-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LKd3eFHlJcPVJ3a7vFdsulFGVUE6g/H9FOxLat84cwQtRzl+74NrFAvGmBWHQXvk TzfOfQJOtsKvYS5ycD7MtA== 0000049648-97-000012.txt : 19970506 0000049648-97-000012.hdr.sgml : 19970506 ACCESSION NUMBER: 0000049648-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970505 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDAHO POWER CO CENTRAL INDEX KEY: 0000049648 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 820130980 STATE OF INCORPORATION: ID FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03198 FILM NUMBER: 97595082 BUSINESS ADDRESS: STREET 1: 1221 W IDAHO ST STREET 2: PO BOX 70 CITY: BOISE STATE: ID ZIP: 83707 BUSINESS PHONE: 2083882200 10-Q 1 MAIN DOCUMENT 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, 1997 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 April 30, 1997 is 37,612,351. IDAHO POWER COMPANY Index Part I. Financial Information: Page No Item 1. Financial Statements Consolidated Statements of Income - Three Months, and Twelve Months Ended March 31, 1997 and 1996 3, 4 Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 5, 6 Consolidated Statements of Cash Flows - Three Months and Twelve Months Ended March 31, 1997 and 1996 7, 8 Consolidated Statements of Capitalization - March 31, 1997 and December 31, 1996 9 Notes to Consolidated Financial Statements 10 - 12 Independent Accountants' Report 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 - 21 Part II. Other Information: Item 1. Legal Proceedings 22 - 23 Item 6. Exhibits and Reports on Form 8-K 24 - 28 Signatures 29 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 FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 Item 1. Financial Statements Three Months Ended March 31, Increase 1997 1996 (Decrease) (Thousands of dollars) REVENUES $155,447 $146,629 $ 8,818 EXPENSES Operation: Purchased power 19,559 8,215 11,344 Fuel expense 14,485 8,532 5,953 Power cost adjustment (1,244) 6,852 (8,096) Other 29,918 33,210 (3,292) Maintenance 10,303 8,806 1,497 Depreciation 17,522 17,395 127 Taxes other than income taxes 5,831 5,130 701 Total expenses 96,374 88,140 8,234 INCOME FROM OPERATIONS 59,073 58,489 584 OTHER INCOME: Allowance for equity funds used during construction - (2) 2 Other - Net 3,389 3,342 47 Total other income 3,389 3,340 49 INTEREST CHARGES: Interest on long-term debt 13,805 12,963 842 Other interest 2,048 1,242 806 Total interest charges 15,853 14,205 1,648 Allowance for borrowed funds used during construction (132) (52) (80) Net interest charges 15,721 14,153 1,568 INCOME BEFORE INCOME TAXES 46,741 47,676 (935) INCOME TAXES 16,361 17,466 (1,105) NET INCOME 30,380 30,210 170 Dividends on preferred stock 1,394 1,952 (558) EARNINGS ON COMMON STOCK $28,986 $28,258 $ 728 AVERAGE COMMON SHARES OUTSTANDING (000) 37,612 37,612 - Earnings per share of common stock $ 0.77 $ 0.75 $ 0.02 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 FOR THE TWELVE MONTHS ENDED MARCH 31, 1997 AND 1996 Twelve Months Ended March 31, Increase 1997 1996 (Decrease) (Thousands of Dollars) REVENUES $587,263 $560,915 $26,348 EXPENSES: Operation: Purchased power 80,383 56,084 24,299 Fuel expense 69,286 47,731 21,555 Power cost adjustment (14,954) 15,849 (30,803) Other 129,375 127,502 1,873 Maintenance 44,228 35,701 8,527 Depreciation 69,832 68,136 1,696 Taxes other than income taxes 21,359 21,984 (625) Total expenses 399,509 372,987 26,522 INCOME FROM OPERATIONS 187,754 187,928 (174) OTHER INCOME: Allowance for equity funds used during construction 48 (16) 64 Other - Net 12,535 15,770 (3,235) Total other income 12,583 15,754 (3,171) INTEREST CHARGES: Interest on long-term debt 53,008 51,320 1,688 Other interest 5,989 5,278 711 Total interest charges 58,997 56,598 2,399 Allowance for borrowed funds used during construction (434) (964) 530 Net interest charges 58,563 55,634 2,929 INCOME BEFORE INCOME TAXES 141,774 148,048 (6,274) INCOME TAXES 50,987 51,644 (657) NET INCOME 90,787 96,404 (5,617) Dividends on preferred stock 6,906 7,916 (1,010) EARNINGS ON COMMON STOCK $83,881 $88,488 $(4,607) AVERAGE COMMON SHARES OUTSTANDING (000) 37,612 37,612 - Earnings per share of common stock $ 2.23 $ 2.35 $(0.12) Dividends paid per share of common stock $ 1.86 $ 1.86 $ - The accompanying notes are an integral part of these statements. IDAHO POWER COMPANY CONSOLIDATED BALANCE SHEETS ASSETS March 31, December 31, 1997 1996 (Thousands of Dollars) ELECTRIC PLANT: In service (at original cost) $2,553,035 $2,537,565 Accumulated provision for depreciation (900,869) (886,885) In service - Net 1,652,166 1,650,680 Construction work in progress 47,435 42,178 Held for future use 1,773 1,773 Electric plant - Net 1,701,374 1,694,631 INVESTMENTS AND OTHER PROPERTY 37,101 36,502 CURRENT ASSETS: Cash and cash equivalents 8,827 7,928 Receivables: Customer 41,818 34,962 Allowance for uncollectible accounts (1,397) (1,394) Notes 5,176 5,104 Employee notes receivable 4,360 4,486 Other 8,010 8,489 Accrued unbilled revenues 20,694 27,709 Materials and supplies (at average cost) 27,813 24,639 Fuel stock (at average cost) 10,133 11,631 Prepayments 15,548 16,165 Regulatory assets associated with income taxes 4,010 4,397 Total current assets 144,992 144,116 DEFERRED DEBITS: American Falls and Milner water rights 32,260 32,260 Company-owned life insurance 55,593 57,291 Regulatory assets associated with income taxes 200,104 196,696 Regulatory assets - other 85,837 89,507 Other 44,024 44,334 Total deferred debits 417,818 420,088 TOTAL $2,301,285 $2,295,337 The accompanying notes are an integral part of these statements. IDAHO POWER COMPANY CONSOLIDATED BALANCE SHEETS CAPITALIZATION & LIABILITIES March 31, December 31, 1997 1996 (Thousands of Dollars) CAPITALIZATION: Common stock equity - $2.50 par value (shares authorized 50,000,000; shares outstanding - 37,612,351) $ 688,025 $ 694,574 Preferred stock 106,924 106,975 Long-term debt 738,553 738,550 Total capitalization 1,533,502 1,540,099 CURRENT LIABILITIES: Long-term debt due within one year 71 71 Notes payable 41,593 54,016 Accounts payable 25,330 36,370 Taxes accrued 35,954 17,304 Interest accrued 1,669 15,886 Accumulated deferred income taxes 4,010 4,397 Other 33,175 12,439 Total current liabilities 155,802 140,483 DEFERRED CREDITS: Regulatory liabilities associated with deferred investment tax credits 70,885 71,283 Deferred income taxes 417,749 411,890 Regulatory liabilities associated with income taxes 34,337 35,028 Regulatory liabilities - other 589 616 Other 88,421 95,938 Total deferred credits 611,981 614,755 COMMITMENTS AND CONTINGENT LIABILITIES (Note 2) TOTAL $2,301,285 $2,295,337 The accompanying notes are an integral part of these statements. IDAHO POWER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 Three Months Ended March 31, 1997 1996 OPERATING ACTIVITIES: (Thousands of Dollars) Cash received from operations: Retail revenues $119,809 $123,351 Wholesale revenues 29,035 17,626 Other revenues 6,173 5,729 Fuel paid (17,157) (14,795) Purchased power paid (11,829) (13,230) Other operation & maintenance paid (37,088) (41,323) Interest paid (includes long and short-term debt only) (14,605) (13,913) Income taxes paid (309) (1,771) Taxes other than income taxes paid (3,488) (2,012) Other operating cash receipts and payments-Net (295) (2,637) Net cash provided by operating activities 70,246 57,025 FINANCING ACTIVITIES: PC bond fund requisitions/Other long-term debt (164) 10,000 Short-term borrowings - Net (19,422) (18,000) Long-term debt retirement (17) (17) Preferred stock retirement (55) (20) Dividends on preferred stock (1,172) (2,015) Dividends on common stock (17,971) (17,481) Other sources/(uses) 593 (1,257) Net cash - financing activities (38,208) (28,790) INVESTING ACTIVITIES: Additions to utility plant (25,828) (16,535) Conservation (299) (107) Increase in investments (2,500) (14,525) Other (2,512) 155 Net cash - investing activities (31,139) (31,012) Change in cash and cash equivalents 899 (2,777) Cash and cash equivalents beginning of period 7,928 8,468 Cash and cash equivalents end of period $8,827 $5,691 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net income $30,380 $30,210 Adjustments to reconcile net income to net cash: Depreciation 17,522 17,395 Deferred income taxes 746 (1,559) Investment tax credit-Net (398) (355) Allowance for funds used during construction (132) (50) Postretirement benefits funding (excl pensions) 336 (696) Changes in operating assets and liabilities: Accounts receivable (430) 77 Fuel inventory (2,672) (6,263) Accounts payable 7,730 (5,015) Taxes payable 18,047 20,734 Interest payable 1,253 288 Other - Net (2,136) 2,259 Net cash provided by operating activities $70,246 $57,025 The accompanying notes are an integral part of these statements. IDAHO POWER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE TWELVE MONTHS ENDED MARCH 31, 1997 AND 1996 Twelve Months Ended March 31, 1997 1996 OPERATING ACTIVITIES: (Thousands of Dollars) Cash received from operations: Retail revenues $486,962 $473,214 Wholesale revenues 77,961 61,195 Other revenues 24,913 23,027 Fuel paid (62,160) (55,877) Purchased power paid (68,902) (53,790) Other operation & maintenance paid (172,820) (156,437) Interest paid (includes long and short-term debt only) (53,965) (54,048) Income taxes paid (43,588) (39,174) Taxes other than income taxes paid (24,931) (22,833) Other operating cash receipts and payments-Net 24,166 5,000 Net cash provided by operating activities 187,636 180,277 FINANCING ACTIVITIES: First mortgage bonds issued 57,000 - PC bond fund requisitions/Other long-term debt 114,670 10,000 Short-term borrowings - Net (422) (12,500) Long-term debt retirement (136,369) (519) Preferred stock retirement (26,565) (133) Dividends on preferred stock (7,006) (7,813) Dividends on common stock (70,413) (69,950) Other sources/(uses) (2,295) (1,225) Net cash - financing activities (71,400) (82,140) INVESTING ACTIVITIES: Additions to utility plant (102,939) (83,254) Conservation (4,031) (4,455) Increase in investments (6,544) (14,525) Other 414 2,510 Net cash - investing activities (113,100) (99,724) Change in cash and cash equivalents 3,136 (1,587) Cash and cash equivalents beginning of period 5,691 7,278 Cash and cash equivalents end of period $8,827 $5,691 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net income $90,787 $96,404 Adjustments to reconcile net income to net cash: Depreciation 69,832 68,136 Deferred income taxes 9,506 6,218 Investment tax credit-Net 733 (1,374) Allowance for funds used during construction (482) (948) Postretirement benefits funding (excl pensions) 2,373 (2,516) Changes in operating assets and liabilities: Accounts receivable 2,572 (3,479) Fuel inventory 7,127 (8,147) Accounts payable 11,481 2,294 Taxes payable (6,383) 6,821 Interest payable 4,835 2,499 Other - Net (4,745) 14,369 Net cash provided by operating activities $187,636 $180,277 The accompanying notes are an integral part of these statements. IDAHO POWER COMPANY CONSOLIDATED STATEMENTS OF CAPITALIZATION March 31, December 31, 1997 1996 (Thousands of Dollars) COMMON STOCK EQUITY: Common stock $94,031 $94,031 Premium on capital stock 361,706 362,297 Capital stock expense (3,841) (3,842) Retained earnings 236,129 242,088 Total common stock equity 688,025 44.8% 694,574 45.1% PREFERRED STOCK, cumulative, ($100 par or stated value): 4% preferred stock (authorized 215,000;shares outstanding:1997-169,239, 1996-169,753) 16,924 16,975 Serial preferred stock, authorized 150,000 shares: 7.68% Series, outstanding 150,000 shares 15,000 15,000 Serial preferred stock, without par value, authorized 3,000,000 shares: 7.07% Series (authorized and outstanding 250,000 shares) 25,000 25,000 Auction Rate Preferred Series A (authorized and outstanding 500 shares) 50,000 50,000 Total preferred stock 106,924 7.0 106,975 6.9 LONG-TERM DEBT: 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 9.50 % Series due 2021 75,000 75,000 7.50 % Series due 2023 80,000 80,000 8 3/4% Series due 2027 50,000 50,000 9.52 % Series due 2031 25,000 25,000 Total first mortgage bonds 527,000 527,000 Amount due within one year - - Net first mortgage bonds 527,000 527,000 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 1996B due 2026 24,200 24,200 Variable Rate Series 1996C due 2026 24,000 24,000 Total pollution control revenue bonds 170,460 170,460 REA Notes 1,614 1,632 Amount due within one year (71) (71) Net REA Notes 1,543 1,561 Subsidiary debt 9,000 9,000 American Falls bond guarantee 20,560 20,560 Milner Dam note guarantee 11,700 11,700 Unamortized premium/discount - Net (1,710) (1,731) Total long-term debt 738,553 48.2 738,550 48.0 TOTAL CAPITALIZATION $1,533,502 100.0% $1,540,099 100.0% 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 March 31, 1997 and the consolidated results of operation for the three months, and twelve months ended March 31, 1997 and 1996 and the consolidated cash flows for the three months and twelve months ended March 31, 1997 and 1996. 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, 1996. The results of operation for the interim periods are not necessarily indicative of the results to be expected for the full year. 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. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Idaho Energy Resources Co (IERCo); Idaho Utility Products Company (IUPCo); IDACORP, Inc.; Ida-West Energy Company (Ida-West); Stellar Dynamics, Inc. (Stellar); and Idaho Power Resources Corporation (IPRC). All significant intercompany transactions and balances have been eliminated in consolidation. 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. 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. 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. 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 $1.4 million at March 31, 1997. 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 in place, in its Idaho jurisdiction, a Power Cost Adjustment (PCA) mechanism which provides for Idaho's retail customer rates to be adjusted annually to reflect the Idaho share of forecasted net power supply costs. Deviations from forecasted costs are deferred with interest and then adjusted (trued-up) in the subsequent year. At March 31, 1997, the Company had recorded $11.6 million of power supply costs above those projected in the 1996 forecast in the deferred account. The current deferred balance is adjusted monthly as actual conditions are compared to the forecasted net power supply costs. The Company filed its 1997 PCA application on April 15, 1997, requesting a change in the Idaho jurisdiction PCA rate. The combined effect of this year's PCA change with the revenue sharing mechanism described below will decrease current rates by $2.6 million or an average of 0.63 percent. The proposed rates for Idaho retail customers are $20.2 million below the base rates established in past regulatory proceedings. Under 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, the Company will refund 50 percent of the excess when it makes its next PCA adjustment. In 1996, the Company set aside approximately $4.9 million of revenue for the benefit of its Idaho customers. The Company has filed to reduce customers rates by $3.5 million for the period May 16, 1997 through May 15, 1998 and that the carrying charge (interest) applied to the Idaho jurisdictional demand side conservation expenditures for 1996 in the amount of $1.4 million be retained from sharing and applied against the current regulatory asset balance. 4. FINANCING: The Company currently has a $200,000,000 shelf registration statement which can be used for both First Mortgage Bonds (including Medium Term Notes) and Preferred Stock. In 1996, the Company issued $30,000,000 and $27,000,000 principal amount of Secured Medium Term Notes, due 2001 and 2002, respectively. These transactions have reduced the remaining balance of the shelf registration to $143,000,000 at March 31, 1997. 5. INCOME TAXES: The effective tax rate for the first three months decreased from 36.6% in 1996 to 35.0% in 1997. A reconciliation between the statutory federal income tax rate and the effective rate for the three months ended March 31, 1997 and 1996 is as follows: 1997 1996 Amount Rate Amount Rate Computed income taxes based on statutory federal income tax rate $16,359 35.0 % $16,687 35.0 % Changes in taxes resulting from: Current state income taxes. 1,823 3.9 2,239 4.7 Net depreciation 1,281 2.7 1,099 2.3 Investment tax credits (719) (1.5) (703) (1.5) restored Repair allowance (782) (1.7) (880) (1.8) Low income housing credit (1,014) (2.2) (345) (0.7) Other (587) (1.2) (631) (1.4) $16,361 35.0 % $17,466 36.6 % 6. NEW ACCOUNTING PRONOUNCEMENT: In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE. This statement is effective for financial statements for both interim and annual periods ending after December 15, 1997. The objective of the statement is to simplify the computations of earnings per share. The Company does not expect the adoption of this statement to have a significant effect on its earnings per share. 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 March 31, 1997, and the related consolidated statements of income for the three- and twelve- month periods ended March 31, 1997 and 1996 and consolidated statements of cash flows for the three- and twelve-month periods ended March 31, 1997 and 1996. 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, 1996, 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 31, 1997, 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, 1996 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 Portland, Oregon April 30, 1997 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Idaho Power Company's consolidated financial statements represent the Company and its six wholly-owned subsidiaries: Idaho Energy Resources Company (IERCo); Ida-West Energy Company (Ida-West); IDACORP, Inc.; Idaho Utility Products Company (IUPCo); Idaho Power Resources Corporation (IPRC); and Stellar Dynamics, Inc. (Stellar). This discussion uses the terms Idaho Power and the Company interchangeably to refer to Idaho Power Company and its subsidiaries. Forward-Looking Information Certain matters discussed 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 the Company undertakes no obligation to update any forward-looking statement. Earnings Per Share and Book Value Earnings per share of common stock were $0.77 for the quarter, an increase of $0.02 (2.7 percent) from the same quarter last year. The twelve months ended March 31, 1997 yielded earnings of $2.23 per share, a decrease of $0.12 (5.1 percent) from the twelve months ended March 31, 1996. The twelve-month earnings represent a 12.2 percent earned return on March 31, 1997 common equity, compared to the 13.1 percent earned through March 31 last year. At March 31, 1997, the book value per share of common stock was $18.29, compared to $17.97 for the same period a year ago. RESULTS OF OPERATIONS Precipitation and Streamflows Idaho Power monitors the effect of precipitation and streamflow conditions on Brownlee Reservoir, the water source for the three Hells Canyon hydroelectric projects. In a typical year, these three projects combine to produce about half of the Company's generated electricity. Precipitation in the Company's service territory was below normal levels for the first three months of 1997. At April 1, 1997, reservoir storage above Brownlee was 54 percent of capacity, compared to 71 percent last year and an average storage of 101 percent for the same period. The U.S. Army Corps of Engineers coordinates flood control activities of the Company's water resources based upon streamflow forecasts. This year, due to high mountain snowpacks, the Company is required to draft water from Brownlee Reservoir to make space for holding anticipated flood flows. The reservoir will be refilled during the peak of the runoff in early summer. Inflows into Brownlee result from a combination of precipitation, storage, and ground water conditions. At April 1, 1997, the Company estimated that 9.2 million acre-feet (MAF) of water will flow into Brownlee Reservoir during the April-July runoff period, compared to 8.3 MAF for 1996. This figure represents approximately 191 percent of the 69-year median of 4.81 MAF. Energy Requirements For the first three months of 1997, the Company met its total system energy requirements from the following sources: hydro generation (68 percent); thermal generation (22 percent); and purchased power and other interchanges (10 percent). For the same period of 1996, these figures were 67 percent hydro; 22 percent thermal; and 11 percent purchased power and other interchanges. The Company estimates that 56 percent of its 1997 energy requirements will come from hydro generation, 27 percent from thermal generation, and 17 percent from purchased power and other interchanges. Economy Since 1987, Idaho's economy has consistently posted annual gains in employment. On many occasions in the past ten years, Idaho earned a ranking among the top five fastest growing states in the nation. For this period, nonagricultural employment in the state grew at an annual average compound rate of approximately 4.2 percent per year. Idaho's employment growth continued to show strength in the first two months of 1997. Total non-agricultural employment in the state was up 3.5% when compared to the levels experienced in the first two months of 1996. The leading sectors were construction employment with an 8.3% gain, wholesale and retail trade at 4.2% gain, services with a 3.6% gain, and manufacturing which posted a 2.0% increase in employment. It is likely that Idaho's economy will continue to post employment gains which are above the national average throughout 1997. Power Cost Adjustment Since 1993, the Idaho Public Utilities Commission (IPUC) has permitted Idaho Power to use a PCA mechanism in its Idaho jurisdiction. The PCA enables the Company to collect or to refund a portion of the difference between net power supply costs actually incurred and those allowed in the Company's base rates. The current balance is adjusted monthly as actual conditions are compared to the PCA forecasted net power supply costs. For the period May 1997 through May 1998, the Company filed to have tariffs approved from the IPUC, reducing Idaho jurisdictional customers' PCA rates by $2.6 million (0.63 percent), including the true- up for the PCA period May 1996 through May 1997 and a $3.5 million refund per IPUC Order No. 26216. The proposed rates for Idaho retail customers are $20.2 million below the base rates established in past regulatory proceedings (see Note 3). The reduction reflects anticipated below normal power supply costs in the coming year due to above-average hydroelectric generating conditions. The 1997 PCA forecast reflects power supply costs below those established for PCA expenses in the Company's last general rate proceeding. At March 31, 1997, the Company had recorded as deferred assets and reduction in operating expenses $11.6 million of power supply costs above those projected in the 1996 forecast. Revenues General business revenues were down $6.2 million (5.2 percent) for the quarter but increased $5.5 million (1.2 percent) for the twelve months ended March 31, 1997. The Company's revenues from residential and commercial customers decreased $3.8 million and $0.9 million due to warmer temperatures in the first quarter of 1997 and lower rates due to the 1996/1997 PCA rate decrease. Industrial revenues were also down by $1.6 million. Off-system Sales Off-system sales are composed of firm sales (long-term contracts) and opportunity sales made on a when-available basis. The volume and price of these latter sales depend on the Company's firm energy demand, hydroelectric generating conditions in its service territory, and market conditions throughout the West. Revenues from off-system sales increased $14.3 million (70.0 percent) for the quarter and $23.6 million (38.7 percent) for the twelve months ended. The increase in off-system sales reflects improved hydroelectric generating conditions in 1997 and increased trading of non-system sales when sales margins are favorable and economical. Total operating revenues increased $8.8 million (6.0 percent) for the first quarter and $26.3 million (4.7 percent) for the twelve months ended. Expenses Total operation and maintenance expenses were up $7.4 million (11.3 percent) for the quarter, and $25.5 million (9.0 percent) for the twelve months ended March 31, 1997. Purchased power expenses were up for the quarter by $11.3 million (138.1 percent), and $24.3 million (43.3 percent) for the twelve months ended. The increase also reflects increased purchases from cogeneration and small power production (CSPP), which also experienced strong hydroelectric generating conditions. The increases reflect the Company's increased participation in the buying and selling of non- system power in the wholesale power market. Fuel expenses were up for the quarter $6.0 million (69.8 percent), and $21.6 million (45.2 percent) for the twelve months ended. The increase for the quarter is mainly due to the operation of the Valmy and Jim Bridger coal-fired power plants last winter during periods when market prices were favorable. The PCA component of expenses was down for the quarter, and twelve- month periods by $8.1 million, and $30.8 million respectively. The PCA mechanism reduces expenses when actual power supply costs are above forecast and increases them when power supply costs are below forecast. Other operation expenses decreased for the quarter $3.3 million (9.9 percent) and increased $1.9 million (1.5 percent) for the twelve months ended. The decreased expenses for the quarter are due in part to the reduction in payroll costs associated with the customer records and collections expense. Other maintenance expenses increased for the quarter $1.5 million (17.0 percent) and $8.5 million (23.9 percent) for the twelve months ended. During the first quarter, maintenance on the Company's steam power generation facilities was increased, while the Company maximized its use of hydroelectric facilities. For the twelve month period there was increased maintenance on both transmission and distribution facilities due to facilities damaged or destroyed by natural causes. Other income decreased by $3.2 million or 20.5 percent for the twelve months ended primarily because profits from Bridger Coal Company were down due to decreased sales of coal. Total interest costs increased for the quarter, and twelve months ended by $1.6 million, and $2.4 million, respectively. These increases are partly the result of increased borrowings by the Company's subsidiaries and the issuance of $30.0 million and $27.0 million Medium Term Notes by the Company in 1996. Ida-West Energy Company This wholly-owned subsidiary of the Company holds investments in thirteen operating hydroelectric plants with a total generating capacity of 72 megawatts (MW). Five plants are located in Idaho. The other eight plants are located in California. Ida-West owns, through various entities, a 50 percent equity interest in ten of these projects. It holds 100 percent of the senior debt relating to three of these projects and 100 percent of the subordinated debt relating to another one of these projects. One of Ida-West's wholly-owned subsidiaries also operates and maintains ten of these plants. In addition, Ida-West has an interest in the Hermiston Power Project, a 460-megawatt gas-fired cogeneration project to be located near Hermiston, Oregon. Ida-West has been responsible for managing all permitting and development activities relating to the project since its inception in 1993 and has obtained all permits necessary for construction and operation of the project. Ida-West and its partner are exploring various alternatives for marketing the project's output. To date, the Company's investment in Ida-West is $22.0 million. Ida- West continues an active search for new projects. Idaho Power Resources Corporation IPRC is a wholly-owned subsidiary incorporated in March 1996. IPRC's goals are to establish, acquire, and expand business operations in sustainable infrastructure technology and services. IPRC is charged with marketing the Company's expertise in renewable energy technologies, communication systems, and energy efficiency. The Company's total investment is approximately $4.0 million for development and acquisition activities in IPRC. Stellar Dynamics, Inc. Stellar Dynamics' core business is to provide products and services to control, protect, and monitor utility and industry processes and equipment. Stellar offers design and integration of high-quality modular process control systems backed with field support, training, documentation, and customer service. As Stellar's capital requirements increase, the Company has approved additional equity investments up to a total of $3.0 million. To date, the Company's investment in Stellar is $1.2 million. IDACORP, Inc. Through this wholly-owned subsidiary, the Company is participating in six affordable housing programs. These investments provide a return to IDACORP by reducing the Company's federal income taxes and by assuring a return on investment through tax credits and tax depreciation benefits. To date the Company's investment in IDACORP is $9.2 million. LIQUIDITY AND CAPITAL RESOURCES Cash Flow For the three months ended March 31, 1997, the Company generated $70.2 million in net cash from operations. After deducting for both common and preferred dividends, net cash generation from operations provided approximately $51.1 million for the Company's construction program and other capital requirements. This is a 36.2 percent increase over the same period in 1996. Cash Expenditures Idaho Power estimates that its cash construction program for 1997 will require approximately $89.0 million. This estimate is subject to revision in light of changing economic, regulatory, environmental, and conservation factors. During the first three months of 1997, the Company expended approximately $25.8 million for construction. Idaho Power's primary financial commitments and obligations are related to contracts and purchase orders associated with its ongoing construction program. To the extent required, the Company expects to finance these commitments and obligations by using both internally generated funds and externally financed capital. The Company has regulatory authority to incur up to $200,000,000 of short-term indebtedness. On December 19, 1996, the company replaced its committed lines of credit arrangements with a $120,000,000 multi-year revolving credit facility, which will expire on December 19, 2001. Under this facility the Company will pay a facility fee on the commitment, quarterly in arrears, based on the Company's First Mortgage Bond rating. Commercial paper may be issued in an amount not to exceed 25 percent of revenues for the latest twelve-month period subject to the $200,000,000 maximum described above and is supported by bank lines of credit of an equal amount.. The Company may use this revolving credit facility to finance a portion of its construction program on an interim basis. At March 31, 1997 the Company's short-term borrowings totaled $41.6 million. Financing Program The Company currently has a $200,000,000 shelf registration statement which can be used for both First Mortgage Bonds (including Medium Term Notes) and Preferred Stock. In 1996, the Company issued $30,000,000 and $27,000,000 principal amount of Secured Medium Term Notes, due 2001 and 2002, respectively. These transactions have reduced the remaining balance of the shelf registration to $143,000,000 at March 31, 1997. Idaho Power's 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 March 31, 1997, the Company's consolidated pre-tax interest coverage was 3.40 times. Salmon Recovery Plan Work continues on the development of a comprehensive and scientifically credible plan to ensure the long-term survival of anadromous fish runs on the Columbia and Lower Snake Rivers. In mid-August 1994, the federal government changed its designation of the Snake River Fall Chinook Salmon from Threatened to Endangered. The Company does not anticipate that the new designation will have any major effects on its operations. In September 1991, the Company modified operations at its three-dam Hells Canyon Hydroelectric Complex to protect the Fall Chinook downstream during spawning and juvenile emergence. From its start, the Company's Fall Chinook program has exceeded the protection requirements for threatened species, affording the fish the same high level of protection due an endangered species. In March of 1995, the National Marine Fisheries Service (NMFS) released a Proposed Recovery Plan for the listed Snake River Salmon. The NMFS accepted public comment on the Plan through December of 1995. As drafted, the Plan would not require any change to the Company's current operations for salmon. Pending completion of a final recovery plan by the NMFS, the U.S. Army Corps of Engineers and other governmental agencies operating federally owned dams and reservoirs on the Snake and Columbia Rivers will continue to consult with the NMFS regarding ongoing system operations. These interim operations are not expected to change the Company's current operations for salmon. The Company has negotiated a five-year contract with BPA to replace lost energy and capacity resulting from recovery plans that impact the Company's power supply cost. Nez Perce Lawsuit In 1996, Idaho Power's Board of Directors and the Nez Perce Tribe approved an Agreement between the Company and the Tribe which would resolve a civil lawsuit filed against Idaho Power in December of 1991, in the United States District Court for the District of Idaho, regarding alleged damages to the Tribe's treaty-reserved fishing rights. The suit arose from the construction, maintenance, and operation of Idaho Power's three-dam Hells Canyon Hydroelectric Complex and the project's alleged impact both on fish and the Tribe's treaty-reserved fishing rights. The Agreement required the approval of the United States government (through the Bureau of Indian Affairs (BIA)) acting in its capacity as trustee for the Tribe. Under the terms of the Agreement, Idaho Power would pay the Nez Perce Tribe $11.5 million in the following manner: - $5 million at which time the Nez Perce would move for the dismissal of, with prejudice, their legal action against the Company - $1,625,000 each year for the next four years All payments under the Agreement will be made in 1996 dollars, which allows for adjusted future inflation within a minimum range of 3 percent and a maximum of 7 percent. On July 12, 1996, the IPUC issued Order No. 26513, and on August 5, 1996, the OPUC issued Order No. 96-207 approving capitalization of their respective jurisdictional share of the $11.5 million. The Company has recorded the $11.5 million as a regulatory asset due from ratepayers and a liability to the Tribe. The Tribe requested BIA approval. However, on November 21, 1996, the Portland Area Director of the BIA issued a decision stating that the Agreement did not have to be approved by the BIA and declined to review the Agreement. On December 19, 1996, Idaho Power Company filed an administrative appeal of the BIA's decision. As a result of the BIA decision, the Tribe and the Company explored alternatives to BIA approval that would help assure the ultimate enforceability of the Agreement. The parties agreed to request that the Federal District Court for the District of Idaho approve the Agreement. The Tribe and the Company, by motion, stipulated that the Ninth Circuit Court of Appeals remand the case to the Federal District Court for the District of Idaho, which motion was granted by the Ninth Circuit on February 6, 1997. On March 21, 1997, the Federal District Court for the District of Idaho entered a judgement which incorporated the terms of the Agreement. On March 28, 1997, Idaho Power paid the Tribe $5 million plus agreed upon interest which reduced regulatory assets. In connection with settling the litigation, Idaho Power and the Tribe also reached a provisional settlement regarding the license renewal of the Hells Canyon Complex. In return for the Tribe's support of the Company's application to relicense the project, the Company will place $5 million, the majority of which the Tribe has agreed to dedicate to implementable fisheries restoration efforts, in an escrow account on August 3, 2003, the date by which the Company must file its relicense application. The Tribe will be entitled to earnings from investments on this account until the Company accepts or rejects a new federal license for the project. If the Company accepts the new federal license, the Tribe will take ownership of the money in the account. If the Company rejects the license, the money will be returned to the Company. This settlement is provisional because the Tribe retains the right to opt out of this relicensing settlement at any time prior to the Company's acceptance of a new federal license. Regulatory Settlement On August 3, 1995, Idaho Power filed a proposal with the IPUC to support the Company's organizational redesign. In response to the Company's proposal, the IPUC approved a Settlement that authorizes the Company to defer and amortize costs related to reorganization in return for a general rate freeze through the end of 1999. In addition, the Settlement allows for the accelerated amortization of regulatory liabilities associated with accumulated deferred investment tax credits (ADITCs) to provide a minimum 11.50 percent return on actual year-end common equity for the Idaho jurisdiction. The new rate freeze and the accelerated amortization of regulatory liabilities associated with ADITCs gives the Company time to pursue and to implement its efficiency and growth initiatives with the assurance of at least a reasonable level of financial performance apart from the need to change customer prices. The terms and conditions of the Settlement will remain in effect through 1999. Under the Settlement, when the Company's actual earnings in a given year exceed an 11.75 percent return on year-end common equity, the Company will refund 50 percent of the excess. In 1996, the Company set aside approximately $4.9 million of revenue for the benefit of its Idaho customers. The Company has filed to reduce customers rates by $3.5 million for the period May 16, 1997 through May 15, 1998 and that the carrying charge (interest) applied to the Idaho jurisdictional demand side conservation expenditures for 1996 in the amount of $1.4 million be retained from sharing and applied against the current regulatory asset balance. Other important points in the Settlement are: (1) the Company may accelerate a maximum of $30 million of regulatory liabilities associated with ADITCs over the five-year period; (2) the Company will not be allowed to increase its Idaho general rates prior to January 1, 2000, except under conditions as defined in the Settlement Agreement; and (3) Idaho Power agrees that its quality of service will not decline as a result of corporate reorganization. The Company has received approval from the Idaho State Tax Commission and the Internal Revenue Service on the accounting treatment for the tax credits. Marketing Business Unit To accommodate its customers and allow it to compete in the rapidly evolving competitive market, the Company formed a Marketing Business Unit effective January 1997. This new business unit will be responsible for all purchases and sales of electric energy, market research, and planning and implementation of marketing strategies. The Board of Directors gave approval in the March 1997 meeting for the Company to begin building gas marketing capability. It is the intent of the Company to be a competitive energy provider, including both electricity and gas. To successfully realize this vision, the Marketing Business Unit has been charged with developing an organization with the capability to service our customers' total energy needs. In response to this objective, the Company has begun setting up gas marketing capability in its Boise Office to service the Northwest gas markets and is setting up a gas trading office in Houston, Texas to service the southern and eastern United States gas markets. Gas trading at these locations will begin in the second quarter, 1997. The ability to trade in both electricity and gas physical and commodity markets gives the Marketing Business Unit the flexibility needed to service our customers' total energy needs profitably, while managing the market risk inherent in the energy marketing business. Competition and Strategic Planning Competition is increasing in the electric utility industry, due to a variety of developments. In response, Idaho Power continues to proceed with a strategic planning process. The goal of this process is to anticipate and fully integrate into Company operations any legislative, regulatory, environmental, competitive, or technological changes. With its low energy production costs, Idaho Power is well-positioned to enter a more competitive environment and is taking action to preserve its low-cost competitive advantage. The Company believes the first meaningful step to a competitive retail energy market is the functional unbundling of costs into the various delivery and energy components. The Company believes that the unbundling of costs will create a real means for our customers to compare energy prices and that cost unbundling will facilitate the establishment of more accurate price signals for service components. Legislation has been passed in Idaho requiring the IPUC to initiate an unbundling investigation in July 1997. The Company is prepared to bring forward cost unbundling information in its regulatory jurisdictions during 1997. The Company expects to have a filing before the Idaho Commission prior to the start of its investigation. The Company further believes that the future of the electric utility industry will be characterized by the right of customers to choose their own electric service provider. To remain successful, Idaho Power must continue to provide value to its shareholders in the face of this new competitive environment. The Company's vision involves three strategies for creating this value: selective and efficient use of capital; an enhanced customer orientation; and innovative, efficient operations. Because future prices for power will be determined more by market forces and less by regulatory administration, the Company must be very selective and efficient in the use and allocation of capital. Idaho Power will invest in improving and expanding its core business, in developing new opportunities beyond its current service territory, and in continuing to develop non-regulated opportunities consistent with the Company's core competencies. Based on this vision and the Company's efforts to increase shareholder and customer value, Idaho Power is transforming its operations to improve both efficiency and customer service. Teams of employees are redesigning work processes. In some cases, these improved processes are successfully in place. Independent Grid Operator (IndeGo) A group of twenty-one electric utilities, including Idaho Power, seven Northwest investor-owned utilities, Bonneville Power Administration (BPA) and several public electric entities have signed a memorandum of understanding that will create an independent transmission grid operator called "IndeGO". It will ensure non-discriminatory, open- access to electricity transmission facilities in compliance with recent FERC rulings. This memorandum of understanding is an agreement to investigate the feasibility of developing a regional transmission grid which would be operated by an entity independent of power market interests. It is believed that the formation of such an entity will facilitate the operation of an evolving competitive electric power market. Operating as one regional system, the utilities will be able to increase the efficiency of transmission operations and provide improved access for all system users. IndeGo is envisioned as an independent transmission company not controlled by any individual power market participant(s). It is anticipated that IndeGO will operate as a single control area, with pricing based on a single zonal tariff applied equally to all users including the participating companies. IndeGO will not own transmission facilities at the onset, but will be responsible for the operation of main transmission grid facilities 230 kilovolts (kV) or more that are owned by the participating utilities. The group plans to file the IndeGo proposal with FERC during 1997, and anticipates operation would commence as early as 1999. If the FERC's approval arrives by April 1998, an IndeGo Board and Site Procurement could be expected by July 1998. PART II - OTHER INFORMATION Item 1. Legal Proceedings On December 6, 1991, a complaint entitled Nez Perce Tribe, Plaintiff, vs. Idaho Power Company, Defendant, Civil No. CIV 91-0517-S-EJL, was filed against the Company in the United States District Court for the District of Idaho. On September 11, 1992, the Tribe filed an Amended Complaint in which it amplified its original Complaint by asserting that Brownlee, Oxbow and Hells Canyon Dams were "constructed, operated and maintained in such a manner as to damage plaintiff's rights" to harvest fish, which rights the Tribe asserts to be "present, possessory property right(s)". As the basis for its alleged right to recover damages from the Company, the Tribe asserts that the Company negligently constructed, operated and maintained Brownlee, Oxbow and Hells Canyon Dams, that the Company negligently failed to prevent or mitigate harm to the Tribe, that the Company intentionally and willfully destroyed, interfered with, and dispossessed the Tribe of its property rights, and that the Company improperly exercised dominion over the Tribe's property, thus depriving the Tribe of its possession. The Tribe seeks through its Amended Complaint to secure actual, incidental, consequential and punitive damages in amounts to be proven at trial. On September 18, 1992, the Company filed a motion for summary judgment in the hope of securing dismissal of the Tribe's action. The District Court issued an Order of Reference sending the case to a Federal Magistrate. On July 30, 1993, the Magistrate issued a Report and Recommendation that the District Judge granted that portion of the Company's motion for summary judgment regarding the loss of fish. On November 30, 1993, the District Court entered a Second Order of Reference, in which the Court sent the case back to the Magistrate for the Magistrate to make additional findings with respect to the Tribe's contention that it is entitled to compensation based on physical exclusion from its usual and accustomed fishing places. On February 28, 1994, the Magistrate issued a Second Report and Recommendation wherein it was recommended that the District Court deny the Company's motion for summary judgment as to the Tribe's claim for damages arising from precluding the Tribe's access to its usual and accustomed fishing places and reaffirmed its recommendation in the original Report and Recommendation dated July 30, 1993, to grant the Company's motion for summary judgment as to all other claims. On September 28, 1994, the Federal District Judge issued an Order rejecting the Second Report and Recommendation of the Magistrate granting, in its entirety, the Company's motion for summary judgment. On November 8, 1994, the Tribe filed its Notice of Appeal with the Ninth Circuit Court of Appeals. The Company and the Tribe have reached agreement on a settlement of this case (Settlement Agreement). The Settlement Agreement has been approved by the Nez Perce Tribal Executive Committee and the Company's Board of Directors. Under the terms of the Settlement Agreement, the Company will pay the Nez Perce Tribe $11.5 million in the following manner: -$5 million at which time the Tribe would move for the dismissal of, with prejudice,their legal action against the Company. -$1,625,000 each year for the next four years beginning in 1998. All payments under the Settlement Agreement will be made in 1996 dollars, which allows for adjusted future inflation within a minimum range of 3 percent and a maximum of 7 percent. The first payment of $5.0 million plus inflation adjustment will be paid sometime in 1997. On July 12, 1996 the IPUC issued Order No 26513, and on August 5, 1996, the OPUC issued Order No. 96-207 approving capitalization of their respective jurisdictional share of the $11.5 million. The parties requested Bureau of Indian Affairs (BIA) approval of the Settlement Agreement. However, on November 21, 1996, the Portland Area Director of the BIA issued a decision stating that the Settlement Agreement did not have to be approved by the BIA. On December 19, 1996, the Company filed an administrative appeal of the BIA's decision and have since requested and been granted a stay of said appeal pending pursuit of an alternate federal approval. As a result of the BIA decision, the Tribe and the Company explored alternatives to BIA approval that would help assure the ultimate enforceability of the Settlement Agreement. The parties agreed to request that the Federal District Court for the District of Idaho approve the Settlement Agreement. The Tribe and the Company, by motion, stipulated that the Ninth Circuit Court of Appeals remand the case to the Federal District Court for the District of Idaho, which motion was granted by the Ninth Circuit on February 6, 1997. On March 21, 1997, the Federal District Court for the District of Idaho entered a judgment which incorporated the terms of the Settlement Agreement. On March 28, 1997, the Company paid the Tribe $5 million plus agreed upon interest. This matter has been previously reported in Form 10-K dated March 16, 1992, March 12, 1993, March 10, 1994, March 9, 1995, March 14, 1996, March 13, 1997 and other reports filed with the Commission. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit File Number As Exhibit *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 Exhibit File Number As Exhibit Number Dated 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). *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. Exhibit File # As Exhibit *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 Sales Form 10-Q Agreement, dated January 1, 1996, among for 3/31/96 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. Exhibit File # As Exhibit *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 Senior Form 10-K Management Employees and for Directors- for 1994 a non-qualified, deferred compensation plan effective November 30, 1994. *10(n)(ii)1 1-3198 10(n)(ii) The Executive Annual Incentive Plan for Form 10-K senior management employees effective for 1994 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 effective for 1994 July 1, 1994. *10(n)(iv)1 1-3198 10(n)(iv) The Revised Security Plans for Senior Form 10-K Management Employees and for Directors- 1996 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. 1 Compensatory Plan Exhibit File # As Exhibit *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 March 31, 1997. *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 May 5, 1997 By: /s/ J LaMont Keen J LaMont Keen Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) EX-27 2
UT 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. 1,000 3-MOS DEC-31-1997 MAR-31-1997 PER-BOOK 1,701,374 37,101 144,992 417,818 0 2,301,285 94,031 357,865 236,129 688,025 0 106,924 716,239 0 22,243 41,593 71 0 0 0 726,190 2,301,285 155,447 16,361 96,374 112,735 42,712 3,389 46,101 15,721 30,380 1,394 28,986 34,943 0 70,246 0.77 0.77
EX-15 3 Exhibit 15 May 5, 1997 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 March 31, 1997 and 1996, as indicated in our report dated April 30, 1997; 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 March 31, 1997, is incorporated by reference in Registration Statement Nos. 333- 00139 and 33-51215 on Form S-3, and Registration Statement no. 33- 56071 on Form S-8. 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 EX-12 4
Exhibit 12 Idaho Power Company Consolidated Financial Information Ratio of Earnings to Fixed Charges Twelve Months Ended December 31, Twelve Months (Thousands of Dollars) Ended March 31 1992 1993 1994 1995 1996 1997 Computation of Ratio of Earnings to Fixed Charges: Consolidated net income $ 59,990 $ 84,464 $ 74,930 $ 86,921 $ 90,618 $ 90,787 Income taxes: Income taxes (includes amounts charged to other income and deductions) 24,601 38,057 35,307 49,498 51,316 50,254 Investment tax credit adjustment (1,439) (1,583) (1,064) (1,086) 776 733 Total income taxes 23,162 36,474 34,243 48,412 52,092 50,987 Income before income taxes 83,152 120,938 109,173 135,333 142,710 141,774 Fixed Charges: Interest on long-term debt 53,408 53,706 51,172 51,147 52,165 53,008 Amortization of debt discount, expense and premium - net 392 507 567 567 594 610 Interest on short-term bank loans 647 220 1,157 3,144 2,269 2,369 Other interest 1,011 2,023 1,538 1,598 2,319 3,010 Interest portion of rentals 683 1,077 794 925 991 858 Total fixed charges 56,141 57,533 55,228 57,381 58,338 59,855 Earnings - as defined $139,293 $178,471 $164,401 $192,714 $201,048 $201,629 Ratio of earnings to fixed charges 2.48X 3.10X 2.98X 3.36X 3.45X 3.37X
EX-12.A 5
Exhibit 12(a) Idaho Power Company Consolidated Financial Information Supplemental Ratio of Earnings to Fixed Charges Twelve Months Ended December 31, Twelve Months (Thousands of Dollars) Ended March 31, 1992 1993 1994 1995 1996 1997 Computation of Ratio of Earnings to Fixed Charges: Consolidated net income $ 59,990 $ 84,464 $ 74,930 $ 86,921 $ 90,618 $ 90,787 Income taxes: Income taxes (includes amounts charged to other income and deductions) 24,601 38,057 35,307 49,498 51,316 50,254 Investment tax credit adjustment (1,439) (1,583) (1,064) (1,086) 776 733 Total income taxes 23,162 36,474 34,243 48,412 52,092 50,987 Income before income taxes 83,152 120,938 109,173 135,333 142,710 141,774 Fixed Charges: Interest on long-term debt 53,408 53,706 51,172 51,147 52,165 53,008 Amortization of debt discount, expense and premium - net 392 507 567 567 594 610 Interest on short-term bank loans 647 220 1,157 3,144 2,269 2,369 Other interest 1,011 2,023 1,538 1,598 2,319 3,010 Interest portion of rentals 683 1,077 794 925 991 858 Total fixed charges 56,141 57,533 55,228 57,381 58,338 59,855 Suppl increment to fixed charges* 2,487 2,631 2,622 2,611 2,600 2,597 Total supplemental fixed charges 58,628 60,164 57,850 59,992 60,938 62,452 Supplemental earnings - as defined $141,780 $181,102 $167,023 $195,325 $203,648 $204,226 Supplemental ratio of earnings to fixed charges 2.42X 3.01X 2.89X 3.26X 3.34X 3.27X * 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.
EX-12.B 6
Exhibit 12(b) Idaho Power Company Consolidated Financial Information Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirement Twelve Months Ended December 31, Twelve Months (Thousands of Dollars) Ended March 31, 1992 1993 1994 1995 1996 1997 Computation of Ratio of Earnings to Fixed Charges: Consolidated net income $ 59,990 $ 84,464 $ 74,930 $ 86,921 $ 90,618 $ 90,787 Income taxes: Income taxes (includes amounts charged to other income and deductions) 24,601 38,057 35,307 49,498 51,316 50,254 Investment tax credit adjustment (1,439) (1,583) (1,064) (1,086) 776 733 Total income taxes 23,162 36,474 34,243 48,412 52,092 50,987 Income before income taxes 83,152 120,938 109,173 135,333 142,710 141,774 Fixed Charges: Interest on long-term debt 53,408 53,706 51,172 51,147 52,165 53,008 Amortization of debt discount, expense and premium - net 392 507 567 567 594 610 Interest on short-term bank loans 647 220 1,157 3,144 2,269 2,369 Other interest 1,011 2,023 1,538 1,598 2,319 3,010 Interest portion of rentals 683 1,077 794 925 991 858 Total fixed charges 56,141 57,533 55,228 57,381 58,338 59,855 Preferred dividends requirements 7,611 8,547 10,682 12,392 12,146 10,735 Total fixed charges and preferred dividends 63,752 66,080 65,910 69,773 70,484 70,590 Earnings - as defined $139,293 $178,471 $164,401 $192,714 $201,048 $201,629 Ratio of earnings to fixed charges and preferred dividends 2.18X 2.70X 2.49X 2.76X 2.85X 2.86X
EX-12.C 7
Exhibit 12(c) Idaho Power Company Consolidated Financial Information Supplemental Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements Twelve Months Ended December 31, Twelve Months (Thousands of Dollars) Ended March 31, 1992 1993 1994 1995 1996 1997 Computation of Ratio of Earnings to Fixed Charges: Consolidated net income $ 59,990 $ 84,464 $ 74,930 $ 86,921 $ 90,618 $ 90,787 Income taxes: Income taxes (includes amounts charged to other income and deductions) 24,601 38,057 35,307 49,498 51,316 50,254 Investment tax credit adjustment (1,439) (1,583) (1,064) (1,086) 776 733 Total income taxes 23,162 36,474 34,243 48,412 52,092 50,987 Income before income taxes 83,152 120,938 109,173 135,333 142,710 141,774 Fixed Charges: Interest on long-term debt 53,408 53,706 51,172 51,147 52,165 53,008 Amortization of debt discount, expense and premium - net 392 507 567 567 594 610 Interest on short-term bank loans 647 220 1,157 3,144 2,269 2,369 Other interest 1,011 2,023 1,538 1,598 2,319 3,010 Interest portion of rentals 683 1,077 794 925 991 858 Total fixed charges 56,141 57,533 55,228 57,381 58,338 59,855 Suppl increment to fixed charges* 2,487 2,631 2,622 2,611 2,600 2,597 Supplemental fixed charges 58,628 60,164 57,850 59,992 60,938 62,452 Preferred dividend requirements 7,611 8,547 10,682 12,392 12,146 10,735 Total supplemental fixed charges and preferred dividends 66,239 68,711 68,532 72,384 73,084 73,187 Supplemental earnings - as defined $141,780 $181,102 $167,023 $195,325 $203,648 $204,226 Supplemental ratio of earnings to fixed charges and preferred dividends 2.14X 2.64X 2.44X 2.70X 2.79X 2.79X * 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.
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