IDACORP, Inc.

Welcome to IDA-COR First Quarter 2025 Earnings Conference Call. Today's call is being recorded and our webcast is live. A replay will be available later today and for the next 12 months on the IDA-COR website. If you need assistance at any time during the presentation, please press star zero on your phone. I will now turn the call over to Amy Shaw, Vice President of Finance, Compliance, and Risk.

Thank you. Good afternoon, everyone. We appreciate you joining our call. The slides we'll reference during today's call are available on IDA-COR's website. As noted on slide two, our discussion today includes forward-looking statements, including earnings guidance, spending forecasts, financing plans, regulatory actions and plans, and estimates and assumptions that reflect our current views on what the future holds, all of which are subject to risks and uncertainties. These risks and uncertainties may cause actual results to differ materially from statements made today and we caution against placing undue reliance on any forward-looking statements. Our cautionary note on forward-looking statements and various risk factors are included in more detail for your review in our filings with the Securities and Exchange Commission. As shown on slide three, we have Lisa Goh, President and CEO, Brian Buckham, SEP, CFO, and Treasurer, and John Wunderlich, Investor Relations Manager, presenting today. We also have other members of our management team available for a Q&A session following our prepared remarks. Slide four shows a summary of our first quarter results. IDA-COR's diluted earnings per share were $1.10 compared with 95 cents for last year's first quarter. Our key operating metrics and guidance are unchanged except for our hydropower generation forecast, which has improved. We're reaffirming our full year IDA-COR diluted earnings per share guidance range of $565 to $585. This includes our expectation that Idaho Power will use between $60 and $77 million of additional tax credit amortization. These estimates assume historically normal weather conditions and normal power supply expenses for the rest of the year. Now I'll turn the call over to Lisa.

Thanks, Amy, and thanks to everyone for joining us on the call today. I'll start with a look at the continued customer growth and economic expansion happening across Idaho Power's service area, as you can see on slide five. Our customer base has grown .6% since last year's first quarter, including .9% for residential customers. The first quarter featured several significant new customer investments in the food processing and warehousing sectors. Our existing customer announced a $500 million expansion of its facility in southern Idaho, increasing production by 50% and adding 500,000 square feet to its plant. The expanded plant will total 1.6 million square feet with 24 production lines making it the largest natural food production facility in the country. In addition, the tractor supply company broke ground on a new distribution center in Nampa. The 865,000 square foot facility represents an investment of nearly 225 million. Many of our large customers are far along in their projects, as you can see the magnitude of two of those projects on slide six. Recall we have another large customer that made a financial commitment and whose load ramp is expected to start in 2029. So you can see interest remains high from businesses looking to locate and expand within Idaho Power's service area. As a reminder, prospective customers would be incremental to both our existing anticipated load growth rates and our capital plans. Turning to slide seven, the five-year forecast for retail sales growth is .3% annually. This forecasted growth continues to drive our need for additional system investments and power purchases to help meet projected load deficits. Like our customers, we're very much in execution mode. We're making great progress on the projects being built to support our customers. Our 80 megawatt 2025 battery project is on track to be operational later this spring along with a 150 megawatt storage agreement. In addition, our Boise Bench battery storage project was recently permitted. Our agreements on the 600 megawatt jackalope wind project, 300 megawatts of which will become our first company-owned wind resource are pending approval from the Idaho Commission. A solar PPA project associated with our Clean Energy Your Way program also came online. Our update on the ongoing RFP process for 2028 is on slide eight. On March 31st, the OPUC acknowledged the 2028 final shortlist which includes both owned resources and third-party projects. We're currently working through negotiating and contracting process and we anticipate providing an update later this year. Transmission is also vital to meeting demand and our three major projects are highlighted on slide nine. We're working towards breaking ground on the Boardman to Hemingway project this year with an anticipated in-service date as early as 2027. As I mentioned on the year-end call, we've also entered into an agreement to become a partial owner of the Swift North project. We expect construction to begin as early as this year and take approximately two years to complete. The Gateway West transmission line also remains in our plans. We've initiated permitting and preliminary design activities and are coordinating with Pacific Corps on the timing to best meet customer and system needs. We're pressing full speed ahead on bringing these important projects online to help meet customer demands. As we work to put steel in the ground on new infrastructure projects, we've had a lot of questions about tariffs and executive orders. Idaho Power is actively monitoring the situation as we remain focused on affordability for our customers. We've reviewed countries of origin for our supplies, the potential impacts, and alternative plans to mitigate those impacts. Tariffs on battery storage assets in particular are something we're monitoring because we have several projects in progress. At the same time, we're committed to meeting customer demand and must have the energy and capacity available when and where our customers need it. And switching resources for in-process projects is almost impossible given the demands on our system. Turning to regulatory matters, we submitted the Idaho Commission a notice of intent to file a general rate case in Idaho as early as the end of May. We expect the process for this full general rate case to take approximately seven months, with rates effective no earlier than January 2026. We expect this comprehensive filing will be similar to the full general rate case we filed in 2023. This filing is necessary to recover on the capital investments we've been making to keep our system safe and reliable. We shared some good news with our customers this spring. The combination of the annual power cost and fixed cost adjustments, along with the filing related to additional collection of AFUDC, resulted in Idaho Power requesting a substantial rate decrease for all Idaho customers. It would be a net .3% decrease for residential customers. The power cost adjustment rate decrease was largely due to completing the final year of collection of the 2023 PCA. The AFUDC filing requests recovery of an additional $30 million of financing costs annually related to the investments we've made in licensing the health canning complex. The intent of this filing is to provide incremental cash collection and mitigate future rate impacts once the license is received. We've also requested a price decrease for Oregon customers and our annual spring power cost adjustment. Shifting our attention to slide ten, we receive good news from this year's legislative session in Idaho with Governor Little signing the wildfire standard of care act. Under this new law, commission approved wildfire mitigation plans will establish the standard of care and facilitate access to land for wildfire mitigation work. Some additional details on the legislation are in the 10Q. Idaho Power has had a wildfire mitigation plan, which includes PSPS, in place for several years. And we continue to actively enhance our plan as we pilot new technologies and approaches. I'll close with a look at hydro conditions. We had a great winter with heavy snow in the mountains, in the mountain ranges that helped fuel our 17 hydroelectric projects on the Snake River and its tributaries. Our snowpack currently sits at 108% of normal, which bodes well for another year of solid reservoir storage and ability for us to generate reliable, affordable hydropower. And with that, I will hand the presentation over to Brian for an overview of our financial results.

Hey, thanks Lisa. Hi, everyone. I'm going to start on slide 11, which has our reconciliation of first quarter results. As you can see, Idaho Corp's net income increased $11.4 million for the first quarter this year, when compared with the first quarter last year. And to summarize the quarter, the increase was mainly driven by Idaho Power's higher retail revenues from the January 1st rate case increase, from customer growth and from recording incremental tax credits this year under the Idaho regulatory mechanism. Those benefits, though, were partially offset by higher depreciation and interest expense from our infrastructure project. And I'd expect to see those trends continue throughout the year. Getting into specifics, a net increase in retail revenues per megawatt hour, which is net of power cost adjustment mechanisms, increased operating income by $11.3 million on a relative basis. This benefit was mostly from the increase in Idaho base rates from the limited issue rate case Idaho Power file last year. Customer growth increased operating income by $7.3 million, with no slowdown in customer growth during the past year. Usage for retail customer was relatively consistent quarter over quarter. Residential usage per customer increased, because lower temperatures in the first quarter this year resulted in residential customers using more energy for heating purposes. But that increase was offset by a slight decrease in industrial usage per customer and the effects of customer mix changes, with some customers moving between rate classes with different rate structures. Last, on the revenue side, an increase in the deferral of revenues through the fixed cost adjustment mechanism reduced retail revenues slightly. Other O&M expenses in the first quarter this year were $7.2 million higher. This was partially related to a roughly $3 million increase in wildfire mitigation program and related insurance expenses. They also increased $1.8 million due to a decrease in grant funding for maintenance work, compared to the prior year's first quarter, and then standard labor related costs also contributed to the increase. Depreciation expense increased $5.8 million for the year, which was an expected increase from our continued investment. And on a net basis, other changes in operating revenues and expenses increased operating income by $1.9 million. That resulted primarily from a decrease in Idaho Power's share of net power supply expenses that weren't deferred for future recovery and rates. That's thanks to less volatile natural gas and power market prices in the quarter. On a net basis, non-operating expense increased $2.2 million in the first quarter. Higher long-term debt balances and an increase in interest that Idaho Power is required to pay on transmission customer deposits were what contributed to the increase. And this was partially offset by an increase in AFU-DC, because the average construction work in progress balance was higher. The decrease in income tax expense that you see was mostly the result of an increase in additional ADITC amortization. Based on current expectations of full year financial results, Idaho Power recorded $19.3 million of additional ADITC amortization under the Idaho regulatory settlement stipulation during the first quarter. That was compared with $12.5 million of additional ADITC amortization in the first quarter last year. And remember, we record the ADITCs and the And remember, we record the ADITCs And remember, we record the ADITCs and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the and the

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Yeah, so when we, when new loads would come on, come into the, making a request to us, it would depend on what year they would start for sure. But it's possible that if, you know, we have a number of projects that would meet a need as the need changes, we could certainly contract with those as well. So, but if the customer needs are beyond that in time or amount, we would, we may have to, you know, do some other kind of IRP. Yeah, it's just sort of a, we have to wait and see what is real before we would make that kind of commitment.

Okay, got it. And I think on the last call, you discussed that contract negotiations were ongoing with another data center. Is that still the updated status, or is there anything that's transpired since then?

Yeah, that's, that is still ongoing.

Okay, and then, you know, it looks like as you're transmitting, you know, you highlighted three transmission projects, right? And you can look at your CAPEX forecast, and there are some, you know, incremental investments there. How should we think about the timely recovery of those types of projects? Would that be separate filings from your, you know, base rate filings, or how, you know, confident are you for timely recovery of some of these kind of, you know, larger projects?

Sorry about that. Sorry, of course. We're not looking at each other.

Yeah, so I think at this point, we are looking, this is Tim Tatum from Regulatory Affairs, looking at the rate case and other potential mechanisms to help provide more timely cost recovery of these investments. As I mentioned earlier, those methods that are still in the process of being developed and evaluated internally, but our efforts to reduce regulatory lag, provide more timely cost recovery, are certainly underway and we're hopeful for success in that area. And Brian, what I would add,

this is Brian, you know, we haven't shied away from one-off cases in the past. You've seen us do quite a few of them, but to the extent, the in-service data of a transmission line lined up well with a, you know, a general rate case or some form of tracking mechanism, that's another avenue that we have. So I'd say all options are on the table for those larger transmission projects at this point.

Okay, great. Les, could you just remind us how much capacity is in the short list that was acknowledged by the OPUC for the 2028 RFP?

Adam, do you have that number?

I don't have that exact number. I mean, it was several hundred megawatts, maybe even more than that. And just as a reminder, there was a idle power project on that list as well for 2028. It was a fair amount of projects. All

right, great.

Thank

you very much.

Thank you. Your next question comes from the line of Anthony Crowdle with Mizzou. Please go ahead. Hi, Anthony. Hey, good afternoon,

team. Sorry. I think those guys asked all nine of my questions. Just, I guess, a quick follow-up was just on the wildfire legislation. Just anything in the legislation you guys were hoping to get or the utilities in the state were hoping together that were not, that was not included in what passed?

Well, I feel like we were really happy that it passed at all, to be quite honest. So I can't think of anything offhand that we wanted that we ultimately didn't get. We knew that this is a first step at trying to define the standard of care, and that's essentially what this bill did. Is there anything you would add, Julia?

I think that this bill does a really great job of establishing a first step and establishing that standard of care, like Lisa mentioned. There was an earlier run of the bill that did not go through. I think that the bill that ultimately passed contained the majority of the protections that we were seeking to achieve. So I do think that it's a great result and we were able to get different industry groups comfortable with it with the final version that

passed. Do you see the company in the future looking to push for a fund? It seems that, you know, I know every state has their own issues with respect to wildfire, but it seems investors, you know, I think in another state they're trying to get a fund going. It didn't happen. Or it's not moving the legislature. Is that something that's on the radar in Idaho? We don't believe so.

It was certainly something that we discussed. The hard part is that Idaho is very small, and so, you know, the amount of money that would be needed to create a fund would fall on a few people. So, you know, when you have the state of California that, you know, can put billions of dollars into a fund, it's not really something that Idaho could do. And then it was, well, do you look at a multi-state sort of arrangement? But then that's always the sort of, well, who pays and who gets the benefit? And so it wasn't one that really we thought was something we could do now, but it's something we could certainly think about. But it's also important to remember we do have insurance, and, you know, there might be other strategies like a captive insurance product or something along those lines.

Great. That's all I had. Thanks for taking my questions.

Of course. Thanks for calling in. Thanks, Anthony.

And a final opportunity, press star one to signal for a question, and we'll pause for just a moment. That concludes the question and answer session for today. Ms. Groh, I will turn the conference back to you.

Well, thank you again for everyone joining us today, and we really appreciate your continued interest in IDA-CORE, and we hope you have a great evening. Thank you.