Strong Earnings Streak Continues for IDACORP IDACORP, Inc. (NYSE: IDA) marked its 17th consecutive year of earnings growth in Q4 2024, reinforcing its strong financial position. Idaho Power, its primary subsidiary, reported a stellar 99.96% reliability rate despite rising energy demand. The company served nearly 650,000 customers, reflecting an impressive 2.6% customer growth in 2024. Moody’s forecasts a 4.5% GDP growth in Idaho Power’s service area for 2025, indicating a robust economic outlook.
Strategic Growth and Infrastructure Expansion CEO Lisa Grow highlighted key projects incorporated into the company’s load forecast. These include a signed agreement with a large energy-intensive customer and infrastructure upgrades for Perpetua Resources’ mining operations. These initiatives are expected to drive significant load growth, strengthening Idaho Power’s long-term expansion strategy.
Financial Outlook: CapEx Surge and Rate Adjustments CFO Brian Buckham emphasized the importance of customer growth and rate adjustments as major earnings drivers. IDACORP announced a $5.6 billion capital expenditure (CapEx) plan for 2025-2029, effectively doubling the previous five-year average annual spend. To address regulatory lag, the company plans a general rate case filing in 2025.
For 2025, IDACORP’s earnings guidance is projected between $5.65 and $5.85 per diluted share. Additionally, Idaho Power anticipates utilizing between $60 million and $77 million in tax credit amortization to support financial stability.
Massive Investment in Renewable Energy and Infrastructure IDACORP is set to invest $1 billion to $1.1 billion in CapEx in 2025, aligning with its broader five-year forecast. A substantial portion of this investment will be allocated to wind, solar, and battery storage projects to counter projected load deficits. The company expects retail sales growth to increase to 8.3% annually over the next five years, an upgrade from the previous estimate of 7.7%.
With favorable snowpack conditions, hydropower generation is projected to range between 6.5 million and 8.5 million megawatt hours in 2025, reinforcing Idaho Power’s commitment to renewable energy.
Financial Performance and Key Metrics For 2024, IDACORP reported a diluted EPS of $5.50, up from $5.14 in 2023. Net income surged by $28 million year-over-year, fueled by higher customer growth and rate increases. Operating income benefited from reduced net power supply expenses, favorable energy market prices, and higher wholesale energy sales. Additionally, operating cash flow saw a notable increase, reaching nearly $600 million in 2024.
However, rising operational costs remain a concern. Other O&M expenses rose by $61.1 million due to pension-related expenditures and wildfire mitigation efforts, while depreciation expenses climbed by $28.1 million, reflecting ongoing infrastructure investments.
Analyst Queries: Regulatory Lag and Load Growth Under Scrutiny During the Q&A session, analysts probed management on key concerns:
- Alex Mortimer, Mizuho Securities: Inquired about replenishing the ADITC mechanism. CEO Lisa Grow indicated that the company is exploring options, including integrating it into the upcoming general rate case or through a separate filing.
- David Arcaro, Morgan Stanley: Sought insights into regulatory mechanisms supporting load growth. CFO Brian Buckham reassured that measures to mitigate regulatory lag are under active review.
- Chris Ellinghaus, SWS: Asked about timelines for updates on large-load customers. COO Adam Richins responded that decisions are expected in the coming months, based on studies completed in October.
Market Sentiment: Cautious Optimism Prevails Investor sentiment remains neutral to slightly positive. While analysts acknowledge IDACORP’s strong fundamentals and growth potential, concerns persist regarding regulatory lag, financing risks, and the impact of energy-intensive customers on infrastructure timelines.
Management maintained a confident tone, focusing on strategic growth and infrastructure execution. However, a more cautious stance emerged in addressing regulatory and financial challenges.
Comparing Q4 2024 to Previous Quarters
- The annual retail sales growth forecast was raised from 7.7% to 8.3%, reflecting stronger-than-expected demand.
- Management’s tone remained confident but showed a heightened emphasis on regulatory mitigation and CapEx financing.
- Analysts’ concerns shifted toward the sustainability of large-load customer growth and the impact of rate adjustments on future earnings.
Key Challenges and Risks Ahead
- Regulatory Lag: The need for frequent rate filings remains a challenge. IDACORP is prioritizing mechanisms that align rate base inclusion with infrastructure investments.
- CapEx Financing Risks: The $5.6 billion CapEx plan requires $1.4 billion in equity and $2.2 billion in debt over five years, raising concerns about potential shareholder dilution and balance sheet stability.
- Load Growth Uncertainty: While large-load customers drive expansion, infrastructure timelines may face strain. The company aims to mitigate risks through upfront payments and special contracts.
IDACORP’s earnings call reinforced its long-term growth trajectory, bolstered by strong customer expansion, major infrastructure investments, and renewable energy integration. However, addressing regulatory and financing challenges remains critical for sustained success in the evolving energy market.
