the FASB issued SFAS No. 133 Accounting for
Derivative Instruments and Hedging Transactions. This statement
establishes accounting and reporting standards for derivative
financial instruments and other similar financial instruments and
for hedging activities. It is effective for fiscal years
beginning after June 15, 1999. We are reviewing this statement
to determine its effects on our accounting and reporting
requirements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On November 30, 1995, a complaint entitled Idaho Power Company
vs. Cogeneration, Inc.,Case No. 98467, was filed by the Company
in the District Court of the Fourth Judicial District of the
State of Idaho. The proceeding involves an effort by the Company
to terminate a Firm Energy Sales Agreement (FESA) for a small
hydroelectric generating plant.
As required by PURPA and the orders of the Idaho Public Utilities
Commission (IPUC), on January 7, 1992, the Company entered into a
35-year FESA with Cogeneration, Inc., to purchase the output of a
43-megawatt hydroelectric generating project known as the Auger
Falls Project. The FESA for the Auger Falls Project was approved
by the IPUC on January 27, 1992. The FESA required that on or
before January 1, 1994, Cogeneration, Inc., post cash or cash
equivalent security in the amount of approximately $1.9 million
to assure performance of the FESA. Cogeneration, Inc., failed to
provide the security amount. Consistent with the FESA, the
Company filed a petition for declaratory order with the IPUC
requesting that the FESA be terminated as a result of
Cogeneration, Inc.'s breach. Cogeneration, Inc., cross
petitioned claiming that its failure to perform was excused by
the occurrence of an event of force majeure. On April 17, 1995,
the IPUC issued its order finding that Cogeneration, Inc.'s
failure to post the cash security on January 1, 1994, was a
default under the FESA and further finding that the posting of
the liquid security was required by the public interest. Based
upon those findings, the IPUC ordered Cogeneration, Inc., to post
the cash security prior to May 1, 1995. Cogeneration, Inc.,
failed to comply with the Commission's order and has never posted
the $1.9 million amount required by the FESA.
After the IPUC's order became final and non-appealable, the
Company filed a complaint for declaratory relief in the District
Court of the Fourth Judicial District. The Complaint sought a
determination by the district court that Cogeneration, Inc.'s
failure to provide the cash security and its violation of the
IPUC's orders requiring that it expeditiously provide the cash
security constituted material breaches of the FESA. The Company
asked the district court to find that as a matter of law Idaho
Power was entitled to either terminate or rescind the FESA.
In response to the Company's complaint, Cogeneration, Inc., filed
counterclaims alleging that the Company, by seeking to terminate
the FESA, had breached the FESA and was attempting to monopolize
the electric generation market and drive Cogeneration, Inc., out
of business. Cogeneration, Inc., alleged damages for breach in
excess of $50 million and requested that any damages be trebled
under the anti-trust laws.
On November 30, 1995, the district judge, by memorandum decision
found that Cogeneration, Inc., had materially breached the FESA
and the Company was entitled to either rescind or terminate the
FESA.
On February 16, 1996, Cogeneration, Inc., dismissed its anti-
trust claims against the Company with prejudice, and on February
23, 1996, the Idaho Supreme Court granted Cogeneration, Inc.'s
request for an expedited appeal of the district court's decision
establishing an accelerated briefing schedule and scheduling oral
argument for May 10, 1996.
On August 12, 1996, the Idaho Supreme Court determined that the
District Court's decision that Cogeneration, Inc., had breached
the FESA was premature.
On February 10, 1997, Cogeneration, Inc. filed an amended
Complaint restating its previous claims, requesting a jury trial
rather than the court trial it had previously requested and
raising several new allegations and claims.
Following a court trial, on June 24, 1998 the District Court
issued a memorandum decision finding that Cogeneration, Inc. had
materially breached the FESA and as a result Idaho Power had
properly terminated the FESA.
Cogeneration, Inc. has 42 days from the date of the decision to
file a notice of appeal.
This matter has been previously reported in Form 10-K dated March
12, 1998 and other reports filed with the Commission.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Regular annual meeting of the Company's
stockholders, held May 6, 1998 in Boise, Idaho.
(b) Directors elected at the meeting for a three-year
term:
Robert D. Bolinder
Jon H. Miller
Gene C. Rose
Phil Soulen
Continuing Directors:
Roger L. Breezley Jan B. Packwood
John B. Carley Peter T. Johnson
Jack K. Lemley Joseph W. Marshall
Evelyn Loveless Peter S. O'Neill
(c)(1)a) To elect four Director Nominees; and
b) To ratify the selection of Deloitte
& Touche LLP (D&T) as independent auditors for
the fiscal year ending December 31, 1998; and
c) To Approve the Formation of a Holding Company and
an Agreement and Plan of Exchange.
(2) Director Nominees
Class of Stock For Withhold Total Voted
Common 28,347,377 668,664 29,016,041
4% Preferred 2,051,600 73,100 2,124,700
7.68% Preferred 132,419 596 133,015
Total 30,531,396 742,360 31,273,756
Proposal to Ratify Selection of D&T as Independent Auditors
Class of Stock For Against Abstain Total Voted
Common 28,606,612 153,072 256,357 29,016,041
4% Preferred 2,090,940 19,800 13,960 2,124,700
7.68% Preferred 131,742 788 485 133,015
Total 30,829,294 173,660 270,802 31,273,756
Approval of Formation of Holding Company and
an Agreement and Plan of Exchange.
Class of Stock For Against Abstain Broker Non-Votes Total Voted
Common 22,486,080 403,789 376,847 5,749,326 29,016,042
4% Preferred 1,674,620 84,660 62,600 302,820 2,124,700
7.68% Preferred 91,132 668 1,039 40,175 133,014
Total 24,251,832 489,117 440,486 6,092,321 31,273,756
(3) Election of Directors
Name Votes For Votes Withheld
Robert D. Bolinder 30,559,584 714,172
Jon H. Miller 30,531,396 742,360
Gene C. Rose 30,562,771 710,985
Phil Soulen 30,574,513 699,243
Item 5. Other Information
Rule 14a-4 of the Securities and Exchange Commission's proxy
rules allows the Company to use discretionary voting authority to
vote on matters coming before an annual meeting of shareholders,
if the Company does not have notice of the matter at least 45
days before the date corresponding to the date on which the
Company first mailed its proxy materials for the prior year's
annual meeting of shareholders or the date specified by an
advance notice provision in the Company's Bylaws. The Company's
Bylaws do not contain such an advance notice provision. For the
Company's Annual Meeting of Shareholders expected to be held on
May 5, 1999, shareholders must submit such written notice to the
Secretary of the Company on or before February 8, 1999.
This requirement is separate and apart from the Securities and
Exchange Commission's requirements that a shareholder must meet
in order to have a shareholder proposal included in the Company's
proxy statement under Rule 14a-8. For the 1999 Annual Meeting of
Shareholders, any shareholder who wishes to submit a proposal for
inclusion in the Company's proxy materials pursuant to Rule 14a-8
must submit such proposal to the Secretary of the Company on or
before November 23, 1998.
If the Share Exchange and formation of the holding company are
effective prior to the 1999 Annual Meeting of Shareholders, any
proposal by a common shareholder submitted in accordance with the
above provisions will be considered for IDACORP's 1999 Annual
Meeting of Shareholders or Proxy Statement.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit File Number As Exhibit
*2 1-3198 4(f) Agreement and Plan of Exchange,
Form 10-K dated as of February 2, 1998.
for 1997
*3(a) 33-00440 4(a)(xiii) Restated Articles of Incorporation
of the Company as filed with the
Secretary of State of Idaho on
June 30, 1989.
*3(a)(ii) 33-65720 4(a)(ii) Statement of Resolution
Establishing Terms of Flexible
Auction Series A, Serial Preferred
Stock, Without Par Value
(cumulative stated value of
$100,000 per share), as filed with
the Secretary of State of Idaho on
November 5, 1991.
*3(a)(iii) 33-65720 4(a)(iii) Statement of Resolution
Establishing Terms of 7.07% Serial
Preferred Stock, Without Par Value
(cumulative stated value of $100
per share), as filed with the
Secretary of State of Idaho on June
30, 1993.
*3(b) 33-41166 4(b) Waiver resolution to Restated
Articles of Incorporation adopted
by Shareholders on May 1, 1991.
*3(c) 33-00440 4(a)(xiv) By-laws of the Company amended on
June 30, 1989, and presently in
effect.
*4(a)(i) 2-3413 B-2 Mortgage and Deed of Trust, dated
as of October 1, 1937, between the
Company and Bankers Trust Company
and R. G. Page, as Trustees.
*4(a)(ii) Supplemental Indentures to Mortgage
and Deed of Trust:
Number Dated
1-MD B-2-a First July 1, 1939
2-5395 7-a-3 Second November 15, 1943
2-7237 7-a-4 Third February 1, 1947
2-7502 7-a-5 Fourth May 1, 1948
2-8398 7-a-6 Fifth November 1, 1949
2-8973 7-a-7 Sixth October 1, 1951
2-12941 2-C-8 Seventh January 1, 1957
2-13688 4-J Eighth July 15, 1957
2-13689 4-K Ninth November 15, 1957
2-14245 4-L Tenth April 1, 1958
2-14366 2-L Eleventh October 15, 1958
2-14935 4-N Twelfth May 15, 1959
2-18976 4-O Thirteenth November 15, 1960
2-18977 4-Q Fourteenth November 1, 1961
2-22988 4-B-16 Fifteenth September 15, 1964
2-24578 4-B-17 Sixteenth April 1, 1966
2-25479 4-B-18 Seventeenth October 1, 1966
2-45260 2(c) Eighteenth September 1, 1972
2-49854 2(c) Nineteenth January 15, 1974
2-51722 2(c)(i) Twentieth August 1, 1974
2-51722 2(c)(ii) Twenty-first October 15, 1974
2-57374 2(c) Twenty-second November 15, 1976
2-62035 2(c) Twenty-third August 15, 1978
33-34222 4(d)(iii) Twenty-fourth September 1, 1979
33-34222 4(d)(iv) Twenty-fifth November 1, 1981
33-34222 4(d)(v) Twenty-sixth May 1, 1982
33-34222 4(d)(vi) Twenty-seventh May 1, 1986
33-00440 4(c)(iv) Twenty-eighth June 30, 1989
33-34222 4(d)(vii) Twenty-ninth January 1, 1990
33-65720 4(d)(iii) Thirtieth January 1, 1991
33-65720 4(d)(iv) Thirty-first August 15, 1991
33-65720 4(d)(v) Thirty-second March 15, 1992
33-65720 4(d)(vi) Thirty-third April 16, 1993
1-3198 4 Thirty-fourth December 1, 1993
Form 8-K
Dated 12/17/93
*4(b) Instruments relating to American
Falls bond guarantee. (see Exhibits
10(f) and 10(f)(i)).
*4(c) 33-65720 4(f) Agreement to furnish certain debt
instruments.
*4(d) 33-00440 2(a)(iii) Agreement and Plan of Merger dated
March 10, 1989, between Idaho Power
Company, a Maine Corporation, and
Idaho Power Migrating Corporation.
*4(e) 33-65720 4(e) Rights Agreement dated January 11,
1990, between the Company and First
Chicago Trust Company of New York,
as Rights Agent (The Bank of New
York, successor Rights Agent).
*4(e)(i) 1-3198 4(e)(i) Amendment, dated as of January 30,
Form 10-K 1998, related to agreement filed
for 1997 as Exhibit 4(e).
*10(a) 2-51762 5(a) Agreement, dated April 20, 1973,
between the Company and FMC
Corporation.
*10(a)(i) 2-57374 5(b) Letter Agreement, dated October 22,
1975, relating to agreement filed
as Exhibit 10(a).
*10(a)(ii) 2-62034 5(b)(i) Letter Agreement, dated
December 22, 1976, relating to
agreement filed as Exhibit 10(a).
*10(a)(iii) 33-65720 10(a) Letter Agreement, dated
December 11, 1981, relating to
agreement filed as Exhibit 10(a).
*10(b) 2-49584 5(b) Agreements, dated September 22,
1969, between the Company and
Pacific Power & Light Company
relating to the operation,
construction and ownership of the
Jim Bridger Project.
*10(b)(i) 2-51762 5(c) Amendment, dated February 1, 1974,
relating to operation agreement
filed as Exhibit 10(b).
*10(c) 2-49584 5(c) Agreement, dated as of October 11,
1973, between the Company and
Pacific Power & Light Company.
*10(d) 2-49584 5(d) Agreement, dated as of October 24,
1973, between the Company and Utah
Power & Light Company.
*10(d)(i) 2-62034 5(f)(i) Amendment, dated January 25, 1978,
relating to agreement filed as
Exhibit 10(d).
*10(e) 33-65720 10(b) Coal Purchase Contract, dated as of
June 19, 1986, among the Company,
Sierra Pacific Power Company and
Black Butte Coal Company.
*10(f) 2-57374 5(k) Contract, dated March 31, 1976,
between the United States of
America and American Falls
Reservoir District, and related
Exhibits.
*10(f)(i) 33-65720 10(c) Guaranty Agreement, dated March 1,
1990, between the Company and West
One Bank, as Trustee, relating to
$21,425,000 American Falls
Replacement Dam Bonds of the
American Falls Reservoir District,
Idaho.
*10(g) 2-57374 5(m) Agreement, effective April 15,
1975, between the Company and The
Washington Water Power Company.
*10(h) 2-62034 5(p) Bridger Coal Company Agreement,
dated February 1, 1974, between
Pacific Minerals, Inc., and Idaho
Energy Resources Co.
*10(i) 2-62034 5(q) Coal Sales Agreement, dated
February 1, 1974, between Bridger
Coal Company and Pacific Power &
Light Company and the Company.
*10(i)(i) 33-65720 10(d) Second Restated and Amended Coal
Sales Agreement, dated March 7,
1988, among Bridger Coal Company
and PacifiCorp (dba Pacific Power &
Light Company) and the Company.
*10(i)(ii) 1-3198 10(i)(ii) Third Restated and Amended Coal
Form 10-Q Sales Agreement, dated January 1,
for 3/31/96 1996, among Bridger Coal Company
and PacifiCorp (dba Pacific Power &
Light Company) and the Company.
*10(j) 2-62034 5(r) Guaranty Agreement, dated as of
August 30, 1974, with Pacific Power
& Light Company.
*10(k) 2-56513 5(i) Letter Agreement, dated January 23,
1976, between the Company and
Portland General Electric Company.
*10(k)(i) 2-62034 5(s) Agreement for Construction,
Ownership and Operation of the
Number One Boardman Station on
Carty Reservoir, dated as of
October 15, 1976, between Portland
General Electric Company and the
Company.
*10(k)(ii) 2-62034 5(t) Amendment, dated September 30,
1977, relating to agreement filed
as Exhibit 10(k).
*10(k)(iii) 2-62034 5(u) Amendment, dated October 31, 1977,
relating to agreement filed as
Exhibit 10(k).
*10(k)(iv) 2-62034 5(v) Amendment, dated January 23, 1978,
relating to agreement filed as
Exhibit 10(k).
*10(k)(v) 2-62034 5(w) Amendment, dated February 15, 1978,
relating to agreement filed as
Exhibit 10(k).
*10(k)(vi) 2-68574 5(x) Amendment, dated September 1, 1979,
relating to agreement filed as
Exhibit 10(k).
*10(l) 2-68574 5(z) Participation Agreement, dated
September 1, 1979, relating to the
sale and leaseback of coal handling
facilities at the Number One
Boardman Station on Carty
Reservoir.
*10(m) 2-64910 5(y) Agreements for the Operation,
Construction and Ownership of the
North Valmy Power Plant Project,
dated December 12, 1978, between
Sierra Pacific Power Company and
the Company.
*10(n)(i) 1 1-3198 10(n)(i) The Revised Security Plans for
Form 10-K Senior Management Employees and for
for 1994 Directors-a non-qualified, deferred
compensation plan effective
November 30, 1994.
*10(n)(ii) 1 1-3198 10(n)(ii) The Executive Annual Incentive Plan
Form 10-K for senior management employees
for 1994 effective January 1, 1995.
*10(n)(iii) 1 1-3198 10(n)(iii) The 1994 Restricted Stock Plan for
Form 10-K officers and key executives
for 1994 effective July 1, 1994.
*10(n)(iv) 1 1-3198 10(n)(iv) The Revised Security Plans for
Form 10-K Senior Management Employees and for
for 1996 Directors-a non-qualified, deferred
compensation plan effective August
1, 1996.
*10(o) 33-65720 10(f) Residential Purchase and Sale
Agreement, dated August 22, 1981,
among the United Stated of American
Department of Energy acting by and
through the Bonneville Power
Administration, and the Company.
*10(p) 33-65720 10(g) Power Sales Contact, dated
August 25, 1981, including
amendments, among the United States
of America Department of Energy
acting by and through the
Bonneville Power Administration,
and the Company.
*10(q) 33-65720 10(h) Framework Agreement, dated October
1, 1984, between the State of Idaho
and the Company relating to the
Company's Swan Falls and Snake
River water rights.
*10(q)(i) 33-65720 10(h)(i) Agreement, dated October 25, 1984,
between the State of Idaho and the
Company relating to the agreement
filed as Exhibit 10(q).
*10(q)(ii) 33-65720 10(h)(ii) Contract to Implement, dated
October 25, 1984, between the State
of Idaho and the Company relating
to the agreement filed as Exhibit
10(q).
*10(r) 33-65720 10(i) Agreement for Supply of Power and
Energy, dated February 10, 1988,
between the Utah Associated
Municipal Power Systems and the
Company.
*10(s) 33-65720 10(j) Agreement Respecting Transmission
Facilities and Services, dated
March 21, 1988 among PC/UP&L
Merging Corp. and the Company
including a Settlement Agreement
between PacifiCorp and the Company.
*10(s)(i) 33-65720 10(j)(i) Restated Transmission Services
Agreement, dated February 6, 1992,
between Idaho Power Company and
PacifiCorp.
*10(t) 33-65720 10(k) Agreement for Supply of Power and
Energy, dated February 23, 1989,
between Sierra Pacific Power
Company and the Company.
*10(u) 33-65720 10(l) Transmission Services Agreement,
dated May 18, 1989, between the
Company and the Bonneville Power
Administration.
*10(v) 33-65720 10(m) Agreement Regarding the Ownership,
Construction, Operation and
Maintenance of the Milner
Hydroelectric Project (FERC No.
2899), dated January 22, 1990,
between the Company and the Twin
Falls Canal Company and the
Northside Canal Company Limited.
*10(v)(i) 33-65720 10(m)(i) Guaranty Agreement, dated February
10, 1992, between the Company and
New York Life Insurance Company, as
Note Purchaser, relating to
$11,700,000 Guaranteed Notes due
2017 of Milner Dam Inc.
*10(w) 33-65720 10(n) Agreement for the Purchase and Sale
of Power and Energy, dated October
16, 1990, between the Company and
The Montana Power Company.
*10(x) 1-3198 10(x) Agreement for design of substation
Form 10-Q dated October 4, 1995, between the
for 9/30/95 Company and Micron Technology, Inc.
12 Statement Re: Computation of Ratio
of Earnings to Fixed Charges.
12(a) Statement Re: Computation of
Supplemental Ratio of Earnings to
Fixed Charges.
12(b) Statement Re: Computation of Ratio
of Earnings to Combined Fixed
Charges and Preferred Dividend
Requirements.
12(c) Statement Re: Computation of
Supplemental Ratio of Earnings to
Combined Fixed Charges and
Preferred Dividend Requirements.
15 Letter re: unaudited interim
financial information.
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were
filed for the three months ended June 30, 1998.
*Previously Filed and Incorporated Herein by Reference
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
IDAHO POWER COMPANY
(Registrant)
Date August 7, 1998 By: /s/ J LaMont Keen
J LaMont Keen
Vice President, Chief
Financial
Officer and Treasurer
(Principal Financial Officer
and
Principal Accounting
Officer)
_______________________________
1 Compensatory plan
<TABLE>
<CAPTION>
Ex-12
Idaho Power Company
Consolidated Financial Information
Ratio of Earnings to Fixed Charges
Twelve Months
Twelve Months Ended December 31, Ended
(Thousands of Dollars) June 30,
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Computation of Ratio of Earnings to
Fixed Charges:
Consolidated net income..................... $84,464 $74,930 $86,921 $90,618 $92,274 $93,079
Income taxes:
Income taxes (incl amounts charged
to other income and deductions)............ 38,057 35,307 49,498 51,316 47,559 43,793
Investment tax credit adjustment............ (1,583) (1,064) (1,086) 776 (1,087) (470)
Total income taxes.................... 36,474 34,243 48,412 52,092 46,472 43,323
Income before income taxes...................... 120,938 109,173 135,333 142,710 138,746 136,402
Fixed Charges:
Interest on long-term debt................. 53,706 51,172 51,147 52,165 53,215 52,350
expense and premium - net.................. 507 567 567 594 653 656
Interest on short-term bank loans........... 220 1,157 3,144 2,269 2,902 3,050
Other interest.............................. 2,023 1,538 1,598 2,319 3,990 4,104
Interest portion of rentals................. 1,077 794 925 991 982 1,002
Total fixed charges................... 57,533 55,228 57,381 58,338 61,742 61,162
Earnings - as defined.......................... $178,471 $164,401 $192,714 $201,048 $200,488 $197,564
Ratio of earnings to fixed charges.............. 3.10x 2.98x 3.36x 3.45x 3.25x 3.23x
Exhibit 12
</TABLE>
<TABLE>
<CAPTION>
Ex-12a
Idaho Power Company
Consolidated Financial Information
Supplemental Ratio of Earnings to Fixed Charges
Twelve Months
Twelve Months Ended December 31, Ended
(Thousands of Dollars) June 30,
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Computation of Ratio of Earnings to
Fixed Charges:
Consolidated net income..................... $84,464 $74,930 $86,921 $90,618 $92,274 $93,079
Income taxes:
Income taxes (incl amounts charged
to other income and deductions)............ 38,057 35,307 49,498 51,316 47,559 43,793
Investment tax credit adjustment............ (1,583) (1,064) (1,086) 776 (1,087) (470)
Total income taxes.................... 36,474 34,243 48,412 52,092 46,472 43,323
Income before income taxes...................... 120,938 109,173 135,333 142,710 138,746 136,402
Fixed Charges:
Interest on long-term debt................. 53,706 51,172 51,147 52,165 53,215 52,350
expense and premium - net.................. 507 567 567 594 653 656
Interest on short-term bank loans........... 220 1,157 3,144 2,269 2,902 3,050
Other interest.............................. 2,023 1,538 1,598 2,319 3,990 4,104
Interest portion of rentals................. 1,077 794 925 991 982 1,002
Total fixed charges................... 57,533 55,228 57,381 58,338 61,742 61,162
Supplemental increment to fixed charges* .. 2,631 2,622 2,611 2,600 2,574 2,580
Total supplemental fixed charges...... 60,164 57,850 59,992 60,938 64,316 63,742
Supplemental Earnings - as defined............. $181,102 $167,023 $195,325 $203,648 $203,062 $200,144
Supplemental Ratio of earnings to fixed
charges 3.01x 2.89x 3.26x 3.34x 3.16x 3.14x
<F1>
* Explanation of increment:
Interest on the guaranty of American Falls Reservoir District bonds
and Milner Dam Inc. notes which are already included in operating expense.
Exhibit 12-A
</TABLE>
<TABLE>
<CAPTION>
Ex-12b
Idaho Power Company
Consolidated Financial Information
Ratio of Earnings to Combined Fixed Charges and Preferred Dividends Requirements Twelve Months
Twelve Months Ended December 31, Ended
(Thousands of Dollars) June 30,
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Computation of Ratio of Earnings to
Fixed Charges:
Consolidated net income..................... $84,464 $74,930 $86,921 $90,618 $92,274 $93,079
Income taxes:
Income taxes (incl amounts charged
to other income and deductions)............ 38,057 35,307 49,498 51,316 47,559 43,793
Investment tax credit adjustment............ (1,583) (1,064) (1,086) 776 (1,087) (470)
Total income taxes.................... 36,474 34,243 48,412 52,092 46,472 43,323
Income before income taxes...................... 120,938 109,173 135,333 142,710 138,746 136,402
Fixed Charges:
Interest on long-term debt................. 53,706 51,172 51,147 52,165 53,215 52,350
expense and premium - net.................. 507 567 567 594 653 656
Interest on short-term bank loans........... 220 1,157 3,144 2,269 2,902 3,050
Other interest.............................. 2,023 1,538 1,598 2,319 3,990 4,104
Interest portion of rentals................. 1,077 794 925 991 982 1,002
Total fixed charges................... 57,533 55,228 57,381 58,338 61,742 61,162
Preferred dividends requirements............ 8,547 10,682 12,392 12,146 7,803 8,663
Total fixed charges and preferred
dividends............................ 66,080 65,910 69,773 70,484 69,545 69,825
Earnings - as defined.......................... $178,471 $164,401 $192,714 $201,048 $200,488 $197,564
Ratio of earnings to fixed charges and
preferred dividends.......................... 2.70x 2.49x 2.76x 2.85x 2.88x 2.83x
Exhibit 12-B
</TABLE>
<TABLE>
<CAPTION>
Ex-12c
Idaho Power Company
Consolidated Financial Information
Supplemental Ratio of Earnings to Combined Fixed Charges and Preferred Dividends Requirements
Twelve Months
Twelve Months Ended December 31, Ended
(Thousands of Dollars) June 30,
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Computation of Ratio of Earnings to
Fixed Charges:
Consolidated net income..................... $84,464 $74,930 $86,921 $90,618 $92,274 $93,079
Income taxes:
Income taxes (incl amounts charged
to other income and deductions)............ 38,057 35,307 49,498 51,316 47,559 43,793
Investment tax credit adjustment............ (1,583) (1,064) (1,086) 776 (1,087) (470)
Total income taxes.................... 36,474 34,243 48,412 52,092 46,472 43,323
Income before income taxes...................... 120,938 109,173 135,333 142,710 138,746 136,402
Fixed Charges:
Interest on long-term debt................. 53,706 51,172 51,147 52,165 53,215 52,350
expense and premium - net.................. 507 567 567 594 653 656
Interest on short-term bank loans........... 220 1,157 3,144 2,269 2,902 3,050
Other interest.............................. 2,023 1,538 1,598 2,319 3,990 4,104
Interest portion of rentals................. 1,077 794 925 991 982 1,002
Total fixed charges................... 57,533 55,228 57,381 58,338 61,742 61,162
Supplemental increment to fixed charges* .. 2,631 2,622 2,611 2,600 2,574 2,580
Supplemental fixed charges............ 60,164 57,850 59,992 60,938 64,316 63,742
Preferred dividends requirements............ 8,547 10,682 12,392 12,146 7,803 8,663
Total supplemental fixed charges
and preferred dividends.............. 68,711 68,532 72,384 73,084 72,119 72,405
Supplemental Earnings - as defined............. $181,102 $167,023 $195,325 $203,648 $203,062 $200,144
Supplemental Ratio of earnings to fixed
charges and preferred dividends.............. 2.64x 2.44x 2.70x 2.79x 2.82x 2.76x
<F2>
* Explanation of increment: Exhibit 12-C
interest on the guaranty of American Falls District bonds
and Milner Dam Inc. notes which are already included in operating expense.
</TABLE>
Exhibit 15
August 7, 1998
Idaho Power Company
Boise, Idaho
We have made a review, in accordance with standards established
by the American Institute of Certified Public Accountants, of the
unaudited interim financial information of Idaho Power Company
and subsidiaries for the periods ended June 30, 1998 and 1997, as
indicated in our report dated August 3, 1998; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included
in your Quarterly Report on Form 10-Q for the quarter ended June
30, 1998, is incorporated by reference in Registration Statement
Nos. 333-00139 and 33-51215 on Form S-3, Registration Statement
No. 33-56071 on Form S-8 and Registration Statement No. 333-48031
of IDACORP, Inc. on Form S-4.
We also are aware that the aforementioned report, pursuant to
Rule 436(c) under the Securities Act of 1933, is not considered a
part of the aforementioned registration statements prepared or
certified by an accountant or a report prepared or certified by
an accountant within the meaning of Sections 7 and 11 of that
Act.
DELOITTE & TOUCHE LLP
Portland, Oregon
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from balance
sheets, income statements and cash flow statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,720,067
<OTHER-PROPERTY-AND-INVEST> 113,831
<TOTAL-CURRENT-ASSETS> 202,819
<TOTAL-DEFERRED-CHARGES> 401,968
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,438,685
<COMMON> 94,031
<CAPITAL-SURPLUS-PAID-IN> 358,113
<RETAINED-EARNINGS> 272,830
<TOTAL-COMMON-STOCKHOLDERS-EQ> 724,974
0
106,556
<LONG-TERM-DEBT-NET> 686,227
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 63,649
<COMMERCIAL-PAPER-OBLIGATIONS> 52,527
<LONG-TERM-DEBT-CURRENT-PORT> 35,167
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 769,585
<TOT-CAPITALIZATION-AND-LIAB> 2,438,685
<GROSS-OPERATING-REVENUE> 459,792
<INCOME-TAX-EXPENSE> 22,338
<OTHER-OPERATING-EXPENSES> 360,454
<TOTAL-OPERATING-EXPENSES> 382,792
<OPERATING-INCOME-LOSS> 77,000
<OTHER-INCOME-NET> 4,027
<INCOME-BEFORE-INTEREST-EXPEN> 81,027
<TOTAL-INTEREST-EXPENSE> 29,803
<NET-INCOME> 51,224
2,822
<EARNINGS-AVAILABLE-FOR-COMM> 48,402
<COMMON-STOCK-DIVIDENDS> 34,979
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 91,054
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.29
</TABLE>
