Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Idacorp Inc (IDA, Financial) reported strong financial results for Q2 2024, with diluted earnings per share increasing to $1.71 from $1.35 in the same quarter last year.
- The company raised the lower end of its full-year 2024 earnings guidance to a range of $5.30 to $5.45 per diluted share.
- Idacorp Inc (IDA) experienced robust customer growth, with a 2.6% increase in its customer base since last year's second quarter.
- The company achieved a record peak load of 3,793 megawatts on July 22, 2024.
- Idacorp Inc (IDA) is ahead of schedule on major infrastructure projects, including the mega data center in Kuna and the Micron expansion in Boise.
Negative Points
- The company faces regulatory delays, particularly with the Boardman to Hemingway transmission project, which has been pushed to no earlier than 2027.
- Total other O&M expenses increased by $13.8 million in Q2 2024, driven by higher pension-related expenses and wildfire mitigation costs.
- Idacorp Inc (IDA) is experiencing significant wildfire activity, which has led to infrastructure damage and increased operational challenges.
- The company anticipates more frequent rate cases in the future to manage regulatory lag and support its capital program.
- There is uncertainty around the timing and magnitude of future capital expenditures, which could impact financial planning and cash flow.
Q & A Highlights
Q: With the settlement now working through the process, how are you thinking about the timing of the next rate case and the timing of the capital plan and any guidance around rate base?
A: We are hopeful for the approval of the Oregon case soon, with an effective date in October. For the Idaho rate case, we anticipate settlement discussions to start around September or October. Regarding ongoing rate cases, we aim to reduce regulatory lag as much as possible to support our capital program.
Q: Are you planning on tapping the $300 million ATM, or are you looking at other traditional means like straight equity or junior subordinate forwards?
A: We do not foresee an equity need this year but view the ATM program as a flexible financing tool. Depending on the magnitude of equity needs, we could also consider secondary offerings or block trades.
Q: How are you managing O&M expenses given the growth and pressures seen by peers?
A: We focus on innovation, reducing waste, and deploying technology to manage O&M costs. We prioritize maintenance and safety while looking for efficiencies. Our regulatory mechanisms and grant opportunities also help manage O&M expenses.
Q: Can you touch on the pipeline of load looking to connect into your system and its impact on generation needs?
A: We continue to see robust inquiries from various industries, including data centers and manufacturing. We have a firm process to evaluate and serve these needs without negatively impacting existing customers.
Q: How has your system performed during this active wildfire season, and what measures are in place?
A: Despite the active wildfire season, our system has performed well. We have invested significantly in system hardening and work closely with first responders to ensure safety and reliability.
Q: Can you provide any color on the expected cadence of CapEx spend throughout the five-year plan?
A: The timing of CapEx spend is still being negotiated in contracts. The shape of CapEx will depend on the terms of these contracts, but we aim to spread the spend to manage financing effectively.
Q: How do you think about the trajectory of future rate requests given the significant investments anticipated?
A: We aim to keep rate increases manageable, leveraging mechanisms to smooth impacts and focusing on affordability. Our growing load base and regulatory strategies will help manage the trajectory of rate requests.
Q: How does the anticipated increase in CapEx fit with your equity financing plans and credit ratings?
A: We maintain a strong balance sheet and consider various financing options, including traditional debt and equity. Our metrics are targeted to support our credit ratings, and we plan to manage financing to align with our capital needs.
Q: What is the plan for addressing the large balance of construction work in progress (CWIP) and future rate cases?
A: The current CWIP balance includes projects nearing completion, which will reduce as they are placed in service. We plan to file more frequent rate cases to manage regulatory lag and support our capital investments.
Q: How are you managing the impact of regulatory lag on your financial metrics?
A: We are addressing regulatory lag through rate cases and mechanisms like the limited scope rate case in Idaho. This helps align our financial metrics with our capital investments and supports our credit ratings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
