-----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, El73DYyMD9diWHeoNUlHlpkBNRjL0JnBDL8qq26wpo00ZzcXiZvJ0LOYw/FhPJ0f JQrRrIKZ3aRZWIhviesfEg== 0000049648-98-000007.txt : 19980514 0000049648-98-000007.hdr.sgml : 19980514 ACCESSION NUMBER: 0000049648-98-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: NYSE SROS: PCX 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: SEC FILE NUMBER: 001-03198 FILM NUMBER: 98617467 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, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-3198 IDAHO POWER COMPANY (Exact name of registrant as specified in its charter) Idaho 82-0130980 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1221 W. Idaho Street, Boise, Idaho 83702-5627 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (208) 388-2200 None Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of shares of Common Stock, $2.50 par value, outstanding as of March 31, 1998 is 37,612,351. IDAHO POWER COMPANY Index Page No Definitions 2 Part I. Financial Information: Item 1. Financial Statements Consolidated Statements of Income 3 Consolidated Balance Sheets 4-5 Consolidated Statements of Cash Flows 6 Consolidated Statements of Capitalization 7 Notes to Consolidated Financial Statements 8-10 Independent Accountants' Report 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12-14 Part II. Other Information: Item 6. Exhibits and Reports on Form 8-K 15-19 Signatures 20 DEFINITIONS AFDC Allowance For Funds Used During Construction BPA Bonneville Power Administration CSPP Cogeneration and Small Power Production FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission IPUC Idaho Public Utilities Commission kWh kilowatt-hour MAF Million Acre-Feet MMbtu Million British Thermal Units MOU Memorandum of Understanding MWH Megawatt-Hour OPUC Oregon Public Utilities Commission PCA Power Cost Adjustment REA Rural Electrification Administration SFAS Statement of Financial Accounting Standards FORWARD LOOKING INFORMATION This Form 10-Q contains "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements should be read with the cautionary statements and important factors included in this Form 10-Q at Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Information. Forward- looking statements are all statements other than statements of historical fact, including without limitation those that are identified by the use of the words "anticipates," "estimates," "expects," "intends," "plans," "predicts," and similar expressions. PART I - FINANCIAL INFORMATION IDAHO POWER COMPANY Consolidated Statements of Income Three Months Ended March 31, 1998 1997 (Thousands of Dollars) REVENUES: Total general business $112,223 $112,961 Off system sales 116,413 34,839 Other revenues 9,534 7,647 Total Revenues 238,170 155,447 EXPENSES: Operation: Purchased power 94,206 19,559 Fuel expense 20,720 14,485 Power cost adjustment 475 (1,244) Other 32,947 29,918 Maintenance 9,028 10,303 Depreciation 18,895 17,522 Taxes other than income taxes 5,344 5,831 Total expenses 181,615 96,374 INCOME FROM OPERATIONS 56,555 59,073 OTHER INCOME: Gas trading activities - Net (718) - Other - Net 1,705 3,389 Total other income 987 3,389 INTEREST CHARGES: Interest on long-term debt 13,037 13,805 Other interest 2,086 2,048 Total interest charges 15,123 15,853 Allowance for borrowed funds used during construction (161) (132) Net interest charges 14,962 15,721 INCOME BEFORE INCOME TAXES 42,580 46,741 INCOME TAXES 13,125 16,361 NET INCOME 29,455 30,380 Dividends on preferred stock 1,405 1,394 EARNINGS ON COMMON STOCK $28,050 $28,986 AVERAGE COMMON SHARES OUTSTANDING (000) 37,612 37,612 Earnings per share of common stock (basic and diluted) 0.75 0.77 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 Balance Sheets ASSETS March 31, December 31, 1998 1997 (Thousands of Dollars) ELECTRIC PLANT: In service (at original cost) $2,630,643 $2,605,697 Accumulated provision for depreciation (960,926) (942,400) In service - Net 1,669,717 1,663,297 Construction work in progress 47,662 51,892 Held for future use 1,738 1,738 Electric plant - Net 1,719,117 1,716,927 INVESTMENTS AND OTHER PROPERTY 104,926 97,065 CURRENT ASSETS: Cash and cash equivalents 3,338 6,905 Receivables: Customer 79,113 63,076 Allowance for uncollectible accounts (1,397) (1,397) Gas Operations 28,403 42,128 Notes 4,688 4,613 Employee notes receivable 4,652 4,757 Other 9,613 8,854 Accrued unbilled revenue 23,796 33,312 Materials and supplies (at average cost) 29,792 29,156 Fuel stock (at average cost) 8,253 7,172 Prepayments 14,092 15,381 Regulatory assets associated with income taxes 3,032 3,164 Total current assets 207,375 217,121 DEFERRED DEBITS: American Falls and Milner water rights 32,055 32,055 Company-owned life insurance 50,793 51,915 Regulatory assets associated with income taxes 200,661 198,521 Regulatory assets - other 87,808 90,239 Other 44,511 47,973 Total deferred debits 415,828 420,703 TOTAL $2,447,246 $2,451,816 The accompanying notes are an integral part of these statements. IDAHO POWER COMPANY Consolidated Balance Sheets CAPITALIZATION & LIABILITIES March 31, December 31, 1998 1997 (Thousands of Dollars) CAPITALIZATION: Common stock equity - $2.50 par value (shares authorized 50,000,000; shares outstanding - 37,612,351) $722,011 $711,818 Preferred stock 106,627 106,697 Long-term debt 750,116 746,142 Total capitalization 1,578,754 1,564,657 CURRENT LIABILITIES: Long-term debt due within one year 33,999 33,998 Notes payable 48,816 57,516 Accounts payable 60,928 69,064 Accounts payable gas operations 28,817 42,874 Taxes accrued 38,265 24,295 Interest accrued 16,518 17,918 Deferred income taxes 3,032 3,164 Other 13,902 13,703 Total current liabilities 244,277 262,532 DEFERRED CREDITS: Regulatory liabilities associated with accumulated deferred investment tax credits 70,320 70,196 Deferred income taxes 433,234 423,736 Regulatory liabilities associated with income taxes 27,622 34,072 Regulatory liabilities - other 483 509 Other 92,556 96,114 Total deferred credits 624,215 624,627 COMMITMENTS AND CONTINGENT LIABILITIES TOTAL $2,447,246 $2,451,816 The accompanying notes are an integral part of these statements. IDAHO POWER COMPANY Consolidated Statements Of Cash Flows Three Months Ended March 31, 1998 1997 (Thousands of Dollars) OPERATING ACTIVITIES: Net income $29,455 $30,380 Adjustments to reconcile net income to net cash: Depreciation & amortization 21,654 19,400 Deferred taxes and investment tax credits 1,997 1,360 Change in: Accounts receivable and prepayments (1,752) (5,704) Accrued unbilled revenue 9,516 7,016 Materials & supplies and fuel stock (1,717) (1,676) Accounts payable (22,193) (10,876) Taxes payable 13,969 18,650 Other current assets and liabilities (1,172) 3,047 Other - net (1,255) (2,964) Net cash provided by operating activities 48,502 58,633 INVESTING ACTIVITIES: Additions to utility plant (21,324) (24,586) Investments in affordable housing (5,000) (9,896) Other (2,024) (448) Net cash used in investing activities (28,348) (34,930) FINANCING ACTIVITIES: Proceeds from issuance of: Long-term debt-related to affordable housing 4,084 8,909 Dividends on common stock (17,490) (17,971) Dividends on preferred stock (1,405) (1,394) Increase (decrease) in short-term borrowings (8,700) (12,423) Other - net (210) 75 Net cash provided by (used in) financing activities (23,721) (22,804) Net increase (decrease) in cash and cash equivalents (3,567) 899 Cash and cash equivalents at beginning of period 6,905 7,928 Cash and cash equivalents at end of period $ 3,338 $ 8,827 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Income taxes 1,200 309 Interest (net of amount capitalized) 15,102 14,605 The accompanying notes are an integral part of these statements. IDAHO POWER COMPANY Consolidated Statements Of Capitalization March 31,December 31, 1998 1997 (Thousands of Dollars) COMMON STOCK EQUITY: Common stock $94,031 $94,031 Premium on capital stock 361,849 362,328 Capital stock expense (3,838) (3,840) Retained earnings 269,860 259,299 Accumulated other comprehensive income 109 - Total common stock equity 722,011 45.7% 711,818 45.5% PREFERRED STOCK: 4% preferred stock 16,627 16,697 7.68% Series, serial preferred stock 15,000 15,000 7.07% Series, serial preferred stock 25,000 25,000 Auction rate preferred stock 50,000 50,000 Total preferred stock 106,627 6.8 106,697 6.8 LONG-TERM DEBT: Utility: First mortgage bonds: 5.33 % Series due 1998 30,000 30,000 8.65 % Series due 2000 80,000 80,000 6.93 % Series due 2001 30,000 30,000 6.85 % Series due 2002 27,000 27,000 6.40 % Series due 2003 80,000 80,000 8 % Series due 2004 50,000 50,000 Maturing 2021 through 2031 with rates from 7.5% to 9.52% 230,000 230,000 Total first mortgage bonds 527,000 527,000 Amount due within one year (30,000) (30,000) Net first mortgage bonds 497,000 497,000 Pollution control revenue bonds: 7 1/4% Series due 2008 4,360 4,360 8.30 % Series 1984 due 2014 49,800 49,800 6.05 % Series 1996A due 2026 68,100 68,100 Variable Rate Series 1996 B and C due 2026 48,200 48,200 Total pollution control revenue bonds 170,460 170,460 REA Notes 1,543 1,561 Amount due within one year (73) (72) Net REA Notes 1,470 1,489 American Falls bond guarantee 20,355 20,355 Milner Dam note guarantee 11,700 11,700 Unamortized premium/discount - Net (1,612) (1,637) Net utility debt 699,373 699,367 Subsidiaries: Debt related to investments in affordable housing with rates ranging from 6.95% to 8.65% due 1998 to 2008 50,469 46,385 Other subsidiary debt 4,200 4,316 Total subsidiary debt 54,669 50,701 Amount due within one year (3,926) (3,926) Net subsidiary debt 50,743 46,775 Total long-term debt 750,116 47.5 746,142 47.7 TOTAL CAPITALIZATION $1,578,754 100.0% $1,564,657 100.0% The accompanying notes are an integral part of these statements. 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, 1998 and the consolidated results of operations for the three months ended March 31, 1998 and 1997 and the consolidated cash flows for the three months ended March 31, 1998 and 1997. These financial statements do not contain the complete detail or footnote disclosure concerning accounting policies and other matters which would be included in full year financial statements and, therefore, they should be read in conjunction with the Company's audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Investments in business entities in which the Company and its subsidiaries do not have control, but have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. Revenues In order to match revenues with associated expenses, the Company accrues unbilled revenues for electric services delivered to customers but not yet billed at month-end. Comprehensive Income The Company adopted SFAS 130, Reporting Comprehensive Income, on January 1, 1998. The statement establishes a standard for the reporting and displaying of comprehensive income and its components in the Company's financial statements. For the quarter ended March 31, 1998, the Company's total comprehensive income was not materially different from net income. The components of total comprehensive income include net income, the Company's proportionate share of unrealized holding gains on marketable securities held by an equity investee, and the changes in the Company's additional minimum liability under a deferred compensation plan for certain senior management employees and directors. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on hand and highly liquid temporary investments with original maturity dates of three months or less. The Company has changed the statement of cash flows from the direct method to the indirect method effective for the quarter ended March 31, 1998. Previous year's presentation has been restated to conform with the new method. Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Gas Operations The Company intends to be a competitive energy provider, including both electricity and gas. In April 1997 the Company opened a gas trading office in Houston, Texas to serve the southern and eastern United States gas markets and a Boise, Idaho office that serves the Northwest and Canadian markets. The following table shows gas trading activities for the quarter ended March 31, 1998 (thousands of dollars): Gas revenues $ 97,158 Cost of gas (97,166) Administrative and General expenses (710) Gas trading activities - Net $ (718) Reclassifications Certain items previously reported for periods prior to March 31, 1998 have been reclassified to conform with the current periods presentation. Net income was not affected by these reclassifications. 2. COMMITMENTS AND CONTINGENT LIABILITIES: Commitments under contracts and purchase orders relating to the Company's program for construction and operation of facilities amounted to approximately $2.8 million at March 31, 1998. The commitments are generally revocable by the Company subject to reimbursement of manufacturers' expenditures incurred and/or other termination charges. The Company is party to various legal claims, actions, and complaints, certain of which involve material amounts. Although the Company is unable to predict with certainty whether or not it will ultimately be successful in these legal proceedings, or, if not, what the impact might be, based upon the advice of legal counsel, management presently believes that disposition of these matters will not have a material adverse effect on the Company's financial position, results of operation, or cash flow. 3. REGULATORY ISSUES: The Company has a PCA mechanism that provides for annual adjustments to the rates charged to Idaho retail customers. These adjustments are based on forecasts of net power supply costs, and take effect annually on May 16. The difference between the actual costs incurred and the forecasted costs are deferred, with interest, and trued-up in the next annual rate adjustment. So far in the current rate period, actual power cost expenses have exceeded the forecast. The Company has recorded a regulatory asset of $15.4 million as of March 31, 1998. The variance that exists at the end of the current rate period will be trued-up in the next annual PCA adjustment. On April 15, 1998 the Company filed its annual PCA request with the IPUC. The filing requests a $37.1 million increase over the 1997 rates. The increase is largely due to the return to more normal streamflow conditions and rising costs associated with mandatory purchases from CSPP projects. If this request is approved, revenue from Idaho retail customers will be $20.4 million greater than what would be recovered if the Company was charging the base rates during this rate period. Under IPUC Order No. 26216, when the Company's actual earnings in the Idaho jurisdiction in a given year exceed an 11.75 percent return on year-end common equity, the Company will refund 50 percent of the excess at the same time it makes its next PCA adjustment. In 1997, the Company set aside an estimated $8.7 million of revenue for the benefit of its Idaho customers. Subsequently, this amount was revised to $7.6 million, based on actual data. In the April 15, 1998 PCA filing, the Company requested that this revised amount be applied against the balance of demand-side conservation expenditures which are currently recorded as a regulatory asset. 4. FINANCING: The Company currently has a $200,000,000 shelf registration statement that can be used for both First Mortgage Bonds (including Medium Term Notes) and Preferred Stock of which $143 million remains available at March 31, 1998. 5. INCOME TAXES: The effective tax rate for the first three months decreased from 35.0 percent in 1997 to 30.8 percent in 1998. The table below displays a reconciliation between the statutory federal income tax rate of 35.0 percent and the effective tax rates for the three months ended March 31 (dollars are in thousands): 1998 1997 Amount Rate Amount Rate Computed income taxes based on statutory federal income tax rate $14,903 35.0% $16,359 35.0% Changes in taxes resulting from: Current state income taxes 1,715 4.0 1,823 3.9 Net depreciation 1,350 3.2 1,281 2.7 Investment tax credits restored (729) (1.7) (719) (1.5) Removal costs (653) (1.5) (267) (0.6) Repair allowance (782) (1.8) (782) (1.7) Low income housing credit (1,593) (3.7) (1,014) (2.2) Other (1,086) (2.7) (320) (0.6) $13,125 30.8% $16,361 35.0% 6. PREFERRED STOCK: The number of shares of preferred stock outstanding were as follows: March 31, December 31, 1998 1997 Cumulative, $100 par value: 4% preferred stock (authorized 215,000 166,271 166,972 shares) Serial preferred stock, 7.68% Series 150,000 150,000 (authorized 150,000 shares) Serial preferred stock, cumulative, without par value; total of 3,000,000 shares authorized: 7.07% Series, $100 stated value, 250,000 250,000 (authorized 250,000 shares) Auction rate preferred stock, $100,000 stated value, (authorized 500 shares) 500 500 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, 1998, and the related consolidated statements of income for the three month periods ended March 31, 1998 and 1997 and consolidated statements of cash flows for the three month periods ended March 31, 1998 and 1997. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet and statement of capitalization of Idaho Power Company and subsidiaries as of December 31, 1997, and the related consolidated statements of income, retained earnings, and cash flows for the year then ended (not presented herein); and in our report dated January 30, 1998, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet and statement of capitalization as of December 31, 1997 is fairly stated, in all material respects, in relation to the consolidated balance sheet and statement of capitalization from which it has been derived. DELOITTE & TOUCHE LLP Portland, Oregon May 8, 1998 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion and consolidated financial statements reflect the operations of Idaho Power Company and its wholly owned or controlled subsidiaries. This discussion uses the terms Idaho Power and the Company interchangeably to refer to Idaho Power 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. RESULTS OF OPERATIONS Earnings Per Share and Book Value Earnings per share of common stock (basic and diluted) were $0.75 for the quarter ended March 31, 1998, a decrease of $0.02 (2.6 percent) from the same quarter last year. At March 31, 1998, the book value per share of common stock was $19.20. Revenue General business revenue is dependent on many factors, including the number of customers, revenue per MWH, and weather conditions. In the first quarter of 1998, customers served increased 3.0 percent compared to the first quarter of 1997, due primarily to economic growth in the Company's service territory. The revenue per MWH decreased 1.9 percent, a result of the annual rate adjustments discussed below in "Power Cost Adjustment.". Heating degree days, a common measure used in the utility industry to analyze temperature-related demand, were 11.5 percent less than the first quarter of 1997, and 19.4 percent below normal. This resulted in a 1.6 percent decrease in the average MWH used per customer. These three factors resulted in a 0.7 percent decrease in general business revenue. Off-system sales are comprised of trading in the wholesale electricity markets, long-term contracts, and opportunity sales made when available. The increase in off-system revenue is due primarily to a 158.4 percent increase in MWH sales, primarily from increased trading in the wholesale electricity markets. Expenses Purchased power expenses increased $74.6 million (381.6 percent), due to a 323.3 percent increase in MWHs purchased, primarily from increased trading in the wholesale electricity markets. Fuel expenses increased $6.2 million (43.1 percent), due primarily to a 50.2 percent increase in MWHs generated by Company's coal-fired power plants. Generation by these plants was increased to take advantage of off system sales opportunities. The PCA component of expenses increased $1.7 million. The PCA mechanism reduces expenses when actual power supply costs are above forecast and increases them when power supply costs are below forecast. In the first quarter of 1998, power supply costs were below forecast, while in 1997 they were above forecast. The PCA is discussed below in "Power Cost Adjustment." Other operation expenses increased $3.0 million due to increases in electricity wheeling charges, related to increased MWH sales, and increased payroll-related expenses. Maintenance expenses decreased $1.3 million due primarily to decreased boiler maintenance expenses at the Jim Bridger plant. During the first quarter of 1997, extensive maintenance was performed on the plant while the Company maximized the use of its hydro generation facilities. Other Other income decreased $2.4 million, due primarily to a $1.0 million increase in expenses related to Company initiatives and $0.7 million of losses on gas trading activities. In addition, in 1997 the Company recorded a $0.6 million gain on the sale of an investment. Income taxes decreased due primarily to the decrease in net income before taxes and a decrease in the effective tax rate. The effective tax rate has decreased primarily as a result of increased tax credits from affordable housing and the impact of expected tax settlements for the years 1993-1995. LIQUIDITY AND CAPITAL RESOURCES Cash Flow For the three months ended March 31, 1998, the Company generated $48.5 million in net cash from operations. After deducting for both common and preferred dividends, net cash generation from operations provided approximately $29.6 million for the Company's construction program and other capital requirements. Cash Expenditures Idaho Power estimates that its cash construction program for 1998 will require approximately $100.0 million. This estimate is subject to revision in light of changing economic, regulatory, environmental, and conservation factors. During the first three months of 1998, the Company expended approximately $21.3 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. At March 31, 1998, the Company's short-term borrowings totaled $48.8 million. Financing Program The Company currently has a $200,000,000 shelf registration statement that can be used for both First Mortgage Bonds (including Medium Term Notes) and Preferred Stock of which $143 million remains available at March 31, 1998. 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, the Company's consolidated pre-tax interest coverage was 3.24 times. OTHER MATTERS Power Cost Adjustment The Company has a PCA mechanism that provides for annual adjustments to the rates charged to Idaho retail customers. These adjustments, which take effect annually on May 16, are based on forecasts of net power supply costs. The difference between the actual costs incurred and the forecasted costs are deferred, with interest, and trued-up in the next annual rate adjustment. On April 15, 1998 the Company filed its annual PCA request with the IPUC. The filing requests a $37.1 million increase over the 1997 rates. The increase is largely due to the return to more normal streamflow conditions and rising costs associated with mandatory purchases from CSPP projects. If this request is approved, revenue from Idaho retail customers will be $20.4 million greater than what would be recovered if the Company was charging the base rates during this rate period. Regulatory Settlement Under the terms of an IPUC Settlement in effect though 1999, when the Company's actual earnings in the Idaho jurisdiction exceeds an 11.75 percent return on year-end common equity, the Company will refund 50 percent of the excess to Idaho's retail ratepayers. In 1997, the Company set aside an estimated $8.7 million of revenue for the benefit of its Idaho customers. Subsequently, this amount was revised to $7.6 million, based on actual data. In the April 15, 1998 PCA filing, the Company requested that this revised amount be applied against the balance of demand-side conservation expenditures which are currently recorded as a regulatory asset. 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. Inflows into Brownlee result from a combination of precipitation, storage, and ground water conditions. Independent forecasters have projected that inflow into Brownlee Reservoir during the April-July runoff period will be 5.2 MAF, slightly more than the 70-year median of 4.9 MAF and just more than half of 1997's 9.8 MAF. Holding Company In the second half of 1997, the Company filed applications with state regulatory commissions in Idaho, Oregon, Nevada and Wyoming and with the FERC seeking approval to form a holding company to be called IDACORP, Inc. The purpose of the holding company is to position Idaho Power to respond to the changing business environment in the electric utility industry. Upon consummation of the transaction Idaho Power, along with Ida-West, will become wholly owned subsidiaries of IDACORP. Orders approving the formation of the holding company have been received from Idaho, Oregon, Wyoming and the FERC. Nevada has also approved the transaction and will be issuing its order shortly. The matter was submitted to and approved by the shareholders at the 1998 Annual Meeting. Upon receipt of all regulatory approvals it is expected the holding company will be effective sometime in the second half of 1998. Year 2000 Costs The Year 2000 issue is the result of potential problems with computer systems or any equipment with computer chips that use dates where the year has been stored as just two characters (e.g. 97 for 1997). These systems may incorrectly evaluate dates beyond the year 1999, potentially causing system failure and disruption of operations which could materially affect the Company's ability to conduct business. These systems must be identified and either modified or replaced with systems that correctly recognize dates beyond 1999. The Company has developed and implemented a Year 2000 Compliance Plan that addresses traditional hardware and software systems, embedded systems, and service providers. The plan also includes identification of and coordination with all external interfacing systems. The Company expects its critical systems to be compliant by mid-1999. Idaho Power is connected to an electric grid that connects utilities throughout the western portion of North America. This interconnection is essential to the reliability and operational integrity of each connected utility. This also means that failure of one electric utility in the interconnected grid could cause the failure of others. In this regard, the Company is working closely with other electric industry organizations concerned with the reliability issues and technical collaboration. The Company estimates that its operating expenses related to this issue will total approximately $4.8 million between 1998 and 2000 and will be expensed as incurred. The Company does not expect these expenditures to have a material effect on its financial condition or results of operations. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit File Number As Exhibit 2 Agreement and plan of exchange, dated as of February 2, 1998. *3(a) 33-00440 4(a)(xiii) Restated Articles of Incorporation of the Company as filed with the Secretary of State of Idaho on June 30, 1989. *3(a)(ii) 33-65720 4(a)(ii) Statement of Resolution Establishing Terms of Flexible Auction Series A, Serial Preferred Stock, Without Par Value (cumulative stated value of $100,000 per share), as filed with the Secretary of State of Idaho on November 5, 1991. *3(a)(iii) 33-65720 4(a)(iii) Statement of Resolution Establishing Terms of 7.07% Serial Preferred Stock, Without Par Value (cumulative stated value of $100 per share), as filed with the Secretary of State of Idaho on June 30, 1993. *3(b) 33-41166 4(b) Waiver resolution to Restated Articles of Incorporation adopted by Shareholders on May 1, 1991. *3(c) 33-00440 4(a)(xiv) By-laws of the Company amended on June 30, 1989, and presently in effect. *4(a)(i) 2-3413 B-2 Mortgage and Deed of Trust, dated as of October 1, 1937, between the Company and Bankers Trust Company and R. G. Page, as Trustees. *4(a)(ii) Supplemental Indentures to Mortgage and Deed of Trust: Number Dated 1-MD B-2-a First July 1, 1939 2-5395 7-a-3 Second November 15, 1943 2-7237 7-a-4 Third February 1, 1947 2-7502 7-a-5 Fourth May 1, 1948 2-8398 7-a-6 Fifth November 1, 1949 2-8973 7-a-7 Sixth October 1, 1951 2-12941 2-C-8 Seventh January 1, 1957 2-13688 4-J Eighth July 15, 1957 2-13689 4-K Ninth November 15, 1957 2-14245 4-L Tenth April 1, 1958 2-14366 2-L Eleventh October 15, 1958 2-14935 4-N Twelfth May 15, 1959 2-18976 4-O Thirteenth November 15, 1960 2-18977 4-Q Fourteenth November 1, 1961 2-22988 4-B-16 Fifteenth September 15, 1964 2-24578 4-B-17 Sixteenth April 1, 1966 2-25479 4-B-18 Seventeenth October 1, 1966 2-45260 2(c) Eighteenth September 1, 1972 2-49854 2(c) Nineteenth January 15, 1974 2-51722 2(c)(i) Twentieth August 1, 1974 2-51722 2(c)(ii) Twenty-first October 15, 1974 2-57374 2(c) Twenty-second November 15, 1976 2-62035 2(c) Twenty-third August 15, 1978 33-34222 4(d)(iii) Twenty-fourth September 1, 1979 33-34222 4(d)(iv) Twenty-fifth November 1, 1981 33-34222 4(d)(v) Twenty-sixth May 1, 1982 33-34222 4(d)(vi) Twenty-seventh May 1, 1986 33-00440 4(c)(iv) Twenty-eighth June 30, 1989 33-34222 4(d)(vii) Twenty-ninth January 1, 1990 33-65720 4(d)(iii) Thirtieth January 1, 1991 33-65720 4(d)(iv) Thirty-first August 15, 1991 33-65720 4(d)(v) Thirty-second March 15, 1992 33-65720 4(d)(vi) Thirty-third April 16, 1993 1-3198 4 Thirty-fourth December 1, 1993 Form 8-K Dated 12/17/93 *4(b) Instruments relating to American Falls bond guarantee. (see Exhibits 10(f) and 10(f)(i)). *4(c) 33-65720 4(f) Agreement to furnish certain debt instruments. *4(d) 33-00440 2(a)(iii) Agreement and Plan of Merger dated March 10, 1989, between Idaho Power Company, a Maine Corporation, and Idaho Power Migrating Corporation. *4(e) 33-65720 4(e) Rights Agreement dated January 11, 1990, between the Company and First Chicago Trust Company of New York, as Rights Agent (The Bank of New York, successor Rights Agent). *4(e)(i) 1-3198 Form 4(e)(i) Amendment, dated as of January 30, 10-K for 1997 1998, related to agreement filed as exhibit 4(e). *4(f) 1-3198 Form 4(f) Agreement and Plan of Exchange 10-K for 1997 dated as of February 2, 1998 between Idaho Power Company, and Idaho Power Holding Company. *10(a) 2-51762 5(a) Agreement, dated April 20, 1973, between the Company and FMC Corporation. *10(a)(i) 2-57374 5(b) Letter Agreement, dated October 22, 1975, relating to agreement filed as Exhibit 10(a). *10(a)(ii) 2-62034 5(b)(i) Letter Agreement, dated December 22, 1976, relating to agreement filed as Exhibit 10(a). *10(a)(iii 33-65720 10(a) Letter Agreement, dated December 11, 1981, relating to agreement filed as Exhibit 10(a). *10(b) 2-49584 5(b) Agreements, dated September 22, 1969, between the Company and Pacific Power & Light Company relating to the operation, construction and ownership of the Jim Bridger Project. *10(b)(i) 2-51762 5(c) Amendment, dated February 1, 1974, relating to operation agreement filed as Exhibit 10(b). *10(c) 2-49584 5(c) Agreement, dated as of October 11, 1973, between the Company and Pacific Power & Light Company. *10(d) 2-49584 5(d) Agreement, dated as of October 24, 1973, between the Company and Utah Power & Light Company. *10(d)(i) 2-62034 5(f)(i) Amendment, dated January 25, 1978, relating to agreement filed as Exhibit 10(d). *10(e) 33-65720 10(b) Coal Purchase Contract, dated as of June 19, 1986, among the Company, Sierra Pacific Power Company and Black Butte Coal Company. *10(f) 2-57374 5(k) Contract, dated March 31, 1976, between the United States of America and American Falls Reservoir District, and related Exhibits. *10(f)(i) 33-65720 10(c) Guaranty Agreement, dated March 1, 1990, between the Company and West One Bank, as Trustee, relating to $21,425,000 American Falls Replacement Dam Bonds of the American Falls Reservoir District, Idaho. *10(g) 2-57374 5(m) Agreement, effective April 15, 1975, between the Company and The Washington Water Power Company. *10(h) 2-62034 5(p) Bridger Coal Company Agreement, dated February 1, 1974, between Pacific Minerals, Inc., and Idaho Energy Resources Co. *10(i) 2-62034 5(q) Coal Sales Agreement, dated February 1, 1974, between Bridger Coal Company and Pacific Power & Light Company and the Company. *10(i)(i) 33-65720 10(d) Second Restated and Amended Coal Sales Agreement, dated March 7, 1988, among Bridger Coal Company and PacifiCorp (dba Pacific Power & Light Company) and the Company. *10(i)(ii) 1-3198 10(i)(ii) Third Restated and Amended Coal Form 10-Q Sales Agreement, dated January 1, for 3/31/96 1996, among Bridger Coal Company and PacifiCorp (dba Pacific Power & Light Company) and the Company. *10(j) 2-62034 5(r) Guaranty Agreement, dated as of August 30, 1974, with Pacific Power & Light Company. *10(k) 2-56513 5(i) Letter Agreement, dated January 23, 1976, between the Company and Portland General Electric Company. *10(k)(i) 2-62034 5(s) Agreement for Construction, Ownership and Operation of the Number One Boardman Station on Carty Reservoir, dated as of October 15, 1976, between Portland General Electric Company and the Company. *10(k)(ii) 2-62034 5(t) Amendment, dated September 30, 1977, relating to agreement filed as Exhibit 10(k). *10(k)(iii) 2-62034 5(u) Amendment, dated October 31, 1977, relating to agreement filed as Exhibit 10(k). *10(k)(iv) 2-62034 5(v) Amendment, dated January 23, 1978, relating to agreement filed as Exhibit 10(k). *10(k)(v) 2-62034 5(w) Amendment, dated February 15, 1978, relating to agreement filed as Exhibit 10(k). *10(k)(vi) 2-68574 5(x) Amendment, dated September 1, 1979, relating to agreement filed as Exhibit 10(k). *10(l) 2-68574 5(z) Participation Agreement, dated September 1, 1979, relating to the sale and leaseback of coal handling facilities at the Number One Boardman Station on Carty Reservoir. *10(m) 2-64910 5(y) Agreements for the Operation, Construction and Ownership of the North Valmy Power Plant Project, dated December 12, 1978, between Sierra Pacific Power Company and the Company. *10(n)(i)1 1-3198 10(n)(i) The Revised Security Plans for Form 10-K Senior Management Employees and for for 1994 Directors-a non-qualified, deferred compensation plan effective November 30, 1994. *10(n)(ii)1 1-3198 10(n)(ii) The Executive Annual Incentive Plan Form 10-K for senior management employees for 1994 effective January 1, 1995. *10(n)(iii)1 1-3198 10(n)(iii) The 1994 Restricted Stock Plan for Form 10-K officers and key executives for 1994 effective July 1, 1994. *10(n)(iv)1 1-3198 10(n)(iv) The Revised Security Plans for Form 10-K Senior Management Employees and for for 1996 Directors-a non-qualified, deferred compensation plan effective August 1, 1996. *10(o) 33-65720 10(f) Residential Purchase and Sale Agreement, dated August 22, 1981, among the United Stated of American Department of Energy acting by and through the Bonneville Power Administration, and the Company. *10(p) 33-65720 10(g) Power Sales Contact, dated August 25, 1981, including amendments, among the United States of America Department of Energy acting by and through the Bonneville Power Administration, and the Company. *10(q) 33-65720 10(h) Framework Agreement, dated October 1, 1984, between the State of Idaho and the Company relating to the Company's Swan Falls and Snake River water rights. *10(q)(i) 33-65720 10(h)(i) Agreement, dated October 25, 1984, between the State of Idaho and the Company relating to the agreement filed as Exhibit 10(q). *10(q)(ii) 33-65720 10(h)(ii) Contract to Implement, dated October 25, 1984, between the State of Idaho and the Company relating to the agreement filed as Exhibit 10(q). *10(r) 33-65720 10(i) Agreement for Supply of Power and Energy, dated February 10, 1988, between the Utah Associated Municipal Power Systems and the Company. *10(s) 33-65720 10(j) Agreement Respecting Transmission Facilities and Services, dated March 21, 1988 among PC/UP&L Merging Corp. and the Company including a Settlement Agreement between PacifiCorp and the Company. *10(s)(i) 33-65720 10(j)(i) Restated Transmission Services Agreement, dated February 6, 1992, between Idaho Power Company and PacifiCorp. *10(t) 33-65720 10(k) Agreement for Supply of Power and Energy, dated February 23, 1989, between Sierra Pacific Power Company and the Company. *10(u) 33-65720 10(l) Transmission Services Agreement, dated May 18, 1989, between the Company and the Bonneville Power Administration. *10(v) 33-65720 10(m) Agreement Regarding the Ownership, Construction, Operation and Maintenance of the Milner Hydroelectric Project (FERC No. 2899), dated January 22, 1990, between the Company and the Twin Falls Canal Company and the Northside Canal Company Limited. *10(v)(i) 33-65720 10(m)(i) Guaranty Agreement, dated February 10, 1992, between the Company and New York Life Insurance Company, as Note Purchaser, relating to $11,700,000 Guaranteed Notes due 2017 of Milner Dam Inc. *10(w) 33-65720 10(n) Agreement for the Purchase and Sale of Power and Energy, dated October 16, 1990, between the Company and The Montana Power Company. *10(x) 1-3198 10(x) Agreement for design of substation Form 10-Q dated October 4, 1995, between the for 9/30/95 Company and Micron Technology, Inc. 12 Statement Re: Computation of Ratio of Earnings to Fixed Charges. 12(a) Statement Re: Computation of Supplemental Ratio of Earnings to Fixed Charges. 12(b) Statement Re: Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements. 12(c) Statement Re: Computation of Supplemental Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements. 15 Letter re: unaudited interim financial information. 27 Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K were filed for the three months ended March 31, 1998. *Previously Filed and Incorporated Herein by Reference _______________________________ 1 Compensatory plan 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 13, 1998 By: /s/ J LaMont Keen J LaMont Keen Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) EX-2 2 -4- Exhibit 2 AGREEMENT AND PLAN OF EXCHANGE This AGREEMENT AND PLAN OF EXCHANGE (this "Agreement"), dated as of February 2, 1998, is between IDAHO POWER COMPANY, an Idaho corporation (the "Company"), the company whose shares will be acquired pursuant to the Exchange described herein, and IDAHO POWER HOLDING COMPANY, an Idaho corporation ("IPHC"), the acquiring company. The Company and IPHC are hereinafter referred to, collectively, as the "Companies". WITNESSETH: WHEREAS, the authorized capital stock of the Company consists of (a) 50,000,000 shares of Common Stock, $2.50 par value ("Company Common Stock"), of which 37,612,351 shares are issued and outstanding, (b) 215,000 shares of 4% Preferred Stock, $100 par value, of which 166,972 shares are issued and outstanding, (c) 150,000 shares of Serial Preferred Stock, $100 par value, of which 150,000 shares are issued and outstanding and (d) 3,000,000 shares of Serial Preferred Stock, without par value, of which 500,500 shares are issued and outstanding; the number of shares of Company Common Stock being subject to increase to the extent that shares reserved for issuance are issued prior to the Effective Time, as hereinafter defined. WHEREAS, IPHC is a wholly-owned subsidiary of the Company with authorized capital stock consisting of (a) 120,000,000 shares of Common Stock, without par value ("IPHC Common Stock"), of which 100 shares are issued and outstanding and owned of record by the Company and (b) 20,000,000 shares of Preferred Stock, without par value ("IPHC Preferred Stock"), none of which shares are issued and outstanding; WHEREAS, the Boards of Directors of the respective Companies deem it desirable and in the best interests of the Companies and the shareholders of the Company that each share of Company Common Stock be exchanged for a share of IPHC Common Stock with the result that IPHC becomes the owner of all outstanding Company Common Stock and that each holder of Company Common Stock becomes the owner of an equal number of shares of IPHC Common Stock, all on the terms and conditions hereinafter set forth; and WHEREAS, the Boards of Directors of the Companies have each approved and adopted this Agreement and the Board of Directors of the Company has recommended that its shareholders approve this Agreement pursuant to the Idaho Business Corporation Act (the "Act"); NOW, THEREFORE, in consideration of the premises, and of the agreements, covenants and conditions hereafter contained, the parties hereto agree with respect to the exchange provided for herein (the "Exchange") that at the Effective Time (as hereinafter defined) each share of Company Common Stock issued and outstanding immediately prior to the Effective Time will be exchanged for one share of IPHC Common Stock, and that the terms and conditions of the Exchange and the method of carrying the same into effect shall be as follows: I ARTICLE This Agreement shall be submitted to the shareholders of the Company entitled to vote with respect thereto for approval as provided by the Act. I ARTICLE Subject to the satisfaction of the terms and conditions set forth in this Agreement and to the provisions of Article VI, IPHC agrees to file with the Secretary of State of the State of Idaho (the "Secretary of State") Articles of Share Exchange (the "Articles") with respect to the Exchange, and the Exchange shall take effect upon the effective date as specified in the Articles (the "Effective Time") I ARTICLE A. At the Effective Time: (1) each share of Company Common Stock issued and outstanding immediately prior to the Effective Time shall be automatically exchanged for one share of IPHC Common Stock, which shares shall thereupon be fully paid and non-assessable; (1) PHC shall acquire and become the owner and holder of each issued and outstanding share of Company Common Stock so exchanged; (1) each share of IPHC Common Stock issued and outstanding immediately prior to the Effective Time shall be canceled and shall thereupon constitute an authorized and unissued share of IPHC Common Stock; (1) each share of Company Common Stock held under the Dividend Reinvestment and Stock Purchase Plan, the Employee Savings Plan and the 1994 Restricted Stock Plan (including fractional and uncertificated shares) immediately prior to the Effective Time shall be automatically exchanged for a like number of shares (including fractional and uncertificated shares) of IPHC Common Stock, which shares shall be held under the Dividend Reinvestment and Stock Purchase Plan, the Employee Savings Plan and the 1994 Restricted Stock Plan, as the case may be; and (1) the former owners of Company Common Stock shall be entitled only to receive shares of IPHC Common Stock as provided herein. A. Subject to dissenters' rights as set forth in Part 13 of the Act for the 4% Preferred Stock, $100 par value and the Serial Preferred Stock, $100 par value, shares of the Company's 4% Preferred Stock, $100 par value, Serial Preferred Stock, $100 par value, and Serial Preferred Stock, without par value, shall not be exchanged or otherwise affected in connection with the Exchange and, to the extent issued and outstanding immediately prior to the Effective Time, shall continue to be issued and outstanding following the Exchange as shares of the Company of the applicable series designation. A. As of the Effective Time, IPHC shall succeed to the Dividend Reinvestment and Stock Purchase Plan as in effect immediately prior to the Effective Time, and the Dividend Reinvestment and Stock Purchase Plan shall be appropriately amended to provide for the issuance and delivery of IPHC Common Stock on and after the Effective Time. A. As of the Effective Time, the Employee Savings Plan and the 1994 Restricted Stock Plan shall be appropriately amended to provide for the issuance and delivery of IPHC Common Stock on and after the Effective Time. I ARTICLE The filing of the Articles with the Secretary of State and the consummation of the Exchange are subject to the satisfaction of the following conditions precedent: (1) the approval by the shareholders of the Company, to the extent required by the Act, of this Agreement; (1) the approval for listing, upon official notice of issuance, by the New York Stock Exchange, of IPHC Common Stock to be issued and reserved for issuance pursuant to the Exchange; (1) the receipt of such orders, authorizations, approvals or waivers from the Idaho Public Utilities Commission and all other regulatory bodies, boards or agencies as are required in connection with the Exchange, which orders, authorizations, approvals or waivers remain in full force and effect and do not include, in the sole judgment of the Board of Directors of the Company, unacceptable conditions; and (4) the receipt by the Company of a tax opinion of LeBoeuf, Lamb, Greene & MacRae L.L.P. satisfactory to the Board of Directors of the Company to the effect that (a) common shareholders of the Company (i) will recognize no gain or loss in connection with the Exchange, (ii) will have the same basis in their IPHC Common Stock after the Exchange as they had in their Company Common Stock before the Exchange and (iii) will be entitled to include any period that they held Company Common Stock before the Exchange when determining any holding period with respect to IPHC Common Stock received in the Exchange and (b) IPHC will recognize no gain or loss upon its receipt of Company Common Stock in the Exchange. I ARTICLE Following the Effective Time, each holder of an outstanding certificate or certificates theretofore representing shares of Company Common Stock may, but shall not be required to, surrender the same to IPHC for cancellation and reissuance of a new certificate or certificates in such holder's name or for cancellation and transfer, and each holder or transferee will be entitled to receive a certificate or certificates representing the same number of shares of IPHC Common Stock as the shares of Company Common Stock previously represented by the certificate or certificates surrendered. Until so surrendered or presented for transfer, each outstanding certificate which, immediately prior to the Effective Time, represented Company Common Stock shall be deemed and treated for all corporate purposes to represent the ownership of the same number of shares of IPHC Common Stock as though such surrender or transfer and exchange had taken place. The holders of Company Common Stock at the Effective Time shall have no right to have their shares of Company Common Stock transferred on the stock transfer books of the Company, and such stock transfer books shall be deemed to be closed for this purpose at the Effective Time. I ARTICLE This Agreement may be amended, modified or supplemented, or compliance with any provision or condition hereof may be waived, at any time, by the mutual consent of the Boards of Directors of the Company and of IPHC; provided, however, that no such amendment, modification, supplement or waiver shall be made or effected, if such amendment, modification, supplement or waiver would, in the judgment of the Board of Directors of the Company, materially and adversely affect the shareholders of the Company. Notwithstanding shareholder approval of this Agreement, this Agreement may be terminated and the Exchange and related transactions abandoned at any time prior to the time the Articles are filed with the Secretary of State, if the Board of Directors of the Company determines, in its sole discretion, that consummation of the Exchange would be inadvisable or not in the best interests of the Company or its shareholders. IN WITNESS WHEREOF, each of the Company and IPHC, pursuant to authorization and approval given by its Board of Directors, has caused this Agreement to be executed as of the date first above written. IDAHO POWER COMPANY By:_________________________________ Name: Jan B. Packwood Title: President IDAHO POWER HOLDING COMPANY By:_________________________________ Name: Joseph W. Marshall Title: Chairman of the Board and Chief Executive Officer EX-12 3
Ex-12 Idaho Power Company Consolidated Financial Information Ratio of Earnings to Fixed Charges Twelve Months Twelve Months Ended December 31, Ended (Thousands of Dollars) March 31, 1993 1994 1995 1996 1997 1998 Computation of Ratio of Earnings to Fixed Charges: Consolidated net income..................... $84,464 $74,930 $86,921 $90,618 $92,274 $91,352 Income taxes: Income taxes (incl amounts charged to other income and deductions)............ 38,057 35,307 49,498 51,316 47,559 43,800 Investment tax credit adjustment............ (1,583) (1,064) (1,086) 776 (1,087) (565) Total income taxes.................... 36,474 34,243 48,412 52,092 46,472 43,235 Income before income taxes...................... 120,938 109,173 135,333 142,710 138,746 134,587 Fixed Charges: Interest on long-term debt................. 53,706 51,172 51,147 52,165 53,215 52,447 expense and premium - net.................. 507 567 567 594 653 656 Interest on short-term bank loans........... 220 1,157 3,144 2,269 2,902 3,011 Other interest.............................. 2,023 1,538 1,598 2,319 3,990 3,916 Interest portion of rentals................. 1,077 794 925 991 982 1,066 Total fixed charges................... 57,533 55,228 57,381 58,338 61,742 61,096 Earnings - as defined.......................... $178,471 $164,401 $192,714 $201,048 $200,488 $195,683 Ratio of earnings to fixed charges.............. 3.10x 2.98x 3.36x 3.45x 3.25x 3.20x Exhibit 12
EX-12.A 4
Ex-12a Idaho Power Company Consolidated Financial Information Supplemental Ratio of Earnings to Fixed Charges Twelve Months Twelve Months Ended December 31, Ended (Thousands of Dollars) March 31, 1993 1994 1995 1996 1997 1998 Computation of Ratio of Earnings to Fixed Charges: Consolidated net income..................... $84,464 $74,930 $86,921 $90,618 $92,274 $91,352 Income taxes: Income taxes (incl amounts charged to other income and deductions)............ 38,057 35,307 49,498 51,316 47,559 43,800 Investment tax credit adjustment............ (1,583) (1,064) (1,086) 776 (1,087) (565) Total income taxes.................... 36,474 34,243 48,412 52,092 46,472 43,235 Income before income taxes...................... 120,938 109,173 135,333 142,710 138,746 134,587 Fixed Charges: Interest on long-term debt................. 53,706 51,172 51,147 52,165 53,215 52,447 expense and premium - net.................. 507 567 567 594 653 656 Interest on short-term bank loans........... 220 1,157 3,144 2,269 2,902 3,011 Other interest.............................. 2,023 1,538 1,598 2,319 3,990 3,916 Interest portion of rentals................. 1,077 794 925 991 982 1,066 Total fixed charges................... 57,533 55,228 57,381 58,338 61,742 61,096 Supplemental increment to fixed charges* .. 2,631 2,622 2,611 2,600 2,574 2,565 Total supplemental fixed charges...... 60,164 57,850 59,992 60,938 64,316 63,661 Supplemental Earnings - as defined............. $181,102 $167,023 $195,325 $203,648 $203,062 $198,248 Supplemental Ratio of earnings to fixed charges 3.01x 2.89x 3.26x 3.34x 3.16x 3.11x * Explanation of increment: Interest on the guaranty of American Falls Reservoir District bonds and Milner Dam Inc. notes which are already included in operating expense. Exhibit 12-A
EX-12.B 5
Ex-12b Idaho Power Company Consolidated Financial Information Ratio of Earnings to Combined Fixed Charges and Preferred Dividends Requirements Twelve Months Twelve Months Ended December 31, Ended (Thousands of Dollars) March 31, 1993 1994 1995 1996 1997 1998 Computation of Ratio of Earnings to Fixed Charges: Consolidated net income..................... $84,464 $74,930 $86,921 $90,618 $92,274 $91,352 Income taxes: Income taxes (incl amounts charged to other income and deductions)............ 38,057 35,307 49,498 51,316 47,559 43,800 Investment tax credit adjustment............ (1,583) (1,064) (1,086) 776 (1,087) (565) Total income taxes.................... 36,474 34,243 48,412 52,092 46,472 43,235 Income before income taxes...................... 120,938 109,173 135,333 142,710 138,746 134,587 Fixed Charges: Interest on long-term debt................. 53,706 51,172 51,147 52,165 53,215 52,447 expense and premium - net.................. 507 567 567 594 653 656 Interest on short-term bank loans........... 220 1,157 3,144 2,269 2,902 3,011 Other interest.............................. 2,023 1,538 1,598 2,319 3,990 3,916 Interest portion of rentals................. 1,077 794 925 991 982 1,066 Total fixed charges................... 57,533 55,228 57,381 58,338 61,742 61,096 Preferred dividends requirements............ 8,547 10,682 12,392 12,146 7,803 7,601 Total fixed charges and preferred dividends............................ 66,080 65,910 69,773 70,484 69,545 68,697 Earnings - as defined.......................... $178,471 $164,401 $192,714 $201,048 $200,488 $195,683 Ratio of earnings to fixed charges and preferred dividends.......................... 2.70x 2.49x 2.76x 2.85x 2.88x 2.85x Exhibit 12-B
EX-12.C 6
Ex-12c Idaho Power Company Consolidated Financial Information Supplemental Ratio of Earnings to Combined Fixed Charges and Preferred Dividends Requirements Twelve Months Twelve Months Ended December 31, Ended (Thousands of Dollars) March 31, 1993 1994 1995 1996 1997 1998 Computation of Ratio of Earnings to Fixed Charges: Consolidated net income..................... $84,464 $74,930 $86,921 $90,618 $92,274 $91,352 Income taxes: Income taxes (incl amounts charged to other income and deductions)............ 38,057 35,307 49,498 51,316 47,559 43,800 Investment tax credit adjustment............ (1,583) (1,064) (1,086) 776 (1,087) (565) Total income taxes.................... 36,474 34,243 48,412 52,092 46,472 43,235 Income before income taxes...................... 120,938 109,173 135,333 142,710 138,746 134,587 Fixed Charges: Interest on long-term debt................. 53,706 51,172 51,147 52,165 53,215 52,447 expense and premium - net.................. 507 567 567 594 653 656 Interest on short-term bank loans........... 220 1,157 3,144 2,269 2,902 3,011 Other interest.............................. 2,023 1,538 1,598 2,319 3,990 3,916 Interest portion of rentals................. 1,077 794 925 991 982 1,066 Total fixed charges................... 57,533 55,228 57,381 58,338 61,742 61,096 Supplemental increment to fixed charges* .. 2,631 2,622 2,611 2,600 2,574 2,565 Supplemental fixed charges............ 60,164 57,850 59,992 60,938 64,316 63,661 Preferred dividends requirements............ 8,547 10,682 12,392 12,146 7,803 7,601 Total supplemental fixed charges and preferred dividends.............. 68,711 68,532 72,384 73,084 72,119 71,262 Supplemental Earnings - as defined............. $181,102 $167,023 $195,325 $203,648 $203,062 $198,248 Supplemental Ratio of earnings to fixed charges and preferred dividends.............. 2.64x 2.44x 2.70x 2.79x 2.82x 2.78x * Explanation of increment: Exhibit 12-C interest on the guaranty of American Falls District bonds and Milner Dam Inc. notes which are already included in operating expense.
EX-15 7 Exhibit 15 May 13, 1998 Idaho Power Company Boise, Idaho We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Idaho Power Company and subsidiaries for the periods ended March 31, 1998 and 1997, as indicated in our report dated May 8, 1998; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, is incorporated by reference in Registration Statement Nos. 333-00139 and 33-51215 on Form S-3, Registration Statement No. 33-56071 on Form S-8 and Registration Statement No. 333-48031 of IDACORP, Inc. on Form S-4 filed on March 16, 1998. 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-27 8
UT This schedule contains summary financial information extracted from (balance sheets, income statements and cash flow statements) and is qualifed in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1997 MAR-31-1998 PER-BOOK 1,719,117 104,926 207,375 415,828 0 2,447,246 94,031 358,011 269,969 722,011 0 106,627 686,203 0 63,913 48,816 33,999 0 0 0 785,677 2,447,246 238,170 13,125 181,615 194,740 43,430 987 44,417 14,962 29,455 1,405 28,050 17,490 0 48,502 0.75 0.75
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