Executive Summary / Key Takeaways

• IDACORP, Inc. (NYSE:IDA) is experiencing unprecedented customer and load growth, particularly from large industrial and commercial clients like Micron , driving a significant expansion of its utility infrastructure.
• The company's core investment thesis is anchored in its robust capital expenditure plan, projected to double its average annual spend to $1.1 billion through 2029, and its ability to translate these investments into a more than doubling of its rate base over five years.
• A constructive regulatory environment in Idaho, evidenced by a recent rate case settlement and mechanisms like the Additional Deferred Investment Tax Credit (ADITC) amortization and Allowance for Funds Used During Construction (AFUDC) pre-collection, is crucial for timely cost recovery and maintaining financial health.
• IDACORP's diversified generation mix, featuring a strong foundation in reliable hydropower complemented by strategic investments in battery storage and natural gas, positions it to meet escalating demand while balancing affordability and grid stability.
• Despite challenges such as permitting delays and inflationary pressures, IDACORP's proactive resource planning, conservative load forecasting, and strong balance sheet management underpin its outlook for leading earnings growth and quality in the utility sector.

Powering the Pacific Northwest: IDACORP's Strategic Expansion Amidst Unprecedented Demand

IDACORP, Inc., through its principal operating subsidiary Idaho Power Company, stands as a critical energy provider across approximately 24,000 square miles in southern Idaho and eastern Oregon. Founded in 1915, Idaho Power has built a legacy of reliable electric service, evolving into a holding company structure in 1998 to encompass diversified interests including small hydropower projects and real estate tax credit investments. The company's overarching strategy is currently defined by an imperative to meet an extraordinary surge in customer and energy demand while upholding its commitment to affordability and grid reliability. This dynamic environment, characterized by rapid industrial expansion and population influx, positions IDACORP at the forefront of regional economic development.

The broader utility industry is undergoing significant transformation, driven by trends such as increasing electrification, the burgeoning demand from data centers and artificial intelligence (AI) technologies, and a sustained focus on grid modernization. Reports highlight a substantial increase in U.S. power needs, particularly from AI and data centers, which presents both immense opportunities and complex challenges for utilities. IDACORP's service territory is a microcosm of this trend, attracting major technology and manufacturing players. Against this backdrop, IDACORP's competitive landscape includes regional peers such as Avista Corporation (AVA), Portland General Electric (POR), and Black Hills Corporation (BKH). While precise, directly comparable market share figures for all niche competitors are not publicly detailed, IDACORP maintains a significant presence in its core service areas. Its operational execution, particularly through its reliable hydropower infrastructure, provides an edge in efficiency and customer loyalty. However, it faces competitive pressures from rivals like Portland General Electric, which demonstrates a more aggressive stance in renewable energy integration, and Avista, with potentially broader diversification. IDACORP's strategic focus on its core strengths and regional growth is key to its competitive positioning.

Technological Edge: Hydropower, Storage, and Flexible Generation

IDACORP's core technological differentiation lies in its extensive hydropower generation, which constitutes over one-half of Idaho Power's nameplate generation capacity. This established technology offers several tangible benefits. Hydropower provides a highly reliable and dispatchable source of energy, crucial for maintaining grid stability and meeting peak demand. Its operational costs are relatively low once constructed, contributing significantly to Idaho Power's ability to offer customer bills that are 20% to 30% lower than the national average. Furthermore, as a clean energy source, hydropower aligns with evolving environmental objectives.

Complementing its hydropower foundation, IDACORP is strategically investing in modern energy technologies. The company brought 80 megawatts (MW) of company-owned battery storage facilities online, with another 250 MW commencing construction, and a 20-year agreement for a third-party 150 MW battery storage facility also began operations. These battery storage solutions offer critical flexibility and dispatchable capacity, essential for integrating intermittent renewable resources and managing the volatility of rapidly increasing load demand. Looking ahead, the 2025 Integrated Resource Plan (IRP) explicitly recommends more gas-fired resources, such as the planned 167 MW expansion of the Bennett Mountain natural gas generation facility, to provide additional system flexibility and dispatchable capacity. This pragmatic approach to technology, blending proven hydropower with agile battery storage and responsive natural gas, forms a robust and adaptable generation portfolio. For investors, this technological roadmap translates into a resilient operational model capable of supporting high load growth, maintaining cost-effectiveness, and enhancing grid reliability, thereby solidifying IDACORP's competitive moat and long-term earnings quality.

Unprecedented Growth and Strategic Infrastructure Build-Out

IDACORP is experiencing a period of remarkable expansion, with its customer base growing by 2.3% over the twelve months ended September 30, 2025. This growth is not merely residential; it is significantly driven by "robust activity across several sectors, including manufacturing, food processing, distribution, warehousing and technology". Micron (MU)'s two fabrication projects, representing the largest private capital investment in Idaho's history, are a cornerstone of this industrial engagement, with a second high-volume fabrication plant announced in June 2025. The company's "new large load pipeline remains very robust," with prospective customers potentially adding demand incremental to current forecasts.

To meet this escalating demand, IDACORP has embarked on an ambitious capital expenditure program. The company forecasts spending between $1 billion and $1.1 billion on CapEx in 2025, with a total of $5.6 billion projected for 2025 through 2029, effectively doubling its average annual spend compared to the prior five years. This investment is translating directly into tangible assets, with Idaho Power's Construction Work in Progress (QIP) balance reaching a "fairly staggering $1.4 billion at quarter end" in Q2 2025, and IDACORP's total assets exceeding $10 billion for the first time in Q3 2025. Key infrastructure projects include:

• Transmission Lines: Construction on the Boardman-to-Hemingway (B2H) transmission line began in June 2025, with an anticipated in-service date of late 2027. Idaho Power also committed to an approximate 11% ownership interest and additional capacity entitlement in the Southwest Intertie Project-North (SWIP-N) in February 2025, with construction expected to start in 2026. The Gateway West (GWW) transmission line is also progressing, with a portion in Idaho expected to be completed in 2028 or later. These projects are vital for accessing reliable and affordable energy across the Northwest.
• Generation Resources: Beyond battery storage, Idaho Power is planning a 167 MW expansion of its Bennett Mountain natural gas generation facility, with a pre-permit to construct received in September 2025 and an expected in-service date in 2028. This comes as the company terminated agreements for the 600 MW Jackalope Wind Project in September 2025 due to permitting delays and federal land use policy uncertainties, prompting a search for alternative capacity. The company also has agreements to purchase output from a 100 MW solar facility coupled with 100 MW battery storage and an 80 MW solar facility, both slated for online dates in June 2027.

Financial Performance and Outlook

IDACORP's financial performance in 2025 reflects the positive impact of its strategic initiatives and a supportive regulatory environment. For the third quarter of 2025, net income attributable to IDACORP increased by $10.8 million to $124.4 million, compared to $113.6 million in the third quarter of 2024. Diluted earnings per share for the quarter were $2.26, up from $2.12 in the prior year period. For the first nine months of 2025, net income attributable to IDACORP rose by $28.6 million to $279.9 million, compared to $251.3 million in the same period of 2024, with diluted EPS reaching $5.13.

These gains were primarily driven by a $17.6 million net increase in retail revenues per MWh in Q3 2025, largely due to an overall increase in Idaho base rates effective January 1, 2025. Customer growth further contributed $7.8 million to operating income in Q3 2025. However, increased operating expenses, including $4.2 million higher Other Operations and Maintenance (O&M) expenses in Q3 2025 due to "inflationary pressures on labor-related costs, professional services, and an increase in wildfire mitigation program and related insurance expenses," partially offset these benefits. Depreciation and amortization expense also rose by $8.1 million in Q3 2025, reflecting the growing plant-in-service. Non-operating expenses increased by $9.8 million in Q3 2025, influenced by higher long-term debt balances and increased interest on transmission customer deposits and a new finance lease.

IDACORP's liquidity remains robust, supported by strong operating cash flows, which for the nine months ended September 30, 2025, were $464.1 million, an increase of $6 million from the prior year. The company maintains a target capital structure of approximately 50% debt and 50% equity, with leverage ratios of 52% for IDACORP and 54% for Idaho Power as of September 30, 2025, well within covenant limits. To fund its substantial CapEx, IDACORP has actively utilized financing strategies, including executing forward sale agreements (FSAs) for $575 million in common stock in May 2025, with physical settlement expected by November 9, 2026. Idaho Power also issued $400 million in first mortgage bonds in 2025. Management anticipates needing approximately $1.4 billion in equity and $2.2 billion in debt for capital expenditures from 2025 through 2029.

Looking ahead, IDACORP has raised its full-year 2025 diluted EPS guidance range to $5.80 to $5.90 per share. This outlook incorporates an expected use of $50 million to $60 million in additional tax credit amortization for the full year, a reduction from previous estimates, signaling strong operational performance. O&M expenses are projected to be in the range of $470 million to $480 million for the full year 2025. The 5-year forecasted annual growth rate for retail sales is an impressive 8.3%. Management is confident in its ability to achieve "among the leading earnings growth and earnings quality profiles in the industry over our forecast window".

Regulatory Landscape and Risk Mitigation

The regulatory environment in Idaho is a critical component of IDACORP's investment thesis. The company actively engages with regulators to ensure timely cost recovery and a reasonable return on investment. A significant development is the settlement stipulation filed on October 24, 2025, for Idaho Power's 2025 Idaho general rate case. If approved, this settlement will increase annual Idaho-jurisdictional retail revenue by approximately $110 million, or 7.48%, effective January 1, 2026, with an authorized return on equity (ROE) of 9.6% and a $4.9 billion Idaho-jurisdictional rate base. The ADITC mechanism, which allows for accelerated amortization of investment tax credits to support earnings, remains in place with an annual cap of $55 million from 2026. The Idaho Commission's approval of an additional $29.7 million annually in cash collection of AFUDC related to the Hells Canyon Complex (HCC) relicensing further demonstrates regulatory support for the company's financial health.

Despite these strengths, IDACORP faces several pertinent risks. Regulatory lag, the delay between capital investment and rate recovery, remains a challenge, particularly in a high CapEx environment. Permitting delays, as seen with the termination of the Jackalope Wind Project, can disrupt resource procurement and project timelines. The "rapid addition of new industrial and commercial customer load" also presents risks of power demand potentially exceeding available supply. Inflationary pressures are driving up O&M costs, and environmental regulations, including the detection of invasive Quagga mussels in the Snake River system, pose potential operational and financial impacts. Idaho Power's Wildfire Mitigation Plan, now formalized under the Idaho Wildfire Standard of Care Act, aims to reduce wildfire risk and strengthen system resiliency. The company's power cost adjustment mechanisms in Idaho and Oregon largely mitigate the earnings impact of fluctuations in power supply costs.

Conclusion

IDACORP is at an inflection point, transforming its operations to meet an unprecedented surge in energy demand across its service territory. The core investment thesis is compelling: a utility with a strong foundation in reliable hydropower is strategically investing billions in new transmission and generation infrastructure, including battery storage and natural gas, to support robust customer growth. The recent Idaho general rate case settlement and ongoing regulatory support for cost recovery mechanisms underscore a constructive environment for translating these investments into shareholder value.

While challenges such as regulatory lag, permitting complexities, and inflationary pressures persist, IDACORP's proactive management, conservative forecasting, and commitment to customer affordability provide a solid framework for mitigating these risks. The company's outlook for leading earnings growth and quality, driven by a doubling of its rate base and strategic capital deployment, positions it as an attractive opportunity for discerning investors seeking exposure to a growing, well-managed utility in a high-demand region.