IDACORP, Inc. Announces Year-End and Fourth-Quarter 2014 Results, Initiates 2015 Earnings Guidance
Last update: 19/02/2015 8:00:17 am
IDACORP, Inc. Announces Year-End and Fourth Quarter 2014 Results, Initiates 2015 Earnings Guidance
PR Newswire
BOISE, Idaho, Feb. 19, 2015
BOISE, Idaho, Feb. 19, 2015 /PRNewswire/ -- IDACORP, Inc. (NYSE: IDA) reported 2014 net income attributable to IDACORP of $193.5 million, or $3.85 per diluted share, compared with $182.4 million, or $3.64 per diluted share, in 2013. IDACORP recorded fourth quarter net income attributable to IDACORP of $34.6 million, or $0.69 per diluted share, compared with $27.6 million, or $0.55 per diluted share, in the fourth quarter of 2013. IDACORP is initiating 2015 full year earnings guidance in the range of $3.65 to $3.80 per diluted share and is not expected to use any additional accumulated deferred investment tax credits in 2015 under the Idaho regulatory settlement.
Idaho Power Company, IDACORP's principal operating subsidiary, reported 2014 net income of $189.4 million compared with $176.7 million in 2013, and net income of $34.2 million in the fourth quarter of 2014, compared with net income of $27.4 million for the same period in 2013.
"2014 was another successful year for our company--our seventh consecutive year of earnings growth," said IDACORP, Inc. President and CEO Darrel Anderson. "Our improved results were largely due to income tax benefits related to tax method changes combined with our continued focus on executing business optimization initiatives and actively managing costs. Operationally, weather conditions were more moderate than in 2013, which reduced sales volumes compared to last year, though continued growth in our customer base partially offset the weather-related impacts.
"Idaho Power's 2014 return on year-end equity in the Idaho jurisdiction exceeded 10.5 percent, so Idaho Power will share earnings of approximately $25 million with Idaho customers under the Idaho regulatory settlement.
"Today IDACORP is initiating 2015 full-year earnings per share guidance in the range of $3.65 to $3.80. This estimate reflects continued benefits from tax method changes, normal weather conditions, and ongoing cost management," added Anderson.
Performance Summary
A summary of financial highlights for the years ended December 31, 2014, 2013, and 2012 is as follows (in thousands except per share amounts):
Year Ended December 31, ----------------------------- ------------------------------ 2014 2013 2012 ----------------------------- -------- -------- -------- Idaho Power net income $189,387 $176,741 $168,168 Net income attributable to IDACORP, Inc. $193,480 $182,417 $173,014 Average outstanding shares -- diluted (000's) 50,199 50,126 50,010 IDACORP, Inc. earnings per diluted share $ 3.85 $ 3.64 $ 3.46 ------------------------------ ------- ------- -------
The table below provides a reconciliation of net income attributable to IDACORP for the year ended December 31, 2014 to the year ended December 31, 2013 (items are in millions and are before tax unless otherwise noted):
Net income attributable to IDACORP, Inc. - December 31, 2013 $182.4 Change in Idaho Power net income: Decreased sales volumes attributable to usage per customer, net of associated power supply costs and power cost adjustment (PCA) mechanism impacts $(38.1) Increased sales volumes attributable to customer growth, net of associated power supply costs and PCA mechanism impacts 9.1 Increased labor-related expenses (4.6) Increased depreciation, property tax, and other (net) (3.8) Greater sharing-related costs reflected as pension expense and revenue sharing (0.6) ------- Decrease in Idaho Power operating income (38.0) Increase in allowance for funds used during construction (AFUDC) 3.9 Gains on sale of investments in 2013, not repeated in 2014 (11.6) Changes in other non-operating income and expenses 1.6 Decreased income taxes due to tax method changes for years prior to 2014 29.1 Decreased income taxes due to greater capitalized repairs deduction in 2014 7.8 Decreased other income tax expense 19.8 ------- Total increase in Idaho Power net income 12.6 Other net changes (net of tax) (1.5) ------------------------------------------------- ------ Net income attributable to IDACORP, Inc. - December 31, 2014 $193.5 ================================================= =====
IDACORP's net income increased $11.1 million for the year ended December 31, 2014 when compared with 2013. Idaho Power's operating income decreased by $38.0 million for 2014 compared with 2013. Lower overall usage per customer, primarily due to a return to moderate weather conditions in 2014 compared with 2013, decreased operating income by $38.1 million. These weather-related decreases were partially offset by increased sales volumes associated with continued growth in the number of Idaho Power customers, which increased operating income by $9.1 million when compared with 2013. The number of Idaho Power's general business customers increased by 1.4 percent from December 31, 2013 to December 31, 2014. Increases in labor-related expenses, depreciation, property taxes, and other items combined to decrease operating income by $8.4 million in 2014 when compared with 2013.
In 2014, Idaho Power recorded a $3.9 million increase in AFUDC related to greater average construction work in progress, while in 2013 it recorded a gain of $11.6 million related to the sale of investments in securities that was not repeated in 2014. The net decrease in income tax expense of $56.7 million more than offset the lower pre-tax income in 2014.
Effect of Income Taxes and Tax Method Changes on Results
Income tax accounting method changes for years prior to 2014 increased net income by $29.1 million for 2014 when compared with 2013. In 2013, Idaho Power recorded $4.6 million of income tax expense as a result of a cumulative method change adjustment related to its capitalized repairs deduction for generation assets for years prior to 2013. By contrast, during 2014, Idaho Power recorded an income tax benefit of $24.5 million related to finalization of its method change adjustment for generation assets for years prior to 2014 as well as modifications to its overall capitalized repairs deduction tax method as agreed to with the U.S. Internal Revenue Service. The income tax benefit related to Idaho Power's 2014 capitalized repairs deduction was $7.8 million greater than 2013, due to the impact of the method changes and the amount and type of 2014 capital additions. Income tax expense at Idaho Power not related to method changes was $19.8 million lower in 2014 than in 2013, primarily due to lower pre-tax earnings in 2014.
Effect of Sharing Mechanism on Results
During 2014, Idaho Power recorded a total of $24.7 million related to a December 2011 Idaho regulatory settlement agreement, which requires sharing with Idaho customers of a portion of 2014 earnings exceeding a 10.0 percent return on year-end equity in the Idaho jurisdiction. In accordance with the terms of the settlement agreement, of the $24.7 million, $16.7 million was recorded as additional pension expense and $8.0 million was recorded as a provision against current revenues to be refunded to customers through a future rate reduction. Idaho Power recorded similar amounts in 2013. A total of $118 million in earnings has been shared with Idaho customers through sharing mechanisms since 2009. The impact of sharing on 2014 and 2013 results is reflected in the following table (in millions):
2014 2013 Variance ------------------------------- ------- ------- ------------ Additional pension expense funded through sharing $(16.7) $(16.5) $ (0.2) Provision against current revenue as a result of sharing (8.0) (7.6) (0.4) -------------------------------- ------- ------- ---------- Total $(24.7) $(24.1) $ (0.6) ================================ ====== ====== ======
2015 Annual Earnings Guidance and Key Operating and Financial Metrics
IDACORP is initiating its earnings guidance estimate for 2015 in a range of $3.65 to $3.80 per diluted share. The 2015 guidance incorporates the key operating and financial assumptions listed below:
2015 Estimate(1) 2014 Actual ------------------------------------------ ---------------- ----------- Idaho Power Operating & Maintenance Expense (millions) $340-$350 $355 Idaho Power Additional Amortization of Accumulated Deferred Investment Tax Credits (millions) None None Idaho Power Capital Expenditures, excluding allowance for funds used during construction (millions) $300-$310 $265 Idaho Power Hydroelectric Generation (MWh)(2) 7.0-9.0 6.2 IDACORP Earnings Guidance (per share) $3.65-$3.80 $3.85 ------------------------------------------- ---------------- ----------- (1) As of February 19, 2015. (2) Based on reservoir storage levels and forecasted weather conditions as of February 19. 2015.
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