Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Idacorp Inc (IDA, Financial) reaffirmed its full-year earnings guidance range of $5.25 to $5.45 per diluted share, indicating stable financial expectations.
- Customer base grew by 2.5% since last year's first quarter, reflecting strong market demand and potential for increased revenue.
- Hydropower generation forecast for the year has improved, which could lead to lower operational costs and more sustainable energy production.
- Settlement in principle reached with Oregon Commission staff and other parties, which is expected to result in favorable price changes effective this October.
- Idacorp Inc (IDA) is actively engaging in significant infrastructure projects, including a large battery storage project and the conversion of coal-fired units to natural gas, enhancing sustainability and operational efficiency.
Negative Points
- First quarter 2024 earnings per share decreased to $0.95 from $1.11 in the same quarter last year, indicating a drop in profitability.
- Experienced a $9.1 million decrease in usage per retail customer, which negatively impacted earnings by approximately $0.19 per EPS compared to the first quarter of last year.
- Transmission wheeling-related revenues decreased by $2.8 million due to new regulatory mechanisms, affecting overall revenue generation.
- Total other O&M expenses increased by $13.8 million compared to the first quarter of last year, driven by higher costs in wildfire mitigation and related insurance expenses.
- Regulatory permitting delays on the Boardman to Hemingway project are likely to push the in-service date to 2027, potentially delaying benefits from this investment.
Q & A Highlights
Q: You've been clear in the past about maybe your reluctance to issue an EPS CAGR, but is there any forms of additional guidance or disclosures just maybe a forward financing plan even in a range form that you'll be open to initiating at some point to provide additional clarity?
A: (Brian R. Buckham - IDACORP, Inc. - Senior VP, CFO & Treasurer) Yes, we plan to update our capital plan and CapEx forecast with the results of the RFP and other changes in terms of project timing. We'll likely reissue a rate base CAGR on that as well. We also included QIP so you can see the changes in the QIP balance over time for the next 5 years. In terms of an actual EPS forecast, our plan is to execute well in the regulatory arena and see where that takes us.
Q: How should we think about the cadence of these updates? I know you mentioned in the second quarter call, should we expect that that's sort of the entire update for the year? Or I know last year, you had the third quarter and then the fourth quarter update. Can you just provide sort of any clarity on what the timing of updates throughout the year might look like?
A: (Lisa A. Grow - IDACORP, Inc. - CEO, President & Director) The timing of updates will depend on how the negotiations go from the RFPs that we're currently involved with. Our hope is that an update would be available in the second quarter, but we don't have a specific cadence for announcements. It's likely that any significant updates would not occur until early next year.
Q: Can you provide any detail on what motivated the decision to file a limited scope case versus a full case this time around? Could we potentially see this type of approach utilized more frequently in the coming years with maybe some bigger updates every few years? Or just sort of any additional detail on what the regulatory strategy might look like going forward?
A: (Lisa A. Grow - IDACORP, Inc. - CEO, President & Director) Each year we evaluate our needs. In this case, since we had just finished the 2023 rate case and used a 13-month average on the capital investments, we felt like we had to come back and shore that up. Also, like all utilities, we're seeing some upward pressure on labor. So we felt like it was more of a true-up. The approach we take depends on what's going on in our jurisdictions at the time. Affordability is something we're really thinking carefully about.
Q: What I would add to that is one thing that you've seen our track record of managing O&M, pretty good that we had a 1% CAGR for quite a while. And part of that is when we look at our case going forward, there's certainly incremental L&M, but our mantra is to control that going forward. So if you look at what the building blocks of the rate case would be so long as we continue to be really prudent on our own in spending that helps with the design of the case.
A: (Brian R. Buckham - IDACORP, Inc. - Senior VP, CFO & Treasurer) Also in terms of just regulatory life, we're seeing it mostly in depreciation and interest expense, as I mentioned a while ago, and so a rate base related case to focus on the assets that are in service while they're serving customers, getting recovery on those is one of our focuses for this particular case. If you remember the outcome of our prior case, we did shore up cash quite a bit in terms of amortizing off some of the regulatory assets we have, notably pension and the wildfire mitigation plan. So since we've shored up that cash component of the case, really, it becomes a rate base that we're particularly focused on, given the high CapEx that we have and that we're going to see for a long time going forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
