IDACORP, Inc.

Thank you, Derek, and good afternoon, everyone. Welcome to our Second Quarter 2012 Earnings Release Conference Call.

We issued our earnings release before the markets opened today, and that document along with our SEC Form 10-Q is now posted to our IDACORP website at www.idacorpinc.com. We will be using a few slides to supplement today's call, and these are also located on our IDACORP website.

We'll refer to specific slide numbers as we work our way through today's presentation.

Now moving to Slide 2. On the call today, we have LaMont Keen, IDACORP President and Chief Executive Officer; Darrel Anderson, Idaho Power President, Chief Financial Officer; and Steve Keen, Idaho Power's Senior Vice President, Finance and Treasurer.

We also have other individuals available to help answer your questions during the Q&A period.

Before turning the presentation over to Darrel, I'll cover a few details with you. First, our Safe Harbor statement is on Slide 3.

Our presentation today contains forward-looking statements, and it is important to note that the company's future results could differ materially from those discussed. While these forward-looking statements represent our current judgment of what the future holds, these statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today.

As a result, we caution you against placing undue reliance on these forward-looking statements, which reflect our opinion only as of today. A discussion of factors that could cause future results to differ materially can be found on Slide 3 and in our filings with the Securities and Exchange Commission, which we encourage you to review.

Referring to Slide 4, I'll briefly discuss the financial results from today's earnings press release. Second quarter 2012 net income attributable to IDACORP was $35.3 million, $14.4 million more than last year's second quarter.

Year-to-date net income attributable to IDACORP was $60.2 million, $9.6 million more than the first 6 months of 2011.

Idaho Power second quarter 2012 net income was $34.7 million, $14 million more than the second quarter of 2011, while Idaho Power's year-to-date 2012 net income was $60.5 million, which was $10 million more than the same period in 2011.

IDACORP earnings increased by $0.29 per diluted share quarter-over-quarter to $0.71 per diluted share and by $0.19 per diluted share on a year-to-date basis to $1.21 per diluted share.

As indicated in today's earnings press release, based on these results, we are increasing our current full year 2012 IDACORP earnings guidance from the range of $3 to $3.15 per diluted share to the range of $3.20 to $3.35 per diluted share.

I'll now turn the presentation over to Darrel to discuss other key drivers for the second quarter and review our key operating and financial metrics.

Thanks, Larry, and good afternoon, everyone. I will begin by reviewing the results for the quarter and update you on the key operating and financial metrics.

Steve will discuss our liquidity and financing activities for 2012, and then LaMont will discuss the completion of Langley Gulch and other business-related matters. We will then stand for your questions.

On Slide 5, we present a reconciliation of net income attributable to IDACORP from the second quarter of 2011 to the second quarter of 2012. This reflects an increase in net income of $14.4 million.

The full reconciliation table is included in the Form 10-Q we filed this morning.

Operating income was positively impacted by $5.8 million due to timely recovery of revenue requirements through base rates and adjustment mechanisms. Warmer-than-normal temperatures and below-normal precipitation led to a $19.5 million increase in operating revenues compared with last year's second quarter.

While irrigation sales during the second quarter of 2011 were below historic averages, sales to this customer group in the second quarter of 2012 were near historic highs. Irrigation usage for the second quarter was the third highest in over 10 years.

Cooling degree days in the second quarter this year were 134% greater than the same period last year and nearly 9% greater than normal. Precipitation levels were generally lower throughout Idaho Power's service territory, and this, too, contributed to greater energy demand for operation of irrigation systems.

Pension-related expenses reduced operating income by $2 million, while the combination of changes in other O&M, depreciation, property tax, changes in earnings at Bridger Coal Company and an increase in allowance for funds used during construction, or AFUDC, increased operating income by $6.7 million compared with second quarter 2011.

Idaho Power did not record additional accumulated deferred investment tax credits, or ADITC, in the second quarter of 2012 and reversed the $800,000 recorded in the first quarter this year. This resulted in $3.7 million reduction to net income quarter-over-quarter since amortization of additional ADITC was still anticipated and being recorded in the second quarter of 2011.

Finally, higher pretax earnings resulted in greater income tax expense and, when combined with other net decreases, resulted in a net income reduction of $11.9 million.

Idaho Power does not expect to use additional ADITCs in the Idaho jurisdiction in 2012, and this is reflected on Slide 6. While subject to a number of factors, including those outlined in the Form 10-Q we filed today, Idaho Power's year-end return on equity in the Idaho jurisdiction is now expected to exceed 9.5%, which results in no utilization of additional ADITC.

As indicated on Slide 7, we list the changes in our key operating and financial metrics guidance from those discussed last May.

We have been able to tighten the range of expected Idaho Power capital expenditures to between $230 million and $235 million and the estimated hydroelectric generation range to 7.5 million to 8.5 million megawatt-hours. As a reminder, the annual median hydroelectric generation is 8.6 million megawatt-hours.

As discussed in our Form 10-Q, we continue to expect to invest between $490 million and $500 million in capital expenditures for the 2-year period of 2013 and 2014. These amounts are generally for care and feeding of our existing infrastructure and, on a net basis, are expected to grow rate base over the period.

Based on these assumptions and the positive impact of our second quarter results, we are increasing our 2012 full year IDACORP earnings per share guidance from the range of $3 to $3.15 per diluted share to the range of $3.20 to $3.35 per diluted share. Should we reach the upper end of our earnings range, we would expect to exceed the earnings deadband in the Idaho jurisdiction as prescribed by our agreement with the Idaho Public Utilities Commission, resulting in a portion of our earnings being shared with customers.

As discussed in our 2011 10-K and in the 10-Qs we filed this year, recall that our earnings results are seasonal and that utility revenues and expenses are not incurred evenly during the year. Our tiered rate structure impacts earnings recognition between quarters, as revenues during high or low periods may be influenced by higher seasonal rates.

Now turning to a couple of operating matters. First, I'd like to update you on one of our large industrial customers.

Back in March 2012, the Idaho Public Utility Commission approved a stipulation to amend the electric service agreement between Hoku and Idaho Power. However, as a result of Hoku's failure to remain timely in payments under the revised agreement, Idaho Power terminated its provision of electric service under the primary industrial contract in May 2012.

Idaho Power applied the remaining $2 million deposit then on hand to Hoku's April and May invoices and a portion of June's invoice. The anticipated negative revenue and earnings impacts from termination of service to Hoku have been factored in to our updated earnings guidance.

Now I'd like to update you on the current status of the Boardman to Hemingway transmission line. As discussed in our 2011 Integrated Resource Plan, the line is a proposed 300-mile, 500 KV transmission project between a station near Boardman, Oregon and Hemingway station near Boise, Idaho.

Through a joint funding agreement between Idaho Power, PacifiCorp and the Bonneville Power Administration, Idaho Power's expected share of the permitting phase is approximately 21%, and we would seek that same percentage interest in the completed project. Based on the execution of the terms of the joint funding agreement, Idaho Power's estimated share of the cost of the permitting phase of the project is $11 million and we currently estimate the total project cost to be approximately $820 million, both amounts include AFUDC.

coordination of efforts between state and federal agencies; environmental considerations, including changing regulations around staged route [ph]; as well as ongoing public outreach. These challenges have combined to force the extension of the proposed in-service date.

We continue to work closely with the state and federal permitting agencies, as well as the federal rapid response team in working through the process and welcome their participation.

The next major milestone for the project in the federal permitting process will be the draft environmental impact statement that is due out in the first half of 2013, where we expect to see an agency preferred line route proposal coming from the Bureau of Land Management. We plan to evaluate the impact of the new in-service date in the upcoming 2013 Integrated Resource Plan.

Steve will now discuss IDACORP's 2012 liquidity position and the 2012 expected debt and equity financing requirements.

Thanks, Darrel. I will begin with a discussion on cash flows for the first 6 months of 2012, follow that with a discussion on our liquidity position and conclude with a discussion on financing plans and the modification of our process relating to common stock required for our dividend reinvestments and employee-related stock purchase plan.

Slide 8 includes a portion of this information.

IDACORP's cash flow from operations for the first 6 months of 2012 was $83 million, a decrease of $74 million from the first 6 months of 2011. The reduction was in large part due to $34 million in pension plan contributions made in the first quarter of 2012, whereas no cash contributions were made in the first quarter last year.

Also, IDACORP had net income tax payments of $1 million this year compared with net refunds of nearly $13 million in last year's year-to-date period. And finally, changes in the timing of actual collections from our power cost adjustment mechanisms reduced cash flows by $41 million.

IDACORP and Idaho Power currently have $125 million and $300 million, respectively, in credit facilities with termination dates in October of 2016. Commercial paper outstanding at IDACORP as of June 30 of this year was $54.7 million compared to $61.5 million at March 31, 2012.

Idaho Power had $10 million of commercial paper outstanding as of June 30, 2012 compared to $1.5 million at March 31.

After reductions for outstanding commercial paper and inclusion of modest cash balances of both IDACORP and Idaho Power, we had $78.4 million and $296.2 million, respectively, in available liquidity at June 30, 2012. Also, at that date, there were 3 million IDACORP common shares available for issuance under our continuous equity program, with none issued during either the first or second quarters of 2012.

For the remainder of 2012, we expect minimal need for external financing at both IDACORP and Idaho Power. While we do not have any long-term debt issuances planned for the remainder of this year, we do monitor the debt capital markets with an opportunistic approach to managing future financing needs and could, at some point, decide to issue additional long-term debt.

We continue to target an approximate mix of 50% equity and 50% debt in our capital structure. As of June 30, 2012, IDACORP's capital structure consists of 51% equity and 49% debt, indicating a reduced need for additional equity.

Effectively, July 1, 2012, IDACORP discontinued original issuance of common shares and instructed the plan administrators to use market purchases of IDACORP common stock to meet the needs of IDACORP dividend reinvestment and stock purchase plan and Idaho Power's employee savings plan. However, we may determine at any time in the future to resume original issuances of common stock under these plans.

In addition, while we believe it's unlikely at this point for the remainder of 2012, IDACORP may also decide to issue common stock from time to time under its continuous equity program, depending on market conditions and capital needs. For the remainder of 2012, we will continue to focus on controlling costs, generating sufficient cash from operations to meet operating needs and contribute to capital expenditure requirements.

Now I'll turn it over -- the discussion to LaMont, who will update you on Langley Gulch power plant and other business matters.

Thanks, Steve, and hello, everyone. Referring to Slide 9, we present some information about the Langley Gulch power plant, Idaho Power's newest generation resource.

On June 29, the 300 megawatt gas-fired plant was substantially complete and placed into commercial operation. The power plant immediately began helping satisfy extremely high electricity demand during the triple-digit heat the week of July 9, including during the record system peak on the 12th.

On the regulatory side of the Langley Gulch equation, on Friday, June 29, Idaho Power received an order from the Idaho Public Utilities Commission, approving our application to recover the investments we made to construct and integrate the plant into our operating system. The order, which was consistent with IPUC staff recommendations and only slightly lower than the company's requested amount, approved a $58.1 million increase in annual Idaho jurisdiction base rates effective July 1, 2012 together with a $335.9 million increase in Idaho rate base.

We requested the effective date of July 1 to coincide with the plant's availability to serve summer peak loads in July.

In light of these milestones, I also want to touch briefly on the topic of dividends during today's call. IDACORP's Board of Directors reviews the dividend rate periodically to determine its appropriateness in light of a number of factors outlined on previous calls and in our annual and quarterly reports to the SEC.

You'll remember that on January 19, 2012, IDACORP's Board of Directors voted to increase the quarterly dividend commencing with the dividend paid on February 29, 2012 to $0.33 per share of IDACORP common stock from the prior quarterly dividend amount of $0.30 per share. This increase was consistent with the dividend policy adopted last year, which provides for a target long-term dividend payout ratio of between 50% and 60% of sustainable IDACORP earnings with the flexibility to achieve that payout ratio over time or to adjust the ratio.

While the amount and timing of any dividends remain in the board's discretion, capital costs for construction of the Langley Gulch power plant and its inclusion in rate base were factors the board needed to weigh in setting the dividend. We believe that completion of these milestones will be positive factors when the IDACORP board evaluates future dividend increases.

The timing of any subsequent adjustments, however, has not been determined at this point.

I would also like to mention some areas of business activity underway in Idaho Power's service territory, and for this, I'd refer you to Slide 10. So far this year, we have seen ATCO Structures and Logistics announce the opening of a new manufacturing plant in Pocatello, Idaho, that they report will create more than 150 full-time jobs; the Lactalis American Group announce a $40 million expansion of a mozzarella cheese plant; the Simplot Foundation begin work on its $70 million Jump Project in downtown Boise and St.

Luke's Health System unveil its 10-year $1.2 billion capital plan.

Also underway in the heart of downtown Boise is a 253,000 square foot, $76 million, 18-story office and retail tower with Zions Bank as the anchor business. The official groundbreaking was held July 12 and construction is expected to be completed in 2014.

These major milestones are coupled with the retail rebound that includes the opening or announcement of businesses, including Big Al's, Rosauers Grocery, Nordstrom Rack and Whole Foods. Energy is the oxygen of the economy, and we are pleased to be able to provide service to these new contributors to our state's economy.

And there's also good news regarding customer additions. Even with the economy still in a position of recovery, Idaho Power experienced growth in the total general business customer class in both Idaho and Oregon from second quarter 2011 to second quarter 2012, adding 5,240 new customers.

By comparison, Idaho Power recorded 2,286 additional customers from second quarter 2010 to second quarter 2011 and 2,565 customers for the same period 2009 to 2010. Put simply, we've roughly doubled our customer growth compared with the last 2 periods.

And finally, I want to let you know that Idaho Power remains engaged in proceedings at the Idaho and Oregon PUCs relating to the determination of appropriate power price -- power purchase prices and other terms of PURPA, or Public Utility Regulatory Policies Act of 1978 power purchase agreements. We are also engaged in proceedings with the Federal Energy Regulatory Commission relating to our obligations under PURPA power purchase agreements.

Hearings in the Idaho commission proceedings begin August 7, while proceedings at the Oregon Commission are ongoing.

In concluding my update, there were many positives this quarter, most notably, IDACORP's solid earnings performance for our owners. We are pleased to be in a position to increase our earnings guidance for the remainder of the year and, as mentioned earlier, do not expect to use additional ADITCs in the Idaho jurisdiction in 2012.

And now I and other members of the management team will be happy to take your questions.

I had a question with the outlook for a delay on Boardman to Hemingway, is that an opportunity for another generation asset somewhere in Langley Gulch?

Paul, what I -- in the comment -- in the prepared comments, we talked about the pushback of the in-service date and we also talked about the fact that we are in the process of gearing up our 2013 Integrated Resource Plan. And so what you will see happen, that process starts basically in the next couple of weeks and goes through basically next summer.

And what you will see is all of those various alternatives put into play as they go back and go through the Integrated Resource Planning process. So I think as we've talked about in the past, I mean, Langley Gulch obviously was built at the time with the potential to expand.

Arguably, that may be an option, but there may be other options also put on the table as they go through the planning process. So we would ask that you stay tuned to that process and we will keep you informed as that process makes progress between now and mid next year.

So -- but there'll be -- all the options will be on the table.

And I know that currently, the settlement in Idaho, just $45 million of ADITCs. What's the total bank of ADITCs?

I think the number was around $70 million is the total bank, and that kind of moves down over -- we amortize some of that every period. So -- but it's in and around $70 million, plus or minus.

Just on the guidance revisions, I think you noted earlier one of the positive drivers was the incremental sales to the irrigation customer offset by the lost industrial contract of Hoku. And I'm just curious, can you break that out in terms of the positive EPS benefit from irrigation versus the negative EPS from the contract termination.

Yes. Brian, as it relates to the -- what we carve out in the reconciliation is the $19.5 million, which is really attributable to usage, and so -- and usage period over period.

And so that's what captures the $19.5 million. In our 10-Q, and I'll point you to on or around Page 61, depending on your pagination, we talk a little bit about the impact of Hoku and how it plays out and what we estimate the impact to be.

And in essence, it's less than $5 million. If you kind of read through the disclosures that are there, when you take a look at the impact of the PCA, as well as just the net impact of what the company was expecting to get out of that contract.

Okay, great. And just on the dividend policy, I appreciate the comments before.

Does the dividend get reviewed quarterly or on an annual basis by the board?

This is LaMont. I'll take that.

It's reviewed on an ongoing basis. The next opportunity for the board to look at it would be the board meeting in September.

They meet again in November, and then, obviously, the anniversary, the last adjustment would be January of '13. So it'll be addressed somewhere in that time frame.

At this point, I can't tell you which meeting.

Okay. Okay, so it seems like you're probably at the -- at most at the low end of your payout target.

And, I guess, with Langley Gulch and rates and with Boardman to Hemingway pushed out excluding any new generation to fill that gap in '16, is it accurate that your financial flexibility is growing?

I have to say we've certainly put a major capital expenditure addition behind us, and it's now included in our base rate. So as I indicated, those are positive events, and I think it does give the board more flexibility they had before they knew we had it completed on time and on budget and included in our cost structure.

Brian, this is Darrel. I'll just add.

The other thing that we will always take into consideration is that this balance between -- we want to make sure we remain competitive. We want to make sure that we're getting a fair return back to our owners when we took a look at the total return proposition, both from what the dividend is, as well as the appreciation in value.

So those are other factors that I think we've talked about before that we will take into account with the board, and they're very cognizant of that piece for the owners.

You had the question that was similar in the previous caller's inquiry. I'll ask it in a different way.

You had very low irrigation activity a year ago, second quarter. And this year, this quarter, you had near-record irrigation activities.

If you normalize these results, where would you have been?

Jim, this is Darrel. I don't have a normalized number for you.

But I think when you look at it from where we were as it relates to above normal, I mean, from a standpoint of weather, we weren't that far above normal where we were. The big change was really year-over-year change.

I think on the degree day comparison, I believe it was like 9% above normal. So when you look at it that way, it's -- it isn't that far above normal.

We did see, though, an increase, obviously, in that second quarter. But you also have to look at it, it was really -- it was pretty dry and it was warm.

And so what we have to look at it is not just June, but we also kind of look at the irrigation season overall. And so we look at June, July, August and into September, kind of look at it in total.

While the second quarter was the third highest over the last 10 years or so, what we have to do is kind of measure what's going to be the follow-on impact in the subsequent months. And what I will do, I'll just give you some sense for that, because -- I'll give you some July weather statistics and I'm going to just quote from our local paper today.

They've put out a notice as to how July weather was. In the Boise area, this last July was the fourth warmest since 1864, and we hit 100 nine times in July as compared to something in the more normal period that would be 4 to 5 times.

So the reality of it is, as you know, what we have to be able to do is continue to see kind of what that -- over the entire irrigation season.

I understand what you're saying there, but nonetheless, we don't want to overestimate what next year would bring. And of course, the valuation of your stock is dependent upon what next year brings.

And the other thing I would just add, Jim, too, there are other variables in the usage side of things. A lot of it, what type of crops are being grown and what kind of rotation is taking place, so it can vary above and beyond just the weather aspect of it.

It kind of depends on the types of crops and the -- and when they can get into the fields and do the work that needs to be done. Last year, the reason it was down was because they couldn't get in as early as they wanted to.

And so therefore, a lot of that usage got pushed out later.

I was wondering if you could elaborate a little more on the load growth. I know you attributed I suppose the C&I growth to functioning.

Is that just the year of the I2 [ph]?

I think that -- as it relates to load growth, while we saw an increase in the second quarter, and LaMont mentioned a number of various activities that are taking place from the load standpoint, we still are seeing, I think, if we look at it over a longer period, kind of the 1% sort of number still is a number that we're probably looking at on a longer-term basis.

Got it. And in terms of capital, if I look at kind of the 10-K CapEx, if I just pull out the transmission, would that be about accurate?

Right. But what the -- the thing that's important to note is in the 2013, 2014 capital numbers that we have in there, the $490 million to $500 million, there's very -- there's only a modest amount of capital expenditures associated with the permitting and siting of the transmission facilities embedded into those numbers.

The majority of the dollars being expended in that period of time are really are for caring and feeding of our existing infrastructure, both on the distribution, transmission side, as well as the generation side. So it's not necessarily project-specific, where you have a Langley Gulch or Boardman to Hemingway incorporated into those numbers.

So the amount would be roughly the same less -- over that 2-year period, maybe less $20 million or something?

It would be, yes. But I don't -- it would be -- I'm being told it'd be the same.

Thanks, everybody, for participating on our call this afternoon. We really appreciate your interest in IDACORP.

And hopefully, if we don't see you before, we'll see you at EEI later this fall. Thanks, everybody.

Thanks, everybody.

Thanks a lot.