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 March 31, 2003

OR

	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
	EXCHANGE ACT OF 1934

 

For the transition period from

to

 

		Exact name of registrants as specified		I.R.S. Employer
Commission File		in their charters, state of incorporation, address		Identification
Number		of principal executive offices, and telephone number		Number
1-14465		IDACORP, Inc.		82-0505802
1-3198		Idaho Power Company		82-0130980
		1221 W. Idaho Street
		Boise, ID  83702-5627
		Telephone:  (208) 388-2200
		State of Incorporation:  Idaho
		Web site:   www.idacorpinc.com

 

None

Former name, former address and former fiscal year, if changed since last report.

Indicate by check mark whether the registrants (1) have 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 by check mark whether the registrants are accelerated filers (as defined in Rule 12b-2 of the Exchange Act).

IDACORP, Inc.	Yes   X    No  ___
Idaho Power Company	Yes          No   X

Number of shares of Common Stock outstanding as of March 31, 2003:

IDACORP, Inc.:	38,196,287
Idaho Power Company:	37,612,351 all held by IDACORP, Inc.

 

This combined Form 10-Q represents separate filings by IDACORP, Inc. and Idaho Power Company.  Information contained herein relating to an individual registrant is filed by that registrant on its own behalf.  Idaho Power Company makes no representations as to the information relating to IDACORP, Inc.'s other operations.

COMMONLY USED TERMS
AFDC	-	Allowance for Funds Used During Construction
APB	-	Accounting Principles Board
BPA	-	Bonneville Power Administration
Cal ISO	-	California Independent System Operator
CalPX	-	California Power Exchange
CSPP	-	Cogeneration and Small Power Production
DSM	-	Demand-Side Management
EITF	-	Emerging Issues Task Force
EPA	-	Environmental Protection Agency
EPS	-	Earning per share
FASB	-	Financial Accounting Standards Board
FERC	-	Federal Energy Regulatory Commission
FPA	-	Federal Power Act
Garnet	-	Garnet Energy LLC, a subsidiary of Ida-West
HCC	-	Hells Canyon Complex
Ida-West	-	Ida-West Energy, a subsidiary of IDACORP, Inc.
IE	-	IDACORP Energy, a subsidiary of IDACORP, Inc.
IFS	-	IDACORP Financial Services, a subsidiary of IDACORP, Inc.
IPC	-	Idaho Power Company, a subsidiary of IDACORP, Inc.
IPUC	-	Idaho Public Utilities Commission
IRP	-	Integrated Resource Plan
kW	-	kilowatt
kWh	-	kilowatt-hour
LTICP	-	Long-Term Incentive and Compensation Plan
MD&A	-	Management's Discussion and Analysis
MMbtu	-	Million British Thermal Units
MW	-	Megawatt
MWh	-	Megawatt-hour
OPUC	-	Oregon Public Utility Commission
Overton	-	Overton Power District No. 5
PCA	-	Power Cost Adjustment
PG&E	-	Pacific Gas and Electric Company
PURPA	-	Public Utilities Regulatory Policy Act
REA	-	Rural Electrification Administration
RMC	-	Risk Management Committee
RTOs	-	Regional Transmission Organizations
SCE	-	Southern California Edison
SFAS	-	Statement of Financial Accounting Standards
SPPCo	-	Sierra Pacific Power Company
Valmy	-	North Valmy Steam Electric Generating Plant

 

 

 

 

INDEX

Page
Part I.  Financial Information:
	Item 1.  Financial Statements (unaudited)
		IDACORP, Inc.:
			Consolidated Statements of Operations	1
			Consolidated Balance Sheets	2-3
			Consolidated Statements of Cash Flows	4
			Consolidated Statements of Comprehensive Income (Loss)	5
			Notes to Consolidated Financial Statements	6-23
			Independent Accountants' Report	24
		Idaho Power Company:
			Consolidated Statements of Income	25
			Consolidated Balance Sheets	26-27
			Consolidated Statements of Capitalization	28
			Consolidated Statements of Cash Flows	29
			Consolidated Statements of Comprehensive Income	30
			Notes to Consolidated Financial Statements	31-32
			Independent Accountants' Report	33
	Item 2.  Management's Discussion and Analysis of Financial
		Condition and Results of Operations		34-53
	Item 3.  Quantitative and Qualitative Disclosures about Market Risk			54-55
	Item 4.  Controls and Procedures			55
Part II.  Other Information:
	Item 1.  Legal Proceedings			56
	Item 6.  Exhibits and Reports on Form 8-K			56-61
Signatures				62-63
Certifications				64-67

 

 

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
Item 1.  Financial Statements
IDACORP, Inc.
Consolidated Statements of Operations
(unaudited)

				Three Months Ended March 31,
				2003			2002
				(thousands of dollars except for per
				share amounts)
OPERATING REVENUES:
	Electric utility:
		General business		$	175,062		$	186,120
		Off-system sales			18,608			20,159
		Other revenues			9,752			8,820
			Total electric utility revenues		203,422			215,099
	Energy marketing				3,593			20,981
	Other				4,913			3,513
		Total operating revenues			211,928			239,593
OPERATING EXPENSES:
	Electric utility:
		Purchased power			13,605			30,190
		Fuel expense			25,538			27,929
		Power cost adjustment			51,847			34,060
		Other operations and maintenance			50,585			49,258
		Depreciation			24,135			23,171
		Taxes other than income taxes			5,157			5,186
			Total electric utility expenses		170,867			169,794
	Energy marketing:
		Cost of revenues			3,720			11,462
		Selling, general and administrative			6,703			6,032
		Net (gain) loss on legal disputes			10,938			(2,775)
	Other				8,266			7,823
			Total operating expenses		200,494			192,336
OPERATING INCOME (LOSS):
	Electric utility				32,555			45,305
	Energy marketing				(17,768)			6,262
	Other				(3,353)			(4,310)
		Total operating income			11,434			47,257
OTHER INCOME					2,600			5,094
INTEREST EXPENSE AND OTHER:
	Interest on long-term debt				15,193			13,317
	Other interest				1,045			3,647
	Preferred dividends of Idaho Power Company				868			1,362
		Total interest expense and other			17,106			18,326
INCOME (LOSS) BEFORE INCOME TAXES					(3,072)			34,025
INCOME TAX EXPENSE					-			9,329
NET INCOME (LOSS)				$	(3,072)		$	24,696
AVERAGE COMMON SHARES
	OUTSTANDING (000's)				38,141			37,560
EARNINGS (LOSS) PER SHARE OF COMMON
	STOCK (basic and diluted)			$	(0.08)		$	0.66

The accompanying notes are an integral part of these statements.

 

IDACORP, Inc.
Consolidated Balance Sheets
(unaudited)

			March 31,			December 31,
			2003			2002
ASSETS			(thousands of dollars)
CURRENT ASSETS:
	Cash and cash equivalents		$	41,534		$	42,736
	Receivables:
		Customer		151,927			176,846
		Allowance for uncollectible accounts		(43,212)			(43,311)
		Employee notes		7,684			7,646
		Other		17,691			15,025
	Energy marketing assets			71,665			85,138
	Accrued unbilled revenues			28,890			35,714
	Materials and supplies (at average cost)			23,216			22,812
	Fuel stock (at average cost)			8,791			6,943
	Prepayments			31,355			34,329
	Regulatory assets			15,067			17,147
		Total current assets		354,608			401,025
INVESTMENTS				205,664			206,348
PROPERTY, PLANT AND EQUIPMENT:
	Utility plant in service			3,107,678			3,086,965
	Accumulated provision for depreciation			(1,320,190)			(1,294,961)
		Utility plant in service - net		1,787,488			1,792,004
	Construction work in progress			101,282			96,209
	Utility plant held for future use			2,732			2,335
	Other property, net of accumulated depreciation			13,471			15,950
		Property, plant and equipment - net		1,904,973			1,906,498
OTHER ASSETS:
	American Falls and Milner water rights			31,585			31,585
	Company-owned life insurance			35,605			35,299
	Energy marketing assets - long-term			55,206			64,733
	Regulatory assets			434,076			482,159
	Long-term receivable			52,500			73,941
	Other			51,324			51,050
		Total other assets		660,296			738,767
		TOTAL	$	3,125,541		$	3,252,638

The accompanying notes are an integral part of these statements.

 

 

 

 

 

IDACORP, Inc.
Consolidated Balance Sheets
(unaudited)

				March 31,			December 31,
				2003			2002
LIABILITIES AND SHAREHOLDERS' EQUITY				(thousands of dollars)
CURRENT LIABILITIES:
	Current maturities of long-term debt			$	144,105		$	89,592
	Notes payable				102,850			176,200
	Accounts payable				86,392			130,930
	Energy marketing liabilities				40,451			59,917
	Taxes accrued				84,107			49,709
	Interest accrued				24,645			13,639
	Deferred income taxes				16,080			21,527
	Other				26,800			35,119
		Total current liabilities			525,430			576,633
OTHER LIABILITIES:
	Deferred income taxes				566,005			595,496
	Energy marketing liabilities - long-term				51,683			51,761
	Regulatory liabilities				114,430			114,247
	Other				90,246			87,605
		Total other liabilities			822,364			849,109
LONG-TERM DEBT					868,920			898,676
COMMITMENTS AND CONTINGENT LIABILITIES
PREFERRED STOCK OF IDAHO POWER COMPANY					52,803			53,393
SHAREHOLDERS' EQUITY:
	Common stock, no par value (shares authorized 120,000,000;
		38,341,358 and 38,152,436 shares issued, respectively)			474,140			470,361
	Retained earnings				394,536			415,315
	Accumulated other comprehensive income (loss)				(8,114)			(7,109)
	Treasury stock (145,071 and 134,667 shares at cost, respectively)				(4,538)			(3,740)
		Total shareholders' equity			856,024			874,827
			TOTAL	$	3,125,541		$	3,252,638

The accompanying notes are an integral part of these statements.

 

 

 

 

IDACORP, Inc.
Consolidated Statements of Cash Flows
(unaudited)

				Three Months Ended
				March 31,
				2003			2002
				(thousands of dollars)
OPERATING ACTIVITIES:
	Net income (loss)			$	(3,072)		$	24,696
	Adjustments to reconcile net income (loss) to net cash provided by
		operating activities:
		Net non-cash loss on legal disputes			10,938			-
		Allowance for uncollectible accounts			(99)			-
		Unrealized (gains) losses from energy marketing activities			(1,154)			20,430
		Depreciation and amortization			32,381			28,897
		Deferred taxes and investment tax credits			(30,572)			(14,203)
		Accrued PCA costs			50,578			30,196
		Change in:
			Receivables and prepayments		28,972			23,984
			Accrued unbilled revenues		6,824			10,050
			Materials and supplies and fuel stock		(2,252)			(236)
			Accounts payable and other accrued liabilities		(40,577)			(88,154)
			Taxes receivable/accrued		34,291			66,422
			Other current assets and liabilities		9,949			6,499
		Other - net			(721)			1,676
			Net cash provided by operating activities		95,486			110,257
INVESTING ACTIVITIES:
	Additions to property, plant and equipment				(24,968)			(26,853)
	Investments in affordable housing projects				-			(43,523)
	Other - net				(7,289)			(686)
		Net cash used in investing activities			(32,257)			(71,062)
FINANCING ACTIVITIES:
	Proceeds from issuance of other long-term debt				25,475			-
	Retirement of first mortgage bonds				-			(50,000)
	Retirement of other long-term debt				(766)			(2,829)
	Retirement of preferred stock of Idaho Power Company				(589)			(112)
	Dividends on common stock				(17,706)			(17,466)
	Increase (decrease) in short-term borrowings				(73,350)			23,250
	Common stock issued				4,123			4,088
	Acquisition of treasury shares				(798)			(1,145)
	Other - net				(820)			(2,178)
		Net cash used in financing activities			(64,431)			(46,392)
Net decrease in cash and cash equivalents					(1,202)			(7,197)
Cash and cash equivalents beginning of period					42,736			66,688
Cash and cash equivalents end of period				$	41,534		$	59,491
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid (received) during the period for:
		Income taxes		$	292		$	(41,070)
		Interest (net of amount capitalized)		$	4,581		$	8,681

 

The accompanying notes are an integral part of these statements.

 

 

 

IDACORP, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)

 

				Three Months Ended
				March 31,
				2003			2002
				(thousands of dollars)
NET INCOME (LOSS)				$	(3,072)		$	24,696
OTHER COMPREHENSIVE INCOME (LOSS):
	Unrealized gains on securities:
		Unrealized holding gains (losses) arising during the period,
			net of tax of ($792) and ($123)		(1,334)			(249)
		Less: reclassification adjustment for (gains) losses included
			in net income, net of tax of $211 and ($30)		329			(47)
			Net unrealized gains		(1,005)			(296)
TOTAL COMPREHENSIVE INCOME (LOSS)				$	(4,077)		$	24,400

 

The accompanying notes are an integral part of these statements.

 

 

 

 

 

 

IDACORP, Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Business
IDACORP, Inc. (IDACORP) is a holding company whose principal operating subsidiaries are Idaho Power Company (IPC) and IDACORP Energy (IE).  IPC is regulated by the Federal Energy Regulatory Commission (FERC) and the state regulatory commissions of Idaho and Oregon and is engaged in the generation, transmission, distribution, sale and purchase of electric energy.  IPC is the parent of Idaho Energy Resources Co., a joint venturer in Bridger Coal Company, which supplies coal to the Jim Bridger generating plant owned in part by IPC.

IE, a marketer of electricity and natural gas, is in the process of winding down its operations.

IDACORP's other significant operating subsidiaries are:

Ida-West Energy - developer and manager of independent power projects;

IdaTech - developer of integrated fuel cell systems;

IDACORP Financial Services, Inc. (IFS) - affordable housing and other real estate investments;

Velocitus - commercial and residential Internet service provider; and

IDACOMM - provider of telecommunications services.

 

Principles of Consolidation
The consolidated financial statements of IDACORP and IPC include the accounts of each company and their wholly-owned or controlled subsidiaries.  All significant intercompany balances have been eliminated in consolidation.  Investments in business entities in which IDACORP and IPC and their 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.

Financial Statements
In the opinion of IDACORP and IPC, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly their consolidated financial position as of March 31, 2003, and consolidated results of operations and consolidated cash flows for the three months ended March 31, 2003 and 2002.  These financial statements do not contain the complete detail or footnote disclosure concerning accounting policies and other matters that would be included in full year financial statements and therefore they should be read in conjunction with the audited consolidated financial statements included in IDACORP's and IPC's Annual Report on Form 10-K for the year ended December 31, 2002.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

Earnings Per Share
The computation of diluted earnings (loss) per share (EPS) differs from basic EPS only due to including immaterial amounts of potentially dilutive shares related to stock-based compensation awards.

Options on 1,261,000 shares of common stock were not included in computing the March 31, 2003 diluted EPS because their effects were antidilutive.  Options on 849,000 shares of common stock were not included in computing the March 31, 2002 diluted EPS because the options' exercise prices were greater than the average market price of the common stock during the period.  These options expire from 2010 to 2013 and were still outstanding at March 31, 2003.

Stock-Based Compensation
At March 31, 2003, two stock-based employee compensation plans existed.  These plans are accounted for under the recognition and measurement principles of Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees," and related interpretations.  Grants of restricted stock are reflected in net income based on the market value at the award date, or the year-end price for shares not yet vested.  No stock-based employee compensation cost is reflected in net income for stock options, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant.  IDACORP and IPC have adopted the disclosure only provision of Statement of Financial Accounting Standards (SFAS) 123, "Accounting for Stock-Based Compensation."  The following table illustrates the effect on net income and EPS if the fair value recognition provisions of SFAS 123 had been applied to stock-based employee compensation (in thousands of dollars except for per share amounts):

			Three Months Ended
			March 31,
			2003			2002
Net income (loss), as reported			$	(3,072)		$	24,696
Add: Stock-based employee compensation expense included in
	reported net income (loss), net of related tax effects			(18)			115
Deduct: Total stock-based employee compensation expense
	determined under fair value based method for all awards, net
	of related tax effects			164			607
		Pro forma net income (loss)	$	(3,254)		$	24,204
Earnings (loss) per share:
	Basic and diluted - as reported		$	(0.08)		$	0.66
	Basic and diluted - pro forma			(0.09)			0.64

 

Adopted Accounting Pronouncements
On January 1, 2003, IDACORP and IPC adopted SFAS 143, "Accounting for Asset Retirement Obligations."  This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.  An obligation may result from the acquisition, construction, development and the normal operation of a long-lived asset.  SFAS 143 requires an entity to record the fair value of a liability for an asset retirement obligation (ARO) in the period in which it is incurred.  When the liability is initially recorded, the entity increases the carrying amount of the related long-lived asset to reflect the future retirement cost.  Over time, the liability is accreted to its present value and paid, and the capitalized cost is depreciated over the useful life of the related asset.  If at the end of the asset's life the recorded liability differs from the actual obligations paid, a gain or loss would be recognized.  As a rate-regulated entity, IPC expects to record regulatory assets and liabilities instead of accretion, depreciation and gains or losses, if the criteria for such treatment are met.

SFAS 143 is effective beginning in 2003.  IPC and IDACORP performed detailed assessments of the applicability and implications of SFAS 143, and AROs related to two of IPC's jointly owned coal-fired generation facilities and IPC's transmission and distribution facilities, have been identified.  IPC recorded an ARO of $7 million, an asset of $2 million, accumulated depreciation of $1 million and a regulatory asset of $6 million.  These amounts do not include an amount for the transmission and distribution facilities because, based on the indeterminate life of these assets, an ARO calculation cannot be made.  The regulated operations of IPC also collect removal costs in rates for certain assets that do not have associated legal AROs.  The adoption of SFAS 143 required IPC to redesignate these removal costs as regulatory liabilities.  As of March 31, 2003, IPC estimated that it had approximately $137 million of such regulatory liabilities recorded in Accumulated Provision for Depreciation.

Also, an ARO exists for the reclamation of the Bridger Coal mine property, which is leased by Bridger Coal Company, an equity-method investee of IPC.  Because Bridger Coal has a March 31, 2003 fiscal year end, it adopted SFAS 143 on April 1, 2003.  Upon adoption of SFAS 143, IPC will not record a net change in its investment in Bridger Coal, as Bridger Coal also expects to apply regulatory accounting, recording regulatory assets and liabilities instead of accretion, depreciation and gains or losses.

If the conditions of SFAS 143 had been applied to the consolidated balance sheets at December 31, 2002 and 2001, IDACORP's and IPC's liability for AROs would have been $7 million and $6 million, respectively.

New Accounting Pronouncement
In April 2003, the Financial Accounting Standards Board (FASB) issued SFAS 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," which amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities."