IDACORP INC - 10-Q Quarterly Report

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, 2004

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

For the transition period from

	Exact name of registrants as specified	I.R.S. Employer
Commission File	in their charters, address of principal	Identification
Number	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
	(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 registrants were required to file such reports), and (2) have 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, 2004:

IDACORP, Inc.:	38,184,622
Idaho Power Company:	39,150,812, 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
AG	-	Attorney General
ALJ	-	Administrative Law Judge
Cal ISO	-	California Independent System Operator
CalPX	-	California Power Exchange
EPS	-	Earning per share
ESA	-	Endangered Species Act
FERC	-	Federal Energy Regulatory Commission
FIN	-	Financial Accounting Standards Board Interpretation
FPA	-	Federal Power Act
GAAP	-	Accounting Principles Generally Accepted in the United States of
			America
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
maf	-	Million acre-feet
MD&A	-	Management's Discussion and Analysis of Financial Condition and
			Results of Operations
MMCP	-	Mitigated Market Clearing Price
Moody's	-	Moody's Investors Service
MW	-	Megawatt
MWh	-	Megawatt-hour
NPC	-	Nevada Power Company
OPUC	-	Oregon Public Utility Commission
PCA	-	Power Cost Adjustment
PM&E	-	Protection, Mitigation and Enhancement
PMC	-	Plaintiff's Master Complaint
REA	-	Rural Electrification Administration
RTOs	-	Regional Transmission Organizations
S&P	-	Standard & Poor's Ratings Services
SFAS	-	Statement of Financial Accounting Standards
VIEs	-	Variable Interest Entities
WSPP	-	Western Systems Power Pool

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	6-22
			Independent Accountants' Report	23
		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
			Independent Accountants' Report	32

	Item 2. Management's Discussion and Analysis of Financial
		Condition and Results of Operations		33-56

	Item 3. Quantitative and Qualitative Disclosures about Market Risk			56-57

	Item 4. Controls and Procedures			57

Part II. Other Information:

	Item 1. Legal Proceedings			58

	Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
		Securities		58

	Item 5. Other Information			58

	Item 6. Exhibits and Reports on Form 8-K			59-65

Signatures				66-67

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.

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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
IDACORP, Inc.
Consolidated Statements of Operations
(unaudited)

				Three Months Ended March 31,
				2004		2003
				(thousands of dollars except for per
				share amounts)
OPERATING REVENUES:
	Electric utility:
		General business		$	146,157	$	175,062
		Off-system sales			28,121		18,608
		Other revenues			9,325		9,752
			Total electric utility revenues		183,603		203,422
	Energy marketing				86		3,593
	Other				4,500		4,913
		Total operating revenues			188,189		211,928

OPERATING EXPENSES:
	Electric utility:
		Purchased power			18,505		13,605
		Fuel expense			27,504		25,538
		Power cost adjustment			12,564		51,847
		Other operations and maintenance			54,146		50,585
		Depreciation			24,890		24,135
		Taxes other than income taxes			5,565		5,157
			Total electric utility expenses		143,174		170,867
	Energy marketing:
		Cost of revenues			(79)		3,720
		Selling, general and administrative			520		6,703
		Net loss on legal disputes			-		10,938
	Other				8,380		8,266
			Total operating expenses		151,995		200,494

OPERATING INCOME (LOSS):
	Electric utility				40,429		32,555
	Energy marketing				(355)		(17,768)
	Other				(3,880)		(3,353)
		Total operating income			36,194		11,434

OTHER INCOME					6,357		6,152

OTHER EXPENSES					3,547		3,522

INTEREST EXPENSE AND PREFERRED DIVIDENDS:
	Interest on long-term debt				13,353		15,193
	Other interest				453		1,075
	Preferred dividends of Idaho Power Company				854		868
		Total interest expense and preferred dividends			14,660		17,136

INCOME (LOSS) BEFORE INCOME TAXES					24,344		(3,072)

INCOME TAX EXPENSE					4,685		-

NET INCOME (LOSS)				$	19,659	$	(3,072)

AVERAGE COMMON SHARES OUTSTANDING (000's)					38,200		38,192
EARNINGS (LOSS) PER SHARE OF COMMON
	STOCK (basic and diluted)			$	0.51	$	(0.08)

The accompanying notes are an integral part of these statements.

IDACORP, Inc.
Consolidated Balance Sheets
(unaudited)

			March 31,		December 31,
			2004		2003
ASSETS			(thousands of dollars)

CURRENT ASSETS:
	Cash and cash equivalents		$	79,637	$	75,159
	Receivables:
		Customer		100,743		93,599
		Allowance for uncollectible accounts		(43,309)		(43,210)
		Employee notes		3,312		3,347
		Other		6,988		8,209
	Energy marketing assets			7,194		4,176
	Accrued unbilled revenues			23,951		30,869
	Materials and supplies (at average cost)			27,487		21,351
	Fuel stock (at average cost)			4,975		6,228
	Prepayments			27,276		27,779
	Regulatory assets			5,124		6,269
		Total current assets		243,378		233,776

INVESTMENTS				196,079		204,474

PROPERTY, PLANT AND EQUIPMENT:
	Utility plant in service			3,229,618		3,220,228
	Accumulated provision for depreciation			(1,258,409)		(1,239,604)
		Utility plant in service - net		1,971,209		1,980,624
	Construction work in progress			114,678		96,091
	Utility plant held for future use			2,438		2,438
	Other property, net of accumulated depreciation			39,893		9,166
		Property, plant and equipment - net		2,128,218		2,088,319

OTHER ASSETS:
	American Falls and Milner water rights			31,585		31,585
	Company-owned life insurance			35,829		35,624
	Energy marketing assets - long-term			19,002		14,358
	Regulatory assets			414,193		427,760
	Long-term receivables			3,214		3,106
	Employee notes			4,595		4,775
	Other			58,412		57,949
		Total other assets		566,830		575,157

		TOTAL	$	3,134,505	$	3,101,726

The accompanying notes are an integral part of these statements.

IDACORP, Inc.
Consolidated Balance Sheets
(unaudited)

				March 31,		December 31,
				2004		2003
LIABILITIES AND SHAREHOLDERS' EQUITY				(thousands of dollars)

CURRENT LIABILITIES:
	Current maturities of long-term debt			$	18,027	$	67,923
	Notes payable				92,995		93,650
	Accounts payable				35,775		60,916
	Energy marketing liabilities				7,194		4,317
	Taxes accrued				45,883		35,580
	Interest accrued				22,178		13,741
	Deferred income taxes				5,195		5,639
	Other				23,301		25,557
		Total current liabilities			250,548		307,323

OTHER LIABILITIES:
	Deferred income taxes				553,105		554,715
	Energy marketing liabilities - long-term				19,002		14,393
	Regulatory liabilities				259,961		258,524
	Other				108,455		104,290
		Total other liabilities			940,523		931,922

LONG-TERM DEBT					1,019,418		945,834

COMMITMENTS AND CONTINGENT LIABILITIES

PREFERRED STOCK OF IDAHO POWER COMPANY					52,331		52,366

SHAREHOLDERS' EQUITY:
	Common stock, no par value (shares authorized 120,000,000;
		38,341,358 shares issued)			474,294		472,902
	Retained earnings				405,358		397,167
	Accumulated other comprehensive income (loss)				(2,269)		(2,630)
	Treasury stock (156,736 and 110,748 shares at cost, respectively)				(4,627)		(3,158)
	Unearned compensation				(1,071)		-
		Total shareholders' equity			871,685		864,281

			TOTAL	$	3,134,505	$	3,101,726

The accompanying notes are an integral part of these statements.

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

				Three Months Ended
				March 31,
				2004		2003
				(thousands of dollars)
OPERATING ACTIVITIES:
	Net income (loss)			$	19,659	$	(3,072)
	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			84		(99)
		Unrealized gains from energy marketing activities			-		(1,154)
		Depreciation and amortization			30,667		32,381
		Deferred taxes and investment tax credits			(1,498)		(30,572)
		Accrued power cost adjustment costs			12,043		50,578
		Change in:
			Receivables and prepayments		(4,698)		28,995
			Accrued unbilled revenues		6,918		6,824
			Materials and supplies and fuel stock		392		(2,252)
			Accounts payable and other accrued liabilities		(27,077)		(40,577)
			Taxes receivable/accrued		10,303		34,291
			Other current liabilities		7,319		9,949
		Other assets			754		(2,208)
		Other liabilities			3,441		1,487
			Net cash provided by operating activities		58,307		95,509

INVESTING ACTIVITIES:
	Additions to property, plant and equipment				(38,013)		(24,968)
	Other assets				424		-
	Other liabilities				136		(7,312)
		Net cash used in investing activities			(37,453)		(32,280)

FINANCING ACTIVITIES:
	Issuance of first mortgage bonds				50,000		-
	Issuance of other long-term debt				-		25,475
	Retirement of first mortgage bonds				(50,000)		-
	Retirement of other long-term debt				(1,978)		(766)
	Retirement of preferred stock of Idaho Power Company				(28)		(589)
	Dividends on common stock				(11,466)		(17,706)
	Decrease in short-term borrowings				(1,550)		(73,350)
	Common stock issued				73		4,123
	Acquisition of treasury shares				(1,420)		(798)
	Other assets				-		(475)
	Other liabilities				(7)		(345)
		Net cash used in financing activities			(16,376)		(64,431)

Net increase (decrease) in cash and cash equivalents					4,478		(1,202)

Cash and cash equivalents beginning of period					75,159		42,736

Cash and cash equivalents end of period				$	79,637	$	41,534

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid during the period for:
		Income taxes		$	1	$	292
		Interest (net of amount capitalized)		$	4,738	$	4,581

The accompanying notes are an integral part of these statements.

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

				Three Months Ended
				March 31,
				2004		2003
				(thousands of dollars)

NET INCOME (LOSS)				$	19,659	$	(3,072)

OTHER COMPREHENSIVE INCOME (LOSS):
	Unrealized gains on securities:
		Unrealized holding gains (losses) arising during the period,
			net of tax of $349 and ($792)		615		(1,334)
		Reclassification adjustment for (gains) losses included
			in net income, net of tax of ($164) and $211		(255)		329
			Net unrealized gains (losses)		360		(1,005)

TOTAL COMPREHENSIVE INCOME (LOSS)				$	20,019	$	(4,077)

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 subsidiary is Idaho Power Company (IPC). IPC is an electric utility engaged in the generation, transmission, distribution, sale and purchase of electric energy. IPC is regulated by the Federal Energy Regulatory Commission (FERC) and the state regulatory commissions of Idaho and Oregon. 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.

IDACORP's other operating subsidiaries include:

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;

IDACOMM - provider of telecommunications services;

Ida-West Energy (Ida-West) - operator of independent power projects; and

IDACORP Energy (IE) - marketer of electricity and natural gas, which wound down its operations during 2003.

Principles of Consolidation
The consolidated financial statements of IDACORP and IPC include the accounts of each company and those variable interest entities (VIEs) for which the companies are the primary beneficiaries. All significant intercompany balances have been eliminated in consolidation. Investments in business entities in which IDACORP and IPC are not the primary beneficiary, but have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method.

The entities that IDACORP and IPC consolidate consist primarily of wholly-owned or controlled subsidiaries. In addition, IDACORP consolidates the following VIEs:

Ida-West participates in Marysville Hydro Partners, a joint venture that owns a small hydroelectric project. Marysville has approximately $21 million of total assets, primarily the hydro plant. Marysville also has $19 million of long-term debt, collateralized by the hydroelectric assets. This debt is non-recourse to IDACORP.

IFS is a limited partner in Empire Development Company, LLC (Empire), an entity that earned historic tax credits through the rehabilitation of the Empire Building in Boise, Idaho. Empire has approximately $9 million of assets, primarily real property, and $8 million of long-term debt. This debt is non-recourse to IDACORP, personally guaranteed by the general partner, and collateralized by the property.

Through IFS, IDACORP also holds significant variable interests in VIEs for which it is not the primary beneficiary. These VIEs are historic rehabilitation and affordable housing developments in which IFS holds limited partnership interests ranging from five to 57 percent. These investments were acquired between 1996 and 2002. IFS' maximum exposure to loss in these developments totaled $108 million at March 31, 2004.

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 positions as of March 31, 2004, and consolidated results of operations and consolidated cash flows for the three months ended March 31, 2004 and 2003. 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, 2003. 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 per share (EPS) differs from basic EPS only due to including immaterial amounts of potentially dilutive shares related to stock-based compensation awards. The diluted EPS computation excluded 849,700 common stock options for the three months ended March 31, 2004, because the options' exercise prices were greater than the average market price of the common stock during the period. For the same period in 2003, 1,261,000 options were excluded from the diluted EPS calculation for the same reason. In total, 1,269,700 options were outstanding at March 31, 2004, with expiration dates between 2010 and 2014.

Stock-Based Compensation
Stock-based employee compensation is 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 period-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 (loss) 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,
			2004		2003

Net income (loss), as reported			$	19,659	$	(3,072)
Add: Stock-based employee compensation expense included
	in reported net income (loss), net of related tax effects			121		(18)
Deduct: Total stock-based employee compensation expense
	determined under fair value based method for all awards,
	net of related tax effects			344		164
		Pro forma net income (loss)	$	19,436	$	(3,254)
Earnings (loss) per share:
	Basic and diluted - as reported		$	0.51	$	(0.08)
	Basic and diluted - pro forma			0.51