8-K 1 0001.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K ------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) February 23, 2001 IDACORP, Inc. Idaho Power Company (Exact name of registrant as specified in its charter) Idaho 1-14465 82-0505802 1-3198 82-0130980 (State or other (Commission (I.R.S.Employer jurisdiction of incorporation) File Number) Identification No.) 1221 West Idaho Street Boise, Idaho 83702-5627 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (208) 388-2200 ------------------- Former name or address, if changed since last report. Items 1 through 4, Item 6 and Items 8 and 9 are inapplicable and have been omitted herefrom. ITEM 5. OTHER EVENTS AND FD DISCLOSURE Idaho Power Company's (IPC) utility operations are being affected by the electricity market conditions in the western United States. The tremendous increase in prices for purchased power, along with increasing demand and reduced hydroelectric generation, have combined to produce substantial increases in costs to supply power. The current mountain snowpack above Brownlee Reservoir, IPC's main storage pool for its Hells Canyon hydro facilities, was at 55 percent of normal in February 2001. This indicates that hydroelectric generation could be appreciably diminished in 2001. In May 2001, IPC will implement the annual Power Cost Adjustment (PCA) in Idaho to recover up to 90% of the costs to supply power in the Idaho jurisdiction. The cost recovery mechanism is based on the forecast for the May 2001-May 2002 period and a true-up for the preceding year. Because the resulting rate increases are expected to be large, the Company is exploring an alternative method of cost recovery with the Idaho Public Utilities Commission and the legislature. This method, if approved and implemented, would enable the Company to recover the costs up front but spread the impact on our customers out over a longer period of time. IPC is also proposing a number of programs to decrease its reliance on expensive wholesale power. The programs are designed to reduce overall energy usage, decrease peak-demand levels and increase generation within our service territory. With regard to non-utility energy trading in the state of California, IPC in January 1999 entered into a Participation Agreement with the California Power Exchange (CalPX), a California non-profit public benefit corporation. The CalPX operates a wholesale electricity market in California by acting as a clearinghouse through which electricity is bought and sold. Pursuant to the Participation Agreement, IPC could sell power to the CalPX under the terms and conditions of the CalPX Tariff. On January 18, 2001, the CalPX sent IPC an invoice for $2.2 million - a "default share invoice" - as a result of an alleged Southern California Edison (SCE) payment default of $214.5 million for power purchases. IPC made this payment. On January 24, 2001, IPC terminated its Participation Agreement with the CalPX. On February 8, 2001, the CalPX sent a further default share invoice for $5.2 million, due February 20, 2001, as a result of alleged payment defaults by SCE and Pacific Gas and Electric Company (PG&E), and others. However, as of February 9, 2001 the CalPX owes IPC $4.2 million, for power sold to the CalPX prior to December 2000. IPC will be entitled to receive an additional $7.1 million from the CalPX as of March 6, 2001 for December 2000 deliveries to the CalPX. IPC did not pay the February 8 invoice. The CalPX allocated the defaults of, among others, SCE and PG&E to the remaining participants based upon the level of trading activity of each participant during the preceding three-month period. IPC believes that the default invoices were not proper and that it owes no further amounts to the CalPX. IPC intends to pursue all available remedies in its efforts to collect amounts owed to it by the CalPX. In addition to the amounts due IPC from the CalPX, IPC is currently owed approximately $750,000 from the Cal ISO for sales in November and an additional $36.6 million will come due to IPC from the Cal ISO March 6, 2001 for sales in December. On February 20, IPC filed a petition with the Federal Energy Regulatory Commission (FERC) to intervene in a proceeding which requests the FERC to suspend the use of the CalPX charge back methodology and provides for further FERC oversight in the CalPX's implementation of its default mitigation procedures. Also a preliminary injunction has been granted by a Federal Judge in the Federal District Court for the Central District of California enjoining the CalPX from declaring any CalPX participant in default under the terms of the CalPX Tariff. We are unable to predict the outcome of these situations. In California, IPC believes that it has credit exposure in the range of $30-$40 million. The Company continues to manage this exposure in accordance with the established credit policies. FORWARD-LOOKING INFORMATION In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), we are hereby filing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of the Company in this Current Report on Form 8-K, in presentations, in response to questions or otherwise. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "anticipates", "believes", "estimates", "expects", "intends", "plans", "predicts", "projects", "will likely result", "will continue", or similar expressions) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions, and uncertainties and are qualified in their entirety by reference to, and are accompanied by, the following important factors, which are difficult to predict, contain uncertainties, are beyond our control and may cause actual results to differ materially from those contained in forward-looking statements: o prevailing governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission (FERC), the Idaho Public Utilities Commission (IPUC), the Oregon Public Utilities Commission (OPUC), and the Public Utilities Commission of Nevada (PUNC), with respect to allowed rates of return, industry and rate structure, acquisition and disposal of assets and facilities, operation and construction of plant facilities, recovery of purchased power and other capital investments, and present or prospective wholesale and retail competition (including but not limited to retail wheeling and transmission costs); o the current energy situation in the western United States; o economic and geographic factors including political and economic risks; o changes in and compliance with environmental and safety laws and policies; o weather conditions; o population growth rates and demographic patterns; o competition for retail and wholesale customers; o pricing and transportation of commodities; o market demand, including structural market changes; o changes in tax rates or policies or in rates of inflation; o changes in project costs; o unanticipated changes in operating expenses and capital expenditures; o capital market conditions; o competition for new energy development opportunities; and o legal and administrative proceedings (whether civil or criminal) and settlements that influence the business and profitability of the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements - (i) IDACORP, Inc. Consolidated Statements of Income for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Balance Sheets as of December 31, 2000, 1999 and 1998 Consolidated Statements of Capitalization as of December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Retained Earnings and Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements Independent Auditors' Report (ii) Idaho Power Company Consolidated Statements of Income for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Balance Sheets as of December 31, 2000, 1999 and 1998 Consolidated Statements of Capitalization as of December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Retained Earnings and Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements Independent Auditors' Report (b) Exhibits - 12 Statement Re: Computation of Ratio of Earnings to Fixed Charges (IDACORP, Inc.) 12(a) Statement Re: Computation of Supplemental Ratio of Earnings to Fixed Charges (IDACORP, Inc.) 12(b) Statement Re: Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements (IDACORP, Inc.) 12(c) Statement Re: Computation of Supplemental Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements (IDACORP, Inc.) 12(d) Statement Re: Computation of Ratio of Earnings to Fixed Charges (Idaho Power Company) 12(e) Statement Re: Computation of Supplemental Ratio of Earnings to Fixed Charges (Idaho Power Company) 12(f) Statement Re: Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements (Idaho Power Company) 12(g) Statement Re: Computation of Supplemental Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements (Idaho Power Company) 23 Consent of Deloitte & Touche LLP IDACORP, Inc. Consolidated Statements of Income
Year Ended December 31, ----------------------------------------------------------- 2000 1999 1998 ----------------------------------------------------------- (Thousands of Dollars Except for Per Share Amounts) OPERATING REVENUES: Electric Utility: General business............................ $ 565,357 $ 516,148 $ 514,856 Off system sales............................ 229,986 119,785 214,418 Other revenues.............................. 40,319 22,403 27,136 ------------------ ----------------- ---------------- Total electric utility revenues........... 835,662 658,336 756,410 ------------------ ----------------- ---------------- Diversified Operations: Energy marketing............................ 145,400 31,368 10,745 Other....................................... 24,004 29,426 15,443 ------------------ ----------------- ---------------- Total diversified operations.............. 169,404 60,794 26,188 ------------------ ----------------- ---------------- Earnings of unconsolidated partnerships, joint ventures and subsidiaries................... 14,287 12,022 12,489 ------------------ ----------------- ---------------- Total operating revenues.................. 1,019,353 731,152 795,087 ------------------ ----------------- ---------------- OPERATING EXPENSES: Electric Utility: Purchased power............................. 398,649 106,344 185,271 Fuel expense................................ 94,215 86,617 86,237 Power cost adjustment....................... (120,688) (502) 21,866 Other operations and maintenance............ 193,397 193,867 187,246 Depreciation................................ 80,287 77,833 74,481 Taxes other than income taxes............... 20,166 21,719 20,725 ------------------ ----------------- ---------------- Total electric utility expenses........... 666,026 485,878 575,826 ------------------ ----------------- ---------------- Diversified Operations: Energy marketing............................ 50,811 9,684 2,782 Other....................................... 40,853 36,540 23,056 ------------------ ----------------- ---------------- Total diversified operations.............. 91,664 46,224 25,838 ------------------ ----------------- ---------------- Total operating expenses.................. 757,690 532,120 601,664 ------------------ ----------------- ---------------- OPERATING INCOME............................... 261,663 199,050 193,423 ------------------ ----------------- ---------------- OTHER INCOME: Allowance for equity funds used during construction.............................. 2,565 1,667 300 Gain on sale of asset....................... 14,000 - - Other - net................................. (605) 3,459 5,518 ------------------ ----------------- ---------------- Total other income........................ 15,960 5,126 5,818 ------------------ ----------------- ---------------- INTEREST EXPENSE AND OTHER: Interest on long-term debt.................. 53,356 54,294 52,270 Other interest.............................. 9,983 8,681 8,407 Allowance for borrowed funds used during construction.................. (2,346) (1,392) (900) Preferred dividends of Idaho Power Company.. 5,929 5,572 5,658 ------------------ ----------------- ---------------- Total interest expense and other.......... 66,922 67,155 65,435 ------------------ ----------------- ---------------- INCOME BEFORE INCOME TAXES..................... 210,701 137,021 133,806 INCOME TAXES................................... 70,818 45,672 44,630 ------------------ ----------------- ---------------- NET INCOME..................................... $ 139,883 $ 91,349 $ 89,176 ================== ================= ================ AVERAGE COMMON SHARES OUTSTANDING (000's)....................... 37,556 37,612 37,612 EARNINGS PER SHARE OF COMMON STOCK (basic and diluted).................. $ 3.72 $ 2.43 $ 2.37
The accompanying notes are an integral part of these statements. IDACORP, Inc. Consolidated Balance Sheets
December 31, ----------------------------------------------------------- 2000 1999 1998 ------------------ ----------------- ---------------- (Thousands of Dollars) ASSETS CURRENT ASSETS: Cash and cash equivalents................... $ 106,795 $ 111,338 $ 22,867 Receivables: Customer.................................. 243,647 98,923 102,671 Allowance for uncollectible accounts...... (1,397) (1,397) (1,397) Employee notes............................ 4,742 4,105 4,510 Other..................................... 15,611 12,117 10,702 Energy marketing assets..................... 1,681,554 37,398 - Accrued unbilled revenues................... 44,825 31,994 34,610 Materials and supplies (at average cost).... 29,731 29,611 30,157 Fuel stock (at average cost)................ 5,105 9,329 7,096 Prepayments................................. 24,575 16,097 16,042 Regulatory assets associated with income taxes 8,672 893 2,965 ------------------ ----------------- ---------------- Total current assets...................... 2,163,860 350,408 230,223 ------------------ ----------------- ---------------- INVESTMENTS AND OTHER ASSETS................... 157,068 139,091 124,021 ------------------ ----------------- ---------------- PROPERTY, PLANT AND EQUIPMENT Utility plant in service.................... 2,799,874 2,726,026 2,659,441 Accumulated provision for depreciation...... (1,142,572) (1,073,722) (1,009,387) ------------------ ----------------- ---------------- Utility plant in service - net.............. 1,657,302 1,652,304 1,650,054 Construction work in progress............... 136,388 91,637 59,717 Utility plant held for future use........... 2,167 1,742 1,738 Other property, net of accumulated depreciation 9,179 6,928 5,416 ------------------ ----------------- ---------------- Property, plant and equipment - net....... 1,805,036 1,752,611 1,716,925 ------------------ ----------------- ---------------- DEFERRED DEBITS: American Falls and Milner water rights...... 31,585 31,585 31,830 Company-owned life insurance................ 39,554 40,480 35,149 Regulatory assets associated with income taxes 204,880 214,782 201,465 Regulatory assets - PCA..................... 119,905 - - Regulatory assets - other................... 45,750 56,137 67,212 Other....................................... 71,620 55,277 49,994 ------------------ ----------------- ---------------- Total deferred debits..................... 513,294 398,261 385,650 ------------------ ----------------- ---------------- TOTAL................................... $ 4,639,258 $ 2,640,371 $ 2,456,819 ================== ================= ================
The accompanying notes are an integral part of these statements. IDACORP, Inc Consolidated Balance Sheets
December 31, ----------------------------------------------------------- 2000 1999 1998 ------------------ ----------------- ---------------- (Thousands of Dollars) LIABILITIES AND CAPITALIZATION CURRENT LIABILITIES: Current maturities of long-term debt........ $ 39,774 $ 89,101 $ 6,029 Notes payable............................... 120,600 19,757 38,524 Accounts payable............................ 272,376 145,737 101,975 Energy marketing liabilities................ 1,706,501 33,814 - Taxes accrued............................... 15,631 21,313 24,785 Interest accrued............................ 16,985 19,126 18,365 Deferred income taxes....................... 8,672 893 2,965 Other....................................... 28,104 16,696 12,275 ------------------ ----------------- ---------------- Total current liabilities................. 2,208,643 346,437 204,918 ------------------ ----------------- ---------------- DEFERRED CREDITS: Deferred income taxes....................... 460,464 430,468 422,196 Regulatory liabilities associated with deferred investment tax credits.................... 66,050 67,433 69,396 Regulatory liabilities associated with income taxes..................................... 40,230 33,817 28,075 Regulatory liabilities - PCA................ - 3,378 5,199 Regulatory liabilities - other.............. 4,621 3,363 4,161 Other....................................... 69,259 75,136 70,572 ------------------ ----------------- ---------------- Total deferred credits.................... 640,624 613,595 599,599 ------------------ ----------------- ---------------- LONG-TERM DEBT................................. 864,114 821,558 815,937 ------------------ ----------------- ---------------- COMMITMENTS AND CONTINGENT LIABILITIES PREFERRED STOCK OF IDAHO POWER COMPANY..................................... 105,066 105,811 105,968 ------------------ ----------------- ---------------- COMMON STOCK EQUITY: Common stock, no par value (shares authorized 120,000,000; 37,612,351 shares issued)... 453,102 451,343 451,564 Retained earnings........................... 370,126 300,093 278,607 Accumulated other comprehensive income (loss) (921) 1,534 226 Treasury stock (44,425 shares at cost)...... (1,496) - - ------------------ ----------------- ---------------- Total common stock equity................. 820,811 752,970 730,397 ------------------ ----------------- ---------------- TOTAL................................... $ 4,639,258 $ 2,640,371 $ 2,456,819 ================== ================= ================
The accompanying notes are an integral part of these statements. IDACORP, Inc. Consolidated Statements of Capitalization
December 31, -------------------------------------------------------------- 2000 % 1999 % 1998 % ---- --- ---- --- ---- --- (Thousands of Dollars) COMMON STOCK EQUITY: Common stock......................................... $ 453,102 $ 451,343 $ 451,564 Retained earnings.................................... 370,126 300,093 278,607 Accumulated other comprehensive income (loss)........ (921) 1,534 226 Treasury stock....................................... (1,496) - - ------------ ------------ ------------ Total common stock equity........................ 820,811 46 752,970 45 730,397 44 ------------ ------------ ------------ PREFERRED STOCK OF IDAHO POWER COMPANY: 4% preferred stock................................... 15,066 15,811 15,968 7.68% Series, serial preferred stock................. 15,000 15,000 15,000 7.07% Series, serial preferred stock................. 25,000 25,000 25,000 Auction rate preferred stock......................... 50,000 50,000 50,000 ------------ ------------ ------------ Total preferred stock............................ 105,066 6 105,811 6 105,968 7 ------------ ------------ ------------ LONG-TERM DEBT: First mortgage bonds: 8.65% Series due 2000............................ - 80,000 80,000 6.93% Series due 2001............................ 30,000 30,000 30,000 6.85% Series due 2002............................ 27,000 27,000 27,000 6.40% Series due 2003............................ 80,000 80,000 80,000 8 % Series due 2004............................ 50,000 50,000 50,000 5.83% Series due 2005............................ 60,000 60,000 60,000 7.38% Series due 2007............................ 80,000 - - 7.20% Series due 2009............................ 80,000 80,000 - Maturing 2021 through 2031 with rates ranging from 7.5% to 9.52%................................ 230,000 230,000 230,000 ------------ ------------ ------------ Total first mortgage bonds....................... 637,000 637,000 557,000 Amount due within one year........................... (30,000) (80,000) - ------------ ------------ ------------ Net first mortgage bonds......................... 607,000 557,000 557,000 ------------ ------------ ------------ Pollution control revenue bonds: 7 1/4 % Series due 2008........................... - 4,360 4,360 8.30 % Series 1984 due 2014...................... 49,800 49,800 49,800 6.05 % Series 1996A due 2026..................... 68,100 68,100 68,100 Variable Rate Series 1996B due 2026................ 24,200 24,200 24,200 Variable Rate Series 1996C due 2026................ 24,000 24,000 24,000 Variable Rate Series 2000 due 2027................. 4,360 - - ------------ ------------ ------------ Total pollution control revenue bonds............ 170,460 170,460 170,460 ------------ ------------ ------------ REA notes............................................ 1,339 1,415 1,489 Amount due within one year......................... (77) (76) (74) ------------ ------------ ------------ Net REA notes.................................... 1,262 1,339 1,415 ------------ ------------ ------------ American Falls bond guarantee........................ 19,885 19,885 20,130 ------------ ------------ ------------ Milner Dam note guarantee............................ 11,700 11,700 11,700 ------------ ------------ ------------ Unamortized premium/discount - net................... (1,330) (1,441) (1,539) ------------ ------------ ------------ Debt related to investments in affordable housing with rates ranging from 6.03% to 8.59% due 2000 to 2011 64,063 71,183 62,103 Amount due within one year......................... (9,697) (9,025) (5,955) ------------ ------------ ------------ Net affordable housing debt...................... 54,366 62,158 56,148 ------------ ------------ ------------ Other subsidiary debt................................ 771 457 623 ------------ ------------ ------------ Total long-term debt............................. 864,114 48 821,558 49 815,937 49 ------------ ----- ------------ ----- ------------ ---- TOTAL CAPITALIZATION................................... $1,789,991 100 $1,680,339 100 $1,652,302 100 ============ ===== ============ ===== ============ ====
The accompanying notes are an integral part of these statements. IDACORP, Inc. Consolidated Statements of Cash Flows
Year Ended December 31, ------------------------------------------- 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) OPERATING ACTIVITIES: Net income........................................... $ 139,883 $ 91,349 $ 89,176 Adjustments to reconcile net income to net cash provided by operating activities: Unrealized (gains) losses from energy marketing activities....................................... 28,531 (3,584) - Gain on sale of asset.............................. (14,000) - - Depreciation and amortization...................... 103,971 95,436 87,143 Deferred taxes and investment tax credits.......... 46,718 (1,820) (10,182) Accrued PCA costs.................................. (122,353) (891) 21,658 Change in: Receivables and prepayments...................... (157,182) 2,683 4,883 Accrued unbilled revenues........................ (12,831) 2,616 (1,298) Materials and supplies and fuel stock............ 4,104 (1,687) (925) Accounts payable................................. 125,704 43,762 (9,963) Taxes accrued.................................... (5,682) (3,472) 489 Other current assets and liabilities............. 4,917 5,182 (825) Other - net........................................ (8,145) 1,014 (10,269) ---------- ---------- --------- Net cash provided by operating activities....... 133,635 230,588 169,887 ---------- ---------- --------- INVESTING ACTIVITIES: Additions to property, plant and equipment........... (140,302) (110,974) (89,184) Investments in affordable housing projects........... (29,166) (19,554) (19,139) Proceeds from sale of asset.......................... 17,500 - - Investments in company-owned life insurance.......... - (5,862) - Other - net.......................................... (642) (5,060) 3,206 ---------- ---------- --------- Net cash used in investing activities.............. (152,610) (141,450) (105,117) ---------- ---------- --------- FINANCING ACTIVITIES: Proceeds from issuance of: First mortgage bonds............................... 80,000 80,000 60,000 Long-term debt related to affordable housing projects 10,021 18,730 20,556 Pollution control revenue bonds.................... 4,360 - - Retirement of: Subsidiary debt.................................... (926) (165) (4,316) Long-term debt related to affordable housing projects (17,141) (9,650) (4,838) First mortgage bonds............................... (80,000) - (30,000) Pollution control revenue bonds.................... (4,360) - - Dividends on common stock............................ (69,850) (69,863) (69,868) Increase (decrease) in short-term borrowings......... 100,843 (18,767) (18,992) Acquisition of treasury stock........................ (8,014) - - Other - net.......................................... (501) (952) (1,350) ---------- ---------- --------- Net cash provided by (used in) financing activities 14,432 (667) (48,808) ---------- ---------- --------- Net increase (decrease) in cash and cash equivalents... (4,543) 88,471 15,962 Cash and cash equivalents beginning of period.......... 111,338 22,867 6,905 ---------- ---------- --------- Cash and cash equivalents at end of period............. $ 106,795 $111,338 $ 22,867 ========== ========== ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for: Income taxes....................................... $29,830 $ 51,750 $ 55,527 Interest (net of amount capitalized)............... $61,825 $ 56,295 $ 53,806
The accompanying notes are an integral part of these statements. IDACORP, Inc. Consolidated Statements of Retained Earnings
Year Ended December 31, ------------------------------------------------ 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) RETAINED EARNINGS, BEGINNING OF YEAR....................... $ 300,093 $ 278,607 $ 259,299 NET INCOME................................................. 139,883 91,349 89,176 ------------- ------------ ------------- Total.................................................... 439,976 369,956 348,475 COMMON STOCK DIVIDENDS..................................... (69,850) (69,863) (69,868) ------------- ------------ ------------- RETAINED EARNINGS, END OF YEAR............................. $ 370,126 $ 300,093 $ 278,607 ============= ============ ============= The accompanying notes are an integral part of these statements. Consolidated Statements of Comprehensive Income Year Ended December 31, ------------------------------------------------ 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) NET INCOME................................................. $139,883 $ 91,349 $ 89,176 OTHER COMPREHENSIVE INCOME (LOSS): Unrealized gains (losses) on securities (net of tax of ($1,713), $677, and $2,185)............................ (2,335) 1,017 3,385 Minimum pension liability adjustment (net of tax of ($78), $189 and ($2,054))............................ (119) 291 (3,159) ------------- ------------ ------------- TOTAL COMPREHENSIVE INCOME................................. $137,429 $ 92,657 $ 89,402 ============= ============ =============
The accompanying notes are an integral part of these statements IDACORP, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Nature of Business IDACORP, Inc. (IDACORP or the Company) is a holding company whose principal operating subsidiary is Idaho Power Company (IPC). IPC is regulated by the FERC and the state regulatory commissions of Idaho, Oregon, Nevada and Wyoming, and is engaged in the generation, transmission, distribution, sale and purchase of electric energy. IPC is the parent of Idaho Energy Resources Co., a joint venturer in Bridger Coal Company, which supplies coal to IPC's Jim Bridger generating plant. IDACORP's other significant subsidiaries are: o IDACORP Energy Services - natural gas marketing o Ida-West Energy - independent power projects development and management o IdaTech - developer of integrated fuel cell systems o IDACORP Financial Services - affordable housing and other real estate investments o Rocky Mountain Communications - commercial and residential Internet service provider o IDACOMM - provider of telecommunications services o IDACORP Services - energy related products and services o Applied Power Company - supplier of photovoltaic systems (sold January 2001). 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: 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. System of Accounts The accounting records of IPC conform to the Uniform System of Accounts prescribed by the FERC and adopted by the public utility commissions of Idaho, Oregon, Nevada and Wyoming. Property, Plant and Equipment The cost of additions to utility plant in service represents the original cost of contracted services, direct labor and material, allowance for funds used during construction and indirect charges for engineering, supervision and similar overhead items. Maintenance and repairs of property and replacements and renewals of items determined to be less than units of property are charged to operations. For property replaced or renewed the original cost plus removal cost less salvage is charged to accumulated provision for depreciation while the cost of related replacements and renewals is added to property, plant and equipment. Allowance for Funds Used During Construction (AFDC) The allowance, a non-cash item, represents the composite interest costs of debt, shown as a reduction to interest charges, and a return on equity funds, shown as an addition to other income, used to finance construction. While cash is not realized currently from such allowance, it is realized under the rate making process over the service life of the related property through increased revenues resulting from higher rate base and higher depreciation expense. Based on the uniform formula adopted by the FERC, IPC's weighted-average monthly AFDC rates for 2000, 1999 and 1998 were 8.3 percent, 7.8 percent, and 6.0 percent respectively. Revenues In order to match revenues with associated expenses, IPC accrues unbilled revenues for electric services delivered to customers but not yet billed at month-end. IPC had a regulatory settlement with the Idaho Public Utilities Commission (IPUC) that expired in 1999. Under terms of the settlement, when earnings in the Idaho jurisdiction exceeded an 11.75 percent return on year-end common equity, 50 percent of the excess was set aside for the benefit of IPC's Idaho retail customers. In March 2000 IPC submitted a 1999 annual earnings sharing compliance filing to the IPUC. This filing indicated that there was almost $9.6 million in 1999 earnings and $2.7 million in unused 1998 reserve balances available for the benefit of IPC's Idaho customers. In April 2000 the IPUC ordered that $6.9 million of the revenue sharing balance be refunded to Idaho customers through rate reductions effective May 16, 2000. The IPUC also approved IPC's continuing participation in the Northwest Energy Efficiency Alliance (NEEA) through 2004, ordering IPC to set aside the remaining $5.4 million of revenue sharing dollars to fund that participation. Power Cost Adjustment IPC has a Power Cost Adjustment (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 future annual rate adjustments. Depreciation All utility plant in service is depreciated using the straight-line method at rates approved by regulatory authorities. Annual depreciation provisions as a percent of average depreciable utility plant in service approximated 2.94 percent in 2000, 2.94 percent in 1999 and 2.87 percent in 1998. Income Taxes The Company follows the liability method of computing deferred taxes on all temporary differences between the book and tax basis of assets and liabilities and adjusts deferred tax assets and liabilities for enacted changes in tax laws or rates. Consistent with orders and directives of the IPUC, the regulatory authority having principal jurisdiction, IPC's deferred income taxes (commonly referred to as normalized accounting) are provided for the difference between income tax depreciation and straight-line depreciation computed using book lives on coal-fired generation facilities and properties acquired after 1980. On other facilities, deferred income taxes are provided for the difference between accelerated income tax depreciation and straight-line depreciation using tax guideline lives on assets acquired prior to 1981. Deferred income taxes are not provided for those income tax timing differences where the prescribed regulatory accounting methods do not provide for current recovery in rates. Regulated enterprises are required to recognize such adjustments as regulatory assets or liabilities if it is probable that such amounts will be recovered from or returned to customers in future rates (see Note 2). The State of Idaho allows a three-percent investment tax credit (ITC) upon certain qualifying plant additions. ITC earned on regulated assets are deferred and amortized to income over the estimated service lives of the related properties. Credits earned on non-regulated assets or investments are recognized in the year earned. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on hand and highly liquid temporary investments with maturity dates at date of acquisition of three months or less. Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, 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. Regulation of Utility Operations Electric utilities have historically been recognized as natural monopolies and have operated in a highly regulated environment in which they have an obligation to provide electric service to their customers in return for an exclusive franchise within their service territory with an opportunity to earn a regulated rate of return. This regulatory environment is changing. The generation sector has experienced competition from non-utility power and market producers, and the FERC is requiring utilities, including IPC, to provide wholesale open-access transmission service to others. Transmission services may soon be provided by Regional Transmission Organizations rather than utilities. Some state regulatory authorities are in the process of changing utility regulations in response to federal and state statutory changes and evolving competitive markets. These statutory and conforming regulations may result in increased wholesale and retail competition. In 1997, the Idaho Legislature appointed a committee to study restructuring of the electric utility industry. Although the committee will continue studying a variety of restructuring ideas, it has not recommended any restructuring legislation and is not expected to in the foreseeable future. In 1999, the Oregon legislature passed legislation restructuring the electric utility industry, but exempted IPC's service territory. Due to IPC's low cost structure, it is well positioned to compete in the evolving utility market place. However, the Company is unable to predict what financial impact or effect the adoption of any such legislation would have on IPC's operations. IPC follows Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," and its financial statements reflect the effects of the different rate making principles followed by the various jurisdictions regulating IPC. Pursuant to SFAS 71 IPC capitalizes, as deferred regulatory assets, incurred costs that are expected to be recovered in future utility rates. IPC also records as deferred regulatory liabilities the current recovery in utility rates of costs that are expected to be paid in the future. The following is a breakdown of IPC's regulatory assets and liabilities for the years 2000, 1999 and 1998:
2000 1999 1998 ----------------------- ---------------------- --------------------- Assets Liabilities Assets Liabilities Assets Liabilities ------- ------------ ------- ----------- -------- ----------- (Millions of Dollars) Income taxes....................... $213.6 $ 40.2 $215.7 $33.8 $204.4 $ 28.1 Conservation....................... 32.3 - 37.5 - 43.3 - Employee benefits.................. 3.7 - 4.7 - 5.6 - PCA deferral and amortization...... 119.9 - - 3.4 - 5.2 Other.............................. 9.7 4.7 13.9 3.4 18.3 4.1 Deferred investment tax credits.... - 66.0 - 67.4 - 69.4 ------- -------- ------- ------- -------- -------- Total.................. $379.2 $110.9 $271.8 $108.0 $271.6 $106.8 ======= ======== ======= ======= ======== ========
At December 31, 2000, IPC had $5.5 million of regulatory assets that were not earning a return on investment, excluding the $213.6 million that relates to income taxes. In the event that recovery of costs through rates becomes unlikely or uncertain, SFAS 71 would no longer apply. If the Company were to discontinue application of SFAS 71 for some or all of IPC's operations, then these items may represent stranded investments. If the Company is not allowed recovery of these investments, it would be required to write off the applicable portion of regulatory assets and the financial effects could be significant. Derivative Financial Instruments The Company uses financial instruments such as commodity futures, forwards, options and swaps to manage exposure to commodity price risk in the electricity and natural gas markets. The objective of the Company's risk management program is to mitigate the risk associated with the purchase and sale of natural gas and electricity as well as to optimize its energy marketing portfolio. The accounting for derivative financial instruments that are used to manage risk is in accordance with the concepts established in SFAS No. 80, "Accounting for Futures Contracts," American Institute of Certified Public Accountants Statement of Position 86-2, "Accounting for Options," and Emerging Issues Task Force (EITF) 98-10, "Accounting for Contracts Involved in Energy Trading Activities". EITF 98-10 was adopted effective January 1, 1999 resulting in an adjustment to net income that was not material. Energy trading contracts as defined by EITF 98-10 are reported at fair value on the balance sheet with the resulting gains and losses reported on the income statement. The fair value of positions recorded on the balance sheet is dependant on the prices and volatility of the energy markets. As such, these items on the balance sheet can fluctuate greatly without large changes in volumes or positions. Cash flows from energy trading contracts are recognized in the statement of cash flows as an operating activity. The following table shows a summary of the notional amounts of the Company's forward exposure (including both sales and purchases) as of December 31, 2000 and 1999. The maximum term related to any forward position is ten years.
December 31, 2000 December 31, 1999 ----------------------------- ----------------------------- Gas Electricity Gas Electricity MMbtu's MWh's MMbtu's MWh's ------------- ------------ ----------- ------------- Total gross notional volume........ 190,777 34,453 112,513 10,818
The following table displays the fair values of the Company's energy marketing assets and liabilities at December 31, 2000 and 1999, and the average values for the twelve months ended December 31, 2000 (in thousands of dollars):
Balance at December 31, 2000 Twelve Months Average Balance Balance at December 31, 1999 --------------------------- ------------------------------- ------------------------------ Assets Liabilities Assets Liabilities Assets Liabilities ----------- ----------- ------------ ------------- ------------ ------------- Gas............$ 108,935 $ 115,537 $ 67,263 $ 69,742 $ 8,302 $ 8,220 Electricity.... 1,572,619 1,590,964 401,956 397,914 29,096 25,594 ----------- ----------- ------------ ------------- ------------ ------------- Total..........$1,681,554 $1,706,501 $ 469,219 $ 467,656 $ 37,398 $ 33,814 =========== =========== ============ ============= ============ =============
The gain in fair value of energy trading contract positions (including electricity and natural gas forwards, futures, options and swaps) included in income before income taxes for the years ended December 31, 2000 and 1999 were $145.4 million and $31.4 million respectively. Notional amounts listed above reflect the volume of energy related to transactions with counterparties, but do not measure exposure to market or credit risks. The maximum term detailed above also is not indicative of likely future cash flows as positions may be offset in the markets at any time to meet risk management guidelines. Comprehensive Income Components of the Company's comprehensive income include net income, unrealized holding gains on marketable securities, the Company's proportionate share of unrealized holding gains on marketable securities held by an equity investee, and the changes in additional minimum liability under a deferred compensation plan for certain senior management employees and directors. New Accounting Pronouncements In June 1998 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities." In June 2000, the FASB issued SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities", which amended certain provisions of SFAS 133. The Derivative Implementation Group (DIG), a task force created by the FASB, is continuing to identify and resolve implementation questions related to SFAS 133 and SFAS 138. SFAS 133, as amended by SFAS 138, was effective as of January 1, 2001. As of January 1, 2001 contracts company-wide have been evaluated based upon the SFAS 133 derivative definition and requirements. Most of the Company's identified derivatives consist of energy trading contracts that are currently reported at fair value under the provisions of EITF 98-10. The remaining derivatives are IPC electricity purchase and sales contracts that are subject to regulatory processes. As a result, the adoption of SFAS 133, as amended, did not have a material effect on the Company's financial position, results of operations, or cash flows. Other Accounting Policies Debt discount, expense and premium are being amortized over the terms of the respective debt issues. Reclassifications Certain items previously reported for years prior to 2000 have been reclassified to conform to the current year's presentation. 2. INCOME TAXES: IPC has settled Federal and Idaho tax liabilities on all open years through the 1996 tax year except for amounts related to a partnership which have been, in management's opinion, adequately accrued. A reconciliation between the statutory federal income tax rate and the effective rate is as follows:
2000 1999 1998 ------------ ------------ ------------ (Thousands of Dollars) Computed income taxes based on statutory federal income tax rate.................... $ 73,746 $ 47,957 $46,832 Change in taxes resulting from: AFDC (1,719) (1,071) (420) Investment tax credits (3,083) (3,032) (2,934) Repair allowance........................... (4,550) (2,800) (2,800) Settlement of prior years tax returns...... 161 (380) (1,965) State income taxes (net of federal reduction). 9,793 6,250 7,574 Depreciation............................... 8,243 7,292 5,237 Affordable housing and historic tax credits (net of related deferred taxes)............... (12,962) (8,934) (6,504) Preferred dividends of IPC................. 2,075 1,950 1,980 Other...................................... (886) (1,560) (2,370) ----------- ----------- ----------- Total provision for federal and state income taxes $ 70,818 $ 45,672 $44,630 =========== =========== =========== Effective tax rate......................... 33.6% 33.3% 33.4% The provision for income taxes consists of the following: 2000 1999 1998 ----------- ----------- ----------- (Thousands of Dollars) Income taxes currently payable: Federal.................................. $ 18,984 $ 38,165 $ 45,606 State.................................... 5,169 9,327 9,206 ----------- ----------- ----------- Total.................................. 24,153 47,492 54,812 ----------- ----------- ----------- Income taxes deferred - net of amortization: Federal.................................. 40,641 2,174 (8,006) State.................................... 7,407 (2,031) (1,376) ----------- ----------- ----------- Total.................................. 48,048 143 (9,382) Investment tax credits: Deferred................................. 1,700 1,069 2,134 Restored................................. (3,083) (3,032) (2,934) ----------- ----------- ----------- Total.................................. (1,383) (1,963) (800) ----------- ----------- ----------- Total provision for income taxes........... $ 70,818 $ 45,672 $ 44,630 =========== =========== =========== The tax effects of significant items comprising the Company's net deferred tax liability are as follows: 2000 1999 1998 ------------ ------------ ------------ (Thousands of Dollars) Deferred tax assets: Regulatory liabilities................... $ 40,230 $ 33,817 $ 28,075 Advances for construction................ 9,224 9,646 10,401 Other.................................... 22,488 18,586 20,512 ------------ ------------ ------------ Total.................................. 71,942 62,049 58,988 ------------ ------------ ------------ Deferred tax liabilities: Utility plant............................ 249,546 249,597 247,270 Regulatory assets........................ 213,552 215,675 204,430 Conservation programs.................... 13,561 17,396 16,866 PCA...................................... 47,189 (1,826) (2,543) Other.................................... 17,230 12,568 18,126 ------------ ------------ ------------ Total.................................. 541,078 493,410 484,149 ------------ ------------ ------------ Net deferred tax liabilities............... $469,136 $431,361 $425,161 ============ ============ ============
3. COMMON STOCK: Changes in shares of IDACORP common stock and treasury stock for 2000, 1999 and 1998 were as follows (in thousands of dollars):
COMMON STOCK TREASURY STOCK Shares Amount Shares Amount ------------ ---------------- ------------- ------------ Balance at December 31, 1997..................... 37,612,351 $ 452,519 - $ - Other - net...................................... - (955) - - ------------ ---------------- ------------- ------------ Balance at December 31, 1998..................... 37,612,351 451,564 - - Other - net...................................... - (221) - - ------------ ---------------- ------------- ------------ Balance at December 31, 1999..................... 37,612,351 451,343 - - Treasury shares: Acquired..................................... - - 198,925 8,014 Issued....................................... - - (154,500) (6,518) Other - net...................................... - 1,759 - - ------------ ---------------- ------------- ------------ Balance at December 31, 2000..................... 37,612,351 $ 453,102 44,425 $ 1,496 ============ ================ ============= ============
As of December 31, 2000 there were 3,791,321 shares of authorized but unissued shares of IDACORP common stock were reserved for future issuance under the Company's Dividend Reinvestment and Stock Purchase Plan and IPC's Employee Savings Plan. In addition, 314,114 shares are reserved for the Restricted Stock Plan and 750,000 shares for the Long-Term Incentive and Compensation Plan (LTICP) (see Note 9). The Company has a Shareholder Rights Plan (Plan) designed to ensure that all shareholders receive fair and equal treatment in the event of any proposal to acquire control of the Company. Under the Plan, the Company declared a distribution of one Preferred Share Purchase Right (Right) for each of the Company's outstanding Common Shares held on October 1, 1998 or issued thereafter. The Rights are currently not exercisable and will be exercisable only if a person or group (Acquiring Person) either acquires ownership of 20 percent or more of the Company's Voting Stock or commences a tender offer that would result in ownership of 20 percent or more of such stock. The Company may redeem all but not less than all of the Rights at a price of $0.01 per Right or exchange the Rights for cash, securities (including Common Shares of the Company) or other assets at any time prior to the close of business on the 10th day after acquisition by an Acquiring Person of a 20 percent or greater position. Additionally, the IDACORP Board created the A Series Preferred Stock, without par value, and reserved 1,200,000 shares for issuance upon exercise of the Rights. Following the acquisition of a 20 percent or greater position, each Right will entitle its holder to purchase for $95 that number of shares of Common Stock or Preferred Stock having a market value of $190. If after the Rights become exercisable, the Company is acquired in a merger or other business combination, 50 percent or more of its consolidated assets or earnings power are sold, or the Acquiring Person engages in certain acts of self-dealing, each Right entitles the holder to purchase for $95, shares of the acquiring company's common stock having a market value of $190. Any Rights that are or were held by an Acquiring Person become void if any of these events occurs. The Rights expire on September 30, 2008. The Rights themselves do not give any voting or other rights as shareholders to their holders. The terms of the Rights may be amended without the approval of any holders of the Rights until an Acquiring Person obtains a 20 percent or greater position, and then may be amended as long as the amendment is not adverse to the interests of the holders of the Rights. In 2000, IDACORP's Board of Directors approved the repurchase of up to 350,000 shares of outstanding common stock for distribution to shareholders of an acquired entity as partial payment for the acquisition. As of December 31, 2000, 156,300 shares had been acquired (at a cost of $6.6 million) and 154,500 shares had been issued under this plan. In January 2001, the Company repurchased an additional 150,000 shares (at a cost of $6.2 million) for distribution to shareholders of the acquired entity. 4. PREFERRED STOCK OF IDAHO POWER COMPANY: The number of shares of IPC preferred stock outstanding at December 31, 2000, 1999 and 1998 were as follows:
Shares Outstanding at December 31, --------------------------------------- Call Price 2000 1999 1998 Per Share ---- ---- ---- ----------------------- Preferred stock: Cumulative, $100 par value: 4% preferred stock (authorized 215,000 shares)........................... 150,656 158,112 159,680 $104.00 Serial preferred stock, 7.68% Series (authorized 150,000 shares)............... 150,000 150,000 150,000 $102.97 Serial preferred stock, cumulative, without par value; total of 3,000,000 shares authorized: 7.07% Series, $100 stated value, (authorized 250,000 shares)(a)........... 250,000 250,000 250,000 $103.535 to $100.354 Auction rate preferred stock, $100,000 stated value, (authorized 500 shares)(b). 500 500 500 $100,000.00 -------- -------- --------- Total....................................... 551,156 558,612 560,180 ======== ======== ========= (a) The preferred stock is not redeemable prior to July 1, 2003. (b) Dividend rate at December 31, 2000 was 4.95% and ranged between 4.28% and 5.00% during the year.
During 2000, 1999 and 1998 IPC reacquired and retired 7,456 shares, 1,568 shares and 7,292 shares of 4% preferred stock. As of December 31, 2000, the overall effective cost of all outstanding preferred stock was 6.02 percent. 5. LONG-TERM DEBT: The Company currently has a $300.0 million shelf registration statement that can be used for the issuance of unsecured debt securities and preferred or common stock. At December 31, 2000, none had been issued. On March 23, 2000, IPC filed a $200.0 million shelf registration statement that can be used for first mortgage bonds (including medium term notes), unsecured debt, or preferred stock. On December 1, 2000, $80.0 million principal amount of Secured Medium Term Notes, Series C, 7.38% Series due 2007 were issued and proceeds from this issuance were used for the early redemption in January 2001 of the $75.0 million First Mortgage Bonds 9.50%, Series due 2021. At December 31, 2000, $120.0 million of the total remained to be issued. The amount of first mortgage bonds issuable by IPC is limited to a maximum of $900.0 million and by property, earnings and other provisions of the mortgage and supplemental indentures thereto. Substantially all of the electric utility plant is subject to the lien of the indenture. Pollution Control Revenue Bonds, Series 1984, due December 1, 2014, are secured by First Mortgage Bonds, Pollution Control Series A, which were issued by IPC and are held by a Trustee for the benefit of the bondholders. First mortgage bonds maturing during the five-year period ending 2005 are $30.0 million in 2001, $27.0 million in 2002, $80.0 million in 2003, $50.0 million in 2004 and $60.0 million in 2005. On September 9, 1998, $60.0 million principal amount of Secured Medium Term Notes, Series B, 5.83% Series due 2005 were issued by IPC. Proceeds from this issuance were used to redeem at maturity, the $30.0 million First Mortgage Bonds 5.33% Series B due September 1998, with the balance used for repayment of commercial paper issued in connection with IPC's ongoing business. On November 23, 1999, $80.0 million principal amount of Secured Medium Term Notes, Series B, 7.20% Series due 2009 were issued by IPC. Proceeds from this issuance were used to redeem at maturity, the $80.0 million First Mortgage Bonds 8.65% Series due January 2000. On April 26, 2000, at the request of IPC, the American Falls Reservoir District issued its American Falls Refunding Replacement Dam Bonds, Series 2000, in the aggregate principal amount of $19.9 million for the purpose of refunding on April 26, 2000 a like amount of its bonds dated May 1, 1990. IPC has guaranteed repayment of these bonds. On May 17, 2000, tax exempt Pollution Control Revenue Refunding Bonds Series 2000 in the aggregate principal amount of $4.4 million were issued by Port of Morrow, Oregon for the purpose of refunding on August 1, 2000, a like amount of its Pollution Control Revenue Bonds, Series 1978. At December 31, 2000, 1999 and 1998 the overall effective cost of all outstanding first mortgage bonds and pollution control revenue bonds was 7.52 percent, 7.62 percent and 7.69 percent, respectively. At December 31, 2000, IDACORP Financial Services, Inc., a wholly owned subsidiary of the Company, has $64.1 million of debt with interest rates ranging from 6.03 percent to 8.59 percent. This debt is collateralized by investments in affordable housing projects with a book value of $101.7 million at December 31, 2000. Principal amounts maturing during the five-year period ending 2005 are $9.7 million in 2001, $9.5 million in 2002, $9.2 million in 2003, $9.3 million in 2004 and $8.3 million in 2005. 6. FAIR VALUE OF FINANCIAL INSTRUMENTS: The estimated fair value of the Company's financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash and cash equivalents, customer and other receivables, notes payable, accounts payable, interest accrued, and taxes accrued are reported at their carrying value as these are a reasonable estimate of their fair value. The estimated fair values for long-term debt and investments are based upon quoted market prices of the same or similar issues or discounted cash flow analyses as appropriate. The total estimated fair value of the Company's debt was approximately $933.6 million in 2000, $898.1 million in 1999 and $877.4 million in 1998. Included in investments and other property were financial instruments totaling $20.6 million in 2000, $24.0 million in 1999 and $14.2 million in 1998. Estimated fair value of these instruments was $26.0 million in 2000, $30.6 million in 1999 and $20.3 million in 1998. 7. NOTES PAYABLE: At December 31, 2000, IDACORP had a $50 million three-year credit facility that expires in December 2001, and a $100 million 364-day credit facility that expires in February 2001. Under these facilities the Company pays a facility fee on the commitment, quarterly in arrears, based on IPC's First Mortgage Bond Rating. Commercial paper may be issued up to the amounts supported by the bank credit facilities. Balances and interest rates of short-term borrowings for IDACORP were as follows:
Year Ended December 31, -------------------------------------------- 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) Balance at end of year.............................. $60,900 - - Effective annual interest rate at end of year....... 7.8 % - -
At December 31, 2000, IPC had regulatory authority to incur up to $200 million of short-term indebtedness. IPC has a $120 million multi-year revolving credit facility expiring in December 2001. Under this facility IPC pays a facility fee on the commitment, quarterly in arrears, based on IPC's First Mortgage Bond rating. Commercial paper may be issued subject to the regulatory maximum, and is supported by bank lines of credit of an equal amount. Balances and interest rates of short-term borrowings for IPC were as follows:
Year Ended December 31, -------------------------------------------- 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) Balance at end of year.............................. $59,700 $19,757 $38,524 Effective annual interest rate at end of year....... 6.8% 6.1% 6.0%
8. COMMITMENTS AND CONTINGENT LIABILITIES: Commitments under contracts and purchase orders relating to IPC's program for construction and operation of facilities amounted to approximately $8.3 million at December 31, 2000. Additionally Ida-West Energy has commitments totaling $33.1 million. The commitments are generally revocable, subject to reimbursement of manufacturers' expenditures incurred and/or other termination charges. IPC is currently purchasing energy from 66 on-line cogeneration and small power production facilities with contracts ranging from 1 to 30 years. Under these contracts IPC is required to purchase all of the output from these facilities. During the fiscal year ended December 31, 2000, IPC purchased 862,313 MWh at a cost of $53.7 million. The Company is party to various legal claims, actions, and complaints, certain of which involve material amounts. Although 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 operations or cash flows. 9. STOCK-BASED COMPENSATION IDACORP has two stock-based compensation plans that align employee and shareholder objectives related to the long-term growth of the Company. In 1995, SFAS No. 123, "Accounting for Stock-Based Compensation" was issued. It encourages a fair-value based method of accounting for stock-based compensation. As permitted by SFAS 123, the Company adopted its disclosure-only requirements and continues to account for stock-based compensation in accordance with the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). The Company adopted the 2000 Long-Term Incentive and Compensation Plan (LTICP) for officers, key employees and directors. The LTICP permits the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares, and other awards. The maximum number of shares available under the LTICP is 750,000. In 2000, IDACORP issued 220,000 stock options with an exercise price equal to the market price of the Company's stock on the date of grant. The maximum term of the options is ten years, and they vest over a five-year period. In accordance with APB 25, no compensation costs have been recognized for the option awards in 2000. Stock option transactions in 2000 are summarized as follows. There were no stock option transactions in 1999 and 1998: Weighted Number of average exercise shares price --------------- ---------------- Beginning of year.......... - - Options granted........ 220,000 $35.8125 Options exercised...... - - Options cancelled...... - - --------------- ---------------- End of year................ 220,000 $35.8125 =============== ================ Exercisable................ - - IDACORP has a restricted stock plan for certain key employees. Each grant made under this plan has a three-year restricted period, and the final award amounts depend on the attainment of cumulative earnings per share performance goals. At December 31, 2000 there were 265,766 remaining shares available under this plan. Restricted stock awards are compensatory awards and the Company accrues compensation expense (which is charged to operations) based upon the market value of the granted shares. For the years 2000, 1999 and 1998, total compensation accrued under the plan was $1.5 million, $0.5 million and $0.6 million respectively. The following table summarizes restricted stock activity for the years 2000, 1999 and 1998:
2000 1999 1998 --------- --------- --------- Shares outstanding - beginning of year............. 43,615 43,063 38,365 Shares granted..................................... 34,649 23,497 21,361 Shares forfeited................................... - (9,585) (4,063) Shares issued...................................... (24,709) (13,360) (12,600) --------- --------- --------- Shares outstanding - end of year................... 53,555 43,615 43,063 ========= ========= ========= Weighted average fair value of current year stock grants on grant date..................... $ 34.44 $ 32.88 $ 37.00 ========= ========= =========
Had compensation cost for the stock-based compensation plans been determined on the basis of fair value pursuant to the provisions of SFAS 123, net income and earnings per share would have been as follows:
2000 1999 1998 ----------------- ----------------- --------------- Net income.............................. As reported......................... $ 139,883 $ 91,349 $ 89,176 Pro forma........................... 140,186 91,145 89,155 Basic and diluted earnings per share.... As reported......................... 3.72 2.43 2.37 Pro forma........................... 3.73 2.43 2.37
For purposes of the pro forma calculations above, the estimated fair value of the options and restricted stock are amortized to expense over the vesting period. The fair value of the restricted stock is the market price of the stock on the date of grant. The fair value of each option granted in 2000 was estimated at the date of grant using the Binomial option-pricing model with the following assumptions: Stock dividend yield............... 5.19% Expected stock price volatility.... 27% Risk-free interest rate............ 6.15% Expected option lives.............. 7 years Fair value of options granted...... $8.42 10. BENEFIT PLANS: Pension Plans IDACORP has a noncontributory defined benefit pension plan covering most employees. The benefits under the plan are based on years of service and the employee's final average earnings. The Company's policy is to fund with an independent corporate trustee at least the minimum required under the Employee Retirement Income Security Act of 1974 but not more than the maximum amount deductible for income tax purposes. The Company was not required to contribute to the plan in 2000, 1999 and 1998. The trustee invests the plan's assets primarily in listed stocks (both U.S. and foreign), fixed income securities and investment grade real estate. IDACORP has a nonqualified, deferred compensation plan for certain senior management employees and directors. The Company financed this plan by purchasing life insurance policies and investments in marketable securities, all of which are held by a trustee. The cash value of the policies and investments exceed the projected benefit obligation of the plan but do not qualify as plan assets in the actuarial computation of the funded status. The following table shows the components of net periodic benefit cost for these plans (in thousands of dollars):
Pension Plan Deferred Compensation Plan -------------------------------------- -------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ---------- ---------- ---------- ---------- ---------- Service cost...................... $ 7,442 $ 8,389 $ 7,133 $ 574 $ 744 $ 572 Interest cost..................... 16,718 16,402 15,458 1,965 1,797 1,747 Expected return on assets......... (30,095) (25,240) (22,724) - - - Recognized net actuarial (gain) loss (4,503) (344) (111) 242 279 255 Amortization of prior service cost 708 708 424 (353) (325) (332) Amortization of transition asset.. (263) (263) (263) 613 613 613 ---------- ---------- ---------- ---------- ---------- ---------- Net periodic pension cost......... $(9,993) $ (348) $ (83) $3,041 $3,108 $2,855 ========== ========== ========== ========== ========== ==========
The following table summarizes the changes in benefit obligation and plan assets of these plans (in thousands of dollars):
Pension Plan Deferred Compensation Plan ----------------------------------- ------------------------------------- 2000 1999 1998 2000 1999 1998 ---------- ----------- ---------- ---------- ----------- ----------- Change in projected benefit obligation: Benefit obligation at January 1...... $229,042 $253,729 $224,073 $ 26,925 $ 27,029 $ 25,067 Service cost......................... 7,442 8,389 7,133 574 744 572 Interest cost........................ 16,718 16,402 15,458 1,965 1,797 1,747 Actuarial loss (gain)................ 455 (33,014) 14,139 840 (489) 1,297 Benefits paid........................ (12,376) (16,464) (11,774) (2,516) (2,201) (2,049) Plan amendments...................... - - 4,700 88 45 395 ---------- ----------- ---------- ----------- ---------- ----------- Benefit obligation at December 31.... 241,281 229,042 253,729 27,876 26,925 27,029 ---------- ----------- ---------- ----------- ---------- ----------- Change in plan assets: Fair value at January 1.............. 340,521 290,080 256,893 - - - Actual return on plan assets......... 12,644 66,905 44,961 - - - Employer contributions............... - - - - - - Benefit payments..................... (12,376) (16,464) (11,774) - - - ---------- ----------- ---------- ----------- ---------- ----------- Fair value at December 31............ 340,789 340,521 290,080 - - - ---------- ----------- ---------- ----------- ---------- ----------- Funded status............................. 99,508 111,479 36,351 (27,876) (26,925) (27,029) Unrecognized actuarial loss (gain)........ (85,648) (108,057) (33,722) 6,442 5,844 6,612 Unrecognized prior service cost........... 7,954 8,662 9,370 (355) (796) (1,166) Unrecognized net transition liability..... (1,178) (1,441) (1,704) 2,762 3,375 3,988 Net amount recognized..................... $ 20,636 $ 10,643 $ 10,295 $(19,027) $ (18,502) $ (17,595) Amounts recognized in the statement of financial position consist of: Prepaid (accrued) pension cost............ $ 20,636 $ 10,643 $ 10,295 $(26,365) $ (25,815) $ (25,631) Intangible asset.......................... - - - 2,407 2,579 2,822 Accumulated other comprehensive income.... - - - 4,931 4,734 5,214 Net amount recognized..................... $ 20,636 $ 10,643 $ 10,295 $(19,027) $ (18,502) $ (17,595)
The following table sets forth the assumptions used at the end of each year for all IPC-sponsored pension and postretirement benefit plans:
Pension Benefits Postretirement Benefits --------------------------------- ----------------------------------- 2000 1999 1998 2000 1999 1998 --------- -------- ---------- --------- ---------- ---------- Discount rate............................... 7.5% 7.5% 6.75% 7.5% 7.5% 6.75% Expected long-term rate of return on assets. 9.0 9.0 9.0 9.0 9.0 9.0 Annual salary increases..................... 4.5 4.5 4.5 - - -
Savings Plan IDACORP has an Employee Savings Plan which complies with Section 401(k) of the Internal Revenue Code and covers substantially all employees. The Company matches specified percentages of employee contributions to the plan. Matching contributions amounted to $3.4 million in 2000, $3.1 million in 1999 and $3.0 million in 1998. Postretirement Benefits The Company maintains a defined benefit postretirement plan (consisting of health care and death benefits) that covers all employees who were enrolled in the active group plan at the time of retirement, their spouses and qualifying dependents. The net periodic postretirement benefit cost was as follows (in thousands of dollars):
2000 1999 1998 ------------ ---------- ----------- Service cost........................................... $ 851 $ 895 $ 720 Interest cost.......................................... 3,374 2,867 2,913 Expected return on plan assets......................... (2,522) (2,230) (1,761) Amortization of unrecognized transition obligation..... 2,040 2,040 2,040 Amortization of prior service cost..................... (691) (691) (280) Amortization of unrecognized net gains................. - - (220) ------------ ---------- ----------- Net periodic post-retirement benefit cost.............. $ 3,052 $ 2,882 $ 3,412 ============ ========== ===========
The following table summarizes the changes in benefit obligation and plan assets (in thousands of dollars):
2000 1999 1998 ----------- ----------- ----------- Change in accumulated benefit obligation: Benefit obligation at January 1........................ $ 41,139 $ 38,615 $ 43,459 Service cost........................................... 851 896 720 Interest cost.......................................... 3,374 2,867 2,913 Plan amendments........................................ 1,200 - (9,071) Actuarial loss......................................... 5,635 1,859 3,483 Benefits paid.......................................... (3,393) (3,098) (2,889) ----------- ----------- ----------- Benefit obligation at December 31...................... 48,806 41,139 38,615 ----------- ----------- ----------- Change in plan assets: Fair value of plan assets at January 1................. 26,805 24,346 19,493 Actual (loss) return on plan assets.................... (760) 2,389 4,853 Employer contributions................................. 3,108 2,845 2,789 Benefits paid.......................................... (3,082) (2,775) (2,789) ----------- ----------- ----------- Fair value of plan assets at December 31............... 26,071 26,805 24,346 ----------- ----------- ----------- Funded status............................................... (22,735) (14,334) (14,269) Unrecognized prior service cost............................. (7,336) (9,227) (9,918) Unrecognized actuarial loss (gain).......................... 3,361 (5,556) (7,256) Unrecognized transition obligation.......................... 24,480 26,520 28,560 ----------- ----------- ----------- Accrued benefit obligations included with other deferred credits.................... $ (2,230) $ (2,597) $ (2,883) =========== =========== ===========
The assumed health care cost trend rate used to measure the expected cost of benefits covered by the plan is 6.75%. A one-percentage point change in the assumed health care cost trend rate would have the following effect (in thousands of dollars):
1-Percentage-Point 1-Percentage-Point increase decrease --------------------- ------------------- Effect on total of service and interest cost components..... $ 320 $ (263) Effect on accumulated postretirement benefit obligation..... $ 2,876 $ (2,452)
Postemployment Benefits The Company provides certain benefits to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement. These benefits include salary continuation, health care and life insurance for those employees found to be disabled under our disability plans, and health care for surviving spouses and dependents. The Company accrues a liability for such benefits. In accordance with an IPUC order, the portion of the liability attributable to regulated activities in Idaho as of December 31, 1993, was deferred as a regulatory asset, and is being amortized over ten years. The following table summarizes postemployment benefit amounts included in the Company's consolidated balance sheet (in thousands of dollars):
2000 1999 1998 ------------- -------------- ------------ Included with regulatory assets - other........ $ 1,517 $ 1,889 $ 2,260 Included with other deferred credits........... $ (3,040) $ (3,282) $ (3,372)
11. UTILITY PLANT IN SERVICE AND JOINTLY-OWNED PROJECTS: The following table sets out the major classifications of the IPC's utility plant in service, accumulated provision for depreciation and annual depreciation provisions as a percent of average depreciable balance for the years 2000, 1999 and 1998 (in thousands of dollars):
2000 1999 1998 ---- ---- ---- Balance Avg Rate Balance Avg Rate Balance Avg Rate ------------ ---------- ------------- ----------- ------------ ---------- Production....................... $1,360,409 2.60% $1,348,531 2.60% $1,344,526 2.60% Transmission..................... 410,315 2.30 403,010 2.30 389,011 2.30 Distribution..................... 811,604 3.34 786,488 3.37 736,527 3.15 General and Other................ 217,546 5.42 187,997 5.46 189,377 5.45 ------------ ---------- ------------- ----------- ------------ ---------- Total in service............. 2,799,874 2.94% 2,726,026 2.94% 2,659,441 2.87% Accumulated provision for depreciation............. (1,142,572) (1,073,722) (1,009,387) ------------ ------------- ------------ In service - net......... $1,657,302 $1,652,304 $1,650,054 ============ ============= ============
IPC is involved in the ownership and operation of three jointly-owned generating facilities. The Consolidated Statements of Income include IPC's proportionate share of direct operation and maintenance expenses applicable to the projects. Each facility and extent of IPC participation as of December 31, 2000 are as follows:
Company Ownership --------------------------------------------------- Accumulated Utility Plant In Provision for Name of Plant Location Service Depreciation % MW ---------------------------- --------------------------- ----------------- ----------------- --- ----- (Thousands of Dollars) Jim Bridger Units 1-4...... Rock Springs, WY $ 393,786 $ 209,986 33 707 Boardman................... Boardman, OR 62,382 36,022 10 55 Valmy Units 1 and 2........ Winnemucca, NV 300,852 148,115 50 261
IPC's wholly owned subsidiary, Idaho Energy Resources Company, is a joint venturer in Bridger Coal Company, which operates the mine supplying coal for the Jim Bridger steam generation plant. Coal purchased by IPC from the joint venture amounted to $43.7 million in 2000, $41.9 million in 1999 and $46.2 million in 1998. IPC has contracts to purchase the energy from four PURPA Qualified Facilities that are 50 percent owned by Ida-West Energy Company, a wholly owned subsidiary of the Company. Power purchased from these facilities amounted to $8.1 million in 2000, $8.8 million in 1999 and $8.7 million in 1998. 12. INDUSTRY SEGMENT INFORMATION: The Company has identified two reportable operating segments, Utility Operations and Energy Marketing. The Utility Operations segment has two primary sources of revenue, the regulated operations of IPC and income from Bridger Coal Company, an unconsolidated joint venture also subject to regulation. IPC's regulated operations include the generation, transmission, distribution, purchase and sale of electricity. Energy marketing consists of IPC's unregulated electricity marketing and IDACORP Energy's natural gas marketing operations. IDACORP's other operations include: o Ida-West Energy Company - a developer and manager of independent power projects; o IdaTech, LLC - a developer of integrated fuel cell systems; o IDACORP Financial Services - an investor in affordable housing and other real estate; o Rocky Mountain Communications, Inc. - provider of energy related products and services, home security, satellite television, and other services; o Applied Power Company - manufacturer, supplier and distributor of solar photovoltaic systems (sold January 2001). The following table summarizes the segment information for the Company's utility and energy marketing segments and the total of all other segments, and reconciles this information to total enterprise amounts.
Utility Energy Consolidated Operations Marketing Other Eliminations Total ----------- ----------- ------------ --------------- --------------- (Thousands of Dollars) 2000 ---- Operating revenues................... $ 849,522 $ 145,400 $ 24,431 $ - $ 1,019,353 Operating income..................... 182,020 94,589 (14,946) - 261,663 Other income........................ 3,858 3,370 11,847 (3,115) 15,960 Interest expense .................... 63,660 161 6,216 (3,115) 66,922 Income before income taxes........... 122,218 97,798 (9,315) - 210,701 Income taxes......................... 48,174 38,355 (15,711) - 70,818 Net income........................... 74,044 59,443 6,396 - 139,883 Total assets......................... 2,530,312 1,911,597 197,349 - 4,639,258 Expenditures for long-lived assets... 131,782 1,520 37,961 - 171,263 1999 ---- Operating revenues................... $ 669,761 $ 31,368 $ 30,023 $ - $ 731,152 Operating income..................... 181,248 21,684 (3,882) - 199,050 Other income........................ 5,586 121 490 (1,071) 5,126 Interest expense..................... 62,250 518 5,458 (1,071) 67,155 Income before income taxes........... 124,584 21,287 (8,850) - 137,021 Income taxes......................... 49,507 8,478 (12,313) - 45,672 Net income........................... 75,077 12,809 3,463 - 91,349 Total assets......................... 2,379,571 128,160 132,640 - 2,640,371 Expenditures for long-lived assets... 112,772 312 26,880 - 139,964 1998 Operating revenues................... $ 768,506 $ 10,745 $ 15,836 $ - $ 795,087 Operating income..................... 186,723 7,963 (1,263) - 193,423 Other income......................... 5,757 - 369 (308) 5,818 Interest expense..................... 62,304 - 3,439 (308) 65,435 Income before income taxes........... 130,176 7,963 (4,333) - 133,806 Income taxes......................... 49,893 2,787 (8,050) - 44,630 Net income........................... 80,283 5,176 3,717 - 89,176 Total assets......................... 2,253,277 72,023 131,519 - 2,456,819 Expenditures for long-lived assets... 91,803 - 19,205 - 111,008
INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareowners of IDACORP, Inc.: Boise, Idaho We have audited the accompanying consolidated balance sheets and statements of capitalization of IDACORP, Inc. and its subsidiaries as of December 31, 2000, 1999 and 1998, and the related consolidated statements of income, cash flows, retained earnings and comprehensive income for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of IDACORP, Inc. and subsidiaries at December 31, 2000, 1999 and 1998, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boise, Idaho February 1, 2001 Idaho Power Company Consolidated Statements of Income
Year Ended December 31, ---------------------------------------------- 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) REVENUES: General business..................................... $565,357 $516,148 $514,856 Off system sales..................................... 229,986 119,785 214,418 Other revenues....................................... 40,319 22,403 27,136 ------------ ------------ ----------- Total revenues..................................... 835,662 658,336 756,410 ------------ ------------ ----------- EXPENSES: Operation: Purchased power.................................... 398,649 106,344 185,271 Fuel expense....................................... 94,215 86,617 86,237 Power cost adjustment.............................. (120,688) (502) 21,866 Other.............................................. 146,424 151,800 145,374 Maintenance.......................................... 46,973 42,067 41,872 Depreciation......................................... 80,287 77,833 74,481 Taxes other than income taxes........................ 20,166 21,719 20,725 ------------ ------------ ----------- Total expenses................................... 666,026 485,878 575,826 ------------ ------------ ----------- INCOME FROM OPERATIONS................................. 169,636 172,458 180,584 ------------ ------------ ----------- OTHER INCOME: Allowance for equity funds used during construction.. 2,565 1,667 300 Energy marketing activities - net.................... 92,637 23,206 7,429 Other - net.......................................... 13,669 6,369 12,364 ------------ ------------ ----------- Total other income............................... 108,871 31,242 20,093 ------------ ------------ ----------- INTEREST CHARGES: Interest on long-term debt........................... 53,253 54,150 52,270 Other interest....................................... 4,544 7,864 8,323 Allowance for borrowed funds used during construction..................................... (2,346) (1,392) (900) ------------ ------------ ----------- Total interest charges........................... 55,451 60,622 59,693 ------------ ------------ ----------- INCOME BEFORE INCOME TAXES............................. 223,056 143,078 140,984 INCOME TAXES........................................... 85,568 45,550 45,065 ------------ ------------ ----------- NET INCOME ............................................ 137,488 97,528 95,919 Dividends on preferred stock......................... 5,929 5,572 5,658 ------------ ------------ ----------- EARNINGS ON COMMON STOCK............................... $131,559 $ 91,956 $ 90,261 ============ ============ ===========
The accompanying notes are an integral part of these statements. Idaho Power Company Consolidated Balance Sheets Assets
December 31, -------------------------------------------- 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) ELECTRIC PLANT: In service (at original cost)........................ $2,799,874 $2,726,026 $2,659,441 Accumulated provision for depreciation............... (1,142,572) (1,073,722) (1,009,387) ----------- ------------ ----------- In service - Net................................... 1,657,302 1,652,304 1,650,054 Construction work in progress........................ 131,214 88,348 58,904 Held for future use.................................. 2,167 1,742 1,738 ----------- ------------ ----------- Electric plant - Net............................. 1,790,683 1,742,394 1,710,696 ----------- ------------ ----------- INVESTMENTS AND OTHER PROPERTY......................... 21,884 117,759 105,600 ----------- ------------ ----------- CURRENT ASSETS: Cash and cash equivalents............................ 83,494 95,038 20,029 Receivables: Customer........................................... 215,358 83,412 102,653 Allowance for uncollectible accounts............... (1,397) (1,397) (1,397) Notes.............................................. 2,945 345 467 Employee notes..................................... 4,742 4,105 4,510 Related parties.................................... 311 195 3,164 Other.............................................. 4,943 7,095 5,338 Energy marketing assets.............................. 1,572,619 29,096 - Accrued unbilled revenues............................ 44,825 31,994 34,610 Materials and supplies (at average cost)............. 24,685 28,960 30,143 Fuel stock (at average cost)......................... 5,105 9,329 7,096 Prepayments.......................................... 24,145 16,054 16,011 Regulatory assets associated with income taxes....... 8,672 893 2,965 ----------- ------------ ----------- Total current assets............................. 1,990,447 305,119 225,589 ----------- ------------ ----------- DEFERRED DEBITS: American Falls and Milner water rights............... 31,585 31,585 31,830 Company-owned life insurance......................... 39,554 40,480 35,149 Regulatory assets associated with income taxes....... 204,880 214,782 201,465 Regulatory assets - PCA.............................. 119,905 - - Regulatory assets - other............................ 45,750 56,137 67,212 Other................................................ 50,410 54,496 49,448 ----------- ------------ ----------- Total deferred debits............................ 492,084 397,480 385,104 ----------- ------------ ----------- TOTAL............................................ $4,295,098 $2,562,752 $2,426,989 =========== ============ ===========
The accompanying notes are an integral part of these statements. Idaho Power Company Consolidated Balance Sheets Capitalization and Liabilities
December 31, --------------------------------------------- 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) CAPITALIZATION: Common stock equity: Common stock, $2.50 par value (50,000,000 shares authorized; 37,612,351 shares outstanding). $ 94,031 $ 94,031 $ 94,031 Premium on capital stock............................ 362,430 362,203 362,156 Capital stock expense............................... (4,024) (3,819) (3,823) Retained earnings................................... 313,800 274,181 252,137 Accumulated other comprehensive income (loss)....... (921) 1,534 226 ------------ ------------ ----------- Total common stock equity......................... 765,316 728,130 704,727 Preferred stock....................................... 105,066 105,811 105,968 Long-term debt........................................ 808,977 821,558 815,937 ------------ ------------ ----------- Total capitalization.............................. 1,679,359 1,655,499 1,626,632 ------------ ------------ ----------- CURRENT LIABILITIES: Long-term debt due within one year.................... 30,077 89,101 6,029 Notes payable......................................... 59,700 19,757 38,508 Accounts payable...................................... 250,673 95,125 101,108 Notes and accounts payable to related parties....... 4,212 10,076 28 Energy marketing liabilities.......................... 1,590,964 25,594 - Taxes accrued......................................... 12,983 21,773 25,164 Interest accrued...................................... 15,002 19,122 18,364 Deferred income taxes................................. 8,672 893 2,965 Other................................................. 19,066 16,069 12,117 ------------ ------------ ----------- Total current liabilities......................... 1,991,349 297,510 204,283 ------------ ------------ ----------- DEFERRED CREDITS: Deferred income taxes................................. 452,404 428,923 420,268 Regulatory liabilities associated with deferred investment tax credits.............................. 66,050 67,433 69,396 Regulatory liabilities associated with income taxes... 40,230 33,817 28,075 Regulatory liabilities - PCA.......................... - 3,378 5,199 Regulatory liabilities - other........................ 4,621 3,363 4,161 Other................................................. 61,085 72,829 68,975 ------------ ------------ ----------- Total deferred credits............................ 624,390 609,743 596,074 ------------ ------------ ----------- COMMITMENTS AND CONTINGENT LIABILITIES TOTAL............................................. $4,295,098 $2,562,752 $2,426,989 ============ ============ ===========
The accompanying notes are an integral part of these statements. Idaho Power Company Consolidated Statements of Capitalization
December 31, -------------------------------------------------------------------- 2000 % 1999 % 1998 % ---- --- ---- --- ---- --- (Thousands of Dollars) COMMON STOCK EQUITY: Common stock....................................... $ 94,031 $ 94,031 $ 94,031 Premium on capital stock........................... 362,430 362,203 362,156 Capital stock expense.............................. (4,024) (3,819) (3,823) Retained earnings.................................. 313,800 274,181 252,137 Accumulated other comprehensive income (loss)...... (921) 1,534 226 ----------- ----------- ------------ Total common stock equity...................... 765,316 46 728,130 44 704,727 43 ----------- ----------- ------------ PREFERRED STOCK: 4% preferred stock................................. 15,066 15,811 15,968 7.68% Series, serial preferred stock............... 15,000 15,000 15,000 7.07% Series, serial preferred stock............... 25,000 25,000 25,000 Auction rate preferred stock....................... 50,000 50,000 50,000 ----------- ------------ ----------- Total preferred stock.......................... 105,066 6 105,811 6 105,968 7 ----------- ----------- ------------ LONG-TERM DEBT: First mortgage bonds: 8.65% Series due 2000........................... - 80,000 80,000 6.93% Series due 2001........................... 30,000 30,000 30,000 6.85% Series due 2002........................... 27,000 27,000 27,000 6.40% Series due 2003........................... 80,000 80,000 80,000 8 % Series due 2004........................... 50,000 50,000 50,000 5.83% Series due 2005........................... 60,000 60,000 60,000 7.38% Series due 2007........................... 80,000 - - 7.20% Series due 2009........................... 80,000 80,000 - Maturing 2021 through 2031 with rates ranging from 7.5% to 9.52%............................. 230,000 230,000 230,000 ----------- ----------- ------------ Total first mortgage bonds..................... 637,000 637,000 557,000 Amount due within one year......................... (30,000) (80,000) - ----------- ----------- ------------ Net first mortgage bonds....................... 607,000 557,000 557,000 ----------- ----------- ------------ Pollution control revenue bonds: 7 1/4 % Series due 2008......................... - 4,360 4,360 8.30 % Series 1984 due 2014.................... 49,800 49,800 49,800 6.05 % Series 1996A due 2026................... 68,100 68,100 68,100 Variable Rate Series 1996B due 2026.............. 24,200 24,200 24,200 Variable Rate Series 1996C due 2026.............. 24,000 24,000 24,000 Variable Rate Series 2000 due 2007............... 4,360 - - ----------- ----------- ------------ Total pollution control revenue bonds.......... 170,460 170,460 170,460 ----------- ----------- ------------ REA notes.......................................... 1,339 1,415 1,489 Amount due within one year....................... (77) (76) (74) ----------- ----------- ------------ Net REA notes.................................. 1,262 1,339 1,415 ----------- ----------- ------------ American Falls bond guarantee...................... 19,885 19,885 20,130 ----------- ----------- ------------ Milner Dam note guarantee.......................... 11,700 11,700 11,700 ----------- ----------- ------------ Debt related to investments in affordable housing with rates ranging from 6.03% to 8.77% due 2000 to 2010 - 71,183 62,103 Amount due within one year....................... - (9,025) (5,955) ----------- ----------- ------------ Net affordable housing debt.................... - 62,158 56,148 Other subsidiary debt.............................. - 457 623 Unamortized premium/discount - Net................. (1,330) (1,441) (1,539) ----------- ----------- ------------ Total long-term debt........................... 808,977 48 821,558 50 815,937 50 ----------- ---- ----------- ----- ------------ ----- TOTAL CAPITALIZATION................................. $1,679,359 100 $1,655,499 100 $1,626,632 100 =========== ==== =========== ===== ============ =====
The accompanying notes are an integral part of these statements. Idaho Power Company Consolidated Statements of Cash Flows
Year Ended December 31, ----------------------------------------------- 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) OPERATING ACTIVITIES: Net income................................................... $137,488 $ 97,528 $ 95,919 Adjustments to reconcile net income to net cash: Unrealized (loss) gains from energy marketing activities.. 21,847 (3,502) - Depreciation and amortization.............................. 92,677 95,154 87,044 Deferred taxes and investment tax credits.................. 44,911 (1,747) (10,127) Accrued PCA costs.......................................... (122,353) (891) 21,658 Change in: Receivables and prepayments.............................. (144,077) (489) 1,985 Accrued unbilled revenue................................. (12,831) 2,616 (1,298) Materials and supplies and fuel stock.................... 5,544 (1,050) (911) Accounts payable......................................... 156,932 28,397 (10,658) Taxes accrued............................................ (8,326) (3,391) 1,312 Other current assets and liabilities..................... (3,572) 4,710 (857) Other - net................................................ (6,843) (3,490) (10,340) ----------- ----------- ---------- Net cash provided by operating activities.................... 161,397 213,845 173,727 ----------- ----------- ---------- INVESTING ACTIVITIES: Additions to utility plant................................... (131,711) (108,498) (89,644) Investments in affordable housing projects................... - (19,554) (19,139) Investments in company - owned life insurance................ - (5,862) - Net cash of affiliates transferred to parent................. (4,737) - - Other - net.................................................. 838 (3,066) 867 ----------- ----------- ---------- Net cash used in investing activities...................... (135,610) (136,980) (107,916) ----------- ----------- ---------- FINANCING ACTIVITIES: Proceeds from issuance of: First mortgage bonds....................................... 80,000 80,000 60,000 Pollution control revenue bonds............................ 4,360 - - Long-term debt related to affordable housing projects...... - 18,730 20,556 Retirement of: First mortgage bonds....................................... (80,000) - (30,000) Pollution control revenue bonds............................ (4,360) - - Long-term debt related to affordable housing projects...... - (9,650) (4,838) Subsidiary debt............................................ - (165) (3,316) Dividends on common stock.................................... (69,850) (69,912) (69,889) Dividends on preferred stock................................. (5,929) (5,572) (5,658) Increase (decrease) in short-term borrowings................. 39,943 (14,607) (18,992) Other - net.................................................. (1,495) (680) (550) ----------- ----------- ---------- Net cash used in financing activities...................... (37,331) (1,856) (52,687) ----------- ----------- ---------- Net increase (decrease) in cash and cash equivalents........... (11,544) 75,009 13,124 Cash and cash equivalents at beginning of period............... 95,038 20,029 6,905 ----------- ----------- ---------- Cash and cash equivalents at end of period..................... $ 83,494 $ 95,038 $ 20,029 =========== =========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Income taxes............................................... $ 47,732 $ 50,532 $ 55,527 Interest (net of amount capitalized)....................... $ 58,090 $ 55,186 $ 53,806 Net non-cash assets of affiliates transferred to parent...... $ 17,353 - $ 27,534
The accompanying notes are an integral part of these statements. Idaho Power Company Consolidated Statements of Retained Earnings
Year Ended December 31, ---------------------------------------------- 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) RETAINED EARNINGS, BEGINNING OF YEAR................... $274,181 $252,137 $259,299 NET INCOME............................................. 137,488 97,528 95,919 ------------- -------------- ------------- Total................................................ 411,669 349,665 355,218 DIVIDENDS: Common stock ($1.86 per share)....................... (69,850) (69,912) (69,889) Preferred stock...................................... (5,929) (5,572) (5,658) TRANSFER TO IDACORP, INC............................... (22,090) - (27,534) ------------- -------------- ------------- RETAINED EARNINGS, END OF YEAR......................... $313,800 $274,181 $252,137 ============= ============== =============
The accompanying notes are an integral part of these statements. Consolidated Statements of Comprehensive Income
Year Ended December 31, ---------------------------------------------- 2000 1999 1998 ---- ---- ---- (Thousands of Dollars) NET INCOME...................................................... $ 137,488 $ 97,528 $ 95,919 OTHER COMPREHENSIVE INCOME (LOSS): Unrealized gains on securities (net of tax of ($1,713), $677 and $2,185)............................................... (2,335) 1,017 3,385 Minimum pension liability adjustment (net of tax of ($78), $189 and ( $2,054)).............................. (119) 291 (3,159) ------------- ------------- ------------- TOTAL COMPREHENSIVE INCOME............................. $ 135,034 $ 98,836 $ 96,145 ============= ============= =============
The accompanying notes are an integral part of these statements. Idaho Power Company Notes to the Consolidated Financial Statements On October 1, 1998, IDACORP, Inc. (IDACORP) became the parent of Idaho Power Company and subsidiaries (IPC). At that time ownership interests in two of IPC's subsidiaries were transferred to IDACORP at book value. IPC's financial statements include $3.0 million of net income attributable to the transferred subsidiaries for the year ended December 31, 1998. On January 1, 2000 IPC's ownership interests in two additional subsidiaries were transferred to IDACORP at book value. IPC's financial statements include the following amounts attributable to these transferred subsidiaries for the periods prior to January 1, 2000: As of/Year Ended December 31, 1999 1998 ---------------- ------------ Total assets........................... $ 107,996 $ 90,029 Net assets............................. 22,090 19,706 Net income............................. 2,385 2,216 Except as modified below, the Notes to the Consolidated Financial Statements of IDACORP included in this Current Report on Form 8-K are incorporated herein by reference insofar as they relate to Idaho Power Company. Note 1 - Summary of Significant Accounting Policies Note 3 - Common Stock Note 4 - Preferred Stock of Idaho Power Company Note 5 - Long-Term Debt Note 7 - Notes Payable Note 8 - Commitments and Contingent Liabilities Note 9 - Stock-Based Compensation Note 10 - Benefit Plans Note 11 - Utility Plant in Service and Jointly-Owned Projects Note 1 - Derivative Financial Instruments The following table shows a summary of the notional amounts of IPC's forward exposure (including both sales and purchases) as of December 31, 2000 and 1999. The maximum term related to any forward position is ten years.
December 31, 2000 December 31, 1999 ----------------------------------------------------- Electricity MWh's ----------------------------------------------------- Total gross notional volume............ 34,453 10,818
The following table displays the fair value of IPC's energy marketing assets and liabilities (all electricity) at December 31, 2000 and 1999 and the average values for the twelve months ended December 31, 2000 (in thousands of dollars):
Balance at December 31, 2000 Twelve Months Average Balance Balance at December 31, 1999 ---------------------------- ----------------------------- ---------------------------- Assets Liabilities Assets Liabilities Assets Liabilities ------ ----------- ------ ----------- ------ ----------- $1,572,619 $1,590,964 $ 401,956 $ 397,914 $ 29,096 $ 25,594
The gain in fair value of energy trading contract positions (including electricity forwards, futures, options and swaps) included in the income before income taxes for the years ended December 31, 2000 and 1999 were $140.3 million and $29.7 million respectively. Note 2 - Income Taxes IPC has settled Federal and Idaho tax liabilities on all open years through the 1996 tax year except for amounts related to a partnership which have been, in management's opinion, adequately accrued. A reconciliation between the statutory federal income tax rate and the effective rate is as follows:
2000 1999 1998 ------------- ------------- ------------- (Thousands of Dollars) Computed income taxes based on statutory federal income tax rate................................. 78,070 50,077 $ 49,344 Change in taxes resulting from: AFDC............................................ (1,719) (1,071) (420) Investment tax credits.......................... (3,083) (3,032) (2,934) Repair allowance................................ (4,550) (2,800) (2,800) Settlement of prior years tax returns........... 2 (478) (1,965) State income taxes (net of Federal reduction)... 10,060 6,070 7,630 Depreciation.................................... 8,243 7,292 5,237 Affordable housing tax credits.................. - (8,934) (6,504) Other........................................... (1,455) (1,574) (2,523) ------------- ------------- ------------- Total provision for federal and state income taxes $ 85,568 $ 45,550 $ 45,065 ============= ============= ============= Effective tax rate................................ 38.4% 31.8% 32.0%
The provision for income taxes consists of the following:
2000 1999 1998 ------------- ------------- ------------- (Thousand of Dollars) Income taxes currently payable: Federal......................................... $ 35,259 $ 38,169 $ 45,909 State........................................... 5,398 9,128 9,283 ------------- ------------- ------------- Total......................................... 40,657 47,297 55,192 ------------- ------------- ------------- Income taxes deferred - Net of amortization: Federal......................................... 38,887 2,246 (8,006) State........................................... 7,407 (2,030) (1,321) ------------- ------------- ------------- Total......................................... 46,294 216 (9,327) ------------- ------------- ------------- Investment tax credits: Deferred........................................ 1,700 1,069 2,134 Restored........................................ (3,083) (3,032) (2,934) ------------- ------------- ------------- Total......................................... (1,383) (1,963) (800) ------------- ------------- ------------- Total provision for income taxes.................. $ 85,568 $ 45,550 $ 45,065 ============= ============= =============
The tax effects of significant items comprising the Company's net deferred tax liability are as follows:
2000 1999 1998 --------------- -------------- -------------- (Thousands of Dollars) Deferred tax assets: Regulatory liabilities.......................... $ 40,230 $33,817 $28,075 Advances for construction....................... 9,224 9,646 10,401 Other........................................... 22,273 18,456 20,457 --------------- -------------- -------------- Total......................................... 71,727 61,919 58,933 --------------- -------------- -------------- Deferred tax liabilities: Electric plant.................................. 249,546 249,597 247,270 Regulatory assets............................... 213,552 215,675 204,430 Conservation programs........................... 13,561 17,396 16,866 PCA............................................. 47,189 (1,826) (2,543) Other........................................... 8,954 10,893 16,143 --------------- -------------- -------------- Total......................................... 532,802 491,735 482,166 --------------- -------------- -------------- Net deferred tax liabilities...................... $461,075 $429,816 $423,233 =============== ============== ==============
Note 6 - Fair Value of Financial Instruments The estimated fair value of the Company's financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Cash and cash equivalents, customer and other receivables, notes payable, accounts payable, interest accrued, and taxes accrued are reported at their carrying value as these are a reasonable estimate of their fair value. The estimated fair values for long-term debt and investments are based upon quoted market prices of the same or similar issues or discounted cash flow analyses as appropriate. The total estimated fair value of the Company's debt was approximately $866.3 million in 2000, $898.1 million in 1999, and $877.4 million in 1998. Note 12- Industry Segment Information The Company has identified two reportable operating segments, Utility Operations and Energy Marketing. The Utility Operations segment has two primary sources of income, the regulated operations of IPC and income from Bridger Coal Company, an unconsolidated joint venture also subject to regulation. IPC's regulated operations include the generation, transmission, distribution purchase and sale of electricity. Energy marketing consists of the Company's unregulated electricity marketing operations and, through December 1998, natural gas marketing. The Company's other operations include: o Ida-West Energy Company - a developer and manager of independent power projects (ownership transferred to parent October 1998); o IDACORP Financial Services - an investor in affordable housing (ownership transferred to parent January 2000); o Applied Power Company - manufacturer, supplier and distributor of solar photovoltaic systems (ownership transferred to parent January 2000). The following table summarizes IPC's segment information and reconciles this information to total enterprise amounts:
Utility Energy Consolidated Operations Marketing Other Eliminations Total ------------ ----------- ------------ ------------ ------------- (Thousands of Dollars) 2000 ---- Revenues............................$ 835,662 $ - $ - $ - $ 835,662 Income from operations.............. 169,636 - - - 169,636 Other income........................ 16,242 94,917 (8) (2,280) 108,871 Interest expense ................... 57,731 - - (2,280) 55,451 Income before income taxes.......... 128,147 94,917 (8) - 223,056 Income taxes........................ 48,174 37,397 (3) - 85,568 Net income.......................... 79,973 57,520 (5) - 137,488 Total assets........................ 2,530,312 1,761,611 3,175 - 4,295,098 Expenditures for long-lived assets.. 131,782 - 299 - 132,081 1999 ---- Revenues............................$ 658,336 $ - $ - $ - $ 658,336 Income from operations.............. 172,458 - - - 172,458 Other income........................ 14,377 23,206 (6,341) - 31,242 Interest expense.................... 56,679 - 3,943 - 60,622 Income before income taxes.......... 130,156 23,206 (10,284) - 143,078 Income taxes........................ 49,507 9,143 (13,100) - 45,550 Net income.......................... 80,649 14,063 2,816 - 97,528 Total assets........................ 2,379,571 72,023 111,158 - 2,562,752 Expenditures for long-lived assets.. 112,772 - 22,685 - 135,457 1998 ---- Revenues............................$ 756,410 $ - $ - $ - $ 756,410 Income from operations.............. 180,584 - - - 180,584 Other income........................ 11,897 7,963 233 - 20,093 Interest expense.................... 56,646 - 3,047 - 59,693 Income before income taxes.......... 135,835 7,963 (2,814) - 140,984 Income taxes........................ 49,893 2,787 (7,615) - 45,065 Net income.......................... 85,942 5,176 4,801 - 95,919 Total assets........................ 2,266,055 59,245 101,689 - 2,426,989 Expenditures for long-lived assets.. 91,803 - 19,197 - 111,000
INDEPENDENT AUDITORS' REPORT To The Board of Directors and Shareowner of Idaho Power Company Boise, Idaho We have audited the accompanying consolidated balance sheets and statements of capitalization of Idaho Power Company and its subsidiaries as of December 31, 2000, 1999 and 1998, and the related consolidated statements of income, cash flows, retained earnings, and comprehensive income for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Idaho Power Company and subsidiaries at December 31, 2000, 1999 and 1998, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Boise, Idaho February 1, 2001 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 hereunto duly authorized. IDACORP, Inc. IDAHO POWER COMPANY By:s/ J. LaMont Keen By:s/ J. LaMont Keen -------------------- -------------------- J. LaMont Keen J. LaMont Keen Senior Vice President-Administration Senior Vice President-Administration and Chief Financial Officer and Chief Financial Officer By:s/ Darrel T. Anderson By:s/ Darrel T. Anderson ----------------------- ----------------------- Darrel T. Anderson Darrel T. Anderson Vice President and Treasurer Vice President and Treasurer Dated: February 23, 2001