Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Idacorp Inc (IDA, Financial) reported an increase in third-quarter 2024 diluted earnings per share to $2.12, up from $2.07 in the same period last year.
- The company raised the lower end of its full-year 2024 earnings guidance to a range of $5.35 to $5.45 per diluted share.
- Idacorp Inc (IDA) experienced strong customer growth, with a 2.6% increase in its customer base since last year's third quarter.
- The company set a new record system peak of 3,793 megawatts in July 2024, reflecting robust energy demand.
- Idacorp Inc (IDA) is actively expanding its renewable energy portfolio, including a 300-megawatt wind generation facility, marking its first company-owned wind project.
Negative Points
- Total other O&M expenses increased by $20.3 million in the third quarter, driven by higher pension-related and wildfire mitigation expenses.
- Depreciation expense rose by $5.6 million due to system investments, impacting overall expenses.
- The company anticipates regulatory lag, which may affect earnings growth in the coming years.
- Idacorp Inc (IDA) plans to issue significant external financing, including $1.3 billion in equity and $2 billion in debt from 2025 to 2028, which could impact financial stability.
- The company faces challenges in maintaining affordable rates for customers amid substantial capital expenditure and rate base growth.
Q & A Highlights
Q: Do you expect to be earning around your support level in the coming years, and how should we view the trajectory of tax credit usage?
A: Brian Buckham, CFO, explained that there might be regulatory lag, but it should be consistent year by year. Over time, the inclusion of rate base in rates should eliminate the need to rely on the ADITC mechanism. Regarding tax credits, they have a current balance of about $105 million, with an expectation to use $25 million to $35 million this year.
Q: How do you think about the scale of future generation needs and the split between dispatchable and intermittent resources?
A: Lisa Grow, CEO, emphasized the importance of transmission alongside generation assets. Brian Buckham added that they are adding wind, solar, and batteries, and converting coal fleets to gas. The need for dispatchable resources, especially in winter, is increasing, and they are focusing on this in their IRP.
Q: How do you manage affordability with a 17% rate base growth CAGR?
A: Brian Buckham explained that they conduct a "no harm analysis" to ensure infrastructure costs for large industrial customers are covered by their revenue requirement. Residential rates are expected to track with inflation, while industrial rates will be higher. The CapEx is spread across all customers, but significant portions are allocated to those causing the increase.
Q: What is the expected frequency of rate cases given the significant CapEx program?
A: Lisa Grow indicated that frequent rate cases are expected to reduce regulatory lag due to high capital expenditures. Brian Buckham mentioned the possibility of multiyear arrangements with the commission to manage the cadence of rate changes.
Q: Can you provide insights on dividend growth given the financing needs?
A: Brian Buckham stated that while they slowed the dividend growth rate to reinvest in the business, they aim to return to a 60% to 70% payout ratio over time. Dividend growth may not track earnings annually but is expected to have a steady cadence.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
