8-K: IDACORP Announces Strong Q3 2024 Results and Raises Lower End of Earnings Guidance

IDACORP reported a strong third quarter with increased net income and raised the lower end of its full-year earnings guidance.

Summary

• IDACORP's net income for the third quarter of 2024 was $113.6 million, or $2.12 per diluted share, compared to $105.3 million, or $2.07 per diluted share, in the same quarter of 2023.
• The company's performance was driven by customer growth, rate changes, and favorable weather conditions leading to higher customer usage.
• Increased depreciation and interest expenses partially offset these benefits.
• IDACORP is increasing the lower end of its full-year 2024 earnings guidance to a range of $5.35 to $5.45 per diluted share.
• Idaho Power's expectation of additional tax credits it will use to support earnings also improved to a range of $25 to $35 million in 2024.
• The company plans to procure additional company-owned battery resources and its first-ever company-owned wind power project in Wyoming, along with several power purchase agreements.
• Customer growth at Idaho Power increased operating income by $7.4 million in the third quarter of 2024, with approximately 16,500 new customers, a 2.6% increase year-over-year.
• Usage per retail customer increased operating income by $3.1 million in the third quarter of 2024, primarily due to higher temperatures and lower precipitation.
• Total other O&M expenses in the third quarter of 2024 were $20.3 million higher than the third quarter of 2023, partially related to increased pension and wildfire mitigation expenses.
• Depreciation expense increased $5.6 million in the third quarter of 2024 due to an increase in plant-in-service.
• For the first nine months of 2024, IDACORP's net income increased by $21.4 million compared to the same period in 2023.
• The company's total system rate base could reach approximately $9.2 billion by the end of 2028 if all capital additions are approved by regulators.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, increased earnings guidance, and strategic investments in renewable energy. While there are some challenges related to increased expenses, the overall tone is optimistic and indicates a healthy growth trajectory.

Positives

• Net income increased in both the third quarter and the first nine months of 2024 compared to the same periods in 2023.
• The company experienced strong customer growth, with a 2.6% increase in customers year-over-year.
• Favorable weather conditions led to increased customer usage and higher revenues.
• The lower end of the full-year earnings guidance has been raised, indicating improved financial outlook.
• Idaho Power expects to utilize additional tax credits to support earnings.
• The company is expanding its renewable energy portfolio with new battery storage and wind power projects.
• Retail revenues per megawatt-hour increased, contributing to higher operating income.
• The company has secured a rate increase in Oregon, effective October 15, 2024.

Negatives

• Increased depreciation and interest expenses partially offset the benefits from higher revenues.
• Total other O&M expenses increased significantly, partially due to pension and wildfire mitigation expenses.
• The company experienced a decrease in earnings from its investment in Bridger Coal Company.
• Transmission wheeling-related revenues decreased during the first nine months of 2024.

Risks

• Decisions by regulatory bodies could impact the company's ability to recover costs and earn a return on investment.
• Changes to or elimination of regulatory cost recovery mechanisms could negatively affect the company's financials.
• There are risks associated with capital expenditures for utility infrastructure projects, including delays and cost overruns.
• Economic conditions, such as inflation and increased interest rates, could impact operations and capital investments.
• The rapid addition of new industrial and commercial customer load could strain power supply and increase costs.
• The company faces risks related to operating an electric utility system, including potential liability for fires and outages.
• Abnormal weather conditions, wildfires, and natural disasters could affect customer sales and power generation.
• The company's ability to acquire equipment, materials, fuel, and power on reasonable terms is subject to market conditions.
• The company's ability to obtain debt and equity financing on satisfactory terms is subject to market conditions.
• The company's ability to continue to pay dividends is subject to financial performance and regulatory restrictions.

Future Outlook

IDACORP has increased the lower end of its full-year 2024 earnings guidance and expects to utilize additional tax credits. The company is also planning significant investments in renewable energy resources and infrastructure to meet growing customer needs.

Management Comments

• We had a strong third quarter and benefited from customer growth, rate changes, and weather conditions that contributed to higher customer usage, said IDACORP President and Chief Executive Officer Lisa Grow.
• As expected, higher depreciation and interest expense partially offset those benefits during the quarter, as we continued to acquire resources and build infrastructure to respond to rapidly growing customer needs.
• We are also excited to announce the results of our request for proposal process for energy and capacity resource needs in 2026 and 2027.

Industry Context

The announcement reflects a trend in the utility industry towards increased investment in renewable energy and grid modernization. The company's focus on battery storage and wind power aligns with broader industry efforts to transition to cleaner energy sources. The customer growth and rate increases are indicative of the demand for electricity in the region.

Comparison to Industry Standards

• IDACORP's customer growth of 2.6% year-over-year is a strong indicator of the economic expansion in its service area, which is higher than the national average for utility customer growth.
• The company's move to procure 200 MW of battery storage and 300 MW of wind power is comparable to other utilities that are actively investing in renewable energy resources to meet clean energy goals.
• The increase in O&M expenses, particularly related to pension and wildfire mitigation, is a common challenge faced by utilities in the western United States, where wildfire risks are significant.
• The company's rate base growth forecast of 16.9% CAGR from 2024-2028 is substantial and reflects the significant capital investments being made in infrastructure, which is higher than many other utilities.
• The company's focus on hydropower, with 17 low-cost projects, is a unique advantage compared to utilities that rely more heavily on fossil fuels.

Stakeholder Impact

• Shareholders will benefit from increased earnings and a positive outlook for future growth.
• Customers will benefit from a reliable and increasingly clean energy supply.
• Employees will benefit from the company's continued growth and investment in infrastructure.
• Suppliers and contractors will benefit from the company's capital expenditure plans.
• Creditors will benefit from the company's strong financial performance and liquidity.

Next Steps

• IDACORP will continue to evaluate additional bids to meet its energy and capacity needs.
• The company will proceed with the Idaho limited-issue rate case, with a requested rate increase effective January 1, 2025.
• The company will continue to execute its capital expenditure plan, with a focus on new capacity and energy resources.
• The company will continue to monitor and manage its operating expenses, including pension and wildfire mitigation costs.

Key Dates

Keywords

IDACORP, Idaho Power, Earnings, Financial Results, Renewable Energy, Rate Case, Battery Storage, Wind Power, Customer Growth, Operating Expenses, Net Income, Guidance