IDACORP INC Q3 FY2026 earnings call

• Strong Customer Growth & Demand: Customer count increased 2.2% year-over-year, with industrial revenues jumping 27%. Preliminary load growth for the 2027 Integrated Resource Plan (IRP) is estimated at 8.9%, projecting load to grow from ~19,000 GWh in 2027 to ~29,000 GWh by 2032.
• Major Project Executions: Meta’s data center south of Boise began operations in September. Micron Fab 1 and Fab 2 expansions are progressing well. Idaho Power broke ground on transmission facilities for Perpetua Resources’ Stibnite critical minerals project and celebrated the opening of Tractor Supply’s distribution center.
• Infrastructure Development: The Boardman to Hemingway (B2H) transmission line is 60% complete, targeting late 2027 in-service. Swift North (Nevada) and Gateway West projects are also advancing. Three natural gas fuel projects are underway: Bennett Mountain (167 MW, 2028), South Hills (222 MW, 2029), and Peregrine (430 MW, 2030).
• Affordability & Regulatory Strategy: Residential rates remain 20-30% below the national average, increasing only 24% since 2016 vs. 41% nationally. The company did not file a general rate case in 2026, citing strong revenue from large contracts that offset inflationary pressures under Idaho’s 'growth pays for growth' model.
• Financing & Capital Structure: IDACORP has pre-funded equity needs via forward sale agreements, maintaining a target 50/50 debt-equity structure. QIP (Qualified Investment Property) exceeded $2.1 billion at quarter-end. Interest rate risk is mitigated by limited long-term refinancing requirements over the next five years.

IDACORP reported diluted earnings per share (EPS) of $2.73 for the third quarter of 2026, up from $2.26 in the same period last year. For the first nine months of 2026, diluted EPS was $5.76, compared to $5.13 in 2025. The primary drivers of this financial performance were a nearly $44 million benefit in retail revenues from customer growth and base rate adjustments, and an almost $12 million increase in operating income from large contract customers. Industrial revenues surged by 27% year-over-year due to new large-scale contracts coming online. The company also benefited from lower property taxes due to Idaho legislative changes and decreased net power supply expenses.

• Earnings Per Share: Raised full-year diluted EPS guidance range to $6.40–$6.50, increasing the bottom by 10 cents and the top by 5 cents. This revision reflects strong Q3 operational results and reduced tax credit amortization.
• Tax Credits: Lowered expected additional Investment Tax Credit (ADITC) amortization for Idaho Power to less than $10 million for the full year, down from previous guidance of less than $15 million.
• Operating Expenses: Full-year O&M expense is guided to be between $535 million and $545 million.
• Capital Expenditures: CapEx spending is expected to remain between $1.3 billion and $1.5 billion, trending toward the high end of the range. An updated forecast will be provided in Q4.
• Hydropower Generation: Expected annual generation is revised to 5.5–6.0 million megawatt-hours based on current hydropower conditions.

• Interest Rate Volatility: While exposure is currently limited due to low near-term refinancing needs, rising interest rates could impact future financing costs if significant incremental capital expenditure requires additional debt or equity issuance beyond current plans.
• Regulatory Uncertainty: A general rate case is likely in 2027 as broad-customer infrastructure (e.g., B2H, hydro refurbishments) converts from construction to plant-in-service. Delays or unfavorable outcomes in regulatory processes for major projects (like the Oregon sale) could impact timelines.
• Supply Chain Constraints: Challenges persist in procuring breakers, transformers, conductors, and securing Energy, Procurement, and Construction (EPC) contractors, although the company reports strong bidding interest and secured reservations for key turbines.
• Operational Execution Risks: Heavy infrastructure investment increases working capital balances and associated risks. The company must manage the timing of capital deployment against revenue recognition, particularly regarding large contract customers who may delay final ESA signings (e.g., Micron Fab 2).

Q: Regarding the 2032 RFP shortlist which exceeds immediate needs, what triggers contracting beyond committed capacity?

A: Management clarified that contracting can proceed once a customer signs an Energy Service Agreement (ESA) or makes a significant financial commitment, without necessarily waiting for full commission approval. They noted a pipeline of ~5 GW outside current commitments, including promising and study-phase projects, indicating robust future demand beyond signed contracts.

Q: What is the specific composition and timing of the 2032 capacity needs identified in the RFP?

A: The 2032 need is primarily driven by a 432 MW combined cycle gas plant, which ranked as the top project in the RFP. Management indicated that while the 2031 self-build (430 MW advanced simple cycle) is moving forward, the 2032 decision depends on final load evaluations. Capital expenditure for these projects will be spread across years, often requiring upfront spend before in-service dates.

Q: How does the accelerated IRP load growth profile impact future dividend policy and payout ratios?

A: CFO Brian Buckham stated that while the company aims for a 50-60% dividend payout ratio, they do not have a hard minimum floor. Given the massive reinvestment required for infrastructure, dividends may temporarily fall below the target range. However, management expects shareholder support for this reinvestment strategy, anticipating significant 'dividend horsepower' for future distributions once growth stabilizes.

Q: Will IDACORP utilize ADITCs beyond 2026, specifically looking at 2027 and 2028?

A: Management anticipates using ADITCs in 2027 because many plants will convert from construction to service, triggering depreciation without corresponding rate changes to offset lost AFUDC. By 2028, if a rate case filed in mid-2027 is successful, the resulting rate base adjustment should mitigate the need for ADITCs, though usage remains dependent on precise project timing and financing structures.