What changed in this filing

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Item 1A. Risk Factors

2022-02-17 compared with 2021-02-18 · 144 added, 116 removed, 246 unchanged (51% of the section changed)

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The circumstances and factors set forth below should not be considered a complete list of potential risks that the companies may encounter.

These risk factors may have a material impact on the business, financial condition, or results of operations of IDACORP and Idaho Power and could cause actual results or outcomes to differ materially from those discussed in any forward-looking statements.

These risk factors, as well as additional risks and uncertainties either not known as of the date of this report or that are currently believed to not be material to the business, may have a material impact on the business, financial condition, or results of operations of IDACORP and Idaho Power and could cause actual results or outcomes to differ materially from those discussed in any forward-looking statements.

These risk factors, as well as other information in this report, including without limitation, in Part II - Item 7 - "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Matters Impacting Future Results" in this report, and information in other reports the companies file with the SEC, may be important to understanding any statement in this 2021 Annual Report or elsewhere and should be considered carefully when making any investment decisions relating to IDACORP or Idaho Power.

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Idaho Power's ability to recover its costs and earn a reasonable rate of return can be affected by many regulatory factors, including the timing difference between when Idaho Power incurs costs and when Idaho Power recovers those costs in customers’ rates (often called "regulatory lag" in the utility industry), and differences between the costs included in rates and the amount of actual costs incurred.

Idaho Power is often required to incur costs before the IPUC, OPUC, or FERC approves the recovery of those costs, such as construction costs for new facilities, changes in the long-term cost-effectiveness or changes to the operating conditions of Idaho Power's assets that could result in early retirements of utility facilities, the costs of compliance with legislative and regulatory requirements, increased funding levels of Idaho Power's defined benefit pension plan, and the costs of damage from fires, weather-related events, and natural disasters.

Idaho Power expects to incur increasing costs, which is likely to occur before the IPUC, OPUC, or FERC approve the recovery of those costs, such as construction costs for new facilities and transmission resources, changes in the long-term cost-effectiveness or changes to the operating conditions of Idaho Power's assets that could result in early retirements of utility facilities, the costs of compliance with legislative and regulatory requirements, increased funding levels of Idaho Power's defined benefit pension plan, and the costs of damage from fires, climate change and weather-related events, and natural disasters.

The IPUC, OPUC, and FERC may not allow Idaho Power to recover some or all of those costs on the basis that they find Idaho Power did not reasonably or prudently incur those costs or for other reasons.

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In the past, Idaho Power has been denied recovery, or required to defer recovery pending the next general rate case, including denials or deferrals related to capital expenditures for long-term project expenses.

Adverse outcomes in regulatory proceedings, or significant regulatory lag, may cause Idaho Power to incur increased project costs or result in cancellation of projects, or to record an impairment of its assets or otherwise adversely affect cash flows and earnings.

This may also result in lower credit ratings, reduced access to capital and higher financing costs, and reductions or delays in planned capital expenditures.

For additional information relating to Idaho Power's state and federal regulatory framework and regulatory matters, see Part I - Item 1 - "Business - Utility Operations," Part II - Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Regulatory Matters," and Note 3 - "Regulatory Matters" to the consolidated financial statements of Part II - Item 8 in this report.

Adverse outcomes in regulatory proceedings, or significant regulatory lag, may cause Idaho Power to incur increased or unrecovered project costs or result in cancellation of projects, or to record an impairment of its assets or otherwise adversely affect cash flows and earnings.

This may also result in lower credit ratings, reduced access to capital, higher financing costs, and reductions or delays in planned capital expenditures.

Results of Operations - Regulatory Matters," and Note 3 - "Regulatory Matters" to the consolidated financial statements of Part II - Item 8 in this report.

Idaho Power's regulatory cost recovery mechanisms may not function as intended and are subject to change or elimination, which may adversely affect IDACORP's and Idaho Power's financial condition and results of operations.

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A majority of the differences between these two amounts is deferred for future recovery from, or refund to, customers through rates.

Volatility in power supply costs continues to be significant, in large part due to fluctuations in hydropower generation conditions and high costs for the purchase of renewable energy under mandatory long-term contracts.

Volatility in power supply costs continues to be significant, in large part due to fluctuations in hydropower generation conditions, fuel cost variability from supply chain disruptions and inflationary pressures, general supply and demand economics for fuel and power, the impact of high costs for the purchase of renewable energy under mandatory long-term contracts, and market price variability for the purchase of power from third parties based on seasonal demands and transmission system constraints.

While the power cost adjustment mechanisms function to mitigate the potentially adverse impact on net income of power supply cost volatility, the mechanisms do not eliminate the cash flow impact of that volatility.

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The power cost and fixed cost adjustment mechanisms are generally subject to change at the discretion of applicable state regulators, who could decide to modify or eliminate either mechanism in a manner that adversely impacts IDACORP's and Idaho Power's financial condition, cash flows, and results of operations.

The COVID-19 coronavirus outbreak could adversely affect IDACORP's and Idaho Power's business functions, financial condition, and results of operations.

The COVID-19 coronavirus outbreak has resulted in widespread impacts on the global economy and on Idaho Power's employees, customers, contractors, and suppliers, and there is considerable uncertainty regarding the duration of the COVID-19 pandemic.

Authorities have implemented various measures to reduce the spread of the virus, such as travel bans and restrictions, quarantines, and other restrictive orders and mandates (including those in effect in Idaho Power's service area in the states of Idaho and Oregon), as well as business and government shutdowns.

While governmental authorities have eased some restrictions and vaccines are becoming available, it is possible that an increase in COVID-19 cases could prompt a return to tighter restrictions in some or all of the states and countries in which Idaho Power and its contractors and suppliers operate.

Restrictions of this nature are difficult to predict and may cause Idaho Power or its contractors to miss milestones on construction projects and experience operational delays, delay the delivery of electrical infrastructure and other supplies that it sources from around the globe, delay the connection of electric service to new customers, prolong the time period necessary to perform maintenance of our infrastructure, and significantly reduce the use of electricity by commercial and industrial customers.

Further, while Idaho Power has modified certain business and workforce practices (including employee travel, employee work locations, and cancellation of physical participation in meetings, events, and conferences) to conform to government restrictions and best practices encouraged by government and regulatory authorities, Idaho Power has a limited number of highly skilled operators for some of its critical power plants and its grid operations centers.

If a large proportion of Idaho Power's employees in those critical facilities, however, were to contract COVID-19 at the same time, Idaho Power would rely upon its business continuity plans in an effort to continue operations at those facilities.

In December 2021, the IPUC approved Idaho Power's proposed modifications to the fixed cost adjustment mechanism (FCA) to institute separate, and reduced, fixed cost tracking for customers added to Idaho Power's system after December 31, 2021.

In January 2022, the IPUC approved Idaho Power's proposed modifications to the power cost adjustment mechanism (PCA), which would simplify the mechanism without impairing the intent or effectiveness of the PCA and have no material impact on overall cost recovery.

Operational Risks

Operational risk relates to risks arising from the systems, assets, processes, people, and external factors that affect the operation of IDACORP's or Idaho Power's businesses.

The ongoing impacts of COVID-19 could adversely affect IDACORP's and Idaho Power's business functions, financial condition, and results of operations.

The COVID-19 public health crisis has had, and continues to have, widespread impacts on the global economy and on Idaho Power's employees, customers, contractors, and suppliers, and there is considerable uncertainty regarding the duration and intensity of the COVID-19 public health crisis.

At the peak of the public health crisis, authorities implemented various measures to reduce the spread of the virus, such as restrictive orders and mandates (including those in effect in Idaho Power's service area in the states of Idaho and Oregon), as well as business and government shutdowns.

While governmental authorities have eased restrictions and vaccines are available, it is possible that an increase in COVID-19 cases or variants or their severity could prompt a return to tighter restrictions in some or all of the states and countries in which Idaho Power and its contractors and suppliers operate.

Restrictions of this nature are difficult to predict and may cause Idaho Power or its contractors to miss milestones on construction and generation resource projects and experience operational delays, delay the delivery of electrical infrastructure and other supplies that it sources from around the globe, delay the connection of electric service to new customers, prolong the time period necessary to perform maintenance of infrastructure, and reduce the use of electricity by commercial and industrial customers.

For example, several suppliers and contractors have notified Idaho Power that they will be unable to timely perform services or deliver products due to supply chain and workforce disruptions associated with the public health crisis, and some have attempted to rely on force majeure provisions in their contracts with Idaho Power to permit a delay in performance.

These delays could result in untimely completion of infrastructure projects, which could adversely affect Idaho Power’s operations and financial condition.

The federal government has issued, and may continue to issue, mandates related to COVID-19 vaccines, testing, and other restrictions and requirements that may be applied to Idaho Power and its workforce.

Idaho Power is uncertain to what extent the requirements could disrupt the supply chain or result in Idaho Power losing skilled or specialized employees or limit Idaho Power’s ability to attract and retain skilled or specialized employees who are unwilling to abide by such restrictions, such as obtaining a vaccine or subjecting themselves to masking and weekly testing.

Idaho Power, based on discussions with employees, does believe that attrition of skilled workers could result from application of a mandate for COVID-19 vaccines and masking and testing requirements to Idaho Power's workforce.

If Idaho Power loses key portions of its skilled or specialized

workforce, or significant supply chain disruptions occur, those events could adversely impact Idaho Power's ability to provide reliable service to its customers and its business and results of operations.

Further, while Idaho Power has implemented numerous COVID-19-related safety measures, Idaho Power has a limited number of highly skilled operators for some of its critical power plants and its grid operations centers.

If a large portion of Idaho Power's employees in those critical facilities were to contract COVID-19 at the same time, Idaho Power would need to rely upon its business continuity plans in an effort to continue operations at those facilities.

There is no certainty that such measures will be sufficient to mitigate the adverse impact to its operations.

Additionally, the uncertainty around and impacts of COVID-19 on IDACORP’s and Idaho Power’s business operations and access to capital, on their customers, and on the utility industry and economy as a whole, could adversely impact IDACORP’s common stock price, financial condition, and business operations.

For example, the costs related to Idaho Power's noncontributory defined benefit pension plan, as well as a defined benefit postretirement benefit plan (consisting of health care and death benefits) that covers eligible retirees, are based in part on the value of the plans’ assets and, therefore, adverse investment performance for these assets or the failure to maintain sustained growth in pension investments over time could increase its plan costs and funding requirements related to the plans.

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These uncertain economic conditions may also result in the inability of Idaho Power's customers to pay for electric service, which could affect the collectability of its revenues and adversely affect its financial results.

The degree to which COVID-19 may impact IDACORP's and Idaho Power's liquidity, financial condition, and results of operations is unknown at this time and will depend on future developments, including the continuing spread of the virus, the

severity of the disease, the duration of the outbreak, the deployment rate of the vaccines, actions that may be taken by governmental authorities, and to what extent normal economic and operating conditions can and will resume.

Operational Risks

Operational risk relates to risks arising from the systems, assets, processes, people, and external factors that affect the operation of IDACORP's or Idaho Power's businesses.

The degree to which COVID-19 may continue to impact IDACORP's and Idaho Power's liquidity, financial condition, and results of operations is unknown at this time and will depend on future developments, including the continuing spread of the virus and variants, the severity of the disease, the duration of the outbreak, the effectiveness and deployment rate of vaccines, and actions that may be taken by governmental authorities.

Changes in customer growth and customer usage may negatively affect IDACORP's and Idaho Power's business, financial condition, and results of operations .

Changes in the number of customers and customers' use of electricity are affected by a number of factors, such as population growth or decline in Idaho Power's service area, expansion or loss of service area, changes in customer needs and expectations, adoption rates of energy efficiency measures, customer-generated power such as from solar panels and gas-fired generators, demand-side management requirements, regulation or deregulation, and adverse economic conditions.

An economic downturn or recession, as a result of the COVID-19 pandemic or otherwise, could also negatively impact customer use and reduce revenues and cash flows, thus adversely affecting results of operations.

An economic downturn or recession, as a result of the COVID-19 public health crisis or otherwise, could also negatively impact customer use and reduce revenues and cash flows, thus adversely affecting results of operations.

Many electric utilities, including Idaho Power, have experienced a decline in usage per customer, in part attributable to energy efficiency activities.

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If customers choose to generate their own energy, discontinue a portion or all service from Idaho Power, or replace electric power for heating with natural gas, demand for Idaho Power's energy may decline and adversely impact the affordability of its services for remaining customers.

While Idaho Power has recently experienced a net growth in usage due to an increase in the number of customers, when adjusted for the impacts of weather, the average monthly usage on a per customer basis for Idaho Power's residential customers has declined from 1,035 kWh in 2011 t o 947 kWh in 2020.

Rate mechanisms, such as the Idaho fixed cost adjustment for residential and small commercial customers, are designed to address the financial disincentive associated with promoting energy efficiency activities, but there is no assurance that the mechanism will result in full or timely collection of Idaho Power's fixed costs, which are currently collected in large part through the company's volume-based energy rates that are based on historical sales volume.

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Conversely, if Idaho Power were to experience an unanticipated increase in the demand for energy through, for example, the rapid addition of new industrial and commercial customers or population growth in the service area, Idaho Power may be required to rely on higher-cost purchased power to meet peak system demand and may need to accelerate investment in additional generation or transmission resources.

If the incremental costs associated with the unanticipated changes in loads exceed the incremental revenue received from the sales to the new customers, and Idaho Power is unable to secure timely and full rate relief to recover those increased costs, the resulting imbalance could have an adverse effect on IDACORP's and Idaho Power's financial condition, results of operations, and cash flows.

Idaho Power's 2021 IRP's preferred resource portfolio and action plan included a need to ac quire significant generation and storage resources to meet forecasted increasing energy and capacity needs.

Idaho Power issued requests for proposals in June 2021 and December 2021 for additional energy resources, including renewables or natural gas resource convertible to hydrogen gas power, as described in Part 1, Item 1 - "Resource Planning and Renewable Energy Projects" in this report .

If the incremental costs associated with unanticipated changes in loads exceed the incremental revenue received from the s ales to the new customers, and Idaho Power is unable to secure timely and full rate relief to recover those increased costs, the resulting imbalance could have an adverse effect on IDACORP's and Idaho Power's financial condition, results of operations, and cash flows.

Changes in weather conditions, severe weather, and the impacts of climate change can adversely affect IDACORP's and Idaho Power's operating results and cause them to fluctuate seasonally.

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Thus, weather conditions and the timing and extent of precipitation can cause IDACORP's and Idaho Power's results of operations and financial condition to fluctuate seasonally, quarterly, and from year to year.

Climate change could also have significant physical effects in Idaho Power’s service area, such as increased frequency and severity of storms, lightning, droughts, heat waves, fires, floods, snow loading, and other extreme weather events.

These extreme weather events and their associated impacts could damage transmission, distribution, and generation facilities, causing service interruptions and extended or mass outages, increasing costs and other operating and maintenance expenses, including emergency response planning and preparedness expenses, and limiting Idaho Power's ability to meet customer energy demand.

Climate change could also have significant physical effects in Idaho Power’s service area, such as increased frequency and severity of storms, lightning, high winds, icing events, droughts, heat waves, fires, floods, snow loading, and other extreme weather events.

These extreme weather events and their associated impacts could damage transmission, distribution, and generation facilities, causing service interruptions and extended or mass outages, increasing costs, and limiting Idaho Power's ability to meet customer energy demand.

Sustained drought conditions or decreased snow pack due to reduced precipitation or higher temperatures are likely to decrease power generation from hydropower plants.

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Idaho Power has in place mechanisms to help mitigate the effects of energy market price volatility, but there is no assurance these mechanisms will continue to be in place or function as intended.

The costs of repairing and replacing infrastructure or liability for personal injury, loss of life, and property damage from utility equipment that fails, including as a result of significant weather and weather-related events and fires, may not be covered in full by insurance.

Costs incurred in connection with such events might also not be recovered through customer rates if the costs incurred are greater than those allowed for recovery by regulators.

In addition, state and federal legislation and regulations have been proposed in recent years and may be implemented in the future, including in the State of Oregon and by the EPA under the new Presidential Administration.

These laws are intended to limit the severity and impact of climate change, such as imposing mandatory reductions in greenhouse gas emissions, which could increase Idaho Power’s power supply and compliance costs or require generation facilities to be retired early, resulting in potential stranded costs and write-downs or write-offs if Idaho Power is unable to fully recover investments in such facilities.

If financial markets increasingly view climate change or greenhouse gas emissions as a financial or investment risk for electric utilities, it could negatively affect IDACORP's and Idaho Power's ability to access debt and equity capital markets on favorable terms.

In addition, state and federal legislation and regulations have been proposed in recent years and may be implemented in the future, intended to limit the severity and impact of climate change.

Proposals have included imposing mandatory reductions in GHG emissions, which could increase Idaho Power’s power supply and compliance costs or require generation facilities to be retired early, resulting in potential stranded costs and write-downs or write-offs if Idaho Power is unable to fully recover investments in such facilities.

If financial markets increasingly view climate change or GHG emissions as a financial or investment risk for electric utilities, it could negatively affect IDACORP's and Idaho Power's ability to access debt and equity

capital markets on favorable terms.

For additional information relating to legislation, regulations, and legal proceedings related to environmental matters, see Part II - Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Environmental Matters” in this report.

New advances in power generation, energy efficiency, alternative energy sources, or other technologies that impact the power utility industry could decrease customer energy demand and revenues .

Advances in technology and changes in customer demand and preferences in the electric utility industry have encouraged the development of new technologies for power generation, energy storage, and energy efficiency.

In particular, in recent years the net cost of solar generation and storage technology has decreased significantly, and there are federal and state regulations, laws, and other incentives in place to help further reduce the net cost of solar facilities.

There is potential that customer-owned solar power generation systems, particularly if coupled with energy storage devices, could become sufficiently cost-effective and efficient that an increasing number of Idaho Power's customers choose to install such systems on their homes or businesses, which in turn could require changes in the way Idaho Power builds and manages its distribution systems, and reduce the demand for and sale of energy.

New advances in power generation, energy efficiency, alternative energy sources, or other technologies that impact the power utility industry could decrease customer energy demand and revenues, which could have implications for generation and system planning .

In particular, in recent years the net cost of solar and wind generation and storage technology has decreased significantly, and there are federal and state regulations, laws, and other incentives in place to help further reduce the net cost of solar and wind facilities.

There is potential that customer-owned solar power generation systems, could become sufficiently cost-effective and efficient that an increasing number of Idaho Power's customers choose to install such systems on their homes or businesses, which in turn could require changes in the way Idaho Power builds and manages its distribution systems and substantial grid infrastructure costs, and at the same time reduce the demand for and sale of energy.

Additionally, considerable emphasis has been placed on energy efficiency, such as LED lighting and high-efficiency appliances.

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The introduction of new technologies could pose risks in the form of reduced sales and new business models for energy services.

Advances in technology that reduce the costs of alternative methods of producing electric energy could result in loss of revenue and customers.

These changes in technology could also alter the channels through which customers buy or utilize energy, which could reduce Idaho Power's revenues or impact Idaho Power's expenses.

These changes in technology could also alter the channels through which customers buy or utilize energy, including the potential formation of community-based, cooperative ownership or municipal structures, which could reduce Idaho Power's revenues or impact Idaho Power's expenses.

A reduction in load, however, would not necessarily reduce Idaho Power's need for ongoing investments in its infrastructure to reliably serve its customers.

If Idaho Power is unable to adjust its rate design or maintain adequate regulatory mechanisms allowing for timely cost recovery, declining usage from customer-owned generation sources and energy efficiency would result in under-recovery of Idaho Power's costs and investment in infrastructure, and reduce revenues, which would impact IDACORP's and Idaho Power's financial condition and results of operations.

Acts or threats of terrorism, acts of war, social unrest, cyber attacks, data or physical security breaches, and other acts of individuals or groups seeking to disrupt Idaho Power's operations or the electric power grid could require significant expenditures, or result in claims against the companies, and negatively impact IDACORP's and Idaho Power's financial condition and results of operations .

Idaho Power operates in an industry that requires the continuous use and operation of sophisticated information technology systems and network infrastructure.

Idaho Power's generation and transmission facilities and its grid operations are potential targets for terrorist acts and threats, acts of war, social unrest, cyber attacks, and other disruptive activities of individuals or groups, including by nation states or nation state-sponsored groups.

Federal regulators have stated that the number of organizations seeking opportunities to exploit potential vulnerabilities in the United States energy infrastructure is increasing and that those attacks have become increasingly frequent and sophisticated.

Some of Idaho Power's facilities are deemed "critical infrastructure," in that incapacity or destruction of the facilities could have a debilitating impact on security, reliability or operability of the bulk electric power system, national economic security, and public health and safety.

The possibility that infrastructure facilities, such as generation facilities and electric transmission or distribution facilities, would be direct targets of, or indirect casualties of, an act of terror or cyber attack, including by nation states or nation state-sponsored groups (whether originating internally or externally), may affect Idaho Power's operations by limiting the ability to generate, purchase, or transmit power.

Idaho Power's electric transmission systems are part of an interconnected regional grid, and therefore, it faces the risk of causing or being subject to a blackout due to grid disturbances or disruptions on a neighboring interconnected system.

Cyber threats and attacks can have cascading impacts that unfold with increasing speed across networks, information systems, and other technologies.

Network, information systems, and technology-related events, including those caused by IDACORP or Idaho Power, such as process breakdowns, human error, security architecture or design vulnerabilities, or by third parties, such as computer hackings, cyber attacks, computer viruses, or other destructive or disruptive software, denial of service attacks, social engineering or other malicious activities, or any combination of the foregoing, could result in a degradation or disruption in the energy grid and the services of the companies, as well as the ability to record, process, and report customer, business, and financial information.

Physical or cyber attacks against key suppliers or service providers could have a similar effect on IDACORP and Idaho Power.

Terrorist attacks, acts of war, social unrest, cyber attacks, and similar incidents can create political, economic, social, or financial market instability, and can cause damage to or interference with Idaho Power’s operating assets, customers, or suppliers.

This may result in business interruption, lost revenue, higher commodity prices, disruption in fuel supplies, lower energy consumption, and unstable markets, particularly with respect to electricity and natural gas, and increased security, repair, or other costs, any of which may materially adversely affect Idaho Power in ways that cannot be predicted as of the date of this report.

Any of these risks could materially affect the companies’ consolidated financial results.

These events, and governmental actions in response, could result in a material decrease in revenues and increase costs to protect, repair, and insure Idaho Power's assets and operate its business.

Idaho Power's operations require the continuous availability of information technology systems and network infrastructure, and in the normal course of business, Idaho Power or its vendors collect and store sensitive and confidential customer and employee information and proprietary information of Idaho Power.

Idaho Power’s technology systems are dependent upon connectivity to the internet and third party vendors to host, maintain, modify, and update its systems, which may experience significant system failures or cyber attacks that could compromise the security of Idaho Power’s assets and information.

During 2020 and into 2021, for example, a sophisticated security breach of a software platform used broadly across industry sectors, including the utility industry and many of the industry’s vendors, created a cyber security vulnerability for thousands of companies in the United States as well as a number of governmental entities.

Any data security breaches, such as misappropriation, misuse, leakage, falsification or accidental release or loss of information maintained in IDACORP's and Idaho Power's information technology systems, including customer data, could result in violations of privacy and other laws, financial loss to Idaho Power or to its customers, customer dissatisfaction or diminished customer confidence, damage to Idaho Power’s reputation, and significant litigation and penalty exposure, all of which could materially affect Idaho Power's financial condition and results of operations.

If Idaho Power is unable to adjust its rate design or maintain adequate regulatory mechanisms allowing for timely cost recovery, declining usage from customer-owned generation sources and energy efficiency could result in under-recovery of Idaho Power's costs and investment in infrastructure, and reduce revenues, which would impact IDACORP's and Idaho Power's financial condition and results of operations.

Acts or threats of terrorism, acts of war, social unrest, cyber or physical security attacks, and other malicious acts of individuals or groups seeking to disrupt Idaho Power's operations or the electric power grid or compromise data could adversely impact IDACORP's and Idaho Power's business, financial condition, and results of operations.

Idaho Power operates in an industry that requires the continuous use and operation of sophisticated information technology and increasingly complex operational technology systems and network infrastructure.

Idaho Power's generation and transmission facilities and its grid operations are potential targets for terrorist acts and threats, acts of war, social unrest, cyber and physical security attacks, and other disruptive activities of individuals or groups, including by nation states or nation state-sponsored groups.

There have been cyber and physical attacks within the energy industry on energy infrastructure such as electric substations and pipelines in the past, and there are likely to be additional attacks in the future.

Idaho Power and its vendors have been subject to, and will likely continue to be subject to, attempts to gain unauthorized access to systems and confidential information, or to disrupt operations.

As noted by the U.S.

Department of Homeland Security, the utility industry is continuing to experience an increase in the frequency and sophistication of cybersecurity incidents.

Some of Idaho Power's facilities are deemed "critical infrastructure" under federal standards, in that incapacity or destruction of the facilities could have a debilitating impact on security, reliability or operability of the bulk electric power system, national economic security, and public health and safety.

The fact that infrastructure facilities, such as power generation facilities and electric transmission or distribution facilities, are direct targets of, or potential indirect casualties of, an act of terror or cyber or physical attack (whether originating internal to Idaho Power or externally), may affect Idaho Power's operations by limiting the ability to generate, purchase, or transmit power.

Idaho Power's electric transmission systems are part of an interconnected regional grid, and therefore, it faces the risk of causing or being subject to a long-term power outage due to grid disturbances or disruptions on a neighboring interconnected grid system.

Cyber and physical threats and attacks can have cascading impacts that unfold with increasing speed across networks, information systems, and other technologies.

Network, information systems, and technology-related events, including those caused by IDACORP or Idaho Power through process breakdowns, human error, security architecture or design vulnerabilities, or by third parties through cyber or physical security attacks, could result in a degradation or disruption in the energy grid and the services of the companies, as well as the ability to record, process, and report customer, business, and financial information.

Physical or cyber attacks against key suppliers or service providers could have a similar effect on Idaho Power.

Idaho Power's business operations require the continuous availability of information technology systems and network infrastructure, and in the normal course of business, Idaho Power or its vendors collect and store sensitive and confidential customer and employee information and proprietary information of Idaho Power.

Idaho Power’s technology systems are

dependent upon connectivity to the internet and third-party vendors to host, maintain, modify, and update its systems, which may experience significant system failures or cyber attacks that could compromise the security of Idaho Power’s assets and information.

During 2020 and into 2021, as just one example, a sophisticated security breach of the SolarWinds software platform used by Idaho Power and broadly across industry sectors, including the utility industry and many of the industry’s vendors, created a cyber security vulnerability for thousands of companies in the United States as well as a number of governmental entities.

All information technology systems are vulnerable to disability, unauthorized access, unintentional defects, user error, errors in system changes, and cybersecurity incidents.

Idaho Power is in the process of pursuing complex business system upgrades, and these significant changes increase the risk of system interruption.

Any data security breaches, such as misappropriation, misuse, leakage, falsification or accidental release or loss of information maintained in Idaho Power's information technology systems or on third-party systems, including customer or employee data, could result in violations of privacy and other laws and associated litigation and liability for damages, fines, and penalties;

financial loss to Idaho Power or to its customers;

customer dissatisfaction or diminished customer confidence;

and damage to Idaho Power’s reputation, all of which could materially affect Idaho Power's financial condition and results of operations.

No security measures can completely shield Idaho Power's systems, infrastructure, and data from vulnerabilities to cyber attacks, human error, intrusions, or other catastrophic events that could result in their failure or reduced functionality, and ultimately the potential loss of sensitive information or the loss of Idaho Power's ability to fulfill critical business functions and provide reliable electric power to customers.

Idaho Power maintains insurance related to these events;

Despite the steps Idaho Power may take to detect, mitigate, or eliminate threats and respond to security incidents, the techniques used by those who seek to obtain unauthorized access, and possibly disable or sabotage systems or abscond with information and data, change frequently and Idaho Power may not be able to protect against all such actions.

Idaho Power actively monitors developments in the area of cybersecurity and is involved in various related government and industry groups, and the company’s board receives security updates at least quarterly.

Although Idaho Power continues to make investments in its cybersecurity program, including personnel, technologies, cyber insurance and training of personnel, there can be no assurance that these systems or their expected functionality will be implemented, maintained, or expanded effectively;

nor can security measures completely eliminate the possibility of a cybersecurity breach.

Further, the implementation of security guidelines and measures has resulted in and Idaho Power expects to continue to result in increased costs.

Idaho Power maintains insurance related to many forms of cyber and physical security events;

however, such insurance is subject to exclusions and may be insufficient in amount to offset any losses, costs, or damage experienced, particularly given the potential significant magnitude of a security incident like those reported broadly in the media, and further, any such insurance may become unreasonably expensive or unavailable in the future.

Terrorist attacks, acts of war, social unrest, cyber and physical security attacks, and similar incidents can also have indirect impacts by creating political, economic, social, or financial market instability, and can cause damage to or interference with Idaho Power’s operating assets, customers, or suppliers.

This may result in business interruption, lost revenue, higher commodity prices, disruption in fuel supplies, lower energy consumption, and unstable commodity and financial markets, particularly with respect to electricity and natural gas, any of which may materially adversely affect Idaho Power.

These events, and governmental actions in response, could result in a material decrease in revenues and increase costs to protect, repair, and insure Idaho Power's assets and operate its infrastructure, systems, and business.

Changes in capital expenditures for infrastructure and the risks associated with permitting and construction of utility infrastructure can significantly affect IDACORP's and Idaho Power's financial condition and results of operations .

Idaho Power’s business is capital intensive and requires significant investments in energy generation, transmission, and distribution

infrastructure.

Idaho Power’s business is capital intensive and requires significant investments in power supply, transmission, and distribution infrastructure.

A significant portion of Idaho Power’s facilities were constructed many years ago, and thus require periodic upgrades and frequent maintenance.

Also, long-term anticipated increases in both the number of customers and the demand for energy require expansion and reinforcement of that infrastructure.

For instance, Idaho Power is in the permitting process for two high-voltage transmission line projects, which are intended to help meet future customer energy demands.

Construction projects are subject to usual permitting and construction risks that can adversely affect project costs and the completion time.

Also, short-term and long-term anticipated increases in both the number of customers and the demand for energy require expansion and reinforcement of that infrastructure as described in Idaho Power's 2021 IRP.

Idaho Power is not only in the permitting process for two high-voltage transmission line projects, but has issued requests for proposals for new capacity reso urces, and utility-scale battery storage, which a re intended to help meet increasing customer energy demands.

Idaho Power expects significant investment in capital improvements and expenditures for infrastructure projects that are subject to usual permitting and construction risks that can adversely affect project costs and the completion time.

These risks include, as examples:

• the ability to timely obtain labor or materials at reasonable costs;

• defaults by suppliers and contractors;

• defaults and delays by suppliers and contractors, including delays for specialty equipment that require significant lead times;

• equipment, engineering, and design failures;

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• the effects of adverse weather conditions;

• catastrophic events and natural disasters;

• catastrophic events, natural disasters, pandemics and other public health events;

• availability of financing;

• load forecasts;

• the ability to obtain approval from local, state, or federal regulatory and governmental bodies and to comply with permits and land use rights, and environmental constraints;

• delays and costs associated with disputes and litigation with third parties or stakeholder activism.

The occurrence of any of these risks could cause Idaho Power to operate at reduced capacity levels, which in turn could reduce revenues, increase expenses, or cause Idaho Power to incur penalties.

• delays and costs associated with disputes and litigation with third parties.

The occurrence of any of these risks could cause Idaho Power to operate at reduced capacity levels, which in turn could reduce revenues and reliability, increase expenses, or cause Idaho Power to incur penalties.

If Idaho Power is unable to complete the permitting or construction of a project, or incurs costs that regulators do not deem prudent, it may be unable to recover its costs in full through rates or on a timely basis.

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Thus, termination of a project could negatively affect IDACORP's and Idaho Power's financial condition and results of operations.

Demand for power during peak periods could exceed forecasted supply, resulting in deliverability risks and increased costs for purchasing capacity in the market or acquiring or constructing additional generation resources and battery storage facilities .

Idaho Power's 2021 IRP identified a low-cost preferred resource portfolio and action plan for the next 20-year period that includes adding substantial renewable resources and ending participation in the remaining coal-fired units by the end of 2028.

As Idah o Power implements the IRP's action plan, which also advances its goal to provide 100 percent clean energy by 2045, it remains obligated to provide reliable and affordable energy to its customers, but there are certain potential deliverability and cost risks associated with this transition.

These risks include, but are not limited to, (1) the failure to timely obtain or construct additional resources to meet forecast needs related to load growth and coal exits, (2) increased renewable energy generation presenting risks of uncertainty and variability that could be further compounded as neighboring systems transition towards increasing levels of renewable resources, and (3) increased potential resource volatility due to changes in the energy market.

During peak periods, power demand could exceed Idaho Power’s forecasted available generation capacity, particularly if Idaho Power’s power plants are not performing as anticipated and additional resources and battery storage are not acquired as needed to meet demand.

Competitive market forces or adverse regulatory actions may require Idaho Power to purchase capacity and energy from the market, if such resources are even available for purchase, or build additional resources to meet customers’ energy needs in an expedited manner.

If that occurs, Idaho Power may be unable to recover these additional costs and could experience a lag between when costs are incurred and when regulators permit recovery in customers’ rates, which could have negative impacts on operations and cash flows.

Factors contributing to lower hydropower generation can increase costs and negatively impact IDACORP's and Idaho Power's financial condition and results of operations .

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Idaho Power’s use of coal and natural gas to fuel power generation facilities exposes it to commodity availability and price risk, which can adversely affect IDACORP's and Idaho Power's results of operations and financial condition .

As part of its normal business operations, Idaho Power purchases coal and natural gas in the open market or under short-term or long-term contracts, often with variable pricing terms.

Market prices for coal and natural gas are volatile and influenced by factors impacting supply and demand such as weather conditions, the adequacy and type of generating capacity, fuel transportation availability, economic conditions, regulations related to greenhouse gas emissions, changes in technology, moratoriums on federally leased coal, and increases in coal lease costs.

Natural gas transportation to Idaho Power's three natural gas plants is

limited to one primary p ipeline, presenting a heightened possibility of supply constraint and disruptions separate from the risk of counterparty default.

As part of its

normal business operations, Idaho Power purchases coal and natural gas in the open market or under short-term or long-term contracts, often with variable pricing terms.

Market prices for coal and natural gas are volatile and influenced by factors impacting supply and demand such as weather conditions, the adequacy and type of generating capacity, fuel transportation availability, economic conditions, regulations related to GHG emissions, changes in technology, moratoriums on federally leased coal, and increases in coal lease costs.

Natural gas transportation to Idaho Power's three natural gas plants is limited to one primary p ipeline, presenting a heightened possibility of supply constraint and disruptions separate from the risk of counterparty default.

Most of Idaho Power's coal supply arrangements are under long-term contracts for coal originating in Wyoming, and thus Idaho Power is exposed to risk of disruption of coal production in, or transportation from, that region.

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Idaho Power may not be able to fully or timely recover these increased costs through rates and power cost adjustment mechanisms, which may adversely affect IDACORP's and Idaho Power's financial condition and results of operations.

Idaho Power’s generation, transmission, and distribution facilities are subject to numerous operational risks unique to it and its industry, including circumstances causing power outages, injuries and property damage, loss of life, and fires .

Operating risks associated with Idaho Power's generation, transmission, and distribution facilities include equipment failures, volatility in fuel and transportation pricing, interruptions in fuel supplies, increased regulatory compliance costs, labor disputes or attrition, accidents and workforce safety matters, environmental damage, property damage, wildfires, acts of terrorism or sabotage (both cyber and asset-based), the loss of cost-effective disposal options for solid waste such as coal ash, operator error, and the occurrence of catastrophic events at the facilities.

Idaho Power’s power supply, transmission, and distribution facilities are subject to numerous operational risks unique to it and its industry, including circumstances causing power outages, injuries and property damage, loss of life, and fires .

Operating risks associated with Idaho Power's power supply, transmission, and distribution facilities include equipment failures, volatility in fuel and transportation pricing, interruptions in fuel supplies, increased regulatory compliance costs, changes necessitated by environmental legislation or litigation, labor disputes or attrition, accidents and workforce safety matters, environmental damage, property damage, wildfires, acts of terrorism or sabotage (both cyber and asset-based), the loss of cost-effective disposal options for solid waste such as coal ash, operator error, and the occurrence of catastrophic events at the facilities.

Diminished availability or performance of those facilities could result in reduced customer satisfaction, reputational harm, liability to third parties (including tort liability), and regulatory inquiries and fines.

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These transmission constraints and events could result in failure to provide reliable service to customers and the inability to deliver energy from generating facilities to the power grid, and the inability to access lower cost sources of electric energy.

Idaho Power also enters into agreements with third-party contractors to perform work on its generation, transmission, and distribution facilities, and may in some circumstances retain liability for the quality and completion of those contractors’ work, potentially subjecting Idaho Power to penalties, liability for personal injury, loss of life, or property damage, reputational harm, or enforcement actions or liability if a contractor violates applicable laws, rules, regulations, or orders.

Accidents, terrorist acts, electrical contacts, fires, explosions, catastrophic failures, general system damage or dysfunction, uncontrolled release of water from hydropower dams, and other unplanned events related to Idaho Power's infrastructure would increase repair costs and may expose Idaho Power to liability for personal injury, loss of life, and property damage.

Idaho Power also enters into agreements with third-party contractors to perform work on its power supply, transmission, and distribution facilities, and may in some circumstances retain liability for the quality and completion of those contractors’ work, potentially subjecting Idaho Power to penalties, liability for personal injury, loss of life, or property damage, reputational harm, or enforcement actions or liability if a contractor violates applicable laws, rules, regulations, or orders.

Accidents, terrorist acts, electrical contacts, fires, explosions, catastrophic failures, general system damage or dysfunction, intentional acts of destruction, uncontrolled release of water from hydropower dams, and other unplanned events related to Idaho Power's infrastructure would increase repair costs and may expose Idaho Power to liability for personal injury, loss of life, and property damage.

Fires alleged to have been caused by Idaho Power's transmission, distribution, or generation infrastructure, or that allegedly result from Idaho Power’s or its contractors’ operating or maintenance practices, could also expose Idaho Power to claims for fire suppression and clean-up costs, evacuation costs, fines and penalties, and liability for economic damages, personal injury, loss of life, property damage, and environmental pollution, whether based on claims of negligence, trespass, or otherwise.

The risk of wildfires is exacerbated in forested areas where beetle infestations have caused a significant increase in the quantity of standing dead and dying timber, increasing the risk that such trees may fall from either inside or outside our right-of-way into a powerline igniting a fire and increasing the magnitude of fires.

The risk of wildfires is exacerbated in forested areas where beetle infestations and rising tree mortality rates have caused a significant increase in the quantity of standing dead and dying timber, increasing the risk that such trees may fall from either inside or outside our right-of-way into a powerline igniting a fire and increasing the magnitude of fires.

A significant number of urban-wildland interfaces in and near Idaho Power's service area, and commonly hot, dry summer conditions that may worsen as a result of climate change, increase the likelihood and magnitude of damages that may be caused by fires burning into or allegedly originating from utility equipment.

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Idaho Power maintains insurance coverage for such operating and event risks, but insurance coverage is subject to the terms and limitations of the available policies and may not be sufficient in amount to cover Idaho Power’s ultimate liability.

Coverage limits within wildfire insurance policies could result in material self-insured costs in the event there are fires that are deemed to be separate occurrences covered by self-insured retention amounts under the terms of Idaho Power’s insurance policies.

amounts under the terms of Idaho Power’s insurance policies.

Idaho Power or its contractors and customers could also experience coverage reductions and increased wildfire insurance costs in future years.

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Many of these positions, such as linemen, grid operators, engineering and design personnel, and generation plant operators, require extensive, specialized training.

Idaho Power has experienced in recent years an above-average number of employee retirements and expects the increased level of retirement of its skilled workforce and persons in key positions will continue in 2021 and in the near-term.

At December 31, 2021, approximately 16 percent of Idaho Power's employees were eligible for regular or early retirement under Idaho Power's defined benefit pension plan.

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Idaho Power does not have employment contracts with its officers or key employees and cannot guarantee that any member of its management or any key employee at the IDACORP parent or any subsidiary level will continue to serve in any capacity for any particular period of time.

The loss of skills and institutional knowledge of experienced employees, the failure to foster an inclusive, equitable, and diverse environment in order to hire appropriately qualified employees, the costs associated with attracting, training, and retaining such employees to replace an aging and skilled workforce, a nd the operational and financial costs of unionization or the attempt to unionize all or part of the companies’ workforce, could hav e a negative effect on IDACORP's and Idaho Power's financial condition and results of operations.

The loss of skills and institutional knowledge of experienced employees, the failure to foster an innovative, inclusive, equitable, and diverse environment in order to hire appropriately qualified employees, the costs associated with attracting, training, and retaining such employees to replace an aging and skilled workforce or the inability to do so, a nd the operational and financial costs of unionization or the attempt to unionize all or part of the companies’ workforce, could hav e a negative effect on IDACORP's and Idaho Power's financial condition and results of operations.

Idaho Power could incur increased costs due to such turnover due to a loss of knowledge, errors due to inexperienced employees or substantial training time, loss of productivity, and increased safety compliance issues.

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Changes in legislation, regulation, and government policy may have a material adverse effect on IDACORP’s and Idaho Power’s business in the future.

Specific legislative and regulatory proposals and recently enacted legislation that could have a material impact on IDACORP and Idaho Power include, but are not limited to, tax reform, utility regulation, carbon-reduction initiatives, infrastructure renewal programs, environmental regulation, and modifications to accounting and public company reporting requirements.

Specific legislative and regulatory proposals and recently enacted legislation that could have a material impact on IDACORP and Idaho Power include, but are not limited to, tax reform, utility regulation, carbon-reduction initiatives, infrastructure renewal programs, climate change and environmental regulation, and modifications to accounting and public company reporting requirements.

Further, the proposals and new legislation could have an impact on the rate of growth of Idaho Power’s customers and their willingness to expand operations and increase electric service requirements.

Due to the new Presidential Administration, Idaho Power expects laws, regulations, and policies relating to environmental compliance to change and require IDACORP and Idaho Power and some of their customers to modify their business strategy or restrict activities and projects, potentially subjecting them to increased compliance costs.

For example, in January 2021, the United States rejoined the Paris Agreement on climate change that requires commitments related to greenhouse gas emissions, among other things, and the new Presidential Administration has announced ambitious clean energy initiatives.

Under the current Presidential Administration, Idaho Power expects laws, regulations, and policies relating to environmental compliance to continue to change and require IDACORP and Idaho Power and some of their customers to modify their business strategy or restrict activities and projects, potentially subjecting them to increased compliance costs.

For example, in January 2021, the United States rejoined the Paris Agreement on climate change that requires commitments related to GHG emissions, among other things, and the Presidential Administration has announced ambitious clean energy initiatives.

Many states and localities may continue to pursue climate policies in addition to federal mandates.

The state of Oregon, for instance, has been pursuing cap-and-trade legislation for greenhouse gas emissions.

The state of Oregon, for instance, has been pursuing cap-and-trade legislation for GHG emissions.

Failure to comply with environmental laws and regulations, even if such non-compliance is caused by factors outside of Idaho Power's control, may result in the assessment of civil or criminal penalties or fines, or government enforcement actions.

Idaho Power could also become subject to climate change lawsuits and an adverse outcome could require substantial expenditures and could possibly require payment of damages.

IDACORP and Idaho Power expect federal, state, and local governmental authorities to implement various recent and expected future executive orders from the new Presidential Administration and are unable to predict whether and to what extent such actions will meaningfully change existing legislative and regulatory environments relevant to the companies, or if any such changes would have a net positive or negative impact on the companies.

IDACORP and Idaho Power expect federal, state, and local governmental authorities to implement various recent and expected future executive orders from the Presidential Administration and are unable to predict whether and to what extent such actions will meaningfully change existing legislative and regulatory environments relevant to the companies, or if any such changes would have a net positive or negative impact on the companies.

Idaho Power is unable to estimate the costs of complying with such legislative or regulatory changes due to the uncertainties associated with the nature and implementation of the changes, and may not be able to recover the associated costs.

To the extent that such changes have a negative impact on the companies or Idaho Power’s customers, including as a result of related uncertainty, these changes may materially and adversely impact IDACORP’s and Idaho Power’s business, financial condition, results of operations, and cash flows.

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Disputes over interpretations of tax laws may be settled with the taxing authority in examination, upon appeal, or through litigation.

In recent years, state regulatory mechanisms with income tax-related provisions (such as Idaho Power's May 2018 Idaho tax reform settlement stipulation with the IPUC), have significantly impacted IDACORP's and Idaho Power's results of operations.

Due to the new Presidential Administration, IDACORP and Idaho Power expect tax reform legislation could be enacted that may increase the companies' federal and state tax rates and reporting obligations.

In recent years, state regulatory mechanisms with income tax-related provisions (such as Idaho Power's May 2018 Idaho tax reform settlement stipulation approved by the IPUC), have significantly impacted IDACORP's and Idaho Power's results of operations.

Due to the current Presidential Administration, IDACORP and Idaho Power expect tax reform legislation could be enacted that may increase the companies' federal and state tax rates and reporting obligations.

The outcome of potential future income tax proceedings or laws, or the state public utility commissions' treatment of those outcomes, could differ materially from the amounts IDACORP and Idaho Power record prior to conclusion of those proceedings, and the difference could negatively affect IDACORP’s and Idaho Power’s earnings and cash flows.

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IDACORP's and Idaho Power’s businesses are subject to an extensive set of environmental laws, rules, and regulations, which could impact their operations and costs of operations, potentially rendering some generating units uneconomical to maintain or operate, and could increase the costs and alter the timing of major projects.

IDACORP's and Idaho Power's operations are subject to a number of federal, state, and local environmental statutes, rules, and regulations relating to air and water quality, natural resources, renewable energy, and health and safety.

Many of these laws and regulations are described in Part II - Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Environmental Matters" in this report.

IDACORP's and Idaho Power's operations are subject to a number of federal, state, and local environmental statutes, rules, and regulations relating to climate change, air and water quality, natural resources, endangered species and wildlife, renewable energy, and health and safety.

Many of these laws and regulations are described in Part II - Item 7 - “Management’s Discussion and Analysis of Financial

Condition and Results of Operations - Environmental Matters” in this report.

These laws and regulations generally require IDACORP and Idaho Power to obtain and comply with a wide variety of environmental licenses, permits, and other approvals, including through substantial investment in pollution controls, and may be enforced by both public officials and private individuals.

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Furthermore, Idaho Power may not be able to obtain or maintain all environmental regulatory approvals necessary for operation of its existing infrastructure or construction of new infrastructure.

In response to state and federal regulatory requirements, judicial decisions and international accords, emissions of greenhouse gases including, most significantly CO 2 could be restricted in the future.

If new emissions reduction rules were to become effective, they could result in significant additional compliance costs that would affect Idaho Power's future financial position, results of operations, and cash flows if such costs are not timely recovered through regulated rates.

The utility industry is also facing increasing stakeholder scrutiny related to its environmental, social, and governance (ESG) programs.

Recently, Idaho Power has seen a rise in certain stakeholders, suc h as investors, customers, employees, and lenders placing increasing importance on the impact and social cost of their investments.

Emissions of GHGs, including, most significantly CO 2 , could be further restricted in the future in response to additional state and federal regulatory requirements, increased scrutiny and changing stakeholder expectations with respect to environmental and climate change programs, judicial decisions and international accords.

If new emissions reduction rules were to be come effective, they could result in significant additional compliance costs that would affect Idaho Power's future financial position, results of operations, and cash flows if such costs are not timely recovered through regulated rates.

Moreover, the possibility exists that stricter laws, regulations, or enforcement policies could significantly increase compliance costs and the cost of any remediation that may become necessary.

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As a result of this uncertainty, approaches to comply with the regulations, including available control technologies or other allowed compliance measures, are unpredictable and Idaho Power cannot foresee the potential impacts these regulations would have on Idaho Power's operations or financial condition.

In 2019, Idaho Power also announced its commitment to serve customers with 100 percent clean energy by 2045, which could impact infrastructure resource decisions and costs.

Idaho Power is not guaranteed timely or full recovery through customer rates or insurance of costs associated with environmental regulations, environmental compliance, its clean energy initiatives, plant closures, or clean-up of contamination.

If there is a delay in obtaining any required environmental regulatory approval or if Idaho Power fails to obtain, maintain, or comply with any such approval, construction and/or operation of Idaho Power's generation or transmission facilities could be delayed, halted, or subjected to additional costs.

In 2019, Idaho Power announced its commitment to serve customers with 100 percent clean energy by 2045, and Idaho Power has short-term and medium-term targets for CO 2 emission reductions, which could impact infrastructure resource decisions and costs.

Idaho Power's ability to achieve these targets are subject to a number of risks and uncertainties, including the company's regulatory obligation to serve its customers, the availability and cost of new generation resources, legal and permitting requirements, system operation and energy integration, grid balancing, among others.

Additionally, Idaho Power is not guaranteed timely or full recovery through customer rates of costs associated with environmental regulations, environmental compliance, its clean energy initiatives, plant closures, or clean-up of contamination.

For further discussion of environmental matters that may affect Idaho Power, see "Environmental Matters" in Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report.

Obligations imposed in connection with hydropower license renewals may require large capital expenditures, increase operating costs, reduce hydropower generation, and negatively affect IDACORP's or Idaho Power's results of operations and financial condition .

For the last several years, Idaho Power has been engaged in an effort to renew its federal license for its largest hydropower generation source, the Hells Canyon Complex.

Relicensing includes an extensive public review process that involves numerous natural resource issues and environmental conditions.

The existence of endangered and threatened species in the watershed may result in major operational changes to the region’s hydropower projects, which may be reflected in hydropower licenses, including for the Hells Canyon Complex and the American Falls facility.

Obligations imposed in connection with hydropower license renewals and permitting may require large capital expenditures, increase operating costs, reduce hydropower generation, and negatively affect IDACORP's or Idaho Power's results of operations and financial condition .

For the last several years, Idaho Power has been engaged in an effort to renew its federal license for its largest hydropower generation source, the HCC.

Relicensing and ongoing permitting requirements include an extensive public review process that involves numerous natural resource issues and environmental conditions.

In addition, new interpretations of existing laws and regulations could be adopted or become applicable to hydropower facilities, which could further increase required expenditures for marine life recovery and endangered species protection and reduce the amount of hydropower generation available to meet Idaho Power’s generation requirements.

Idaho Power cannot predict the requirements that might be imposed during the relicensing process, the financial impact of those requirements, whether a new multi-year license will ultimately be issued, and whether the IPUC or OPUC will allow recovery through rates of the substantial costs incurred in connection with the licensing process and subsequent compliance.

Imposition of onerous conditions in the relicensing process could result in Idaho Power incurring significant capital expenditures, increase operating costs (including power purchase costs), and reduce hydropower generation, which could negatively affect results of operations and financial condition.

Idaho Power cannot predict the requirements that might be imposed during the relicensing and permitting process, the financial impact of those requirements,

whether a new multi-year license will ultimately be issued, and whether the IPUC or OPUC will allow recovery through rates of the substantial costs incurred in connection with the licensing process and subsequent compliance.

Imposition of onerous conditions in the relicensing and permitting processes could result in Idaho Power incurring significant capital expenditures, increase operating costs (including power purchase costs), and reduce hydropower generation, which could negatively affect results of operations and financial condition.

Idaho Power could be subject to penalties, reputational harm, and operational changes if it violates mandatory reliability and security requirements, which could adversely impact IDACORP's and Idaho Power's results of operations and financial condition.

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Potential monetary and non-monetary penalties for a violation of FERC regulations may be substantial, and in some circumstances monetary penalties may exceed $1.4 mi llion per day per violation.

As a utility with a large customer base, Idaho Power is

subject to adverse publicity focused on the reliability of its services and the speed with which it is able to respond to electric outages caused by storm damage or other unanticipated events.

As a utility with a large customer base, Idaho Power is subject to adverse publicity focused on the reliability of its services and the speed with which it is able to respond to electric outages caused by storm damage or other unanticipated events.

Adverse publicity could harm the reputations of IDACORP and Idaho Power;

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The legal costs and final resolution of matters in which IDACORP or Idaho Power are involved could have reputational impact and a short- or long-term negative effect on their financial condition and results of operations.

Similarly, the terms of resolution could require the companies to change their operational practices and procedures, which could also have a negative effect on their financial positions and results of operations.

Addressing any adverse publicity or governmental scrutiny could be time consuming and expensive, regardless of the basis of the assertions being made, and could impact Idaho Power's relationship with employees, stakeholders, and regulators.

Further, the terms of resolution could require the companies to change their operational practices and procedures, which could also have a negative effect on their financial positions and results of operations.

Changes in accounting standards or rules may impact IDACORP's and Idaho Power's financial results and disclosures.

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Financial and investment risks relate to IDACORP's and Idaho Power's ability to meet financial obligations and mitigate exposure to market risks, including liquidity risks and the ability to raise capital and cost of funding, risks related to credit ratings, credit risk, liquidity, interest rates, and commodity prices.

Volatility or disruptions in the financial markets, failure of IDACORP or Idaho Power to satisfy conditions necessary for obtaining loans or issuing debt securities, and denial of regulatory authority to issue debt or equity securities, may negatively affect IDACORP’s and Idaho Power’s ability to access capital and/or increase their cost of borrowing and ability to execute on their strategic plans .

on their strategic plans .

IDACORP and Idaho Power use credit facilities, commercial paper markets, and long-term debt as significant sources of liquidity and funding for operating and capital requirements and debt maturities not satisfied by operating cash flow.

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Also, while the credit facilities represent a contractual obligation to make loans, one or more of the participating banks may default on their obligations to make loans under, or may withdraw from, the credit facilities.

Idaho Power is required to obtain regulatory approval in Idaho, Oregon, and Wyoming in order to borrow money or to issue securities and is therefore dependent on the public utility commissions of those states to issue favorable orders in a timely

manner to permit them to finance their operations, capital expenditures, and debt maturities.

IDACORP's and Idaho Power's credit facilities include financial covenants that limit the amount of debt that can be outstanding as a percentage of total capital, and Idaho Power's long-term debt has also been issued under an indenture that contains a number of financial covenants.

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If access to capital were to become significantly constrained or costs of capital increased significantly due to lowered credit ratings, prevailing industry conditions, regulatory constraints, the volatility of the capital markets or other factors, IDACORP's and Idaho Power's ability to pursue improvements or acquisitions (including generating capacity and transmission assets, which may be necessary for future growth), liquidity, financial condition, and results of operations could be adversely affected.

Changes in the method for determining LIBOR and the potential replacement of LIBOR may affect our credit facilities and the interest rates on such borrowings.

LIBOR, the London interbank offered rate, is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally.

The interest rates for any borrowings under IDACORP and Idaho Power’s credit facilities, as amended in December 2019, are based on either (1) a floating rate that is equal to the highest of the prime rate, federal funds rate plus 0.5 percent, or LIBOR rate plus 1.0 percent, or (2) the LIBOR rate, plus, in each case, an applicable margin, provided that the federal funds rate and LIBOR rate will not be less than zero percent, provided that, an alternate benchmark rate selected by the administrative agent for the credit facilities and IDACORP and Idaho Power will apply during any period in which the LIBOR rate is unavailable or unascertainable.

In July 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

On November 30, 2020, the ICE Benchmark Administration, the administrator of LIBOR, with the support of the United States Federal Reserve and the United Kingdom's Financial Conduct Authority, announced plans to consult on ceasing publication of LIBOR on December 31, 2021 for only the one week and two month LIBOR tenors, and on June 30, 2023 for all other LIBOR tenors.

While this announcement extends the transition period to June 2023, the United States Federal Reserve concurrently issued a statement advising banks to stop new LIBOR issuances by the end of 2021.

In the United States, the Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate (SOFR) as an alternative to LIBOR.

It is not presently known whether SOFR or any other alternative reference rates that have been proposed will attain market acceptance as replacements of LIBOR.

The consequences of these developments cannot be entirely predicted, but could cause IDACORP and Idaho Power to suffer from potential increases in interest rates on any borrowings.

Idaho Power’s energy risk management policy and programs relating to economically hedging commodity exposures and credit risk may not always perform as intended, and as a result, IDACORP and Idaho Power may suffer economic losses .

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Certain of Idaho Power's purchase or sale, hedging, and derivative agreements may result in the receipt of, or posting of, collateral with counterparties.

Fluctuations in commodity prices that lead to the posting of collateral with counterparties negatively impact liquidity, and

downgrades in Idaho Power's credit ratings may lead to additional collateral posting requirements.

Idaho Power has additional indirect credit exposures to financial institutions in the form of letters of credit provided as security by power suppliers under various purchased power contracts and by vendors for infrastructure development projects.

Fluctuations in commodity prices that lead to the posting of collateral with counterparties negatively impact liquidity, and downgrades in Idaho Power's credit ratings may lead to additional collateral posting requirements.

Idaho Power has additional indirect credit exposures to financial institutions in the form of letters of credit provided as security by power suppliers under

various purchased power contracts and by vendors for infrastructure development projects.

If any of the credit ratings of the letter of credit issuers were to drop below investment grade, the vendor or supplier would need to replace the security with an acceptable substitute, which may be impracticable and may expose Idaho Power to losses resulting from a vendor or supplier default.

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The federal Surface Mining Control and Reclamation Act and state laws and regulations establish operational, reclamation, bonding, and closure obligations and standards for mining of coal.

Bridger Coal Company’s estimate of reclamation liability and bonding obligations is reviewed periodically by Idaho Power’s management committee, audit committee of the board of directors, external and internal auditors, and by government regulators.

BCC’s estimate of reclamation liability and bonding obligations is reviewed periodically by Idaho Power’s management committee, audit committee of the board of directors, external and internal auditors, and by government regulators.

Idaho Power funds a trust and posts collateral in the form of a surety bond purchased jointly with the co-owner of BCC to cover such projected mine reclamation costs pursuant to the laws of the state of Wyoming.

funds are invested in debt and equity securities and poor performance of these investments would reduce the amount of funds available for their intended purpose, which could require Idaho Power to make additional cash contributions.

If actual costs related to those obligations exceed estimates, government regulations relating to those obligations change significantly or unexpected cash funding obligations are required, IDACORP’s and Idaho Power’s results of operations and financial condition could be adversely affected.

The trust funds are invested in debt and equity securities and poor performance of these investments would reduce the amount of funds available for their intended purpose, which could require Idaho Power to make additional cash contributions.

If actual costs related to those

obligations exceed estimates, government regulations relating to those obligations change significantly or unexpected cash funding obligations are required, IDACORP’s and Idaho Power’s results of operations and financial condition could be adversely affected.

As a holding company, IDACORP does not have its own operating income and must rely on the cash flows from its subsidiaries to pay dividends and make debt payments .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors