IDACORP INC 10-K

ida-20221231 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31 , 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ________________________________ Exact name of registrants as specified in Commission File Number their charters, address of principal executive offices, zip code and telephone number I.R.S. Employer Identification No. 1-14465 IDACORP, Inc. 82-0505802 1-3198 Idaho Power Company 82-0130980 1221 W. Idaho Street Boise, ID 83702-5627 (208) 388-2200 State of incorporation: Idaho Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, without par value IDA New York Stock Exchange Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934: Idaho Power Company: Preferred Stock Indicate by check mark whether the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act. IDACORP, Inc. Yes ☒ No ☐ Idaho Power Company Yes ☐ No ☒ Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act. IDACORP, Inc. Yes ☐ No ☒ Idaho Power Company Yes ☐ No ☒ Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ 1 Table of Contents Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files). IDACORP, Inc. Yes ☒ No ☐ Idaho Power Company Yes ☒ No ☐ Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. IDACORP, Inc.: Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Idaho Power Company: Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrants have filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Sections 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. IDACORP, Inc. Yes ☒ No ☐ Idaho Power Company Yes ☒ No ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. IDACORP, Inc. ☐ Idaho Power Company ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). IDACORP, Inc. ☐ Idaho Power Company ☐ Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Act). IDACORP, Inc. Yes ☐ No ☒ Idaho Power Company Yes ☐ No ☒ Aggregate market value of voting and non-voting common stock held by non-affiliates (June 30, 2022): IDACORP, Inc.: $ 5,319,700,024 Idaho Power Company: None Number of shares of common stock outstanding as of February 10, 2023: IDACORP, Inc.: 50,570,167 Idaho Power Company: 39,150,812 , all held by IDACORP, Inc. 2 Table of Contents Documents Incorporated by Reference: Part III, Items 10 - 14 Portions of IDACORP, Inc.’s definitive proxy statement to be filed pursuant to Regulation 14A for the 2023 annual meeting of shareholders. This combined Form 10-K represents separate filings by IDACORP, Inc. and Idaho Power Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Idaho Power Company makes no representation as to the information relating to IDACORP, Inc.’s other operations. Idaho Power Company meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format. 3 Table of Contents TABLE OF CONTENTS Page Commonly Used Terms 5 Cautionary Note Regarding Forward-Looking Statements 6 Part I Item 1 Business 8 Information about our Executive Officers 22 Item 1A Risk Factors 23 Item 1B Unresolved Staff Comments 36 Item 2 Properties 36 Item 3 Legal Proceedings 37 Item 4 Mine Safety Disclosures 37 Part II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 38 Item 6 Reserved Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A Quantitative and Qualitative Disclosures About Market Risk 76 Item 8 Financial Statements 79 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 136 Item 9A Controls and Procedures 136 Item 9B Other Information 140 Item 9C Disclosure Regarding Foreign Jurisdiction that Prevent Inspections 140 Part III Item 10 Directors, Executive Officers and Corporate Governance* 140 Item 11 Executive Compensation* 140 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters* 140 Item 13 Certain Relationships and Related Transactions, and Director Independence* 141 Item 14 Principal Accountant Fees and Services* 141 Part IV Item 15 Exhibits and Financial Statement Schedules 142 Item 16 Form 10-K Summary 151 Signatures 152 * Except as indicated in Items 10, 12, and 14, IDACORP, Inc. information is incorporated by reference to IDACORP, Inc.'s definitive proxy statement for the 2023 annual meeting of shareholders. 4 Table of Contents COMMONLY USED TERMS The following select abbreviations, terms, or acronyms are commonly used or found in multiple locations in this report: 2022 Annual Report - IDACORP's and Idaho Power's Annual Report on Form 10-K for the year ended December 31, 2022 MD&A - Management’s Discussion and Analysis of Financial Condition and Results of Operations ADITC - Accumulated Deferred Investment Tax Credits MMBtu - Million British Thermal Units AFUDC - Allowance for Funds Used During Construction Moody's - Moody’s Investors Service AOCI - Accumulated Other Comprehensive Income MW - Megawatt BCC - Bridger Coal Company, a joint venture of IERCo MWh - Megawatt-hour BLM - U.S. Bureau of Land Management NAAQS - National Ambient Air Quality Standards CAA - Clean Air Act NAV - Net Asset Value CO 2 - Carbon Dioxide NEPA - National Environmental Policy Act CWA - Clean Water Act NMFS - National Marine Fisheries Service EIS - Environmental Impact Statement NOAA Fisheries - National Oceanic and Atmospheric Administration's National Marine Fisheries Service EPA - U.S. Environmental Protection Agency NO x - Nitrogen Oxide ESA - Endangered Species Act O&M - Operations and Maintenance ESG - Environmental, Social, and Governance OATT - Open Access Transmission Tariff FCA - Idaho Fixed Cost Adjustment OPUC - Public Utility Commission of Oregon FERC - Federal Energy Regulatory Commission PCA - Idaho-jurisdiction Power Cost Adjustment FPA - Federal Power Act PCAM - Oregon Power Cost Adjustment Mechanism GAAP - Generally Accepted Accounting Principles PURPA - Public Utility Regulatory Policies Act of 1978 GHG - Greenhouse Gas REC - Renewable Energy Credit HCC - Hells Canyon Complex RPS - Renewable Portfolio Standard IDACORP - IDACORP, Inc., an Idaho Corporation SEC - U.S. Securities and Exchange Commission Idaho Power - Idaho Power Company, an Idaho Corporation SIP - State Implementation Plan Idaho ROE - Idaho-jurisdiction return on year-end equity SMSP - Security Plan for Senior Management Employees Ida-West - Ida-West Energy Company, a subsidiary of IDACORP, Inc. SOFR - Secured Overnight Financing Rate administered by the Federal Reserve Bank of New York IERCo - Idaho Energy Resources Co., a subsidiary of Idaho Power Company SO 2 - Sulfur Dioxide IFS - IDACORP Financial Services, Inc., a subsidiary of IDACORP, Inc. USACE - U.S. Army Corps of Engineers IPUC - Idaho Public Utilities Commission USFWS - U.S. Fish and Wildlife Service IRP - Integrated Resource Plan Western EIM - Energy imbalance market implemented in the western United States Jim Bridger plant - Jim Bridger power plant WDEQ - Wyoming Department of Environmental Quality kWh - Kilowatt-hour WMP - Wildfire Mitigation Plan LTICP - IDACORP 2000 Long-Term Incentive and Compensation Plan WOTUS - Waters of the United States MATS - Mercury and Air Toxics Standards WPSC - Wyoming Public Service Commission 5 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS In addition to the historical information contained in this report, this report contains (and oral communications made by IDACORP, Inc. (IDACORP) and Idaho Power Company (Idaho Power) may contain) statements that relate to future events and expectations, such as statements regarding projected or future financial performance, cash flows, capital expenditures, dividends, capital structure or ratios, load forecasts, strategic goals, challenges, objectives, and plans for future operations. Such statements constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, or future events or performance, often, but not always, through the use of words or phrases such as "anticipates," "believes," "could," "estimates," "expects," "intends," "potential," "plans," "predicts," "preliminary," "projects," "may," "may result," "may continue," or similar expressions, are not statements of historical facts and may be forward-looking. Forward-looking statements are not guarantees of future performance and involve estimates, assumptions, risks, and uncertainties that may differ materially from actual results, performance, or outcomes. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in forward-looking statements include those factors set forth in Part I, Item 1A - "Risk Factors" and Part II, Item 7 - "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this report, subsequent reports filed by IDACORP and Idaho Power with the U.S. Securities and Exchange Commission (SEC), and the following important factors: • decisions by the Idaho and Oregon public utilities commissions and the Federal Energy Regulatory Commission that impact Idaho Power's ability to recover costs and earn a return on investment; • changes to or the elimination of Idaho Power's regulatory cost recovery mechanisms; • impacts of economic conditions, including an inflationary or recessionary environment and increasing interest rates, on items such as operations and capital investments, supply costs and delivery delays, supply scarcity and shortages, population growth or decline in Idaho Power's service area, changes in customer demand for electricity, revenue from sales of excess power, credit quality of counterparties and suppliers and their ability to meet financial and operational commitments, and collection of receivables; • changes in residential, commercial, and industrial growth and demographic patterns within Idaho Power's service area, and the associated impacts on loads and load growth; • abnormal or severe weather conditions (including conditions and events associated with climate change), wildfires, droughts, earthquakes, and other natural phenomena and natural disasters, which affect customer sales, hydropower generation levels, repair costs, service interruptions, liability for damage caused by utility property, and the availability and cost of fuel for generation plants or purchased power to serve customers; • advancement of self-generation, energy storage, energy efficiency, alternative energy sources, and other technologies that may reduce Idaho Power's sale or delivery of electric power or introduce operational vulnerabilities to the power grid; • expense and risks associated with capital expenditures for, and the permitting and construction of, utility infrastructure that Idaho Power may be unable to complete or that may not be deemed prudent by regulators for full cost recovery or a full return on investment; • power demand exceeding supply, and the rapid addition of new industrial and commercial customer load and the volatility of such new load demand, resulting in increased costs for purchasing energy and capacity in the market, if available, or acquiring or constructing additional generation, transmission, and battery storage facilities; • variable hydrological conditions and over-appropriation of surface and groundwater in the Snake River Basin, which may impact the amount of power generated by Idaho Power's hydropower facilities; • Idaho Power's ability to acquire fuel, power, electrical equipment, and transmission capacity on reasonable terms and prices, particularly in the event of unanticipated or abnormally high resource demands, price volatility, lack of physical availability, transportation constraints, outages due to maintenance or repairs to generation or transmission facilities, disruptions in the supply chain, or credit quality or a lack of credit of counterparties and suppliers; • disruptions or outages of Idaho Power’s generation or transmission systems or of any interconnected transmission systems, which can result in liability for Idaho Power, increase power supply costs and repair expenses, and reduce revenues; • accidents, electrical contacts, fires (either affecting or caused by Idaho Power facilities or infrastructure), explosions, infrastructure failures, general system damage or dysfunction, and other unplanned events that may occur while operating and maintaining assets, which can cause unplanned outages; reduce generating output, damage company assets, operations, or reputation; subject Idaho Power to third-party claims for property damage, personal injury, or 6 Table of Contents loss of life; or result in the imposition of fines and penalties for which Idaho Power may have inadequate insurance coverage; • acts or threats of terrorist incidents, 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, or the disruption or damage to the companies’ business, operations, or reputation resulting from such events; • increased purchased power costs and operational and reliability challenges associated with purchasing and integrating intermittent renewable energy sources into Idaho Power's resource portfolio; • Idaho Power’s concentration in one industry and one region, and the resulting exposure to regional economic conditions and regional legislation and regulation; • employee workforce factors, including the operational and financial costs of unionization or the attempt to unionize all or part of the companies’ workforce, the cost and ability to attract and retain skilled workers and third-party contractors, the cost of living and the related impact on recruiting employees, and the ability to adjust to fluctuations in labor costs; • failure to comply with state and federal laws, regulations, and orders, including interpretations and enforcement initiatives by regulatory and oversight bodies, which may result in penalties and fines and increase the cost of compliance and remediation; • changes in tax laws or related regulations or interpretations of applicable laws by federal, state, or local taxing jurisdictions, and the availability of tax credits; • adoption of, changes in, and costs of compliance with, laws, regulations, and policies relating to the environment, climate change, natural resources, and threatened and endangered species, and the ability to recover associated increased operational and compliance costs through rates; • inability to timely obtain and the cost of obtaining and complying with required governmental permits and approvals, licenses, rights-of-way, and siting for transmission and generation projects and hydropower facilities; • failure to comply with mandatory reliability and cyber and physical security requirements, which may result in penalties, reputational harm, and operational changes; • ability to obtain debt and equity financing or refinance existing debt when necessary and on favorable terms, which can be affected by factors such as credit ratings, volatility or disruptions in the financial markets, interest rate fluctuations, decisions by the Idaho or Oregon public utility commissions, and the companies' past or projected financial performance; • ability to enter into financial and physical commodity hedges with creditworthy counterparties to manage price and commodity risk for fuel, power, and transmission, and the failure of any such risk management and hedging strategies to work as intended, and the potential losses the companies may incur on those hedges, which can be affected by factors such as the volume of hedging transactions and degree of price volatility; • changes in actuarial assumptions, changes in interest rates, increasing health care costs, and the actual and projected return on plan assets for pension and other post-retirement plans, which can affect future pension and other postretirement plan funding obligations, costs, and liabilities and the companies' cash flows; • the remediation costs associated with planned exits from participation in Idaho Power’s co-owned coal plants; • ability to continue to pay dividends and achieve target dividend payout ratios based on financial performance, capital requirements, and in light of credit rating considerations, contractual covenants and restrictions, and regulatory limitations; and • adoption of or changes in accounting policies and principles, changes in accounting estimates, and new SEC or New York Stock Exchange requirements, or new interpretations of existing requirements. Any forward-looking statement speaks only as of the date on which such statement is made. N ew factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. IDACORP and Idaho Power disclaim any obligation to update publicly any forward-looking information, whether in response to new information, future events, or otherwise, except as required by applicable law. 7 Table of Contents PART I ITEM 1. BUSINESS OVERVIEW Background IDACORP, Inc. (IDACORP) is a holding company incorporated in 1998 under the laws of the state of Idaho. Its principal operating subsidiary is Idaho Power Company (Idaho Power). IDACORP is subject to the provisions of the Public Utility Holding Company Act of 2005, which provides the Federal Energy Regulatory Commission (FERC) and state utility regulatory commissions with access to books and records and imposes record retention and reporting requirements on IDACORP. Idaho Power was incorporated under the laws of the state of Idaho in 1989 as the successor to a Maine corporation that was organized in 1915 and began operations in 1916. Idaho Power is an electric utility engaged in the generation, transmission, distribution, sale, and purchase of electric energy and capacity and is regulated by the state regulatory commissions of Idaho and Oregon and by the FERC. Idaho Power is the parent of Idaho Energy Resources Co. (IERCo), a joint venturer in Bridger Coal Company (BCC), which mines and supplies coal to the Jim Bridger power plant (Jim Bridger plant) owned in part by Idaho Power. Idaho Power's utility operations constitute nearly all of IDACORP's current business operations. IDACORP’s other notable subsidiaries include IDACORP Financial Services, Inc. (IFS), an investor in affordable housing and other real estate tax credit investments, and Ida-West Energy Company (Ida-West), an operator of small hydropower generation projects that satisfy the requirements of the Public Utility Regulatory Policies Act of 1978 (PURPA). IDACORP’s and Idaho Power’s principal executive offices are located at 1221 W. Idaho Street, Boise, Idaho 83702, and the telephone number is (208) 388-2200. Available Information IDACORP and Idaho Power make available free of charge on their websites their Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934 as soon as reasonably practicable after the reports are electronically filed with or furnished to the U.S. Securities and Exchange Commission. IDACORP's website is www.idacorpinc.com and Idaho Power's website is www.idahopower.com . The contents of these websites are not part of IDACORP's and Idaho Power's Annual Report on Form 10-K for the year ended December 31, 2022 (2022 Annual Report). UTILITY OPERATIONS Background Idaho Power provided electric utility service to approximately 618,000 retail customers in southern Idaho and eastern Oregon as of December 31, 2022. Approximately 518,000 of these customers are residential. Idaho Power’s principal commercial and industrial customers are involved in food processing, electronics and general manufacturing, agriculture, health care, government, and education. Idaho Power also provides irrigation customers with electric utility service to operate irrigation pumps during the agricultural growing season. Idaho Power holds franchises, typically in the form of right-of-way arrangements, in 72 cities in Idaho and 7 cities in Oregon and holds certificates from the respective public utility regulatory authorities to serve all or a portion of 25 counties in Idaho and 3 counties in Oregon. Idaho Power's service area is shaded in the illustration on the following page and covers approximately 24,000 square miles with an estimated population of 1.4 million. 8 Table of Contents Idaho Power is under the jurisdiction (as to rates, service, accounting, and other general matters of utility operation) of the Idaho Public Utilities Commission (IPUC), the Public Utility Commission of Oregon (OPUC), and the FERC. The IPUC and OPUC determine the rates that Idaho Power is authorized to charge to its retail customers. Idaho Power is also under the regulatory jurisdiction of the IPUC, the OPUC, and the Wyoming Public Service Commission as to the issuance of debt and equity securities. As a public utility under the Federal Power Act (FPA), Idaho Power has authority to charge market-based rates for wholesale energy sales under its FERC tariff and to provide transmission services under its open access transmission tariff (OATT). Additionally, the FERC has jurisdiction over Idaho Power's sales of transmission capacity and wholesale electricity, hydropower project relicensing, and system reliability and security, among other items. Regulatory Accounting Idaho Power meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation, with the impacts of rate regulation reflected in its financial statements. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant, and equipment; regulatory assets and liabilities; operating revenues; other operations and maintenance expense; depreciation expense; and income tax expense. These principles sometimes result in Idaho Power recording expenses and revenues in a different period than when an unregulated enterprise would record such expenses and revenues. In these instances, the amounts are deferred or accrued as regulatory assets or regulatory liabilities on the balance sheet and recorded on the income statement when recovered or returned in rates or when otherwise directed to begin amortization by a regulator. Additionally, regulators can impose regulatory liabilities upon a regulated company for amounts previously collected from customers that are expected to be refunded. Idaho Power records regulatory assets or liabilities if it expects the amounts will be reflected in future customer rates, based on regulatory orders or other available evidence. Consistent with orders and directives of the IPUC, unless contrary to applicable income tax guidance, Idaho Power does not provide deferred income tax expense or benefit for certain income tax temporary differences and instead recognizes the tax impact currently (commonly referred to as flow-through accounting) for rate making and financial reporting. Therefore, Idaho Power's effective income tax rate is impacted as these differences arise and reverse. Idaho Power recognizes such adjustments as regulatory assets or liabilities if it is probable that the amounts will be recovered from or returned to customers in future rates. 9 Table of Contents Business Strategy IDACORP is committed to its focus on competitive total returns and generating long-term value for shareholders. IDACORP’s business strategy emphasizes Idaho Power as its core business, as Idaho Power's regulated utility operations are the primary driver of IDACORP's operating results. IDACORP’s strategy is focused on four areas: growing financial strength, improving Idaho Power's core business, enhancing Idaho Power’s brand, and keeping employees safe and engaged. IDACORP's board of directors has reviewed and affirmed IDACORP’s long-term strategy. In executing on these four strategic cornerstones, IDACORP seeks to balance the interests of shareowners, Idaho Power customers, employees, and other stakeholders. Idaho Power is committed to working for strong, sustainable financial results by continuing to safely provide reliable, affordable, clean energy to its customers from diversified generation resources. Rates and Revenues Idaho Power generates revenue primarily through the sale of electricity to retail and wholesale customers and the provision of transmission service. The prices that the IPUC, the OPUC, and the FERC authorize Idaho Power to charge for electric power and services are critical factors in determining IDACORP's and Idaho Power's results of operations and financial condition. In addition to the discussion below, more information on Idaho Power's regulatory framework and rate regulation can be found in the “Regulatory Matters” section of Part II, Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) and Note 3 – “Regulatory Matters” to the consolidated financial statements included in this report. Retail Rates : Idaho Power's rates for retail electric services are generally determined on a “cost of service” basis. Rates are designed to provide, after recovery of allowable operating expenses, including depreciation on capital investments, an opportunity for Idaho Power to earn a reasonable return on investment as authorized by regulators. Idaho Power regularly evaluates the need to request changes in its retail electricity price structure through the use of general rate cases, power cost adjustment mechanisms in Idaho and Oregon, a fixed cost adjustment (FCA) mechanism in Idaho, balancing accounts and tariff riders, and subject-specific filings to recover its costs of providing service and to earn a return on investment. Retail prices are generally determined through formal ratemaking proceedings that are conducted under established procedures and schedules before the issuance of a final order. Participants in these proceedings include Idaho Power, the staffs of the IPUC or OPUC, and other interested parties. The IPUC and OPUC are charged with ensuring that the prices and terms of service are fair, non-discriminatory, and provide Idaho Power an opportunity to recover its prudently incurred or allowable costs and expenditures and earn a reasonable return on investment. The ability to request rate changes does not, however, ensure that Idaho Power will recover all of its costs or earn a specified rate of return, or that its costs will be recovered in advance of or at the same time when the costs are incurred. In addition to general rate case filings, ratemaking proceedings can involve charges or credits related to specific costs, programs, or activities, as well as the recovery or refund of amounts deferred or accrued under specific authorization from the IPUC or OPUC. Deferred amounts are generally collected from, and accrued amounts are generally refunded to, retail customers through the use of base rates or supplemental tariffs. Outside of base rates, three of the most significant mechanisms for recovery of costs are the power cost adjustment mechanisms, FCA mechanism, and energy efficiency riders. For more information on these mechanisms, see Note 3 – “Regulatory Matters” and Note 4 – “Revenues” to the consolidated financial statements included in this report. Retail Energy Sales: Weather, seasonal customer demand, energy efficiency, customer generation, customer growth, and economic conditions all impact the amount of electricity that Idaho Power sells as well as the costs it incurs to provide that electricity. Idaho Power's utility revenues are not earned, and associated expenses are not incurred, evenly during the year. Idaho Power’s retail energy sales typically peak during the summer irrigation and cooling season, with a lower peak during the winter heating season. Extreme temperatures increase sales to customers who use electricity for cooling and heating, and mild temperatures decrease sales. Availability of water and extreme temperatures during the agricultural growing season impact electricity sales to customers who use electricity to operate irrigation pumps. Alternative methods of generation, including customer-owned solar and other forms of distributed generation, have the potential to decrease Idaho Power sales to customers. Also, development of new technologies and services to help energy consumers manage energy in new ways could continue to alter demand for Idaho Power's electric energy. Approximately 95 percent of Idaho Power’s retail revenue originates from customers located in Idaho, with the remainder originating from customers located in Oregon. Idaho Power’s operations, including information on energy sales, are discussed further in Part II, Item 7 - MD&A - "Results of Operations - Utility Operations.” 10 Table of Contents The table that follows presents Idaho Power’s revenues and sales volumes for the last three years, classified by customer type. Year Ended December 31, 2022 2021 2020 Retail revenues (thousands of dollars): Residential (includes $22,595, $34,835, and $34,409, respectively, related to the FCA (1) ) $ 645,236 $ 583,061 $ 547,404 Commercial (includes $922, $1,407, and $1,543, respectively, related to the FCA (1) ) 347,970 314,745 293,057 Industrial 217,368 195,214 181,258 Irrigation 170,964 168,664 154,791 Provision for sharing — (569) — Deferred revenue related to HCC relicensing AFUDC (2) (8,780) (8,780) (8,780) Total retail revenues 1,372,758 1,252,335 1,167,730 Wholesale energy sales 66,519 40,839 33,656 Transmission wheeling-related revenues 80,527 67,997 51,592 Energy efficiency program revenues 33,197 29,920 42,478 Other revenues 88,039 64,319 51,884 Total electric utility operating revenues $ 1,641,040 $ 1,455,410 $ 1,347,340 Energy sales (thousands of Megawatt-hour (MWh)): Residential 6,056 5,645 5,463 Commercial 4,306 4,164 4,009 Industrial 3,510 3,471 3,369 Irrigation 1,950 2,126 1,987 Total retail energy sales 15,822 15,406 14,828 Wholesale energy sales 427 600 1,197 Energy sales bundled with renewable energy credits 892 739 690 Total energy sales 17,141 16,745 16,715 (1) The FCA mechanism is an alternative revenue program in the Idaho jurisdiction and does not represent revenue from contracts with customers as disclosed in Note 4 – “Revenues” to the consolidated financial statements included in this report. (2) The IPUC allows Idaho Power to recover a portion of the allowance for funds used during construction (AFUDC) on construction work in progress related to the Hells Canyon Complex (HCC) relicensing process, even though the relicensing process is not yet complete and the costs have not been moved to electric plant in service. Idaho Power is collecting $8.8 million annually in the Idaho jurisdiction but is deferring revenue recognition of the amounts collected until the license is issued and the accumulated license costs approved for recovery are placed in service. Wholesale Markets : Idaho Power participates in the wholesale energy markets by purchasing power to help meet load demands and selling power that is in excess of load demands. Idaho Power's market activities are guided by an energy risk management policy and frequently updated operating plans. These operating plans are impacted by factors such as customer demand for power, market prices, generating costs, transmission constraints, and availability of generating resources. Some of Idaho Power's 17 hydropower generation facilities are operated to optimize the water that is available by choosing when to run hydropower generation units and when to store water in reservoirs. Idaho Power at times operates these and its other generation facilities to take advantage of market opportunities. These decisions affect the timing and volumes of market purchases and market sales. Even in below-normal water years, there are opportunities to vary water usage to capture wholesale marketplace economic benefits, maximize generation unit efficiency, and meet peak loads. Compliance factors such as allowable river and reservoir stage elevation changes and flood control requirements also influence these generation dispatch decisions. Idaho Power's wholesale energy sales depend largely on the availability of generation resources above the amount necessary to serve customer loads as well as market power prices at the time when those resources are available. A reduction in either factor leads to lower wholesale energy sales. Idaho Power also provides energy transmission services through its OATT. The OATT rate is revised each year based primarily on financial and operational data Idaho Power files annually with the FERC in its Form 1. The FERC oversees mandatory transmission and network reliability standards, as well as power and transmission markets, including protection against market manipulation. These mandatory transmission and reliability standards were developed by the North American Electric Reliability Corporation and the Western Electricity Coordinating Council, which have responsibility for compliance and enforcement of transmission, reliability, and security standards. 11 Table of Contents Competition: Idaho Power's electric utility business has historically been recognized as a natural monopoly. Idaho Power competes with fuel distribution companies, including natural gas providers, in serving the energy needs of customers for space heating, water heating, and appliances. Alternative methods of generation, including customer-owned solar and other forms of distributed generation, and energy efficiency measures, also have the potential to decrease Idaho Power sales to existing customers. Idaho Power also participates in the wholesale energy markets and in the electric transmission markets. Generally, these wholesale markets are regulated by the FERC, which requires electric utilities to transmit power to or for wholesale purchasers and sellers and make available, on a non-discriminatory basis, transmission capacity for the purpose of providing these services. In return for agreeing to provide service to all customers within a defined service area, electric utilities are typically provided with an exclusive right to provide service in that service area. However, certain prescribed areas within Idaho Power's service area, such as municipalities or Native American Tribal reservations, may elect not to take service from Idaho Power and instead operate as a municipal electric utility or otherwise as a separate entity. In such cases, the entity would be required to purchase or otherwise obtain rights to Idaho Power's distribution infrastructure within the municipal or other designated area. Idaho Power would have no responsibility for providing electric service to the municipal or separate entity, absent Idaho Power's voluntary agreement to provide that service. Power Supply Overview: Idaho Power primarily relies on company-owned hydropower, coal-fired, and gas-fired generation facilities and long-term power purchase agreements to supply the energy needed to serve customers, and for power sales into the wholesale markets. Market purchases and sales are used to supplement Idaho Power's generation and balance supply and demand throughout the year. Idaho Power’s generating plants and their capacities are listed in Part I, Item 2 - “Properties.” Various external and internal factors impact power supply costs, such as weather, load demand, economic conditions, fuel costs, and availability of generation resources. Idaho Power’s annual hydropower generation varies depending on water conditions in the Snake River Basin. Drought conditions and increased peak load demand cause a greater reliance on potentially more expensive energy sources to meet load requirements. Conversely, favorable hydropower generation conditions increase production at Idaho Power’s hydropower generating facilities and reduce the need for thermal generation and wholesale market purchased power. Weather also affects the generation of PURPA and non-PURPA purchased power. Economic conditions, weather, supply constraints, and governmental regulations can affect the market price of natural gas and coal, which impact fuel expense and market prices for purchased power. Idaho Power's power cost adjustment mechanisms mitigate in large part the earnings impacts to Idaho Power of volatile fuel and power costs. Idaho Power’s system is dual peaking, with the larger peak demand occurring in the summer. Idaho Power reached its highest all-time system peak demand of 3,751 megawatts (MW) on June 30, 2021. Idaho Power's highest all-time winter peak demand of 2,604 MW occurred on December 22, 2022. During these and other similar heavy load periods, Idaho Power’s system is fully committed to serve load and meet required operating reserves. The table that follows shows Idaho Power’s total power supply for the last three years. Power Supply Percent of Total Generation 2022 2021 2020 2022 2021 2020 (thousands of MWh) Hydropower plants 5,347 5,382 6,967 48 % 48 % 54 % Coal-fired plants 3,657 2,981 3,719 32 % 27 % 29 % Natural gas-fired plants 2,319 2,765 2,109 20 % 25 % 17 % Total system generation 11,323 11,128 12,795 Purchased power - cogeneration and small power production 2,756 3,040 3,087 Purchased power - other 4,422 3,783 1,985 Total purchased power 7,178 6,823 5,072 Total power supply 18,501 17,951 17,867 12 Table of Contents Hydropower Generation : Idaho Power operates 17 hydropower projects located on the Snake River and its tributaries. Together, these hydropower facilities provide a total nameplate capacity of 1,799 MW and have averaged total annual generation of approximately 7.7 million MWh over the last 30 years. The amount of water available for hydropower generation depends on several factors—the amount of snowpack in the mountains upstream of Idaho Power’s hydropower facilities, upstream reservoir storage, springtime precipitation and temperatures, main river and tributary base flows, the condition of the Eastern Snake Plain Aquifer and its spring flow impact, summertime irrigation withdrawals and returns, and upstream reservoir regulation. Idaho Power actively participates in collaborative work groups focused on water management issues in the Snake River Basin, with the goal of preserving the long-term availability of water for use at Idaho Power’s hydropower projects on the Snake River. During low water years, when stream flows into Idaho Power’s hydropower projects are reduced, Idaho Power’s hydropower generation is reduced, resulting in a greater reliance on other generation resources and wholesale power purchases. In 2022, below-normal snow accumulation and drought conditions persisted, resulting in lower than average hydropower generation of 5.3 million MWh. In 2021, below-normal snow accumulation and drought conditions resulted in lower than average hydropower generation of 5.4 million MWh. In 2020, snowpack conditions, coupled with strong early season irrigation demands, yielded lower inflows to Idaho Power’s hydroelectric projects and resulted in 7.0 million MWh of hydropower generation. For 2023, snow accumulation has been strong through the date of this report; however, upstream reservoirs and basin soils continue to reflect the prior year's drought conditions. As such, Idaho Power's 2023 estimate of annual generation from its hydropower facilities is between 5.5 million MWh and 7.5 million MWh. Idaho Power obtains licenses for its hydropower projects from the FERC, similar to other utilities that operate nonfederal hydropower projects on qualified waterways. The licensing process includes an extensive public review process and involves numerous natural resource and environmental agencies. The licenses last from 30 to 50 years depending on the size, complexity, and cost of the project. Idaho Power is actively pursuing the FERC relicensing of the HCC, its largest hydropower generation source, and American Falls, its second largest hydropower resource. Idaho Power also has Oregon licenses for the HCC under the Oregon Hydroelectric Act. For further information on relicensing activities, see Part II, Item 7 – MD&A – "Regulatory Matters – Relicensing of Hydropower Projects.” Idaho Power is subject to the provisions of the FPA as a “public utility” and as a “licensee” by virtue of its hydropower operations. As a licensee under Part I of the FPA, Idaho Power and its licensed hydropower projects are subject to conditions described in the FPA and related FERC regulations. These conditions and regulations include, among other items, provisions relating to condemnation of a project upon payment of just compensation, amortization of project investment from excess project earnings, and possible takeover of a project after expiration of its license upon payment of net investment and severance damages. Coal-Fired Generation : Idaho Power co-owns the following coal-fired power plants: • Jim Bridger, located in Wyoming, in which Idaho Power has a one-third interest; and • North Valmy, located in Nevada, in which Idaho Power has a 50 percent interest. PacifiCorp is the operator of the Jim Bridger plant. BCC supplies coal to the Jim Bridger plant. IERCo, a wholly-owned subsidiary of Idaho Power, owns a one-third interest in BCC and PacifiCorp owns a two-third interest in BCC and is the operator of the Bridger Coal Mine. The mine operates under a long-term sales agreement that provides for delivery of coal through 2024. BCC has reserves to provide coal deliveries through the current term of the agreement, as well as reserves available to allow for an extension of the term agreement. Idaho Power also has a coal supply contract providing for annual deliveries of coal through December 2023 from the Black Butte mine located near the Jim Bridger plant. This contract supplements the BCC deliveries and provides another coal supply to fuel the Jim Bridger plant. The Jim Bridger plant’s rail load-in facility and unit coal train, while limited, provides the opportunity to access other fuel supplies for tonnage requirements above established contract minimums. Idaho Power's 2021 Integrated Resource Plan (2021 IRP) identified a preferred resource portfolio and action plan that includes the conversion from coal to natural gas of two units at the Jim Bridger plant in 2024 and an end to Idaho Power's participation in the remaining two coal-fired units at the Jim Bridger plant by the end of 2028. For more information on the 2021 IRP, refer to "Resource Planning" in this Item 1 – "Business." In June 2022, the IPUC approved Idaho Power's amended application, with modifications, requesting authorization to allow the Jim Bridger plant to be fully depreciated and recovered through customer rates by end-of-year 2030. Details of the order relating to the Jim Bridger plant are described more fully in Part II, Item 7 – MD&A – "Regulatory Matters." 13 Table of Contents NV Energy is the operator of the North Valmy plant. Idaho Power expects to meet 2023 and future fuel requirements through existing inventory and new or existing coal supply contracts. Idaho Power has an established process approved by the IPUC and OPUC for recovery of non-fuel costs related to Idaho Power’s plan to end its participation in coal-fired operations at the North Valmy plant. Idaho Power ended its participation in coal-fired operations at unit 1 of the North Valmy plant in December 2019, as planned. Idaho Power's 2021 IRP identified a preferred resource portfolio and action plan that includes plans to end Idaho Power's participation in coal-fired operations at unit 2 at the end of 2025. Natural Gas-fired Generation : Idaho Power owns and operates the Langley Gulch natural gas-fired combined-cycle combustion turbine power plant and the Danskin and Bennett Mountain natural gas-fired simple-cycle combustion turbine power plants. All three plants are located in Idaho. Idaho Power operates the Langley Gulch plant as a baseload unit and the Danskin and Bennett Mountain plants to meet peak supply needs. The plants are also used to take advantage of wholesale market opportunities. Natural gas for all facilities is purchased based on system requirements and dispatch efficiency. The natural gas is transported through the Williams-Northwest Pipeline under Idaho Power's 55,584 million British thermal units (MMBtu) per day long-term gas transportation service agreements. These transportation agreements vary in contract length but generally contain the right for Idaho Power to extend the term. In addition to the long-term gas transportation service agreements, Idaho Power has entered into a long-term storage service agreement with Northwest Pipeline for 131,453 MMBtu of total storage capacity at the Jackson Prairie Storage Project. This firm storage contract expires in 2043. Idaho Power purchases and stores natural gas with the intent of fulfilling needs as identified for seasonal peaks or to meet system requirements. As of February 10, 2023, Idaho Power had approximately 34.4 million MMBtu of natural gas financially hedged for physical delivery, primarily for the operational dispatch of the Langley Gulch plant through August 2024. Idaho Power plans to manage the procurement of additional natural gas for the peaking units primarily on the daily spot market or from storage inventory as necessary to meet system requirements and fueling strategies. Purchased Power : As described below, Idaho Power purchases power in the wholesale market as well as pursuant to long-term power purchase contracts and exchange agreements. Wholesale Market Transactions : To supplement its self-generated power and long-term purchase arrangements, Idaho Power purchases power in the wholesale market based on economics, operating reserve margins, energy risk management policy guidelines, and unit availability. Depending on availability of excess power or generation capacity, pricing, and opportunities in the markets, Idaho Power also sells power in the wholesale markets. During 2022 and 2021, Idaho Power purchased 3.9 million MWh and 3.2 million MWh, respectively, of power through wholesale market purchases at an average cost of $74.16 per MWh and $40.65 per MWh, respectively. During 2022 and 2021, Idaho Power sold 0.4 million MWh and 0.6 million MWh of power in wholesale market sales, respectively, with an average price of $155.78 per MWh and $68.07 per MWh, respectively. Idaho Power has two firm multi-year wholesale purchased power contracts to address increased demand during summer months. These agreements total approximately 150 MW per hour during peak summer periods through 2024. Long-term Power Purchase and Exchange Arrangements : In addition to its wholesale market purchases, Idaho Power has the following notable long-term power purchase contracts and energy exchange agreements: • Jackpot Holdings, LLC - for 120 MW (nameplate generation) from the Jackpot solar facility located in southern Idaho and on-line in December 2022. The contract term ends in 2042. • Telocaset Wind Power Partners, LLC - for 101 MW (nameplate generation) from the Elkhorn Valley wind project located in eastern Oregon. The contract term ends in 2027. • USG Oregon LLC - for 22 MW (estimated average annual output) from the Neal Hot Springs Unit #1 geothermal power plant located near Vale, Oregon. The contract term ends in 2037. • Clatskanie People's Utility - for up to 18 MW of generation from the Arrowrock hydropower project in southern Idaho in exchange for energy from Idaho Power's system or power purchased at the Mid-Columbia trading hub. The contract term ends in 2025. • Raft River Energy I, LLC - for up to 13 MW (estimated average annual output) from its Raft River Geothermal Power Plant Unit #1 located in southern Idaho. The contract term ends in 2033. • Black Mesa Energy, LLC - a 20-year power purchase agreement to purchase the output from a planned 40-MW solar facility, which Idaho Power plans to sell exclusively to a large industrial customer under its Clean Energy Your Way program, with a scheduled in-service date of June 2023. 14 Table of Contents • Franklin Solar LLC - a 25-year power purchase agreement to purchase the output from a planned 100-MW solar facility located in southern Idaho, with a scheduled in-service date of June 2024; the power purchase agreement is pending IPUC approval. • Pleasant Valley Solar, LLC - a 20-year power purchase agreement to purchase the output from a planned 200-MW solar facility, which Idaho Power plans to sell exclusively to a large industrial customer under its Clean Energy Your Way program, with a scheduled in-service date of March 2025; the power purchase agreement is pending IPUC approval. PURPA Qualifying Facility Energy Sales Agreements : Idaho Power purchases power from PURPA qualifying facilities as mandated by federal law. As of December 31, 2022, Idaho Power had contracts with on-line PURPA qualifying facilities with a total of 1,137 MW of nameplate generation capacity, with an additional 75 MW nameplate capacity of projects projected to be on-line through 2024. The energy sales agreements for these qualifying facilities have original contract terms ranging from one to 35 years. The expense and volume of purchases from PURPA qualifying facilities during the last three years is included in the following table: Year Ended December 31, 2022 2021 2020 PURPA contracts expense (in thousands) $ 189,367 $ 199,517 $ 194,380 MWh purchased under PURPA contracts (in thousands) 2,756 3,040 3,087 Average cost per MWh from PURPA contracts $ 68.71 $ 65.63 $ 62.97 Pursuant to the requirements of PURPA, the IPUC and OPUC have each issued orders and rules regulating Idaho Power’s purchase of power from qualifying facilities that meet the requirements of PURPA. A key component of the PURPA contracts is the energy price contained within the agreements. PURPA regulations specify that a utility must pay energy prices based on the utility’s avoided costs. The IPUC and OPUC have established specific rules and regulations to calculate the avoided cost that Idaho Power is required to include in PURPA energy sales agreements under each state's jurisdiction. For PURPA energy sales agreements, Idaho Power is required to purchase all of the output delivered from the contracted qualifying facilities, subject to some exceptions such as adverse impacts on system reliability. The Idaho jurisdictional portion of the costs associated with PURPA contracts is fully recovered through base rates and the Idaho-jurisdiction power cost adjustment mechanism, and the Oregon jurisdictional portion is recovered through base rates and an Oregon power cost adjustment mechanism. Thus, the primary impact of high power purchase costs under PURPA contracts is on customer rates. Participation in Western Energy Imbalance Market : Idaho Power participates in an energy imbalance market in the western United States (Western EIM) under which the participating parties enable their systems to interact for automated intra-hour economic dispatch of generation from committed resources to serve loads. The Western EIM is intended to reduce the power supply costs to serve customers through more efficient dispatch of a larger and more diverse pool of resources, to integrate intermittent power from renewable generation sources more effectively, and to enhance reliability. Participation in the Western EIM is voluntary and available to all balancing authorities in the western United States. Idaho Power is participating with other stakeholders in different regional forums discussing the potential for developing other energy markets in the western U.S., including development of a potential day-ahead wholesale centralized market, which Idaho Power believes could provide additional benefits through the centralized economic dispatch of resources of participating utilities. Transmission Services Electric transmission systems deliver energy from electric generation facilities to distribution systems for final delivery to customers. Transmission systems are designed to move electricity over long distances because generation facilities can be located hundreds of miles away from customers. Idaho Power’s generating facilities are interconnected through its integrated transmission system and are operated on a coordinated basis to achieve maximum capability and reliability. Idaho Power’s transmission system is directly interconnected with the transmission systems of the Bonneville Power Administration, Avista Corporation, PacifiCorp, NorthWestern Energy, and NV Energy. These interconnections, coupled with transmission line capacity made available under agreements with some of those entities, permit the interchange, purchase, and sale of power among entities in the Western Interconnection, the transmission grid covering much of western North America. Idaho Power provides wholesale transmission service for eligible transmission customers on a non-discriminatory basis. Idaho Power is a member of the Western Electricity Coordinating Council, the Western Power Pool, NorthernGrid, and the North American Energy Standards Board. These groups have been formed to more efficiently coordinate transmission reliability and planning throughout the Western Interconnection. Demand for transmission services can be affected by regional market factors, such as loads and generation of utilities in Idaho Power’s region. 15 Table of Contents Transmission to serve Idaho Power's retail customers is subject to the jurisdiction of the IPUC and OPUC for retail rate making purposes. Idaho Power provides cost-based wholesale and retail access transmission services under the terms of a FERC approved OATT. Services under the OATT are offered on a nondiscriminatory basis such that all potential customers, including Idaho Power, have an equal opportunity to access the transmission system. As required by FERC standards of conduct, Idaho Power's transmission function is operated independently from Idaho Power's energy marketing function. Idaho Power is jointly working with various partners on the development of two significant transmission projects. The Boardman-to-Hemingway project is a proposed 300-mile, high-voltage transmission line between a substation near Boardman, Oregon, and the Hemingway substation near Boise, Idaho. The Gateway West project is a high-voltage transmission line project between a substation located near Douglas, Wyoming, and the Hemingway substation. Both projects are intended to meet future anticipated resource needs and are discussed in Part II, Item 7 – MD&A - "Liquidity and Capital Resources - Capital Requirements" in this report. Resource Planning Integrated Resource Planning: The IPUC and OPUC require that Idaho Power prepare biennially an IRP. Idaho Power filed its most recent 2021 IRP with the IPUC and OPUC in 2021 and expects to file its next IRP in June 2023 (2023 IRP). Each IRP seeks to forecast Idaho Power's loads and resources for a 20-year period, analyzes potential supply-side, demand-side, and transmission resource options, and identifies potential near-term, mid-term, and long-term actions. The four primary goals of the IRP are to: • identify sufficient resources to reliably serve the growing demand for energy within Idaho Power's service area throughout the 20-year planning period; • ensure the selected resource portfolio balances cost and risk, while including environmental considerations; • give balanced treatment to supply-side and demand-side measures; and • involve the public in the planning process in a meaningful way. During the time between IRP filings, the public and regulatory oversight of the activities identified in the IRP allows for discussion and adjustment of the IRP as warranted. Idaho Power makes periodic adjustments and corrections to the resource plan to reflect economic conditions, anticipated resource development, changes in technology, and regulatory requirements. The load forecast assumptions Idaho Power currently plans to use in its upcoming 2023 IRP are included in the table below, together with the average annual growth rate assumptions used in the prior two IRPs. While assumptions are estimates only and subject to change based on actual customer load ramp-rates, the 2023 IRP assumptions include significant large commercial and industrial additions in the 5-year forecasted annual growth rate, including potential load from new facilities recently announced by Meta Platforms, Inc. and Micron Technology, Inc. The rate of load growth can impact the timing and extent of development of resources, such as new generation plants or transmission infrastructure, to serve those loads. 5-Year Forecasted Annual Growth Rate 20-Year Forecasted Annual Growth Rate Retail Sales (Billed MWh) Annual Peak (Peak Demand) Retail Sales (Billed MWh) Annual Peak (Peak Demand) 2023 IRP (preliminary) 5.5% 3.7% 2.2% 1.8% 2021 IRP 2.6% 2.1% 1.4% 1.4% 2019 IRP 1.3% 1.4% 1.0% 1.2% Idaho Power's 2021 IRP identified a preferred resource portfolio and action plan, which included the addition of a 120-MW solar resource in late 2022, the conversion from coal to natural gas of two units at the Jim Bridger plant in 2024, the end to Idaho Power's participation in coal-fired operations at the North Valmy plant unit 2 in 2025, the completion of the Boardman-to-Hemingway transmission line in 2026, and an end to Idaho Power's participation in the remaining two coal-fired units at the Jim Bridger plant by the end of 2028. The 2021 IRP preferred resource portfolio and action plan also included a need to acquire significant generation and storage resources to meet energy and capacity needs. Including the resources noted above, over the next 20 years the 2021 IRP planned for the addition of 1,685 MW of storage capacity, 1,405 MW of solar capacity, 700 MW of wind capacity, 500 MW of transmission capacity, and 400 MW of capacity from demand response. As noted in the 2021 IRP, there is uncertainty surrounding the resource sufficiency estimates and project completion dates, including uncertainty around the timing and extent of third-party development of renewable resources, fuel commodity prices, regulatory requirements, the actual completion date of the Boardman-to-Hemingway transmission project, and the economics and logistics of coal-fired 16 Table of Contents plant conversions and retirements. These uncertainties, as well as others, may result in changes to the desirability of the preferred portfolio and adjustments to the timing and nature of anticipated and actual actions compared to those identified in the 2021 IRP. In November 2022 and January 2023, respectively, the IPUC and OPUC issued orders acknowledging Idaho Power's 2021 IRP. In preparing its 2023 IRP, Idaho Power intends to analyze the potential acceleration of timing of construction of the Gateway West transmission project and the potential conversion of additional coal-fired generation units to natural gas. Idaho Power expects to complete and file its 2023 IRP with the IPUC and OPUC in June 2023. Energy Efficiency and Demand Response Programs: Idaho Power’s energy efficiency and demand response portfolio is comprised of 22 programs. The energy efficiency programs target energy savings across the entire year, while the demand response programs target system demand reduction in the summer at times of peak loads. The programs are offered to all customer segments and emphasize the wise use of energy, especially during periods of high demand. This energy and demand reduction can reduce or delay the need for new generation and transmission infrastructure. Idaho Power’s programs include: • financial incentives for irrigation customers for either improving the energy efficiency of an irrigation system or installing new energy efficient systems; • energy efficiency programs for new and existing homes including electric heating, ventilation and cooling equipment, as well as energy efficient building techniques, air duct sealing, and energy efficient lighting; • incentives to industrial and commercial customers for acquiring energy efficient equipment, and using energy efficiency techniques for operational and management processes; • demand response programs to reduce peak summer demand through the voluntary cycling of central air conditioners for residential customers, interruption of irrigation pumps, and reduction of commercial and industrial demand through actions taken by business owners and operators; and • participation in the Northwest Energy Efficiency Alliance, which supports market transformation efforts across the region. In 2022, Idaho Power’s energy efficiency programs reduced energy usage by approximately 141,000 MWh compared with 138,000 MWh in 2021. For 2022, Idaho Power had a demand response available capacity of approximately 320 MW. In 2022, 2021, and 2020, Idaho Power expended approximately $42 million, $38 million, and $51 million, respectively, on both energy efficiency and demand response programs. Funding for these programs is provided through a combination of the Idaho and Oregon energy efficiency tariff riders, base rates, and the power cost adjustment mechanisms. Energy efficiency program expenditures funded through the riders are reported as an operating expense with an equal amount of revenues recorded in other revenues, resulting in no net impact on earnings. Environmental, Social, and Governance Initiatives Overview: IDACORP’s and Idaho Power’s corporate governance and nominating committee, with considerable focus from the board of directors, is primarily responsible for the oversight of the companies’ environmental, social, and governance (ESG) initiatives and are regularly informed of the goals, measures, and results of the companies' ESG and sustainability programs. Each committee of the board of directors is assigned a portion of the oversight of the companies' ESG and sustainability programs. Idaho Power has established an internal ESG Steering Committee co-led by an officer and senior manager and composed of a cross-functional team of key employees from multiple departments to oversee ESG activities and inform leadership and the board of directors on ESG-related activities and matters it identifies as material to the company's operations and financial condition. IDACORP and Idaho Power publicly release annual ESG reports and the most current report is located on Idaho Power’s website, together with other information on ESG issues relevant to Idaho Power, including short-, medium-, and long-term carbon dioxide (CO 2 ) emission reduction targets. IDACORP's and Idaho Power's 2021 ESG Report released in April 2022 incorporated elements of the Task Force on Climate-Related Financial Disclosures guidelines and the Sustainability Accounting Standards Board repor ting framework, as well as the Edison Electric Institute (EEI) E SG reporting template. Additionally, in 2022 Idaho Power responded to the Climate Disclosure Project (CDP) annual questionnaire, providing emissions data and management plans to address risks associated with climate change. The ESG reports, CDP filing, and related website content are not incorporated by reference into this 2022 Annual Report. IDACORP’s and Idaho Power’s ESG initiatives include: • establishing responsible management goals and long-term strategies related to the companies’ impact on the environment; such as 17 Table of Contents ◦ the "Clean Today, Cleaner Tomorrow. ®" goal to provide Idaho Power's customers with 100-percent clean energy by 2045; ◦ the sustainability benefits from the Boardman-to-Hemingway and Gateway West transmission projects, which include integrating renewable energy generation and deferring or eliminating the need for development of additional fossil-fueled resources; ◦ integrating renewable resources into Idaho Power's generation mix and identifying and investigating new generation and storage technologies; as part of this effort, Idaho Power has issued requests for proposals (RFPs) for additional energy resources, including renewables or natural gas resource convertible to hydrogen gas power, and to-date has procured solar power and battery storage as a result of those RFPs; ◦ continuing various environmental stewardship programs along the Snake River, including fish habitat preservation, water temperature reduction, and fish and plant restoration; ◦ wildfire mitigation planning and actions, and ◦ wildlife habitat, archaeological and cultural resource, and raptor protection stewardship; • operational excellence in safely providing reliable, affordable, clean energy, including enhancing grid resiliency and reliability; • engaging and empowering Idaho Power’s workforce (including succession planning at all levels, employee development, leadership education, retirement planning education, and providing competitive compensation and benefits, including post-retirement benefits); • promoting a culture of safety, security, and inclusiveness for all employees; and • building strong community partnerships for healthy, sustainable economic development in Idaho Power’s service area. Based on shareholder engagement feedback, beginning in 2021 Idaho Power also has publicly released its EEO-1 statement to report its demographic workforce data. Reducing Carbon Emissions Intensity: Carbon emissions intensity is a measure of the pounds of CO 2 emitted per MWh of energy generated. Idaho Power tracks carbon emissions intensity to measure the impact of its efforts to reduce carbon emissions relative to growing power demand in its service area. Idaho Power has actively engaged in voluntary carbon emissions intensity reduction over the past decade with an original short-term goal to reduce emissions 10-15 percent from the baseline year of 2005 levels. Idaho Power increased the short-term goal to reduce carbon emission intensity by at least 15-20 percent for the period from 2010-2020, and exceeded this goal with an estimated average reduction o f 29 percent over th at period compared with 2005. In May 2020, IDACORP’s and Idaho Power’s boards of directors approved an increased short-term goal to reduce carbon emission intensity by 35 percent for the period from 2021-2025 compared with 2005. In January 2022, Idaho Power posted its emissions reduction report on its website that established short-, medium-, and long-term targets for further CO 2 reductions. This report also includes annual power generation levels and associated CO 2 emissions and emissions intensity for the 2021-2040 period. The emissions reduction report is not incorporated in this 2022 Annual Report. Idaho Power has significantly reduced its CO 2 emissions since the 2005 baseline year, primarily by decreasing its coal generation levels, including terminating coal generation at the North Valmy Unit 1 in 2019 and at the Boardman plant in 2020, and also by upgrading it s hydropower facilities , and through its energy efficiency, demand-side management and cloud-seeding programs. Idaho Power plans to continue to reduce CO 2 emissions in future years, including a medium-term goal with a targeted 86 percent reduction in annual CO 2 emissions tons by 2030, compared with the 2005 baseline year. In 2019, Idaho Power announced its long-term goal to provide 100 percent clean energy by 2045. Reduction in Coal-Fired Generation: Idaho Power monitors environmental requirements and assesses whether environmental control measures are or remain economically appropriate. In 2017 and 2018, the IPUC and OPUC approved settlement stipulations allowing accelerated depreciation and cost recovery for the North Valmy plant in connection with Idaho Power's plan to end its participation in the operation of units 1 and 2. Idaho Power ended its participation in the operation of unit 1 in December 2019, as planned, and plans to end its participation in unit 2 no later than the end of 2025. In October 2020, Idaho Power and co-owner Portland General Electric ceased coal-fired operations at the Boardman plant, as planned. In June 2022, the IPUC approved Idaho Power's amended application requesting, among other things, authorization to allow the Jim Bridger plant to be fully depreciated and recovered by end-of-year 2030. In September 2021, the co-owner and operator of the Jim Bridger plant submitted its 2021 IRP to the IPUC that contemplates ceasing coal-fired generation in units 1 and 2 in 2023 and converting those units to natural gas generation by 2024. The details of the IPUC's order relating to the Jim Bridger plant are described more fully in Part II, Item 7 – MD&A – "Regulatory Matters." As of the date of this report, Idaho Power expects to cease coal-fired operations at all jointly-owned coal-fired generation plants by the end of 2028. 18 Table of Contents Climate Change Adaptation : Idaho Power believes its practice of in-depth planning and prudent preparation helps the company adapt to and address the risks of climate change. For more than 100 years, Idaho Power has adapted to changes in temperatures, water conditions, economic impacts, and regulatory requirements. In recent years, Idaho Power has proactively addressed risks associated with climate change through preventative measures. To address the physical impacts of climate change, Idaho Power conducts cloud-seeding operations, implements a wildfire mitigation plan, enhances grid resiliency and reliability, and continues to further Snake River shading and in-stream river enhancement projects. Idaho Power also plans for the social and economic impacts of climate change by furthering its carbon emissions reduction goals, continuing efforts to achieve its path away from coal generation, increasing the integration of renewable energy, and enhancing customer and stakeholder communication. Additionally, to plan for the potential regulatory impacts of climate change, Idaho Power considers climate-related impacts in planning efforts, plans and advocates for additional transmission capacity to integrate additional renewable energy onto its system, identifies and investigates new technologies, including battery storage, hydrogen generation, and modular nuclear reactor technology, and evaluates modifications to its pricing structure it believes will help ensure fair pricing for all customers. Environmental Regulation and Costs Idaho Power's activities are subject to a broad range of federal, state, regional, and local laws and regulations designed to protect, restore, and enhance the quality of the environment. Environmental regulation impacts Idaho Power’s operations due to the cost of installation and operation of equipment and facilities required for compliance with environmental regulations, the modification of system operations to accommodate environmental regulations, and the cost of acquiring and complying with permits and licenses. In addition to generally applicable regulations, Idaho Power's jointly-owned coal-fired power plants, natural gas combustion turbine power plants, and hydropower generating plants are subject to a broad range of environmental requirements, including those related to air and water quality, waste materials, and endangered species. For a more detailed discussion of these and other environmental issues, refer to Part II - Item 7 - MD&A - "Environmental Matters" in this report. Environmental Expenditures: Idaho Power’s environmental compliance expenditures will remain significant for the foreseeable future, particularly given the volume of existing and proposed regulations at the federal level. Idaho Power estimates its environmental expenditures, based upon present environmental laws and regulations, will be as follows for the periods indicated, excluding AFUDC (in millions of dollars): 2023 2024-2025 Capital expenditures: License compliance and relicensing efforts at hydropower facilities $ 21 $ 119 Investments in equipment and facilities at thermal plants 10 6 Total capital expenditures $ 31 $ 125 Operating expenses: Operating costs for environmental facilities - hydropower $ 23 $ 46 Operating costs for environmental facilities - thermal 12 18 Total operations and maintenance $ 35 $ 64 Idaho Power anticipates that finalization, implementation, or modification of a number of federal and state rulemakings and other proceedings addressing, among other things, greenhouse gases and endangered species, could result in substantial changes in operating and compliance costs, but Idaho Power is unable to estimate those changes in costs given the uncertainty associated with existing and potential future regulations. Idaho Power expects that it would seek to recover increases in costs through the ratemaking process. Beyond increasing costs generally, these environmental laws and regulations could affect IDACORP's and Idaho Power's results of operations and financial condition if the costs associated with these environmental requirements and potential early plant retirements cannot be fully recovered in rates on a timely basis. Idaho Power is actively pursuing the relicensing of the HCC, its largest hydropower generation source. As of the date of this report, although Idaho Power believes issuance of a new HCC license by the FERC is likely in 2024 or thereafter, Idaho Power is unable to predict the exact timing of issuance by the FERC of any license order or the ultimate capital investment and ongoing operating and maintenance costs Idaho Power will incur in complying with any new license. However, Idaho Power estimates that the annual costs it will incur to obtain a new long-term license for the HCC, including AFUDC, are likely to range from $30 million to $40 million until issuance of the license. Subsequent to the issuance of a new license, Idaho Power expects to incur increased annual capital expenditures and operating and maintenance costs to comply with the requirements of any new license. 19 Table of Contents Human Capital Overview: Idaho Power's purpose is powering lives by safely providing reliable, affordable, clean energy. Idaho Power believes that it will prosper by committing to the needs, safety, and success of its customers, communities, employees, and owners. Idaho Power relies on its foundational core values to guide its plan and actions: safety first; integrity always; and respect for all. To further its objectives, Idaho Power’s human capital programs are designed to attract, retain, and develop high quality employees, without regard to race, color, religion, national origin, sex (including pregnancy), age, sexual orientation, gender identity, genetic information, veteran status, physical or mental disability, or marital status. Idaho Power believes it maintains a good relationship with its employees due to a strong safety culture, a respectful and inclusive environment, opportunities for development, and competitive compensation and benefits. Idaho Power regularly conducts employee engagement surveys to seek feedback from its employees on a variety of topics, including safety reporting, support for development, understanding of the company’s objectives, communication, being treated with respect, and feeling valued. Idaho Power shares the survey results with employees, and senior management incorporates the results of the surveys in their action plans in order to respond to the feedback and improve employee relations. As of December 31, 2022, IDACORP had 2,070 full-time employee s, 2,062 of wh om were employed by Idaho Power and 8 of whom were employed by Ida-West. IDACORP had 7 part-time employee s, 4 of whom were employed by Idaho Power. Of IDACORP's full-time employees, 52 percent have worked at the company for over 10 years as of the date of this report. All IDACORP and Idaho Power employees work in the United States. As of the date of this report, no Idaho Power employees are represented by unions. Board and Board Committee Oversight : The companies’ management updates the full board of directors and its committees regularly on safety metrics, total rewards for employees, benefit and pension programs, succession planning and training programs, and diversity, equity, and inclusion initiatives, among other things. Each committee of the board of directors is delegated and takes on specific roles in this oversight. The compensation and human resources committee is responsible for overseeing employee compensation, benefit plans, general labor issues, diversity, equity, inclusion, and safety issues. The audit committee is responsible for overseeing risk management, including compliance with the code of business conduct, physical security risks relating to employees, and environmental compliance. The corporate governance and nominating committee is responsible for overseeing risks associated with governance, lobbying and government relations, political contributions, and social issues associated with employees as part of its ESG risk oversight function. Safety : Idaho Power is committed to the safety of its employees, customers, and the communities it serves. Idaho Power believes that safe, engaged, and effective employees are critical to the company’s success and that the company’s record of safety helps keep its service reliable and affordable. Idaho Power consistently ranks in the top 30 percent of all United States utilities in safety performance. Reflective of Idaho Power's focus on safety, the company’s Occupational Health and Safety Administration (OSHA) recordable injury rate was below the industry average rate from 2018 through 2021, and its safety metrics in 2021 were the strongest in the company’s history. In 2022, Idaho Power saw increases in its OSHA recordable injury rate, severity rate, and lost-time injury rate, which returned those rates closer to Idaho Power's 10-year average for each respective rate. In response to the increase, Idaho Power held a series of contractor and leader safety summits in 2022 to align on expectations and ensure safety continues to be at the forefront of all its work. In recognition of Idaho Power's safety culture and the dedication of its employees, the Edison Electric Institute (EEI) presented the inaugural Thomas F. Farrell, II Safety Leadership and Innovation Award in the Member Company Project category to Idaho Power in January 2022. Idaho Power was selected for its approach of combining psychological safety and behavioral safety with practical application of human performance principles. The award recognizes the contributions of leadership and innovation to the advancement of safety in the energy industry. Recipients of the award are selected by a panel consisting of leadership from the labor, contractor, and academic communities; regulatory agencies; and EEI senior leadership. Total Rewards : Idaho Power provides its employees with competitive pay and benefits, based in large part on salary studies and market data. Idaho Power utilizes a structured compensation schedule and regularly conducts compensation analyses that helps mitigate the potential for gender, race, or ethnicity-based disparities in compensation. Beyond base salaries and incentive compensation, benefits for all full-time employees include a 401k plan with company matching contributions, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, parental leave, employee assistance programs, and tuition assistance. After five years of employment, a full-time employee vests in Idaho Power’s defined benefit pension plan. Idaho Power also ties annual employee incentive compensation to metrics based on the categories 20 Table of Contents of earnings, power system reliability, and customer satisfaction reflective of broad stakeholder interests and each employee's contribution. Idaho Power delivers a variety of training opportunities and provides rotational assignment and continuous learning and development opportunities to all employees. Idaho Power's talent development programs, overseen by a talent development team in the Human Resources department, are designed to help employees achieve their career goals, build management skills, and lead their organizations. Idaho Power also encourages and enables its employees to support many charitable causes. This includes volunteer program engagement promoted by the company or employees. Idaho Power also has an employee-led organization called the “Employee Community Funds,” which administers charitable contributions from employees; Idaho Power matches a portion of employee donations, which supplements the company’s separate charitable contributions. Diversity, Equity, and Inclusion: One of Idaho Power’s core values as a company is “respect for all.” IDACORP’s and Idaho Power’s Code of Business Conduct, available publicly on IDACORP’s website, states Idaho Power's position that employees deserve a workplace where they can be treated in a professional and respectful manner, and each of the company's employees has the responsibility to create and maintain such an environment. In furtherance of this core value, Idaho Power posts its " Our Commitment to Each Other " initiative on its website, which promotes an inclusive company environment as follows: At Idaho Power, we are committed to an inclusive environment where we are all valued, respected and given equal consideration for our contributions. We believe that to be successful as a company we must be able to innovate and adapt, which only happens when we seek out and value diverse backgrounds, opinions and perspectives. Our collaborative environment thrives when we are engaged, feel we belong and are empowered to do our best work. We are a stronger company when we stand together and embrace our differences. As of December 31, 2022, 44 percent of Idaho Power’s senior management were women, 21 percent of its officers were women, and 36 percent of its board of directors were women. Idaho Power also has programs in place to encourage STEM participation, training to minimize bias and ensure a respectful and inclusive workplace, with a mindset of unity, community outreach to underserved communities, and partnerships with multiple diversity-focused organizations. IDACORP FINANCIAL SERVICES, INC. IFS invests in real estate tax credit projects, such as affordable housing developments, which provide a return principally by reducing federal and state income taxes through tax credits and accelerated tax depreciation benefits. IFS has focused on a diversified approach to its investment strategy in order to limit both geographic and operational risk with most of IFS’s investments having been made through syndicated funds. At December 31, 2022, the unamortized amount of IFS’s portfolio was approximately $29 million ($92 million in gross tax credit investments, net of $63 million of accumulated amortization). IFS generated tax credits of $6.4 million in 2022, $6.2 million in 2021, and $5.3 million in 2020. In 2022 and 2021, IFS received distributions related to fully-amortized real estate tax credit investments that reduced IDACORP's income tax expense by $0.8 million and $1.0 million, respectively. In 2020, IFS received nominal distributions related to fully-amortized real estate tax credit investments. IDA-WEST ENERGY COMPANY Ida-West operates and has a 50 percent ownership interest in nine hydropower projects that have a total nameplate capacity of 44 MW. Four of the projects are located in Idaho and five are in northern California. All nine projects are “qualifying facilities” under PURPA. Idaho Power purchased all of the power generated by Ida-West’s four Idaho hydropower projects at a cost of approximately $8 million in both 2022 and 2021 and $9 million in 2020. 21 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names, ages, and positions of the executive officers of IDACORP and Idaho Power are listed below (in alphabetical order), along with their business experience during at least the past five years. There are no family relationships among these officers, nor is there any arrangement or understanding between any officer and any other person pursuant to which the officer was appointed. RYAN N. ADELMAN, 48 • Vice President of Power Supply of Idaho Power Company, August 2020 - present • Vice President of Transmission & Distribution, Engineering and Construction of Idaho Power Company, October 2019 - August 2020 • Regional Manager for t he Southeast Region of Idaho Power Company, January 2018 - October 2019 BRIAN R. BUCKHAM, 43 • Senior Vice President and Chief Financial Officer of IDACORP, Inc. and Idaho Power Company, March 2022 - present • Senior Vice President and General Counsel of IDACORP, Inc. and Idaho Power Company, February 2017 - March 2022 MITCH COLBURN, 39 • Vice President of Planning, Engineering and Construction of Idaho Power Company, August 2020 - present • Director of Engineering and Construction of Idaho Power Company, March 2020 - August 2020 • Director of Resource Planning and Operations of Idaho Power Company, January 2018 - March 2020 • Senior Manager, Transmission & Distribution Strategic Projects of Idaho Power Company, April 2017 - January 2018 SARAH E. GRIFFIN, 53 • Vice President of Human Resources of Idaho Power Company, October 2019 - present • Director of Human Resources of Idaho Power Company, May 2014 - October 2019 LISA A. GROW, 57 • President and Chief Executive Officer of IDACORP, Inc. and Idaho Power Company, June 2020 - present • President of Idaho Power Company, October 2019 - June 2020 • Senior Vice President and Chief Operating Officer of Idaho Power Company, April 2016 - October 2019 JAMES BO D. HANCH EY, 47 • Vice President of Customer Operations and Chief Safety Officer of Idaho Power Company, October 2019 - present • Customer Service Senior Manager of Idaho Power Company, February 2018 - October 2019 • Regional Manager of Southern Region of Idaho Power Company, May 2014 - February 2018 PATRICK A. HARRINGTON, 62 • Vice President, General Counsel, and Corporate Secretary of IDACORP, Inc. and Idaho Power Company, March 2022 - present • Corporate Secretary of IDACORP, Inc. and Idaho Power Company, March 2007 - March 2022 JEFFREY L. MALMEN, 55 • Senior Vice President of Public Affairs of IDACORP, Inc. and Idaho Power Company, April 2016 - present KEN W. PETERSEN, 59 • Vice President, Chief Accounting Officer and Treasurer of IDACORP, Inc. and Idaho Power Company, March 2020 - present • Vice President, Controller and Chief Accounting Officer of IDACORP, Inc. and Idaho Power Company, January 2014 - March 2020 ADAM J. RICHINS, 44 • Senior Vice President and Chief Operating Officer of Idaho Power Company, October 2019 - present • Vice President of Customer Operations and Business Development of Idaho Power Company, March 2017 - October 2019 22 Table of Contents ITEM 1A. RISK FACTORS IDACORP and Idaho Power operate in a highly regulated industry and business environment that involves significant risks, many of which are beyond the companies' control. 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, 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 the "Cautionary Note Regarding Forward-Looking Statements" and Part II - Item 7 - "Management’s Discussion and Analysis of Financial Condition and Results of Operations" (MD&A), and in other reports the companies file with the SEC, should be considered carefully when making any investment decisions relating to IDACORP or Idaho Power. Below are certain important utility-specific regulatory, operational, legal and compliance, financial and investment, and general business risks that may cause IDACORP's and Idaho Power's future business results to be different than anticipated as of the date of this report. Utility-Specific Regulatory Risks Utility-specific regulatory risk includes the risks that federal, state, or local regulators may impose additional requirements and costs on Idaho Power and the utility industry, reduce authorized rates of return or otherwise adversely affect recovery of costs and the opportunity to earn a return on investments, or require Idaho Power as a utility to make adverse changes to its business models, strategies, and practices. State or federal regulators may not approve customer rates that provide timely or sufficient recovery of Idaho Power's costs or allow Idaho Power to earn a reasonable rate of return, which could adversely affect IDACORP's and Idaho Power's financial condition and results of operations . The prices that the Idaho Public Utilities Commission (IPUC) and Public Utility Commission of Oregon (OPUC) authorize Idaho Power to charge customers for its retail services, and the tariff rate that the FERC permits Idaho Power to charge for its transmission services, are significant factors influencing IDACORP’s and Idaho Power’s business, results of operations, liquidity, and financial condition. Idaho Power's ability to recover its costs and earn a reasonable rate of return can be affected by many regulatory factors, including the time 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 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, costs associated with changes in the long-term cost-effectiveness or operating conditions of Idaho Power's assets that could result in early retirements of utility facilities, costs of compliance with legislative and regulatory requirements, fuel and wholesale power costs, and increased funding levels of Idaho Power's defined benefit pension plan. The IPUC, OPUC, and FERC may not allow Idaho Power to recover some or all of those costs or costs that have already been deferred as regulatory assets if they find Idaho Power did not reasonably or prudently incur those costs or for other reasons. The IPUC and OPUC may adopt different methods of calculating the allocation of the total utility costs in their respective jurisdictions, resulting in certain costs excluded in both states. Ratemaking has generally been premised on estimates of historic costs based on a test year, so if a given year’s actual costs are higher than historic costs, rates may not be sufficient to cover actual costs. While rate regulation is also premised on the assumption that rates established are fair, just, and reasonable, regulators have considerable discretion in applying this standard. Economic, political, legislative, public policy, or regulatory pressures may lead stakeholders to seek rate reductions or refunds, limits on rate increases, or lower allowed rates of return on investments for Idaho Power. The ratemaking process typically involves multiple intervening parties, including governmental bodies, consumer advocacy groups, and customers, generally with the common objective of limiting rate increases or even reducing rates. 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 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. 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 - MD&A - "Regulatory Matters," and Note 3 - "Regulatory Matters" to the consolidated financial statements of Part II - Item 8 in this report. 23 Table of Contents 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. Idaho Power has power cost adjustment mechanisms in its Idaho and Oregon jurisdictions and a fixed cost adjustment (FCA) mechanism in Idaho. The power cost adjustment mechanisms track Idaho Power’s actual net power supply costs (primarily fuel and purchased power less wholesale energy sales) and compare these amounts to net power supply costs being recovered in retail rates. 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, 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. When power costs rise above the level recovered in current retail rates, Idaho Power incurs the costs but recovery of those costs is deferred to a subsequent collection period, which can adversely affect Idaho Power’s operating cash flow and liquidity until those costs are recovered from customers. The FCA mechanism is a decoupling mechanism that allows Idaho Power to charge Idaho residential and small commercial customers when it recovers less than the base level of fixed costs per customer that the IPUC authorized for recovery in the most recent general rate case. The power cost and FCA 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. 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. 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. Continued inflationary pressures, or a n economic downturn, or a recession 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. State or federal regulations may be enacted to encourage or require mandatory energy conservation or technological advances that increase energy efficiency, which could further reduce usage per customer. Also, changing customer needs and expectations and increased competition from customer-owned generation could lead to lower customer satisfaction, reduced loyalty, difficulty in obtaining rate increases, legislation to deregulate electric service, and customers seeking alternative sources of energy and electric service. 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 1,032 kilowatt-hour (kWh) in 2012 to 929 kWh in 2022. Rate mechanisms, such as the Idaho FCA 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. Any undercollection of fixed costs would adversely impact revenues, earnings, and cash flows. The formation of municipal utilities or similar entities for distribution systems within Idaho Power's service area could also result in a load decrease. The loss of loads resulting from some of these events may result in excess infrastructure and stranded costs and require IDACORP and Idaho Power to modify or eliminate large generation, storage, or transmission projects. This could in turn result in reduced revenues as well as write-downs or write-offs if regulators determine that the costs of the projects were incurred imprudently, which could have a material adverse impact on IDACORP's and Idaho Power's financial condition, results of operations, and cash flows. 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. Idaho Power's 2021 Integrated Resource Plan's (IRP) preferred resource 24 Table of Contents portfolio and action plan included a need to ac quire significant generation and storage resources to meet forecasted increasing energy and capacity needs. There can be no assurance that these energy and capacity needs will not change or that the resources will be adequate to meet load demands, in which case Idaho Power would need to rely on wholesale power purchases and would be subject to the volatility of wholesale markets. 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 affect IDACORP's and Idaho Power's operating results and cause them to fluctuate seasonally. Idaho Power's electric power sales are seasonal, with demand in Idaho Power's service area peaking during the hot summer months, with a secondary peak during the cold winter months. Electric power demands by irrigation customers in Idaho Power's service area, which are impacted by temperatures and the timing and amount of precipitation, can also create significant seasonal changes in usage. Seasonality of revenues may be further impacted by Idaho Power's tiered rate structure, under which rates charged to customers are often higher during higher-load periods, such as hot summers and cold winters. Market prices for power also often increase significantly during these peak periods, at times when Idaho Power is required to purchase power in the wholesale markets to meet customer demand. While Idaho Power has regulatory mechanisms to help mitigate the impact of weather on power supply costs, there is no assurance that it will continue to receive such regulatory protection in the future. By contrast, when temperatures are relatively mild or where precipitation supplants irrigation systems, loads are often lower as customers are not using electricity for heating and air conditioning or irrigation purposes. 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, 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. The costs of repairing and replacing infrastructure or any costs related to Idaho Power 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 the increasing threat of 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. Idaho Power's customers' energy needs vary with weather and to the extent weather conditions are affected by climate change, customers' energy use could increase or decrease. Increased energy use due to weather changes may require Idaho Power to invest in generating assets and transmission and distribution infrastructure, while decreased energy use due to weather changes may result in decreased revenues. Extreme weather conditions creating high energy demand may raise wholesale electricity prices for power that Idaho Power purchases to serve customers, increasing the cost of energy Idaho Power provides to its customers, and at the same time can increase the revenues Idaho Power receives for wholesale market sales of excess generation during regional extreme weather events. Variations in hydropower generation that increase Idaho Power's reliance on market purchases may lead to more costly power supply sources for its customers and reduce benefits from selling surplus hydropower in the wholesale market. The price of power in the wholesale energy markets tends to be higher during periods of high regional demand that tends to occur with weather extremes, which may cause Idaho Power to purchase power in the wholesale market during peak price periods, increasing power supply costs. 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. 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 greenhouse gas (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 - MD&A - "Environmental Matters” in this report. 25 Table of Contents 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 . 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, renewable energy, energy storage, customer-owned generation, and energy efficiency. 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, wind, and energy storage 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. Energy efficiency programs, including programs sponsored by Idaho Power under a directive from state regulatory commissions, are designed to reduce energy use and demand. The introduction of new technologies could pose risks in the form of reduced sales and new business models for energy services. 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 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 fuel pipelines in the past with notable reports in the media of electric industry infrastructure specifically being targeted for and impacted by physical attacks more recently, 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 war 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. All information technology systems are vulnerable to disability, unauthorized access, unintentional defects, user 26 Table of Contents 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. 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, 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. 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 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, 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 also entered into contracts to purchase, own, and operate 180 megawatts of battery storage assets as well as issued a request for proposals for new resources, which are 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 and delays by suppliers and contractors, including delays for specialty equipment that require significant lead times; • increases in price and limitations on availability of commodities, materials, and equipment; • imposition of tariffs on commodities, materials, and equipment sourced by foreign providers; • equipment, engineering, and design failures; • credit quality of counterparties and suppliers and their ability to meet financial and operational commitments; • unexpected environmental and geological problems; • the effects of adverse weather conditions; • catastrophic events, natural disasters, epidemics, pandemics and other public health or disruptive events that could result in supply chain disruptions, as well as permitting and construction delays; • availability of financing; • 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; and • delays and costs associated with disputes and litigation with third parties. 27 Table of Contents 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. Further, if Idaho Power is unable to secure permits or joint funding commitments to develop transmission infrastructure necessary to serve loads or if other resources become more economical, it may terminate those projects and, as alternatives, seek to develop additional generation facilities within areas where Idaho Power has available transmission capacity or pursue other more costly options to serve loads. To limit the timing-related risks of these projects, Idaho Power may enter into purchase orders and construction contracts and incur engineering and design service costs in advance of receiving necessary regulatory approvals or permits. If any of the projects are canceled for any reason, including Idaho Power's failure to receive necessary regulatory approvals or permits or because the project is no longer economical, Idaho Power could incur significant cancellation penalties under purchase orders or construction contracts. Additionally, termination of a project carries with it the potential for impairment of the associated asset if regulators deny full recovery of project costs. Thus, termination of a project could negatively affect IDACORP's and Idaho Power's financial condition and results of operations. Demand for power 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 . Idaho Power derives a significant portion of its power supply from its hydropower facilities. During both 2022 and 2021, 48 percent o f Idaho Power's electric power from Idaho Power-owned generation was from hydropower facilities. Due to Idaho Power’s heavy reliance on hydropower generation, the impacts of climate change and factors such as precipitation and snowpack, the timing of run-off, and the availability of water in the Snake River Basin can significantly affect its operations. The combination of a long-term trend of declining Snake River base flows, over-appropriation of water, and periods of drought have led to water rights disputes and proceedings among surface water and ground water irrigators and the State of Idaho. Recharging the Eastern Snake Plain Aquifer by diverting surface water to porous locations and permitting it to sink into the aquifer is one approach to the over-appropriation dispute. Diversions from the Snake River for aquifer recharge or the loss of water rights reduce Snake River flows available for hydropower generation. When hydropower generation is reduced, Idaho Power must increase its use of more expensive thermal generating resources and market power purchases; therefore, costs increase and opportunities for wholesale energy sales are reduced, reducing revenues and potentially earnings. Through its power cost adjustment mechanisms, Idaho Power expects to recover most (but not all) of the increase in net power supply costs caused by lower hydropower generation. The timing of recovery of the increased costs, however, may not occur until the subsequent power cost adjustment year, adversely affecting cash flows and liquidity. 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 . A s 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 28 Table of Contents counterparty default. Idaho Power's current coal supply arrangements are under long-term contracts for coal originating in Wyoming, Utah, and Colorado, and thus Idaho Power is exposed to risk of disruption of coal production in, or transportation from, those regions. Idaho Power may from time to time enter into new, or renegotiate, these contracts but can provide no assurance that such contracts will be negotiated or renegotiated on satisfactory terms, or at all. There also can be no assurance that counterparties to the natural gas or coal supply agreements will fulfill their obligations to supply natural gas or coal, and they may experience regulatory, financial, or technical problems or unforeseeable events that inhibit their ability to deliver natural gas or coal. Disruptions in transportation of fuel and defaults by coal and natural gas suppliers may cause Idaho Power to seek alternative, and potentially more costly, sources of fuel or rely on other generation sources or wholesale market power purchases. Idaho Power's failure to provide service due to such disruptions may also result in fines, penalties, or cost disallowances through the regulatory process. 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 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 war 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. Operation of Idaho Power's owned and co-owned generating stations below expected capacity levels, or unplanned outages at these stations, could cause reduced energy output and lower efficiency levels and result in lost revenues and increased expenses for alternative fuels or wholesale market power purchases. Further, during high-load periods the transmission system in Idaho Power's service area is constrained, limiting the ability to transmit electric energy within the service area and access electric energy from outside the service area. Idaho Power's transmission facilities are also interconnected with those of third parties, and thus operation of Idaho Power's and third-parties' facilities could be adversely affected by unexpected or uncontrollable events. 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 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, acts of terrorism or war, 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 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. Further, there has been an increasing trend in the degree of annual destruction from wildfires in the western United States. 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. Idaho Power or its contractors and customers could also experience coverage reductions and increased wildfire insurance costs in future years. Idaho Power may be unable to fully recover costs in excess of insurance through customer rates or regulatory mechanisms and, even if such recovery is possible, it could take several years to collect. If the amount of insurance is insufficient or otherwise unavailable, and if Idaho Power is unable to fully recover in rates the costs of uninsured losses, IDACORP’s and Idaho Power’s financial condition, results of operations, or cash flows could be materially affected. 29 Table of Contents Purchases of power from renewable energy projects, and integration of power generated from those projects into Idaho Power's system, may increase costs and decrease system reliability, and adversely affect Idaho Power's and IDACORP's results of operations and financial condition. An abundance of intermittent, non-dispatchable generation from renewable energy projects interconnected with Idaho Power's system has had an impact on the operation of Idaho Power's generation plants, system reliability, power supply costs, and the wholesale power markets. Idaho Power is generally obligated under federal law to purchase power from certain renewable energy projects, regardless of the then-current load demand, availability of lower cost generation resources, or wholesale energy market prices. As of December 31, 2022, Idaho Power had federally-mandated contracts to purchase energy from 129 on-line projects with third parties. This increases the likelihood and frequency that Idaho Power will be required to reduce output from its lower-cost hydropower and fossil fuel-fired generation resources, which in turn increases power purchase costs and customer rates and impacts Idaho Power's ability to invest in additional generation and earn a reasonable return on rate base in the future. Further, balancing load and generation from Idaho Power's power generation portfolio is challenging, and Idaho Power expects that its operational and infrastructure costs will continue to increase as a result of its efforts to integrate intermittent, non-dispatchable generation from a large number of renewable energy projects. If Idaho Power is unable to timely recover those costs through its rates, power cost adjustment mechanisms, or otherwise, those increased costs may negatively affect IDACORP's and Idaho Power's results of operations, financial condition, and cash flows. IDACORP's and Idaho Power's activities are concentrated in one industry and in one region, which exposes it to risks from lack of diversification, regional economic conditions, and regional legislation and regulation. IDACORP and Idaho Power do not have diversified operations or sources of revenue. Idaho Power comprises the bulk of IDACORP's operations, and Idaho Power's business is concentrated solely in the electric power industry. Furthermore, Idaho Power's provision of electric service to retail customers is conducted exclusively in its southern Idaho and eastern Oregon service area. As a result, IDACORP's and Idaho Power's future performance, revenues, and collectability of revenues, as well as expenses, will be affected by regional economic conditions, regulatory and legislative activity, weather conditions, and other events and conditions in its service area and in the electric power industry. The impacts of a retiring workforce with specialized utility-specific functions and the inability to hire qualified third-party vendors could increase costs and adversely affect IDACORP's and Idaho Power's financial condition and results of operations . Idaho Power’s operations require a skilled workforce to perform specialized utility functions. Many of these positions, such as linemen, grid operators, engineering and design personnel, and generation plant operators, require extensive, specialized training. 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. Employee retention and recruitment may also be negatively impacted by more flexible remote work opportunities, higher pay offered by other employers, or lower cost of living in other areas. 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. Idaho Power also hires third-party vendors to assist in performing a variety of ordinary business functions, such as power plant maintenance, data warehousing and management, software development and licensing, electric transmission and distribution operations, billing and metering processes, and vegetation management, among other things. In recent years, Idaho Power has experienced increased competition and rising prices for many forms of third-party vendor services. While Idaho Power does not rely entirely on third-party vendors for many of these business functions, the unavailability of such vendors could adversely affect the quality and cost of Idaho Power's electric service and negatively impact its results of operation. Legal and Compliance Risks Legal and compliance risk relates to risks arising from government and regulatory action and from legal proceedings and compliance with applicable laws, rules, orders, regulations, policies, and procedures, including those related to financial reporting, environmental, health, and safety, and potential changes in legal requirements. 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 30 Table of Contents 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. 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 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 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. Changes in income tax laws and regulations, or differing interpretation or enforcement of applicable laws by the U.S. Internal Revenue Service or other taxing jurisdictions, could have a material adverse impact on IDACORP’s or Idaho Power’s financial condition and results of operations . IDACORP and Idaho Power must make judgments and interpretations about the application of the law when determining the provision for income taxes. Amounts of income tax-related assets and liabilities involve judgments and estimates of the timing and probability of recognition of income, deductions, and tax credits, which are subject to challenge by taxing authorities. These judgments may include estimates for potential outcomes regarding tax positions that may be subject to challenge by the taxing authorities. 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 approved by the IPUC), have significantly impacted IDACORP's and Idaho Power's results of operations. 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. Further, in some instances, the treatment from a ratemaking perspective of any net income tax expense (including from increased tax rates) or benefit could be different than IDACORP or Idaho Power anticipate or request from applicable state regulatory commissions, which could have a negative effect on their financial condition and results of operations. In addition, Idaho Power uses the regulatory flow-through income tax accounting method as described in Note 1 - "Summary of Significant Accounting Policies" to the consolidated financial statements included in this report, and potential changes in income tax laws or interpretations may impact IDACORP's and Idaho Power's income taxes and reporting obligations differently than most other companies. 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 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 - MD&A - "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. Some of these regulations are pending, changing, or subject to interpretation, and failure to comply may result in penalties, mandatory operational changes, and other adverse consequences, including costs associated with defending against claims by governmental authorities or private parties and complying with new operating requirements. Idaho Power devotes significant resources to environmental monitoring, pollution control equipment, and mitigation projects to comply with existing and anticipated environmental regulations. However, it is possible that federal, state and local authorities could attempt to enforce more stringent standards, stricter regulation, and more expansive application of environmental regulations. 31 Table of Contents Environmental regulations have created the need for Idaho Power to install new pollution control equipment at, and may cause Idaho Power to perform environmental remediation on, its owned and co-owned power generation facilities, often at a substantial cost. Compliance with environmental regulations can significantly increase capital spending, operating costs, and plant outages, and can negatively affect the affordability of Idaho Power's services for customers. Idaho Power cannot predict with certainty the amount and timing of all future expenditures necessary to comply with these environmental laws and regulations, although Idaho Power expects the expenditures could be substantial. In some cases, the costs to obtain permits and ensure facilities are in compliance may be prohibitively expensive. If the costs of compliance with new regulations renders the generating facilities uneconomical to maintain or operate, Idaho Power would need to identify alternative resources for power, potentially in the form of new generation and transmission facilities, market power purchases, demand-side management programs, or a combination of these and other methods. 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 addition, some environmental regulations are currently subject to litigation and not yet final. 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 announced its long-term goal to serve customers with 100 percent clean energy by 2045, and Idaho Power has short-term and medium-term goals 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. 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, terminated, or subjected to additional costs. For further discussion of environmental matters that may affect Idaho Power, see "Environmental Matters" in Item 7 - MD&A in this report. 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 Hells Canyon Complex (HCC). Relicensing and ongoing permitting requirements include 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 HCC and the American Falls facility. 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 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. As an owner and operator of a bulk power transmission system, Idaho Power is subject to mandatory reliability and security standards issued by the FERC and other regulators. The standards are based on the functions that need to be performed to ensure the bulk power system operates reliably and are guided by reliability, security, and market interface principles. Compliance with reliability standards subjects Idaho Power to higher operating costs and increased capital expenditures. Idaho Power has received in recent years notices of violations from, and regularly self-reports reliability standard compliance issues to, the FERC, the North American Electric Reliability Corporation, and the Western Electricity Coordinating Council. 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. Adverse publicity could harm the reputations of IDACORP and Idaho Power; may make state legislatures, utility commissions, and other regulatory authorities less likely to view the 32 Table of Contents companies in a favorable light; and may cause Idaho Power to be subject to less favorable legislative and regulatory outcomes or increased regulatory oversight. The imposition of any of the foregoing on Idaho Power for its actual or alleged failure to comply with reliability and security requirements could also have a negative effect on its and IDACORP’s results of operations and financial condition. IDACORP and Idaho Power are subject to costs and other effects of legal and regulatory proceedings, disputes, and claims . From time to time in the normal course of business, IDACORP and Idaho Power are subject to various lawsuits, regulatory proceedings, disputes, and claims that could result in adverse judgments or settlements, fines, penalties, injunctions, or other adverse consequences. These matters are subject to a number of uncertainties, and management is often unable to predict the outcome of such matters; resulting liabilities could exceed amounts currently reserved or insured against with respect to such matter. 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. 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. The Financial Accounting Standards Board and the U.S. Securities and Exchange Commission have made and may continue to make changes to accounting standards that impact presentation and disclosures of financial condition and results of operations. Further, new accounting orders issued by the FERC could significantly impact IDACORP's and Idaho Power's reported financial condition. IDACORP and Idaho Power do not have any control over the impact these changes may have on their financial conditions or results of operations nor the timing of such changes. Idaho Power meets the requirements under accounting principles generally accepted in the United States of America to reflect the impact of regulatory decisions in its financial statements and to defer certain costs as regulatory assets until those costs are collected in rates, and to defer some items as regulatory liabilities. If recovery of these amounts ceases to be probable, if Idaho Power determines that it no longer meets the criteria for applying regulatory accounting or if accounting rules change to no longer provide for regulatory assets and liabilities, Idaho Power could be required to eliminate some or all of those regulatory assets or liabilities. Any of these circumstances could result in write-offs and have a material effect on IDACORP's and Idaho Power’s financial condition and results of operations. Financial and Investment Risks 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 . 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. Credit facilities represent commitments by the participating banks to make loans and issue letters of credit. However, the ability and obligation of the participating banks to make those loans and issue letters of credit is subject to specified conditions and volatility or disruptions in the financial markets could affect the companies' ability to obtain debt financing or draw upon or renew existing credit facilities on favorable terms and comply with debt covenants. Idaho Power's ability to issue long-term debt is also subject to a number of conditions included in an indenture, and Idaho Power's ability to issue long-term debt and commercial paper is subject to the availability of purchasers willing to purchase the securities under reasonable terms or at all. Because of these limitations, IDACORP and Idaho Power may be unable to issue commercial paper or short-term or long-term debt at reasonable interest rates and terms or at all. Higher interest rates on short-term borrowings with variable interest rates could also have an adverse effect on IDACORP's and Idaho Power's operating results. Changes in interest rates may also impact the fair value of the debt securities in Idaho Power's pension funds, as well as Idaho Power's ability to earn a return on short-term investments of excess cash. 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 33 Table of Contents manner to permit them to finance their operations, capital expenditures, and debt maturities. IDACORP's and Idaho Power's credit facilities consist of revolving lines of credit not to exceed an aggregate principal amount outstanding at any one time of $100 million and $300 million, respectively (Credit Facilities). The 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. The companies must also make specified representations in connection with requests for loans and it is possible that they may be unable to do so at the time of such request, which would limit or eliminate the obligation of the banks to provide loans. Failure to maintain these representations and covenants could preclude IDACORP and Idaho Power from issuing commercial paper, borrowing under their Credit Facilities, or issuing long-term debt, and could trigger a default and repayment obligation under debt instruments, which could limit their ability to pursue certain projects, acquisitions, or improvements, to support future growth, and adversely impact IDACORP's and Idaho Power's financial condition, results of operations, and liquidity. A downgrade in IDACORP’s and Idaho Power’s credit ratings could affect the companies’ ability to access capital, increase their cost of borrowing, and require the companies to post collateral with transaction counterparties. Credit rating agencies periodically review the corporate credit ratings and long-term ratings of IDACORP and Idaho Power. These ratings are premised on financial ratios and performance, the regulatory environment and rate mechanisms, the effectiveness of management, resource risks and power supply costs, and other factors. IDACORP and Idaho Power also have borrowing arrangements that rely on the ability of the banks to fund loans or support commercial paper, a principal source of short-term financing. In addition, IDACORP's or Idaho Power's credit ratings may change as a result of the differing methodologies or change in the methodologies used by the various rating agencies. Downgrades of IDACORP’s or Idaho Power’s credit ratings, or those affecting relationship banks, could limit the companies’ ability to access short- and long-term capital under reasonable terms or at all, reduce the pool of potential lenders, increase borrowing costs under existing Credit Facilities, limit access to the commercial paper market, require the companies to pay a higher interest rate on their debt, limit the ability of IDACORP to declare and make dividends, and require the companies to post additional performance assurance collateral with transaction counterparties. 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. Stakeholder actions and increased regulatory activity related to ESG matters, particularly global climate change and reducing GHG emissions, could negatively impact IDACORP and Idaho Power. The power and gas utility industry is facing increasing stakeholder scrutiny related to ESG matters. Recently, Idaho Power has seen a rise in certain stakeholders, such as investors, customers, employees, and lenders, placing increasing importance on the impact and social cost associated with climate change. GHG emissions, 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 become effective, they could result in significant additional compliance costs that could negatively impact 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. In addition, the increasing focus on climate change and stricter regulatory and legal requirements may result in Idaho Power facing adverse reputational risks associated with certain of its operations producing GHG emissions. If Idaho Power is unable to satisfy the increasing climate-related expectations of certain stakeholders, IDACORP and Idaho Power may suffer reputational harm, which could cause IDACORP’s stock price to decrease or cause certain investors and financial institutions not to purchase the companies’ debt securities or otherwise provide the companies with capital or credit on favorable terms, which may cause IDACORP’s and Idaho Power’s cost of capital to increase. 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 losses . Idaho Power enters into transactions to buy and sell power, natural gas, and transmission service, enters into transactions to hedge its positions in coal, natural gas, power, and other commodities, and enters into economic hedge transactions to mitigate in part exposure to variable commodity prices. IDACORP and Idaho Power could recognize losses as a result of volatility in the market value of these contracts or if a counterparty fails to perform. The derivative instruments used for hedging might not offset the underlying exposure being mitigated as intended, due to pricing inefficiencies or other terms of the derivative instruments, and any such failure to mitigate exposure could result in losses. 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 34 Table of Contents Power's credit ratings may lead to additional collateral posting requirements. In 2022, Idaho Power recorded gains on economic hedges of $68.5 million, compared with $12.1 million of gains in 2021. The change in the magnitude of the gain is reflective of an increased volume of transactions, as well as high volatility in prices. At times, Idaho Power’s energy risk management policy results in Idaho Power entering into economic hedges in an environment where prices are high, and if prices are lower at the time the economic hedge settles, Idaho Power will record losses on the economic hedges. Depending on the volume of economic hedges and the degree of price volatility, those losses can be substantial, and the power cost adjustment mechanisms generally provide that Idaho Power will incur a portion of those losses. Forecasts of future fuel needs and loads and available resources to meet those loads are inherently uncertain and may cause Idaho Power to over- or under-hedge actual resource needs, exposing the company to market risk on the over- or under-hedged position. To the extent that commodity markets are illiquid, Idaho Power may not be able to execute its risk management strategies, which could result in undesired over-exposure to unhedged positions that Idaho Power may not be able to collect in customer rates. The FERC may take action to limit volatility in the energy market by imposing price limits or other market restrictions to control market-based rate sales, which could adversely affect the companies' financial results. As a result, risk management actions, or the failure or inability to manage commodity availability and price and counterparty risk, may adversely affect IDACORP’s and Idaho Power’s financial condition and results of operations. 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. If the security were not replaced, the party could be in default under the contract and Idaho Power's remedies for default may be inadequate to fully compensate Idaho Power for its losses. Further, the bankruptcy or insolvency of a counterparty to commodity or other transactions could impair Idaho Power’s ability to collect amounts receivable from those counterparties, potentially including the ability to collect or retain collateral posted by a counterparty. Idaho Power is a participant in the energy markets, including the energy imbalance market in the western United States (Western EIM), and engages in direct and indirect power purchase and sale transactions in connection with that participation. The Western EIM has collateral posting requirements based on established credit criteria, but there is no assurance the collateral will be sufficient to cover obligations that counterparties may owe each other in the Western EIM and any such credit losses could be socialized to all Western EIM participants, including Idaho Power. A significant failure of a participant in the Western EIM to make payments when due on its obligations could have a ripple effect on various Idaho Power counterparties in the power, gas, and derivative markets if those counterparties experience ancillary liquidity issues, and could generally result in a decline in the ability of Idaho Power’s counterparties to perform on their obligations. The performance of pension and postretirement benefit plan investments, increasing health care costs, and other factors impacting plan costs and funding obligations could adversely affect IDACORP's and Idaho Power's financial condition and results of operations - primarily cash flows and liquidity . Idaho Power provides a noncontributory defined benefit pension plan covering most employees, as well as a defined benefit postretirement benefit plan (consisting of health care and death benefits) that covers eligible retirees. Costs of providing these benefits 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 Idaho Power’s plan costs and funding requirements related to the plans. Idaho Power's self-insured costs of health care benefits for eligible employees and retirees have increased in recent years and Idaho Power believes that future legislative changes related to the provision of health care benefits and other external market conditions and factors, could cause such costs to continue to rise. As benefit costs continue to rise, there is no assurance that the IPUC and OPUC will continue to allow recovery. The key actuarial assumptions that affect pension funding obligations are the expected long-term return on plan assets and the discount rate used in determining future benefit obligations. Idaho Power evaluates the actuarial assumptions on an annual basis, taking into account changes in market conditions, trends, and future expectations. Estimates of future investment market performance, changes in interest rates, and other factors Idaho Power and its actuary firms use to develop the actuarial assumptions are inherently uncertain, and actual results could vary significantly from the estimates. Changes in demographics, including timing of retirements or changes in life expectancy assumptions, may also increase Idaho Power's plan costs and funding requirements. Future pension funding requirements and the timing of funding payments are also subject to the impacts of changes in legislation. Depending on the timing of contributions to the plans and Idaho Power's ability to recover costs through rates, cash contributions to the plans could reduce the cash available for the companies' businesses and payment of dividends. For additional information regarding Idaho Power's funding obligations under its benefit plans, see Note 11 - "Benefit Plans" to the consolidated financial statements included in this report. 35 Table of Contents If the assumptions underlying coal mine reclamation at Bridger Coal Company and related forecast trust fund growth are materially inaccurate, Idaho Power’s costs could be greater than anticipated or be incurred sooner than anticipated . Bridger Coal Company (BCC), a subsidiary of Idaho Power located in the state of Wyoming, uses surface mining to extract coal to be used for power generation at the Jim Bridger power plant. 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. 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. 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 . IDACORP is a holding company with no significant operations of its own, and its primary assets are shares or other ownership interests of its subsidiaries, primarily Idaho Power. IDACORP’s subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts to IDACORP, whether through dividends, loans, or other means. The ability of IDACORP’s subsidiaries to pay dividends or make distributions to IDACORP depends on several factors, including each subsidiary's actual and projected earnings and cash flow, capital requirements and general financial condition, regulatory restrictions, tax obligations, covenants contained in credit facilities to which they are parties, and the prior rights of holders of their existing and future first mortgage bonds and other debt or equity securities. Further, the amount and payment of dividends is at the discretion of the board of directors, which may reduce or cease payment of dividends at any time. See Note 6 - "Common Stock" to the consolidated financial statements included in this report for a further description of restrictions on IDACORP's and Idaho Power's payment of dividends. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Idaho Power's properties consist of the physical assets necessary to support its utility operations, which include generation, transmission, and distribution facilities. In addition to these physical assets, Idaho Power has rights-of-way and water rights that enable it to use its facilities. Idaho Power’s system is composed of 17 hydropower generating plants located in southern Idaho and eastern Oregon, three natural gas-fired plants in southern Idaho, and interests in two coal-fired steam electric generating plants located in Wyoming and Nevada. As of December 31, 2022, the system also includes approximately 4,832 pole-miles of high-voltage transmission lines, 23 step-up transmission substations located at power plants, 21 transmission substations, 11 switching stations, 30 mixed-use transmission and distribution substations, 189 energized distribution substations (excluding mobile substations and dispatch centers), and approximately 29,384 pole-miles of distribution lines. Idaho Power holds Federal Energy Regulatory Commission licenses for all of its hydropower projects that are subject to federal licensing. Relicensing of Idaho Power’s hydropower projects is discussed in Part II - Item 7 - "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Regulatory Matters – Relicensing of Hydropower Projects" in this report. IDACORP's and Idaho Power's headquarters are located in Boise, Idaho. The corporate headquarters campus consists of approximately 305,741 square feet of owned office space. Excluding Idaho Power's power generation facilities and substations, Idaho Power owns an additional 1,168,813 square feet of office, warehouse, and industrial space to support its operations in Idaho and Oregon. Idaho Power owns all of its interests in principal plants and other important units of real property, except for portions of certain projects licensed under the Federal Power Act and reservoirs and other easements. Substantially all of Idaho Power’s property is subject to the lien of its Mortgage and Deed of Trust and the provisions of its project licenses. Idaho Power’s property is subject to minor defects common to properties of such size and character that it believes do not materially impair the value to, or the use by, Idaho Power of such properties. Idaho Power considers its properties to be well-maintained and in good operating condition. 36 Table of Contents Through Idaho Energy Resources Co., Idaho Power owns a one-third interest in Bridger Coal Company and coal leases near the Jim Bridger power plant in Wyoming from which coal is mined and supplied to the plant. Ida-West Energy Company holds 50-percent interests in nine hydropower plants that have a total nameplate capacity of 44 MW. These plants are located in Idaho and California. Idaho Power's hydropower projects and other owned and co-owned generating facilities and their nameplate capacities, as of the date of this report, are included in the table below. Project Nameplate Capacity (Kilowatt) (1) License Expiration Hydropower Projects: Properties Subject to Federal Licenses: Lower Salmon 60,000 2034 Bliss 75,038 2034 Upper Salmon 34,500 2034 Shoshone Falls 14,729 2040 CJ Strike 82,800 2034 Upper Malad - Lower Malad 21,770 2035 Brownlee - Oxbow - Hells Canyon (Hells Canyon Complex) 1,256,501 2005 (2) Swan Falls 27,170 2042 American Falls 92,340 2025 Cascade 12,420 2031 Milner 59,448 2038 Twin Falls 52,898 2040 Other Hydropower: Clear Lake - Thousand Springs 9,300 Total Hydropower 1,798,914 Steam and Other Generating Plants: Jim Bridger (coal-fired) (3) 775,286 North Valmy Unit 2 (coal-fired) (3)(4) 144,900 Danskin (gas-fired) 270,900 Langley Gulch (gas-fired) 318,453 Bennett Mountain (gas-fired) 172,800 Salmon (diesel-internal combustion) 5,000 Total Steam and Other 1,687,339 Total Generation 3,486,253 (1) Actual generation capacity from a facility may be greater or less than the rated nameplate generation capacity. (2) Licensed on an annual basis while the application for a new multi-year license is pending. (3) Idaho Power’s ownership interests are one-third for Jim Bridger and 50 percent for North Valmy. Amounts shown represent Idaho Power’s share. (4) Pursuant to an agreement with NV Energy, Idaho Power's participation in coal-fired operations of North Valmy ended in December 2019 at unit 1 and is planned to end no later than the end of 2025 at unit 2. ITEM 3. LEGAL PROCEEDINGS Refer to Note 10 – “Contingencies” to the consolidated financial statements included in this report. SEC regulations require IDACORP and Idaho Power to disclose certain information about proceedings arising under federal, state or local environmental provisions if the companies reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to the SEC regulations, the companies use a threshold of $1 million or more for purposes of determining whether disclosure of any such proceedings is required. ITEM 4. MINE SAFETY DISCLOSURES Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 of this report. 37 Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES IDACORP’s common stock, without par value, is traded on the New York Stock Exchange under the trading symbol "IDA". On February 10, 2023, there were 7,447 holders of record of IDACORP common stock. The outstanding shares of Idaho Power’s common stock, $2.50 par value, are held by IDACORP and are not traded. IDACORP became the holding company of Idaho Power on October 1, 1998. For information regarding IDACORP's dividend policy, see Part II - Item 7 - "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Dividends" in this report. For information relating to restrictions on dividends see, Note 6 - "Common Stock" to the consolidated financial statements in this report. IDACORP did not repurchase any shares of its common stock during the fourth quarter of 2022. Performance Graph The graph below shows a comparison of the five-year cumulative total shareholder return for IDACORP common stock, the S&P 500 Index, and the Edison Electric Institute (EEI) Electric Utilities Index. The data assumes that $100 was invested on December 31, 2017, with beginning-of-period weighting of the peer group indices (based on market capitalization) and monthly compounding of returns. Source: Bloomberg and EEI 2017 2018 2019 2020 2021 2022 IDACORP $ 100.00 $ 104.56 $ 123.06 $ 113.86 $ 138.29 $ 135.44 S&P 500 100.00 95.61 125.71 148.83 191.51 156.79 EEI Electric Utilities Index 100.00 103.67 130.41 128.89 150.96 152.70 The foregoing performance graph and data shall not be deemed “filed” as part of this Form 10-K for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference into any other filing of IDACORP or Idaho Power under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent IDACORP or Idaho Power specifically incorporates it by reference into such filing. 38 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in this report, the general financial condition and results of operations for IDACORP and its subsidiaries and Idaho Power and its subsidiary are discussed. The discussion of IDACORP's and Idaho Power's general financial condition and results of operations for 2021 compared with 2020 can be found in their Annual Report on Form 10-K for the year ended December 31, 2021. See Part II - Item 7 - MD&A in that report for further information on the companies' prior period results of operations. While reading the MD&A, please refer to the accompanying consolidated financial statements of IDACORP and Idaho Power. Also refer to "Cautionary Note Regarding Forward-Looking Statements" and Part I - Item 1A - "Risk Factors" in this report for important information regarding forward-looking statements made in this MD&A and elsewhere in this report. INTRODUCTION IDACORP is a holding company whose principal operating subsidiary is Idaho Power. IDACORP’s common stock is listed and trades on the New York Stock Exchange under the trading symbol "IDA". Idaho Power is an electric utility whose rates and other matters are regulated by the Idaho Public Utilities Commission (IPUC), Public Utility Commission of Oregon (OPUC), and Federal Energy Regulatory Commission (FERC). Idaho Power generates revenues and cash flows primarily from the sale and distribution of electricity to customers in its Idaho and Oregon service areas, as well as from the wholesale sale and transmission of electricity. Idaho Power is the parent of Idaho Energy Resources Co. (IERCo), a joint venturer in Bridger Coal Company (BCC), which mines and supplies coal to the Jim Bridger power plant (Jim Bridger plant) owned in part by Idaho Power. IDACORP’s other notable subsidiaries include IDACORP Financial Services, Inc., an investor in affordable housing and other real estate tax credit investments; and Ida-West Energy Company, an operator of small hydropower generation projects that satisfy the requirements of the Public Utility Regulatory Policies Act of 1978 (PURPA). EXECUTIVE OVERVIEW IDACORP is committed to its focus on competitive total returns and generating long-term value for shareholders. IDACORP’s business strategy emphasizes Idaho Power as IDACORP’s core business, since Idaho Power’s regulated electric utility operations are the primary driver of IDACORP’s operating results. This strategy is described in Part I, Item 1 - "Business - Business Strategy" of this report. Examples of IDACORP's and Idaho Power's achievements, notable events, milestones, and recognitions during 2022 include: • IDACORP achieved net income growth for a fifteenth consecutive year; • IDACORP increased its quarterly common stock dividend to $0.79 per share from $0.75 per share, as a part of a 163 percent increase in quarterly dividends approved over the last eleven years; • Idaho Power's customer count grew 2.4 percent in 2022; • In 2022, Idaho Power sold 15,822 megawatt-hours (MWh) of power to retail customers, the highest in its history; • Idaho Power set a new winter system peak demand of 2,574 megawatts (MW) on December 19, 2022, and agai n on December 22, 2022, with 2,604 MW of demand, exceeding the previous winter high of 2,527 MW set on January 6, 2017; • Amid unprecedented retail customer usage and demand in 2022, Idaho Power’s reliability metrics were among the best in company history and Idaho Power provided uninterrupted service to its retail customers 99.97 percent of the time; • In 2022, Idaho Power ranked 6th highest in customer satisfaction among 92 investor-owned utilities, as rated by an independent third party customer satisfaction study; • As part of its “Clean Today. Cleaner Tomorrow.®” goal and in alignment with its 2021 IRP, Idaho Power obtained regulatory approval to accelerate depreciation for its co-owned Jim Bridger plant, reflecting Idaho Power’s plan to exit all coal-fired generation by 2028; and • To reliably serve growing customer demand, Idaho Power has undertaken a substantial capital program for new capacity and energy resources, and in 2022 began constructing two sizeable utility-scale battery storage facilities while conducting requests for proposals (RFPs) for additional resources. 39 Table of Contents Summary of 2022 Financial Results The following is a summary of Idaho Power's net income, net income attributable to IDACORP, and IDACORP's earnings per diluted share for the years ended December 31, 2022, 2021, and 2020 (in thousands, except earnings per share amounts): Year Ended December 31, 2022 2021 2020 Idaho Power net income $ 254,867 $ 243,225 $ 233,235 Net income attributable to IDACORP, Inc. $ 258,982 $ 245,550 $ 237,417 Average outstanding shares – diluted (000’s) 50,699 50,645 50,572 IDACORP, Inc. earnings per diluted share $ 5.11 $ 4.85 $ 4.69 The table below provides a reconciliation of net income attributable to IDACORP for the year ended December 31, 2022, from the year ended December 31, 2021 (items are in millions and are before tax unless otherwise noted): Net income attributable to IDACORP, Inc. - December 31, 2021 $ 245.6 Increase (decrease) in Idaho Power net income: Customer growth, net of associated power supply costs and power cost adjustment mechanisms 12.1 Usage per retail customer, net of associated power supply costs and power cost adjustment mechanisms 8.8 Idaho fixed cost adjustment (FCA) revenues (12.7) Retail revenues per MWh, net of associated power supply costs and power cost adjustment mechanisms 24.4 Transmission wheeling-related revenues 12.5 Other operations and maintenance (O&M) expenses (38.1) Depreciation expense 5.4 Other changes in operating revenues and expenses, net (14.8) Decrease in Idaho Power operating income (2.4) Non-operating expense, net 15.7 Income tax expense (1.7) Total increase in Idaho Power net income 11.6 Other IDACORP changes (net of tax) 1.8 Net income attributable to IDACORP, Inc. - December 31, 2022 $ 259.0 IDACORP's net income increased $13.4 million for 2022 compared with 2021, due primarily to higher net income at Idaho Power. Idaho Power's customer growth of 2.4 percent added $12.1 million to Idaho Power's operating income compared with 2021. Higher sales volumes on a per-customer basis increased operating income by $8.8 million in 2022 compared with 2021, as higher sales volumes on a per customer basis for residential, commercial, and industrial customers were partially offset by lower sales volumes on a per customer basis for irrigation customers. Warmer summer weather in Idaho Power's service area during the third quarter of 2022 and colder winter weather during the first and fourth quarters of 2022, compared with the same periods of 2021, led customers to use more energy per customer for cooling and heating. Greater precipitation during the spring of 2022, compared with the spring of 2021, reduced usage per irrigation customer for irrigation pumping by 9 percent in 2022 compared with 2021. The positive revenue impact of the increase in sales volumes per residential and small commercial customer was partially offset by the FCA mechanism, which decreased revenues in 2022 by $12.7 million compared with 2021. The net increase in retail revenues per MWh, net of associated power supply costs and power cost adjustment mechanisms, increased operating income by $24.4 million in 2022 compared with 2021. This was due partially to changes in Idaho Power's customer sales mix, which includes separate rate tariffs based on customer class. To a greater extent, the net increase in retail revenues per MWh was due to the June 1, 2022 rate increase for Idaho Power’s Idaho retail customers related to an order from the IPUC that authorized Idaho Power to accelerate the depreciation on and recover through 2030 the net book value of coal-related assets at Idaho Power's jointly-owned Jim Bridger plant as of December 31, 2020, plus forecasted plant investments (Bridger Order). Idaho Power plans to cease participation in all coal-related operations at the Jim Bridger plant by 2028. Idaho 40 Table of Contents Power expects the Bridger Order to increase operating revenues, net depreciation expense, and income tax expense in future periods and estimates the impacts of the Bridger Order will increase net income by approximately $10 million in 2023. From 2023, Idaho Power expects the ongoing annual benefit to net income from the Bridger Order to decline each year through 2030, primarily due to the annual decline in Jim Bridger plant coal-related rate base, which Idaho Power expects to be fully depreciated by December 31, 2030. For more information on the Bridger Order, see "Regulatory Matters" in this MD&A. During 2022, transmission wheeling-related revenues increased $12.5 million compared with 2021. Weather variations between the southwest United States and the Pacific Northwest and energy price volatility in the western United States led to price spreads between energy market hubs. The price spreads in 2022 increased wheeling activity across Idaho Power's transmission system for wheeling customers to access these markets. Also, Idaho Power's OATT rates increased 4 percent in October 2021 and 1 percent in October 2022, and Idaho Power saw a significant increase in transmission line-loss settlement rates and associated revenues in the fourth quarter of 2022 compared with the fourth quarter of 2021. In addition, two new long-term wheeling agreements executed in April 2021 contributed to increased wheeling volumes during the first three months of 2022 compared with the same period in 2021. Other O&M expenses increased $38.1 million in 2022 compared with 2021, due partially to inflationary pressures on labor-related costs, professional services, and supplies. Also, maintenance activities at the Jim Bridger plant, Langley Gulch natural gas plant, Bennett Mountain natural gas plant, and American Falls hydropower project contributed to the increase in other O&M expenses in 2022 compared with 2021. Most of those maintenance activities are performed as scheduled maintenance, but not annually. Depreciation expense decreased $5.4 million, due primarily to the impact of the Bridger Order, which resulted in Idaho Power recording the deferral of certain depreciation expense in the second quarter of 2022. This decrease was partially offset by higher utility plant in service in 2022, compared with 2021. Other changes in operating revenues and expenses, net, decreased operating income by $14.8 million in 2022 compared with 2021, due primarily to the increase in net power supply expenses that were not deferred for future recovery in rates through Idaho Power's power cost adjustment mechanisms. Higher wholesale natural gas and power market prices in the western United States and higher energy usage by Idaho Power customers, combined with below-average generation from Idaho Power's hydroelectric facilities, increased Idaho Power's net power supply expenses in 2022. Non-operating expense, net, decreased $15.7 million in 2022 compared with 2021. Allowance for funds used during construction (AFUDC) increased as the average construction work in progress balance was higher throughout 2022 compared with 2021. Also, interest income increased due to higher market interest rates, and investment income increased related to life insurance claims in the rabbi trust for Idaho Power's nonqualified defined benefit pension plans, in 2022 compared with 2021. In addition, costs recorded in 2021 related to an Idaho Power postretirement medical plan did not recur in 2022, as expected. These items were partially offset by higher interest expense on long-term debt in 2022 compared with 2021. The $1.7 million increase in Idaho Power income tax expense in 2022 compared with 2021 was primarily due to greater 2022 pre-tax income. 2023 Initiatives and Strategy IDACORP’s strategy is focused on four areas: growing financial strength, improving Idaho Power's core business, enhancing Idaho Power’s brand, and keeping employees safe and engaged. IDACORP's board of directors has reviewed and affirmed IDACORP’s long-term strategy. In executing on these four strategic cornerstones, IDACORP seeks to balance the interests of shareowners, Idaho Power customers, employees, and other stakeholders. Idaho Power is committed to working for strong, sustainable financial results by continuing to safely provide reliable, affordable, clean energy to its customers from diversified generation resources, including an increasingly clean portfolio of generation as Idaho Power works toward its “Clean Today. Cleaner Tomorrow®” goal of 100% clean energy by 2045. More specific information on IDACORP’s strategy is included in Item 1 – “Business,” in this report. Overview of General Factors and Trends Affecting Results of Operations and Financial Condition IDACORP's and Idaho Power's results of operations and financial condition are affected by a number of factors, and the impact of those factors is discussed in more detail below in this MD&A. To provide context for the discussion elsewhere in this report, some of the more notable factors include the following: 41 Table of Contents • Economic Conditions and Loads: Economic conditions impact consumer demand for energy, revenues, collectability of accounts, the volume of wholesale energy sales, and the need to construct and improve infrastructure, purchase power, and implement programs to meet customer load demands. In recent years, Idaho Power has seen significant growth in the number of customers in its service area. In 2022, Idaho Power's customer count grew by 2.4 percent. Reflective of that recent customer growth, Idaho Power sold 15,822 MWh of power to retail customers in 2022, the highest in its history, and Idaho Power reached a new winter system peak power demand of 2,604 MW on December 22, 2022. While current inflationary and volatile economic conditions could slow the rate of residential customer growth in the near-term, Idaho Power expects its number of customers and, to a greater extent its load due to anticipated commercial and industrial customer growth, to increase in the foreseeable future. In 2022, Idaho Power began preparing its 2023 IRP, its 20-year forecast of power demand and supply options. As of the date of this report, the preliminary load forecast assumptions Idaho Power expects to use in the 2023 IRP are included in the table below. The 2023 preliminary IRP assumptions include significant large commercial and industrial additions in the 5-year forecasted annual growth rate, including potential load from new facilities recently announced by Meta Platforms, Inc. and Micron Technology, Inc. (Micron). For comparison purposes, the analogous average annual growth rates used in the prior two IRPs are included. 5-Year Forecasted Annual Growth Rate 20-Year Forecasted Annual Growth Rate Retail Sales (Billed MWh) Annual Peak (Peak Demand) Retail Sales (Billed MWh) Annual Peak (Peak Demand) 2023 IRP (preliminary) 5.5% 3.7% 2.2% 1.8% 2021 IRP 2.6% 2.1% 1.4% 1.4% 2019 IRP 1.3% 1.4% 1.0% 1.2% Idaho Power believes that existing and sustained growth in customers, load, and peak demand for electricity, along with changes in the regional transmission markets that have constrained the availability of transmission outside Idaho Power’s service area to import energy during peak load periods, require that Idaho Power increase its investment in capacity resources, transmission, and distribution infrastructure. This includes the Boardman-to-Hemingway and Gateway West transmission projects, along with other capacity and energy resources contemplated by the resource procurements described in the "Rate Base Growth and Infrastructure Investment" section below in this MD&A. In order to meet growth in its service area, Idaho Power relies on numerous vendors to provide goods and services. Economic conditions in 2021 and 2022 have resulted in supply chain constraints and inflationary cost increases. Those inflationary pressures have impacted not only external costs, but also Idaho Power's internal labor costs. Inflationary pressures on both external costs and internal labor costs were notable components of the increases in other O&M expenses in 2022 compared with 2021. Idaho Power also experienced significant increases in fuel costs during 2022, reflective of the economic environment. Idaho Power has taken measures to help ensure the availability of supply chain-constrained items that are needed to serve new and existing customers, such as ordering distribution transformers and other electrical apparatus in advance and from new suppliers. Idaho Power has also taken measures to help mitigate where possible cost increases through supplier diversity and contract negotiation, as it works to meet the demands of continued customer and load growth amid an uncertain national and global economic environment. Idaho Power also has an energy risk management and hedging process designed to mitigate some, but not all, of the price risk associated with volatile and elevated power supply and fuel costs. • Rate Base Growth and Infrastructure Investment: The rates established by the IPUC, OPUC, and FERC are determined with the intent to provide an opportunity for Idaho Power to recover authorized operating expenses and depreciation and earn a reasonable return on “rate base.” Rate base is generally determined by reference to the original cost (net of accumulated depreciation) of utility plant in service and certain other assets, subject to various adjustments for deferred income taxes and other items. Over time, rate base is increased by additions to utility plant in service and reduced by depreciation, retirement, and write-off of utility plant. Idaho Power is pursuing significant enhancements to its utility infrastructure in an effort to maintain system reliability, ensure an adequate supply of electricity and capacity, and provide service to new customers. These infrastructure projects include major ongoing new transmission projects such as the Boardman-to-Hemingway and Gateway West projects, as well as utility-scale battery storage projects and other resource procurements. Idaho Power's existing hydropower and thermal generation facilities also require continuing upgrades and equipment replacement, and the company is undertaking a significant relicensing effort for the Hells Canyon Complex (HCC), its largest hydropower generation resource. Idaho Power intends to pursue timely 42 Table of Contents inclusion of any significant completed capital projects into rate base as part of a future general rate case or other appropriate regulatory proceeding. As noted previously, Idaho Power believes that existing and sustained growth in customers, load, and peak demand for electricity, along with transmission constraints, has created the need for Idaho Power to acquire significant generation and storage resources to meet energy and capacity needs over the next several years. While demand varies and is based on numerous factors, based on Idaho Power's analysis of its load and current resource balance, Idaho Power believes it will have resource capacity deficits for peak needs in each of the years from 2023 through 2027. Idaho Power spent $52 million in 2022 on new resource procurements, and expects to spend more than $600 million from 2023 through 2027 on resource additions to address projected energy and capacity deficits. For more information about forecasted capital expenditures and expected rate base growth, see the "Liquidity and Capital Resources" section of this MD&A. • Regulation of Rates and Cost Recovery; General Rate Case Filing: The prices that Idaho Power is authorized to charge for its electric and transmission service is a critical factor in determining IDACORP's and Idaho Power's results of operations and financial condition. Those rates are established by state regulatory commissions and the FERC and are intended to allow Idaho Power an opportunity to recover its expenses and earn a reasonable return on investment. Idaho Power focuses on timely recovery of its costs through filings with its regulators, working to put in place innovative regulatory mechanisms, and prudent management of expenses and investments. Idaho Power has a regulatory settlement stipulation in Idaho that includes provisions for the accelerated amortization of accumulated deferred investment tax credits (ADITC) to help achieve a minimum 9.4 percent Idaho-jurisdiction return on year-end equity (Idaho ROE). The settlement stipulation also provides for the potential sharing between Idaho Power and its Idaho customers of Idaho-jurisdictional earnings in excess of 10.0 percent of Idaho ROE, which would adjust to the authorized return on equity determined in the next general rate case. The settlement stipulation has no expiration date but the minimum Idaho ROE would revert back to 95 percent of the authorized return on equity determined in the next Idaho general rate case. The specific terms of the settlement stipulation are described in Note 3 - "Regulatory Matters" to the consolidated financial statements included in this report. With Idaho Power’s current and anticipated significant infrastructure investments, including those that are intended to help meet projected near-term capacity deficits, Idaho Power believes it is likely that it will file a general rate case in Idaho during 2023, as early as June 2023, with a general rate case filing in Oregon likely to follow in 2024. However, several factors impact Idaho Power’s timing and need to file general rate cases. As it looks to a potential 2023 general rate case, Idaho Power is assessing the expected increase in depreciation expense from rate-base eligible assets as they are placed into service (including its battery storage projects that it expects to be in-service in 2023), the significant amounts of capital expenditures Idaho Power has made since its last general rate case filed in 2011, the expected financing costs for capital expenditures in a higher interest-rate environment, and, to a lesser extent, the inflationary pressures on other O&M expenses described above. In Idaho, Idaho Power is required to file a notice of its intent to file a general rate case with the IPUC at least 60 days before filing an application for a general rate case, and Idaho Power expects the processing of a general rate case in Idaho would span at least seven months before new rates would be in effect. In Oregon, Idaho Power expects that processing of a general rate case would take approximately ten months. • Weather Conditions: Weather and agricultural growing conditions have a significant impact on Idaho Power's energy sales. Relatively low and high temperatures result in greater energy use for heating and cooling, respectively. During the agricultural growing season, which in large part occurs during the second and third quarters of each year, irrigation customers use electricity to operate irrigation pumps, and weather conditions can impact the timing and extent of use of those pumps. Idaho Power also has tiered rates and seasonal rates, which contribute to increased revenues during higher-load periods, most notably during the third quarter of each year when overall customer demand is highest. Much of the adverse or favorable impact of weather on sales of energy to residential and small commercial customers is mitigated through the Idaho FCA mechanism, which is described in Note 3 - "Regulatory Matters" to the consolidated financial statements included in this report. Further, as Idaho Power's hydropower facilities comprise over one-half of Idaho Power's nameplate generation capacity, precipitation levels impact the mix of Idaho Power's generation resources. When hydropower generation decreases, Idaho Power must rely on more expensive generation sources and purchased power. When favorable hydropower generating conditions exist for Idaho Power, they also may exist for other Pacific Northwest hydropower facility operators, lowering regional wholesale market prices and impacting the revenue Idaho Power receives from 43 Table of Contents wholesale energy sales. Much of the adverse or favorable impact of this volatility is addressed through the Idaho and Oregon power cost adjustment mechanisms, which lessen the potential earnings benefit or detriment of volatile hydrological conditions and their impact on overall power supply costs. For 2023, Idaho Power expects generation from its hydropower resources to be in the range of 5.5 million to 7.5 million MWh, compared with average total annual hydropower generation of approximately 7.7 million MWh over the last 30 years. • Mitigation of Impact of Fuel and Purchased Power Expense: In addition to hydropower generation, Idaho Power relies significantly on natural gas and coal to fuel its generation facilities and on power purchases in the wholesale markets. Fuel costs are impacted by electricity sales volumes, the terms and conditions of contracts for fuel, Idaho Power's generation capacity, the availability of hydropower generation resources, transmission capacity, energy market prices, and Idaho Power's hedging program for managing fuel costs. Purchased power costs are impacted by the terms and conditions of contracts for purchased power, the rate of expansion of alternative energy generation sources such as wind or solar energy, generation resource maintenance outages, and wholesale energy market prices. The Idaho and Oregon power cost adjustment mechanisms mitigate in large part the potential adverse earnings impacts to Idaho Power of fluctuations in power supply costs. However, collection from customers or return to customers of most of the difference between actual power supply costs compared with those included in retail rates is deferred to a subsequent period, which can affect Idaho Power’s operating cash flow and liquidity until those costs are recovered from or returned to customers. • Regulatory and Environmental Compliance Costs; Coal Plant Retirements: Idaho Power is subject to extensive federal and state laws, policies, and regulations, as well as regulatory actions and audits by agencies and quasi-governmental agencies, including the FERC, the North American Electric Reliability Corporation, and the Western Electricity Coordinating Council. Compliance with these requirements directly influences Idaho Power's operating environment and affects Idaho Power's operating costs. Moreover, environmental laws and regulations may increase the cost of constructing new facilities, may increase the cost of operating generation plants, may require that Idaho Power install additional pollution control devices at existing generating plants, may result in penalties for non-compliance, even where inadvertent, or may require that Idaho Power curtail or cease operating certain generation plants. Idaho Power expects to spend significant amounts on environmental compliance and controls for the foreseeable future. Due to economic factors in part associated with the costs of compliance with environmental regulation, Idaho Power accelerated the retirement date of its jointly-owned coal-fired generating plant in Valmy, Nevada (Valmy plant), ceasing coal-fired operations at one unit in 2019 and planning to cease its participation in coal-fired operations at the remaining unit by year-end 2025. Idaho Power's jointly-owned coal plant in Boardman, Oregon, ceased operations as planned in October 2020. In June 2022, the IPUC approved Idaho Power's request to allow the coal-related assets at the Jim Bridger plant to be fully depreciated and recovered by end-of-year 2030. The IPUC's Bridger Order related to Idaho Power's plan to cease participation in coal-related operations at the Jim Bridger plant by 2028 is described more fully in the "Regulatory Matters" section of this MD&A. • Water Management and Relicensing of Hydropower Projects: Because of Idaho Power's reliance on stream flow in the Snake River and its tributaries, Idaho Power participates in numerous proceedings and venues that may affect its water rights, seeking to preserve the long-term availability of its rights for its hydropower projects. Also, Idaho Power is involved in renewing its long-term federal licenses for the HCC, its largest hydropower generation source, and for American Falls, its second largest hydropower generation source. Given the number of parties involved, Idaho Power's relicensing costs have been and are expected to continue to be substantial. Idaho Power cannot currently determine the ultimate terms of, and costs associated with, any resulting long-term licenses for the HCC or American Falls hydroelectric facilities. • Wildfire Mitigation Efforts: In recent years, the western United States has experienced an increasing trend in the degree of annual destruction from wildfires. A variety of factors have contributed to this trend including climate change, increased wildland-urban interfaces, historical land management practices, and overall wildland and forest health. While Idaho Power has not experienced to date the extent of catastrophic wildfires within its service area that have occurred in California and elsewhere in the western United States, Idaho Power is taking a proactive approach to wildfire threat in its service area and transmission corridors. Idaho Power has adopted a Wildfire Mitigation Plan (WMP) that outlines actions Idaho Power is taking or is working to implement in the future to reduce wildfire risk and to strengthen the resiliency of its transmission and distribution system to wildfires. Idaho Power's approach to achieve these objectives includes identifying areas subject to elevated risk; system hardening programs, vegetation management, and field personnel practices to mitigate wildfire risk; incorporating current and forecasted weather and field conditions into operational practices; public safety power shutoff protocols adopted in 2022; and evaluating the performance and effectiveness of the strategies identified in the WMP through metrics and monitoring. In June 2021, 44 Table of Contents the IPUC authorized Idaho Power to defer, for future amortization, the Idaho jurisdictional share of actual incremental O&M expenses and depreciation expense of certain capital investments necessary to implement the WMP. The WMP cases with the IPUC are described in more detail in the "Regulatory Matters" section of this MD&A. RESULTS OF OPERATIONS This section of MD&A takes a closer look at the significant factors that affected IDACORP’s and Idaho Power’s earnings. In this analysis, the results for 2022 are compared with 2021. The table below presents Idaho Power’s energy sales and supply (in thousands of MWh) for the last two years. Year Ended December 31, 2022 2021 Retail energy sales 15,822 15,406 Wholesale energy sales 427 600 Energy sales bundled with renewable energy credits 892 739 Total energy sales 17,141 16,745 Hydropower generation 5,347 5,382 Coal generation 3,657 2,981 Natural gas and other generation 2,319 2,765 Total system generation 11,323 11,128 Purchased power 7,178 6,823 Line losses (1,360) (1,206) Total energy supply 17,141 16,745 For purposes of illustration, Boise, Idaho weather-related information for the last two years is presented in the table that follows. Year Ended December 31, 2022 2021 Normal (2) Heating degree-days (1) 5,797 4,856 5,321 Cooling degree-days (1) 1,401 1,393 1,045 Precipitation (inches) 12.7 12.3 11.5 (1) Heating and cooling degree-days are common measures used in the utility industry to analyze the demand for electricity and indicate when a customer would use electricity for heating and air conditioning. A degree-day measures how much the average daily temperature varies from 65 degrees. Each degree above 65 degrees is counted as one cooling degree-day, and each degree below 65 degrees is counted as one heating degree-day. While Boise, Idaho weather conditions are not necessarily representative of weather conditions throughout Idaho Power's service area, the greater Boise area has the majority of Idaho Power's customers. (2) Normal heating degree-days and cooling degree-days elements are, by convention, the arithmetic mean of the elements computed over 30 consecutive years. The annual normal amounts are the sum of the 12 monthly normal amounts. These normal amounts are computed by the National Oceanic and Atmospheric Administration. Sales Volume and Generation: In 2022, retail sales volumes increased 3 percent compared with the prior year, primarily due to growth in the number of Idaho Power customers and increased usage per customer in all customer classes, except for irrigation customers. Warmer summer weather in Idaho Power's service area during the third quarter of 2022 and colder winter weather during the first and fourth quarters of 2022, compared with the same periods in 2021, caused customers to use more energy for cooling and heating. Greater precipitation in Idaho Power's service area during the spring of 2022, compared with the spring of 2021, reduced usage per irrigation customer for irrigation pumping by 9 percent in 2022 compared with 2021. The number of Idaho Power customers grew by 2.4 percent in 2022. Wholesale energy sales volumes decreased 29 percent during 2022 compared with 2021, as higher retail sales volumes and lower than average available hydroelectric generation from Idaho Power resources led to less energy being available for opportunistic market sales. 45 Table of Contents Total system generation increased 2 percent in 2022 compared with 2021, due primarily to higher coal-fired generation, partially offset by decreased natural gas generation. Natural gas generation decreased 16 percent due primarily to higher natural gas market prices. This decrease in natural gas generation during 2022 led to a significant increase in coal generation to help reliably meet customer demand. The financial impacts of fluctuations in wholesale energy sales, purchased power, fuel expense, and other power supply-related expenses are addressed in Idaho Power's Idaho and Oregon power cost adjustment mechanisms, which are described below in "Power Cost Adjustment Mechanisms." Operating Revenues Retail Revenues : The table below presents Idaho Power’s retail revenues (in thousands), MWh sales (in thousands), and number of customers for the last two years. Year Ended December 31, 2022 2021 Retail revenues: Residential (includes $22,595 and $34,835, respectively, related to the FCA (1) ) $ 645,236 $ 583,061 Commercial (includes $922 and $1,407, respectively, related to the FCA (1) ) 347,970 314,745 Industrial 217,368 195,214 Irrigation 170,964 168,664 Provision for sharing — (569) Deferred revenue related to HCC relicensing AFUDC (2) (8,780) (8,780) Total retail revenues $ 1,372,758 $ 1,252,335 Volume of Sales (MWh) Residential 6,056 5,645 Commercial 4,306 4,164 Industrial 3,510 3,471 Irrigation 1,950 2,126 Total retail MWh sales 15,822 15,406 Number of retail customers at year-end Residential 518,490 505,774 Commercial 77,306 76,022 Industrial 128 125 Irrigation 22,071 21,832 Total customers 617,995 603,753 (1) The FCA mechanism is an alternative revenue program and does not represent revenue from contracts with customers. (2) The IPUC allows Idaho Power to recover a portion of the AFUDC on construction work in progress related to the HCC relicensing process, even though the relicensing process is not yet complete and the costs have not been moved to electric plant in service. Idaho Power is collecting approximately $8.8 million annually in the Idaho jurisdiction but is deferring revenue recognition of the amounts collected until the license is issued and the accumulated license costs approved for recovery are placed in service. Changes in rates, changes in customer demand, and changes in FCA mechanism revenues are the primary reasons for fluctuations in retail revenues from period to period. See "Regulatory Matters" in this MD&A for a list of rate changes implemented over the last two years. The primary influences on customer demand for electricity are weather, economic conditions, and energy efficiency. Extreme temperatures increase sales to customers who use electricity for cooling and heating, while mild temperatures decrease sales. Precipitation levels and the timing of precipitation during the agricultural growing season also affect sales to customers who use electricity to operate irrigation pumps. Rates are also seasonally adjusted, providing for higher rates during summer peak load periods, and residential customer rates are tiered, providing for higher rates based on higher levels of usage. The seasonal and tiered rate structures contribute to seasonal fluctuations in revenues and earnings. 46 Table of Contents Retail Revenues : Retail revenues increased $120.4 million in 2022 compared with 2021. The primary factors affecting retail revenues during the period were the following: • Rates : Customer rates, excluding collections of amounts related to the power cost adjustment mechanisms, increased retail revenues by $24.4 million in 2022 compared with 2021, due primarily to the June 1, 2022 rate increase for Idaho Power’s Idaho retail customers related to the Bridger Order. Also, changes in Idaho Power's customer sales mix, which includes separate rate tariffs based on customer class, contributed to the increase in retail revenues. Customer rates also include the collection from customers of amounts related to the power cost adjustment mechanisms, which increased revenues by $70.3 million in 2022 compared with 2021. The adjustments related to the Idaho-jurisdiction power cost adjustment mechanism (PCA) in rates do not have a significant effect on operating income as a corresponding amount is recorded in expense in the same period it is collected through rates. • Customers : Customer growth of 2.4 percent increased retail revenues by $19.5 million in 2022 compared with 2021. • Usage : Higher usage (on a per customer basis) in all customer classes except irrigation customers, increased retail revenues by $18.3 million during 2022 compared with 2021. Warmer summer weather in Idaho Power's service area during the third quarter of 2022 and colder winter weather during the first and fourth quarters of 2022, compared with the same periods of 2021, led retail customers to use more energy per customer for cooling and heating. Higher precipitation during the spring of 2022, compared with the spring of 2021, led agricultural irrigation customers to use 9 percent less energy per customer to operate irrigation pumps during 2022. Heating degree-days in Boise, Idaho, were 19 percent higher during 2022 compared with 2021, and 9 percent higher than normal. Also, cooling degree-days in Boise, Idaho, were 1 percent higher during 2022 compared with 2021 and 34 percent above normal. • Idaho FCA Revenues: The FCA mechanism, applicable to Idaho residential and small commercial customers, adjusts revenue each year to accrue, or defer, the difference between the authorized fixed-cost recovery amount per customer and the actual fixed costs per customer recovered by Idaho Power through volume-based rates during the year. Higher usage (on a per customer basis) by residential and small commercial customers during 2022 decreased the amount of FCA revenue accrued by $12.7 million, compared with 2021. • Sharing : Idaho Power did not record any provision for sharing in 2022. In 2021, Idaho Power recorded a $0.6 million provision against current revenues to be refunded to customers through an approved rate reduction which was included in PCA rates in June 2022. This revenue sharing arrangement, which requires Idaho Power to share with Idaho customers a portion of Idaho-jurisdiction earnings exceeding a 10.0 percent Idaho ROE, is described in "Regulatory Matters" in this MD&A and Note 3 -"Regulatory Matters" to the consolidated financial statements included in this report. Wholesale Energy Sales : Wholesale energy sales consist primarily of long-term sales contracts, opportunity sales of surplus system energy, and sales into the energy imbalance market in the western United States, and do not include derivative transactions. The table below presents Idaho Power’s wholesale energy sales for the last two years (in thousands, except for revenue per MWh amounts). Year Ended December 31, 2022 2021 Wholesale energy revenues $ 66,519 $ 40,839 Wholesale MWh sold 427 600 Wholesale energy revenues per MWh $ 155.78 $ 68.07 In 2022, wholesale energy revenue increased by $25.7 million, or 63 percent, compared with 2021, as higher average wholesale energy prices more than offset a decrease in volumes sold. Wholesale energy prices were higher compared with 2021 as extreme summer and winter weather resulted in higher demand and higher fuel costs (natural gas and coal) in the wholesale markets in the region. Wholesale energy sales volumes decreased 29 percent in 2022 compared with 2021, as higher retail sales volumes led to less energy available for opportunistic market sales. The earnings impacts of fluctuations in wholesale energy sales are largely mitigated by Idaho Power's Idaho and Oregon power cost adjustment mechanisms, which are described below in "Power Cost Adjustment Mechanisms" in this MD&A. 47 Table of Contents Transmission Wheeling-Related Revenues: Revenue related to transmission wheeling increased $12.5 million, or 18 percent, in 2022 compared with 2021, as weather-related price spreads between electricity market hubs increased wheeling activity across Idaho Power's transmission system during 2022, compared with 2021. Also, Idaho Power saw a significant increase in transmission line-loss settlement rates and associated revenues in the fourth quarter of 2022 compared with the fourth quarter of 2021. In addition, two new long-term wheeling agreements executed in April 2021 contributed to increased wheeling volumes during the first three months of 2022 compared with the same period in 2021. Idaho Power's OATT rates increased approximately 4 percent during the period from October 1, 2021 to September 30, 2022, as compared with the rates in effect from October 1, 2020 to September 30, 2021. Also, Idaho Power's OATT rate increased 1 percent in October 2022. Refer to "Regulatory Matters" in this MD&A for more information on Idaho Power's OATT rate. Energy Efficiency Program Revenues: In both Idaho and Oregon, energy efficiency riders fund energy efficiency program expenditures. Expenditures funded through the riders are reported as an operating expense with an equal amount recorded in revenues, resulting in no net impact on earnings. The cumulative variances between expenditures and amounts collected through the riders are recorded as regulatory assets or liabilities. A liability balance indicates that Idaho Power has collected more than it has spent and an asset balance indicates that Idaho Power has spent more than it has collected. At December 31, 2022, Idaho Power's energy efficiency rider balances were a $3.8 million regulatory asset in the Idaho jurisdiction and a $0.2 million regulatory liability in the Oregon jurisdiction. Operating Expenses Purchased Power : The table below presents Idaho Power’s purchased power expenses and volumes for the last two years (in thousands, except for MWh amounts). Year Ended December 31, 2022 2021 Expense PURPA contracts $ 189,367 $ 199,517 Other purchased power (including wheeling) 354,978 194,174 Total purchased power expense $ 544,345 $ 393,691 MWh purchased PURPA contracts 2,756 3,040 Other purchased power 4,422 3,783 Total MWh purchased 7,178 6,823 Cost per MWh from PURPA contracts $ 68.71 $ 65.63 Cost per MWh from other sources $ 80.28 $ 51.33 Weighted average - all sources $ 75.84 $ 57.70 Idaho Power is required by federal law to purchase power from some PURPA generation projects at a specified price regardless of the then-current load demand or wholesale energy market prices. The intermittent, non-dispatchable nature of most PURPA generation increases the likelihood that Idaho Power will at times be required to reduce output from its lower-cost hydropower or its fossil fuel-fired generation resources and may be required to sell its excess power in the wholesale power market at a significant loss. Although it was not the case in 2022 or 2021, the other purchased power cost per MWh often exceeds the wholesale energy sales revenue per MWh because Idaho Power generally needs to purchase more power during heavy load periods than during light load periods, and conversely has less energy available for wholesale energy sales during heavy load periods than light load periods. Market energy prices are typically higher during heavy load periods than during light load periods. Also, in accordance with Idaho Power's energy risk management policy, Idaho Power may purchase or sell energy several months in advance of anticipated delivery. The regional energy market price is dynamic and additional energy transactions that Idaho Power makes at current market prices may be noticeably different than the advance transaction prices. Most of the non-PURPA purchased power and substantially all of the PURPA power purchase costs are recovered through base rates and Idaho Power's power cost adjustment mechanisms. Purchased power expense increased $150.7 million, or 38 percent, in 2022 compared with 2021. The increase in purchased power expense in 2022 is primarily due to higher wholesale energy market prices as extreme summer and winter weather resulted in higher demand and higher fuel costs (natural gas and coal) in the wholesale markets in the region. 48 Table of Contents Fuel Expense : The table below presents Idaho Power’s fuel expenses and thermal generation for the last two years (in thousands, except per MWh amounts). Year Ended December 31, 2022 2021 Expense Coal $ 105,552 $ 95,324 Natural gas (1) 124,658 85,226 Total fuel expense $ 230,210 $ 180,550 MWh generated Coal 3,657 2,981 Natural gas (1) 2,319 2,765 Total MWh generated 5,976 5,746 Cost per MWh - Coal $ 28.86 $ 31.98 Cost per MWh - Natural gas $ 53.76 $ 30.82 Weighted average, all sources $ 38.52 $ 31.42 (1) Includes a negligible amount of expense and generation related to the Salmon diesel-fired generation plant. The majority of the fuel for Idaho Power’s jointly-owned coal-fired plants is purchased through long-term contracts, including purchases from BCC, a one-third owned joint venture of IERCo. The price of coal from BCC is subject to fluctuations in mine operating expenses, geologic conditions, and production levels. BCC supplies up to two-thirds of the coal used by the Jim Bridger plant. Natural gas is mainly purchased on the regional wholesale spot market at published index prices. In addition to commodity (variable) costs, both natural gas and coal expenses include costs that are more fixed in nature for items such as capacity charges, transportation, and fuel handling. Period to period variances in fuel expense per MWh are noticeably impacted by these fixed charges when generation output is substantially different between the periods. Fuel expense increased $49.7 million, or 28 percent, in 2022 compared with 2021, primarily due to higher natural gas market prices in 2022, which resulted in a 74 percent increase in the average cost per MWh of natural gas generation. Also, coal-fired generation increased to compensate for the significant decrease in natural gas generation resulting from higher natural gas market prices. Idaho Power's increase in coal generation in 2022 has resulted in the company using a significant portion of its share of coal inventory at its jointly-owned coal plants. Due to existing coal supply constraints, Idaho Power is currently optimizing dispatch of coal generation resources in an effort to help ensure adequate coal supply during its period of peak demand in 2023. Given the coal supply constraints, Idaho Power may need to rely on more purchased power and natural gas-fired generation in those periods, depending in part on hydroelectric generating conditions in those periods. Included in fuel expense are losses and gains on settled financial gas hedges entered into in accordance with Idaho Power's energy risk management policy. In 2022 and 2021, gains on financial gas hedges of $68.5 million and $12.1 million, respectively, reduced natural gas fuel expense. Most of these realized hedging gains are passed on to customers through the power cost adjustment mechanisms described below. Power Cost Adjustment Mechanisms : Idaho Power's power supply costs (primarily purchased power and fuel expense, less wholesale energy sales) can vary significantly from year to year. Volatility of power supply costs arises from factors such as weather conditions, wholesale market prices, volumes of power purchased and sold in the wholesale markets, Idaho Power's hydropower and thermal generation volumes and fuel costs, generation plant availability, and retail loads. To address the volatility of power supply costs, Idaho Power's power cost adjustment mechanisms in the Idaho and Oregon jurisdictions allow Idaho Power to recover from customers, or refund to customers, most of the fluctuations in power supply costs. In the Idaho jurisdiction, the PCA includes a cost or benefit sharing ratio that allocates the deviations in net power supply expenses between customers (95 percent) and Idaho Power (5 percent), with the exception of PURPA power purchases and demand response program incentives, which are allocated 100 percent to customers. The Idaho deferral period, or PCA year, runs from April 1 through March 31. Amounts deferred during the PCA year are primarily recovered or refunded during the subsequent June 1 through May 31 period. Because of the power cost adjustment mechanisms, the primary financial impacts of power supply cost variations is that cash is paid out but recovery from customers does not occur until a future period, or cash that is collected is refunded to customers in a future period, resulting in fluctuations in operating cash flows from year to year. 49 Table of Contents The table below presents the components of the Idaho and Oregon power cost adjustment mechanisms for the last two years (in thousands). Year Ended December 31, 2022 2021 Power supply cost deferral $ (116,994) $ (22,036) Oregon power supply cost deferral (1,079) — Amortization of prior year authorized balances 17,414 (27,808) Total power cost adjustment expense $ (100,659) $ (49,844) The power supply (deferrals) accruals represent the portion of the power supply cost fluctuations (deferred) accrued under the power cost adjustment mechanisms. When actual power supply costs are lower than the amount forecasted in power cost adjustment rates, most of the difference is accrued as an increase to a regulatory liability or decrease to a regulatory asset. When actual power supply costs are higher than the amount forecasted in power cost adjustment rates, most of the difference is deferred as an increase to a regulatory asset or decrease to a regulatory liability. During 2022, higher purchased power costs led to higher actual power supply costs compared with the forecasted amount, which resulted in a significant increase in the amount of power supply costs deferred by the mechanism. The amortization of the prior year’s balances represents the offset to the amounts being collected or refunded in the current power cost adjustment year that were deferred or accrued in the prior power cost adjustment year (the true-up component of the power cost adjustment mechanism). Other Operations and Maintenance Expenses : Other O&M expenses increased $38.1 million, or 11 percent, in 2022 compared with 2021, due partially to inflationary pressures on labor-related costs, professional services, and supplies. Also, maintenance activities at the Jim Bridger plant, Langley Gulch natural gas plant, Bennett Mountain natural gas plant, and American Falls hydropower project contributed to the increase in other O&M expenses in 2022 compared with 2021. Most of those maintenance activities are performed as scheduled maintenance, but not annually. Income Taxes IDACORP's and Idaho Power's 2022 income tax expense increased $0.9 million and $1.7 million, respectively, when compared with 2021. The increases were primarily due to higher pre-tax earnings at Idaho Power. For additional information relating to IDACORP's and Idaho Power's income taxes, see Note 2 - “Income Taxes” to the consolidated financial statements included in this report. On August 16, 2022, the Inflation Reduction Act of 2022 (the 2022 IRA) was signed into law. The 2022 IRA provides for, among other things, numerous renewable energy tax credits, for example: extension of the current investment (ITC) and production (PTC) tax credits, a new ITC for standalone energy storage, application of the PTC to solar, transition to a technology-neutral ITC and PTC after 2024, and created a transferability option that allows credits to be sold to an unrelated taxpayer. The 2022 IRA modifies the calculation of most of the energy tax credits by introducing the concept of a “base credit” (e.g., 6 percent ITC) and a “bonus credit” (e.g., an additional 24 percent ITC) if certain wage and apprenticeship requirements are met in the construction and ongoing maintenance of the renewable energy facilities. Additionally, the 2022 IRA also established a 15 percent alternative minimum tax for C-corporations with an average financial statement income of more than $1 billion for the previous three taxable years. IDACORP and Idaho Power are not subject to the alternative minimum tax . LIQUIDITY AND CAPITAL RESOURCES Overview Idaho Power continues to pursue significant enhancements to its utility infrastructure in an effort to ensure an adequate supply of electricity, to provide service to new customers, and to maintain system reliability. Idaho Power's existing hydropower and thermal generation facilities also require continuing upgrades and component replacement. Cash capital expenditures, excluding AFUDC and net costs of removing assets from service, were $419 million in 2022 and $288 million in 2021. Idaho Power expects an increase in capital expenditures over the next several years, with estimated total capital expenditures of up to $3.3 billion over the period from 2023 through 2027. Idaho Power funds its liquidity needs for capital expenditures through cash flows from operations, debt offerings, commercial paper markets, credit facilities, a term loan facility, and capital contributions from IDACORP. 50 Table of Contents As of February 10, 2023, IDACORP's and Idaho Power's access to debt, equity, and credit arrangements included: • their respective $100 million and $300 million revolving credit facilities; • IDACORP's shelf registration statement filed with the U.S. Securities and Exchange Commission (SEC) on May 16, 2022, which may be used for the issuance of debt securities and common stock; • Idaho Power's shelf registration statement filed with the SEC on May 16, 2022, which may be used for the issuance of first mortgage bonds and debt securities; $1.15 billion remains available for issuance pursuant to state regulatory authority; and • IDACORP's and Idaho Power's issuance of commercial paper, which may be issued up to an amount equal to the available credit capacity under their respective credit facilities. IDACORP and Idaho Power monitor capital markets with a view toward opportunistic debt and equity transactions, taking into account current and potential future long-term needs. As a result, IDACORP may issue debt securities or common stock, and Idaho Power may issue debt securities or first mortgage bonds, if the companies believe terms available in the capital markets are favorable and that issuances would be financially prudent. Idaho Power also periodically analyzes whether partial or full early redemption of one or more existing outstanding series of first mortgage bonds is desirable, and in some cases, may refinance indebtedness with new indebtedness. As described in the "Financing Cash Flows" section below, during 2022 Idaho Power issued first mortgage bonds, including a portion of the first mortgage bonds on a delayed-draw basis to be issued in March 2023, drew from a term loan facility, and redeemed pollution control revenue bonds. Based on planned capital expenditures and other O&M expenses, the companies believe they will be able to meet capital and debt service requirements and fund corporate expenses during at least the next twelve months with a combination of existing cash, operating cash flows generated by Idaho Power's utility business, availability under existing credit facilities, and access to commercial paper and short-term and long-term debt markets. IDACORP and Idaho Power generally seek to maintain capital structures of approximately 50 percent debt and 50 percent equity. Maintaining this ratio influences IDACORP's and Idaho Power's debt and equity issuance decisions. As of December 31, 2022, IDACORP's and Idaho Power's capital structures, as calculated for purposes of applicable debt covenants, were as follows: IDACORP Idaho Power Debt 45% 46% Equity 55% 54% IDACORP and Idaho Power generally maintain their cash and cash equivalents in highly liquid investments, such as U.S. Treasury Bills, money market funds, and bank deposits. Operating Cash Flows IDACORP's and Idaho Power's principal sources of cash flows from operations are Idaho Power's sales of electricity and transmission capacity. Significant uses of cash flows from operations include the purchase of fuel and power, other operating expenses, interest, income taxes, and plan contributions. Operating cash flows can be significantly influenced by factors such as weather conditions, rates and the outcome of regulatory proceedings, and economic conditions. As fuel and purchased power are significant uses of cash, Idaho Power has regulatory mechanisms in place that provide for the deferral and recovery of the majority of the fluctuation in those costs. However, if actual costs rise above the level currently allowed in retail rates, deferral balances increase (reflected as a regulatory asset), negatively affecting operating cash flows until such time as those costs, with interest, are recovered from customers. IDACORP’s and Idaho Power’s operating cash inflows in 2022 were $351 million and $380 million, respectively, a decrease of $12 million for IDACORP and an increase of $58 million for Idaho Power, when compared with 2021. With the exception of cash flows related to income taxes, IDACORP's operating cash flows are principally derived from operating cash flows from Idaho Power. Significant items that affected the companies' operating cash flows in 2022 when compared with 2021 were as follows: 51 Table of Contents • a $14 million and a $12 million increase in IDACORP and Idaho Power net income, respectively; • changes in regulatory assets and liabilities, mostly related to the relative amounts of costs deferred and collected under the Idaho PCA, FCA, and energy efficiency program cost mechanisms, decreased operating cash inflows by $46 million; • changes in deferred taxes and taxes accrued and receivable combined to decrease operating cash flows for IDACORP by $11 million and increase operating cash flows for Idaho Power by $9 million; and • changes in working capital balances due primarily to timing, including fluctuations in accounts receivable and unbilled revenues, accounts and wages payable, materials, supplies, and fuel stock, and other assets and liabilities, as follows: ◦ timing of collections of accounts receivable and unbilled revenues decreased operating cash flows by $72 million for IDACORP and $73 million for Idaho Power; ◦ the changes in materials, supplies, and fuel stock decreased operating cash flows by $13 million for IDACORP and Idaho Power, which was primarily due to an increase in material and supply inventory offset by the timing of purchases and consumption of coal at Idaho Power's jointly-owned coal-fired generating plants; ◦ the changes in accounts and wages payable increased operating cash flows by $95 million for IDACORP and $149 million for Idaho Power, which was primarily due to an in increase power supply costs and associated timing of payments, and includes a $54 million difference between IDACORP and Idaho Power related to intercompany estimated tax payments; and ◦ the changes in other assets and liabilities, which includes accrued paid time off and leave, customer deposits, accrued interest, and other miscellaneous liabilities, increased operating cash flows by $27 million for IDACORP and Idaho Power. Investing Cash Flows Investing activities consist primarily of capital expenditures related to new construction of, and improvements to, Idaho Power’s generation, transmission, and distribution facilities. IDACORP's and Idaho Power's net investing cash outflows for 2022 were $424 million and $410 million, respectively. Investing cash outflows for 2022 and 2021 were primarily for construction of utility infrastructure needed to address Idaho Power’s aging plant and equipment, customer growth, and environmental and regulatory compliance requirements. Significant items and transactions that affected investing cash flows in 2022 and 2021 were as follows: • IDACORP’s and Idaho Power’s investing cash outflows for 2022 and 2021 included $433 million and $300 million, respectively, of additions to utility plant; • IDACORP's and Idaho Power's investing cash inflows for 2022 and 2021 included $18 million and $6 million, respectively, from Boardman-to-Hemingway project joint permitting participants relating to a portion of the permitting expenditures; • IDACORP's investing cash outflows for 2022 and 2021 included $10 million and $15 million, respectively, of tax credit investments in affordable housing and other real estate, which provide a return principally by reducing federal and state income taxes through tax credits and accelerated tax depreciation benefits; • IDACORP's investing cash outflows and inflows for 2022 and 2021 included $25 million in purchases of short-term investments and $25 million and $50 million, respectively, in sales of short-term investments; • IDACORP's and Idaho Power's investing cash inflows for 2022 and 2021 included an $8 million and $14 million, respectively, return of investment from IERCo, a wholly-owned subsidiary of Idaho Power; and • IDACORP's and Idaho Power's investing cash outflows and inflows for 2022 included $44 million and $31 million in purchases of equity and held-to-maturity securities, respectively, and $64 million in sales of equity securities, held in a rabbi trust, which is designated to provide funding for obligations related to Idaho Power's security plan for senior management employees. Financing Cash Flows Financing activities provide supplemental cash for both day-to-day operations and capital requirements as needed. IDACORP's and Idaho Power's net financing cash inflows for 2022 were $35 million and $78 million, respectively. Idaho Power funds liquidity needs for capital investment, working capital, managing commodity price risk, dividends, and other financial commitments through cash flows from operations, debt offerings, commercial paper markets, credit facilities, a term loan facility, and capital contributions from IDACORP. IDACORP funds its cash requirements, such as payment of taxes, payment of dividends, capital contributions to Idaho Power, and non-utility expenses allocated to IDACORP, through cash flows from operations, commercial paper markets, sales of common stock, and credit facilities. Significant items and transactions that affected financing cash flows in 2022 were as follows: 52 Table of Contents • in 2022, Idaho Power drew $150 million from a term loan facility; • in December 2022, Idaho Power issued $23 million in principal amount of its 4.99 percent first mortgage bonds, secured medium term notes, Series N, maturing in December 2032; • in December 2022, Idaho Power issued $25 million in principal amount of its 5.06 percent first mortgage bonds, secured medium term notes, Series N, maturing in December 2042; • in December 2022, Idaho Power redeemed, prior to maturity, $4.4 million in principal amount of variable rate pollution control revenue bonds, Series 2000, maturing in February 2027. The bonds were redeemed prior to maturity due to demolition of the Boardman power plant in October 2022; and • IDACORP and Idaho Power paid dividends of $154 million and $114 million in 2022, respectively. Financing Programs and Available Liquidity IDACORP Equity Programs: IDACORP issued no equity securities in 2022 other than under its equity compensation plans. As described elsewhere in this MD&A, IDACORP has significant planned capital expenditures in the near-term, and the company could determine to issue equity during 2023, depending on market conditions, its financial and regulatory strategy, and other factors. Term Loan Credit Agreement: In March 2022, Idaho Power entered into a term loan credit agreement (Term Loan Facility). The Term Loan Facility is a two-year senior unsecured term loan facility in the aggregate principal amount of $150 million, used for general corporate purposes, including funding Idaho Power's capital projects. The maturity date of the Term Loan Facility is March 4, 2024. At December 31, 2022, $150 million in principal amount had been drawn and was outstanding on the Term Loan Facility. For more information about the Term Loan Facility, see Note 5 - "Long-term Debt" to the consolidated financial statements included in this report. Idaho Power First Mortgage Bonds : Idaho Power's issuance of long-term indebtedness is subject to the approval of the IPUC, OPUC, and Wyoming Public Service Commission (WPSC). In May and June 2022, Idaho Power received orders from the IPUC, OPUC, and WPSC authorizing the company to issue and sell from time to time up to $1.2 billion in aggregate principal amount of debt securities and first mortgage bonds, subject to conditions specified in the orders. For more detailed information about Idaho Power First Mortgage Bonds, see Note 5 - "Long-term Debt" to the consolidated financial statements included in this report. In December 2022, Idaho Power entered into a Bond Purch ase Agreement with certain institutional purchasers, relating to t he sale by the Idaho Power of $170 million in aggregate principal amount of first mortgage bonds, secured medium-term notes, Series N (Series N Notes). Also in December 2022, Idaho Power entered into the Fifty-second Supplemental Indenture, dated December 20, 2022, to the Indenture (Fifty-second Supplemental Indenture). The Fifty-second Supplemental Indenture provides for, among other items, the issuance of Series N Notes pursuant to the Indenture. The Series N Notes consist of four tranches of bonds, due in 2032, 2042, 2043, and 2053, respectively. The first two tranches were issued on December 22, 2022, and Idaho Power has a commitment to issue the third and fourth tranches on March 8, 2023, each under the Indenture . Idaho Power intends to use the proceeds of the sale of the Series N Notes for general corporate purposes, primarily related to the construction of a battery storage project. At December 31, 2022, $48 million in principal amount of Series N Notes had been issued and was outstanding. For more detailed information about the Series N Notes, see Note 5 - "Long-term Debt" to the consolidated financial statements included in this report. IDACORP and Idaho Power Credit Facilities (Credit Facilities) : The IDACORP Credit Facility, which may be used for general corporate purposes and commercial paper backup, consists of a revolving line of credit not to exceed the aggregate principal amount at any one time outstanding of $100 million, including swingline loans in an aggregate principal amount at any time outstanding not to exceed $10 million, and letters of credit in an aggregate principle amount at any time outstanding not to exceed $50 million. The Idaho Power Credit Facility, which may be used for general corporate purpose and commercial paper backup, consists of a revolving line of credit, through the issuance of loans and standby letters of credit, not to exceed the aggregate principle amount at any one time outstanding of $300 million, including swingline loans in an aggregate principal amount at any time outstanding not to exceed $30 million, and letters of credit in an aggregate principal amount at any time outstanding not to exceed $50 million. IDACORP and Idaho Power have the right to request an increase in the aggregate principal amount of the facilities to $150 million and $450 million, respectively, in each case subject to certain conditions. The IDACORP and Idaho Power Credit Facilities have similar terms and conditi ons. The interest rates for any borrowings under the facilities are based on either (1) a floating rate that is equal to the highest of the prime rate, federal funds rate plus 0.5 perc ent, or one-month SOFR rate plus 1.1 percent, or 0.0 percent, or (2) the Secured Overnight Financing Rate administered by the Federal Reserve Bank of New York (SOFR) Market Index rate, plus, in each case, an applicable margin, provided that 53 Table of Contents the federal funds rate and SOFR rate will not be less than zero. If during any period the SOFR rate is unavailable or unascertainable, an alternate benchmark rate selected by the administrative agent and the borrower would apply. The applicable margin is based on IDACORP's or Idaho Power's, as applicable, senior unsecured long-term indebtedness credit rating by rating agencies, as set forth on a schedule to the credit agreements. Under their respective Credit Facilities, the companies pay a facility fee on the commitment based on the respective company's credit rating for senior unsecured long-term debt securities. On December 6, 2025, the extension of $15.6 million and $46.9 million on the IDACORP and Idaho Power Credit Facilities, respectively, terminates. The extension of the remaining $84.4 million of the IDACORP Credit Facility and the remaining $253.1 million of the Idaho Power Credit Facility, respectively, terminates on December 7, 2026. Each facility contains a covenant requiring each company to maintain a leverage ratio of consolidated indebtedness to consolidated total capitalization equal to or less than 65 percent as of the end of each fiscal quarter. In determining the leverage ratio, “consolidated indebtedness” broadly includes all indebtedness of the respective borrower and its subsidiaries, including, in some instances, indebtedness evidenced by certain hybrid securities (as defined in the credit agreement). “Consolidated total capitalization” is calculated as the sum of all consolidated indebtedness, consolidated stockholders' equity of the borrower and its subsidiaries, and the aggregate value of outstanding hybrid securities. At December 31, 2022, the leverage ratios for IDACORP and Idaho Power were 45 percent and 46 percent, respectively. IDACORP's and Idaho Power's ability to utilize their respective Credit Facilities is conditioned upon their continued compliance with the leverage ratio covenants included in the Credit Facilities. There are additional covenants, subject to exceptions, that prohibit certain mergers, acquisitions, and investments, restrict the creation of certain liens, and prohibit entering into any agreements restricting dividend payments from any material subsidiary. At December 31, 2022, IDACORP and Idaho Power believe they were in compliance with all of their respective Credit Facility covenants and, as of the date of this report, do not believe they will be in violation or breach of such covenants during 2023. The events of default under the Credit Facilities include, without limitation, non-payment of principal, interest, or fees; materially false representations or warranties; breach of covenants; bankruptcy or insolvency events; condemnation of property; cross-default to certain other indebtedness; failure to pay certain judgments; change of control; failure of IDACORP to own free and clear of liens the voting stock of Idaho Power; the occurrence of specified events or the incurring of specified liabilities relating to benefit plans; and the incurring of certain environmental liabilities, subject, in certain instances, to cure periods. Upon any event of default relating to the voluntary or involuntary bankruptcy of IDACORP or Idaho Power or the appointment of a receiver, the obligations of the lenders to make loans under the applicable facility and to issue letters of credit will automatically terminate and all unpaid obligations will become due and payable. Upon any other event of default, the lenders holding greater than 50 percent of the outstanding loans or greater than 50 percent of the aggregate commitments (required lenders) or the administrative agent with the consent of the required lenders may terminate or suspend the obligations of the lenders to make loans under the facility and to issue letters of credit under the facility and/or declare the obligations to be due and payable. During an event of default under the facilities, the lenders may, at their option, increase the applicable interest rates then in effect and the letter of credit fee by 2.0 percentage points per annum. A ratings downgrade would result in an increase in the cost of borrowing but would not result in a default or acceleration of the debt under the facilities. However, if Idaho Power's ratings are downgraded below investment grade, Idaho Power must extend or renew its authority for borrowings under its IPUC and OPUC regulatory orders. Without additional approval from the IPUC, the OPUC, and the WPSC, the aggregate amount of short-term borrowings by Idaho Power at any one time outstanding may not exceed $450 million. Idaho Power has obtained approval of the state public utility commissions of Idaho, Oregon, and Wyoming for the issuance of short-term borrowings with maturities of three years and under through December 2026. IDACORP and Idaho Power Commercial Paper: IDACORP and Idaho Power have commercial paper programs under which they issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time not to exceed the available capacity under their respective Credit Facilities, described above. IDACORP's and Idaho Power's Credit Facilities are available to the companies to support borrowings under their commercial paper programs. The commercial paper issuances are used to provide an additional financing source for the companies' short-term liquidity needs. The maturities of the commercial paper issuances will vary, but may not exceed 270 days from the date of issue. Individual instruments carry a fixed rate during their respective terms, although the interest rates are reflective of current market conditions, subjecting the companies to fluctuations in interest rates. 54 Table of Contents Available Short-Term Borrowing Liquidity The following table outlines available short-term borrowing liquidity as of the dates specified (in thousands): December 31, 2022 December 31, 2021 IDACORP (2) Idaho Power IDACORP (2) Idaho Power Revolving credit facility $ 100,000 $ 300,000 $ 100,000 $ 300,000 Commercial paper outstanding — — — — Identified for other use (1) — (19,885) — (24,245) Net balance available $ 100,000 $ 280,115 $ 100,000 $ 275,755 (1) American Falls bonds that Idaho Power could be required to purchase prior to maturity under the optional or mandatory purchase provisions of the bonds, if the remarketing agent for the bonds were unable to sell the bonds to third parties. (2) Holding company only. IDACORP and Idaho Power had no short term commercial paper outstanding during the years ended December 31, 2022 and 2021. At February 10, 2023, IDACORP had no loans outstanding under the IDACORP Credit Facility and no commercial paper outstanding, and Idaho Power had no loans outstanding under the Idaho Power Credit Facility and had $60.0 million of commercial paper outstanding with a weighted average interest rate of 4.97 percent. Idaho Power issued the commercial paper to provide additional liquidity for Idaho Power to meet obligations related to the purchase of natural gas and wholesale power and hedging activities. Impact of Credit Ratings on Liquidity and Collateral Obligations IDACORP’s and Idaho Power’s access to capital markets, including the commercial paper market, and their respective financing costs in those markets, depends in part on their respective credit ratings. The following table outlines the ratings of Idaho Power’s and IDACORP’s securities, and the ratings outlook, by Moody’s Investors Service (Moody's) and Standard & Poor’s Ratings Services as of the date of this report: IDACORP Idaho Power Moody's Investors Service: Rating Outlook Stable Stable Long-Term Issuer Rating Baa2 Baa1 First Mortgage Bonds None A2 Senior Secured Debt None A2 Commercial Paper P-2 P-2 Standard & Poor's Rating Services: Corporate Credit Rating BBB BBB Rating Outlook Stable Stable Short-Term Rating A-2 A-2 Senior Secured Debt None A- These security ratings reflect the views of the ratings agencies. An explanation of the significance of these ratings may be obtained from each rating agency. Such ratings are not a recommendation to buy, sell, or hold securities. In July 2022, Moody's Long-Term Issuer rating for IDACORP was downgraded to Baa2 from Baa1, and Idaho Power's Long-Term Issuer rating was downgraded to Baa1 from A3. In addition, Moody's ratings for Idaho Power's First Mortgage Bonds and Senior Secured Debt were downgraded to A2 from A1. IDACORP and IPC's short-term ratings for commercial paper were affirmed at Prime-2 and the outlook for both companies were rated as stable. Following the Moody's credit ratings changes, the companies’ credit ratings remain investment grade and the companies do not believe the ratings changes will have a material impact on their liquidity nor access to debt capital. Moody’s credit ratings of Baa3 and above are considered to be investment grade, or prime, ratings. Any rating can be revised upward or downward or withdrawn at any time by a rating agency if it decides that the circumstances warrant the change. Idaho Power maintains margin agreements relating to its wholesale commodity contracts that allow performance assurance collateral to be requested of and/or posted with certain counterparties. As of December 31, 2022, Idaho Power had no performance assurance collateral posted. Should Idaho Power experience a reduction in its credit rating on its unsecured debt to 55 Table of Contents below investment grade, Idaho Power could be subject to requests by its wholesale counterparties to post additional performance assurance collateral, and counterparties to derivative instruments and other forward contracts could request immediate payment or demand immediate ongoing full daily collateralization on derivative instruments and contracts in net liability positions. Based upon Idaho Power’s current energy and fuel portfolio and market conditions as of December 31, 2022, the amount of additional collateral that could be requested upon a downgrade to below investment grade is approximately $113.3 million. To minimize capital requirements, Idaho Power actively monitors its portfolio exposure and the potential exposure to additional requests for performance assurance collateral through sensitivity analysis. Capital Requirements Idaho Power's cash capital expenditures, excluding AFUDC, were $419 million during the year ended December 31, 2022. The cash expenditure amount excludes net costs of removing assets from service. The table below presents Idaho Power's estimated accrual-basis additions to property, plant, and equipment for 2023 through 2027 (in millions of dollars). The amounts in the table exclude AFUDC but include net costs of removing assets from service that Idaho Power expects would be eligible to be included in rate base in future rate case proceedings. Given the uncertainty associated with the timing of infrastructure projects and associated expenditures, actual expenditures and the timing of such expenditures could deviate substantially from those set forth in the table. The capital expenditure table below assumes, among other projects, construction and ownership of a number of capacity resources identified in Idaho Power's RFPs, 2021 IRP, and preliminary 2023 IRP modeling in order to safely and reliably serve the company's customers. The timing and amount of actual constructed projects and capital expenditures could be affected by Idaho Power’s ability to timely obtain labor or materials at reasonable costs, supply chain disruptions and delays, regulatory determinations, inflationary pressures, macroeconomic conditions, or other issues, including those described below. 2023 2024 2025-2027 Expected capital expenditures (excluding AFUDC) $ 650-700 $ 800-850 $ 1,500-1,700 Infrastructure Projects: A significant portion of expected capital expenditures included in the five-year forecast above relate to a large number of relatively small projects as Idaho Power continues to add to its system to accommodate growth and maintain reliability and operational effectiveness. These projects involve significant capital expenditures in the aggregate. Examples of anticipated system enhancements planned for 2023 through 2027 and estimated costs include the following: • $50-$150 million per year for construction and replacement of transmission lines and stations other than the Boardman-to-Hemingway and Gateway West projects; • $125-$170 million per year for construction and replacement of distribution lines and stations, including replacement of underground distribution cables; • $10-$50 million per year for ongoing improvements and replacements at thermal plants; • $80-$130 million per year for hydropower plant improvement programs, including relicensing costs; and • $50-$80 million per year for general plant improvements, such as land and buildings, vehicles, information technology, and communication equipment. Other Major Infrastructure Projects: Idaho Power has recently completed or is engaged in the development of a number of significant projects and has entered into arrangements with third parties for joint development of infrastructure projects. The most notable projects are described below. Resource Additions to Address Projected Energy and Capacity Deficits : As noted previously, Idaho Power believes that existing and sustained growth in customers, load, and peak demand for electricity, along with transmission constraints, will create the need for Idaho Power to acquire significant generation, transmission, and storage resources to meet energy and capacity needs over the next several years. While demand varies and is affected by numerous factors, based on Idaho Power's analysis of its load and current resource balance, Idaho Power believes it will have resource capacity deficits for peak needs in each of the years from 2023 through at least 2027. To help meet peak needs in 2023 and 2024, Idaho Power entered into contracts to purchase, own, and operate 180 MW of battery storage assets with expected useful lives of approximately 20 years, and also entered into two 20-year power purchase agreements for the combined 140 MW output of planned third-party solar facilities. To help address the additional capacity deficits projected for 2025 through 2027, Idaho Power has initiated or issued RFPs for additional resources. The capital requirements table above includes capital expenditures of more than $600 million from 2023 through 2027 for resource additions to address projected energy and capacity deficits in those years. Depending on factors such as RFP results, the timing of project in-service dates, estimated load and resource balances and customer growth, the nature and quantity of resources owned versus acquired under power purchase agreements or similar agreements, and the 56 Table of Contents outcome of regulatory proceedings, actual expenditures and their timing could deviate substantially from Idaho Power's expected expenditures. Boardman-to-Hemingway Transmission Line : The Boardman-to-Hemingway line, a proposed 300-mile, high-voltage transmission project between a substation near Boardman, Oregon, and the Hemingway substation near Boise, Idaho, would provide transmission service to meet future resource needs. Idaho Power has a joint funding agreement with PacifiCorp and the Bonneville Power Administration (BPA) to pursue permitting of the project. Under the current joint funding agreement, Idaho Power has an approximate 21 percent interest, BPA has an approximate 24 percent interest, and PacifiCorp has an approximate 55 percent interest in the permitting phase of the project. In January 2022, the participants executed a non-binding term sheet regarding the ownership structure that would be addressed through amended or new funding agreements for the future phases of the project. The term sheet contemplates that Idaho Power would acquire BPA's ownership interest, which would increase Idaho Power's interest to approximately 45 percent, and Idaho Power would provide transmission service to BPA's customers across Southern Idaho. In January 2023, BPA issued a Letter to Region to announce that the participants have concluded negotiations on final agreements to transfer ownership interest and began its public process to provide regional stakeholders with more information about the contracts and an opportunity to comment prior to a final decision. After the outreach period and BPA's final decision, BPA, PacifiCorp, and Idaho Power plan to finalize the agreements by mid-2023. Idaho Power has spent approximately $154 million, including Idaho Power's AFUDC, on the Boardman-to-Hemingway project through December 31, 2022. Pursuant to the terms of the joint funding arrangements, Idaho Power has received $99 million in reimbursement as of December 31, 2022, from project co-participants for their share of costs. As of the date of this report, no material co-participant reimbursements are outstanding. Joint permitting participants are obligated to reimburse Idaho Power for their share of any future project permitting expenditures or agreed upon early construction expenditures incurred by Idaho Power under the terms of the joint funding agreement. The permitting phase of the Boardman-to-Hemingway project is subject to federal review and approval by various federal agencies. Federal agency records of decision have been received and all lawsuits challenging the federal rights-of-way have been resolved. In the separate State of Oregon permitting process, the state's Energy Facility Siting Council (EFSC) approved Idaho Power's site certificate on September 27, 2022. The Oregon Department of Energy subsequently issued the final order and site certificate. Three limited parties filed appeals to the Oregon Supreme Court asking that court to overturn EFSC's approval of the Boardman-to-Hemingway site certificate. Idaho Power expects a decision from the Oregon Supreme Court in June 2023. Total cost estimates for the project are between $1.1 billion and $1.3 billion, including Idaho Power's AFUDC. The capital requirements table above includes approximately $430 million of Idaho Power's share of estimated costs (excluding AFUDC) related to the remaining permitting phase, design, material procurement, and construction phases of the project. The preliminary estimates of construction costs could change as the construction timeline nears and as the project participants obtain more detailed information on construction and material costs. In July 2021, Idaho Power awarded contracts for detailed design, geotechnical investigation, land surveying, and right-of-way option acquisition; and that work commenced in the third quarter of 2021. In April 2022, Idaho Power awarded a contract for constructability consulting services. Idaho Power's 2021 IRP, which has been acknowledged by the IPUC and OPUC, included the Boardman-to-Hemingway transmission line in its resource capacity plans for 2026. Given the status of ongoing permitting activities and the construction period, Idaho Power expects the in-service date for the transmission line will be no earlier than 2026. Gateway West Transmission Line : Idaho Power and PacifiCorp are pursuing the joint development of the Gateway West project, a high-voltage transmission lines project between a substation located near Douglas, Wyoming, and the Hemingway substation located near Boise, Idaho. In 2012, Idaho Power and PacifiCorp entered a joint funding agreement for permitting of the project. Idaho Power has expended approximately $52 million, including Idaho Power's AFUDC, for its share of the permitting phase of the project through December 31, 2022. As of the date of this report, Idaho Power estimates the total cost for its share of the project (including both permitting and construction) to be between $300 million and $500 million, including AFUDC. The capital requirements table above includes approximately $40 million of Idaho Power's share of estimated costs (excluding AFUDC) for the permitting phase of the project and early construction costs, based on Idaho Power's current estimate that it may commence construction of applicable segments during that time period. 57 Table of Contents The permitting phase of the Gateway West project was subject to review and approval of the U.S. Bureau of Land Management (BLM). The BLM has published its records of decision for all segments of the transmission line. In late 2020, PacifiCorp completed construction and commissioned a 140-mile segment of their portion of the project in Wyoming. Idaho Power and PacifiCorp continue to coordinate the timing of next steps to best meet customer and system needs. Hells Canyon Complex Relicensing : The HCC, located on the Snake River where it forms the border between Idaho and Oregon, provides approximately 70 percent of Idaho Power's hydropower generating nameplate capacity and 36 percent of its total generating nameplate capacity. Idaho Power has been engaged in the process of obtaining from the FERC a new long-term license for the HCC. The past and anticipated future costs associated with obtaining a new long-term license for the HCC are significant. As of the date of this report, Idaho Power estimates that the annual costs it will incur to obtain a new long-term license for the HCC, including AFUDC but excluding costs expected to be incurred for complying with the license after issuance, are likely to range from $30 million to $40 million until issuance of t he license. As of the date of this report, Idaho Power believes issuance of a new HCC license by the FERC is likely in 2024 or thereafter. Upon issuance of a long-term license, Idaho Power expects that the annual capital expenditures and operating and maintenance expenses associated with complian ce with the terms and conditions of the long-term license could also be substantial. Idaho Power intends to seek recovery of those relicensing and compliance costs in rates through the regulatory process. In December 2016, Idaho Power filed an application with the IPUC requesting a determination that Idaho Power's expenditures of $220.8 million through year-end 2015 on relicensing of the HCC were prudently incurred, and thus eligible for future inclusion in retail rates in a future rate proceeding. In April 2018, the IPUC issued an order approving a settlement stipulation signed by Idaho Power, the IPUC staff, and a third-party intervenor recognizing that a total of $216.5 million in expenditures were reasonably incurred, and therefore should be eligible for inclusion in customer rates at a later date. Environmental Regulation Costs: Idaho Power anticipates that it will continue to incur significant expenditures for its compliance with environmental regulations related to the operation of its hydropower and thermal generation facilities. In addition, Idaho Power expects it will continue to incur significant expenditures for its hydropower relicensing efforts. The near-term cost estimates for environmental matters are summarized in Part I, Item 1 - "Business - Environmental Regulation and Costs" of this report. The capital portion of these amounts is included in the Capital Requirements table above but does not include costs related to possible changes in current or new environmental laws or regulations and enforcement policies that may be enacted in response to issues such as climate change and emissions from coal-fired and gas-fired generation plants. Long-Term Resource Planning: The IPUC and OPUC require that Idaho Power prepare biennially an IRP. The IRP seeks to forecast Idaho Power's loads and resources for a 20-year period, analyzes potential supply-side, demand-side, and transmission options, and identifies potential near-term, mid-term, and long-term actions. Idaho Power filed its most recent IRP with the IPUC and OPUC in 2021. Idaho Power's 2021 IRP identified a preferred resource portfolio and action plan, which included the addition of a 120-MW solar resource in late 2022, the conversion from coal to natural gas of two units at the Jim Bridger plant in 2024, the end to Idaho Power's participation in coal-fired operations at the North Valmy plant unit 2 in 2025, the completion of the Boardman-to-Hemingway transmission line in 2026, and an end to Idaho Power's participation in the remaining two coal-fired units at the Jim Bridger plant by the end of 2028. The 2021 IRP preferred resource portfolio and action plan also includes a need to acquire significant generation and storage resources to meet energy and capacity needs. Including the resources noted above, over the next 20 years the 2021 IRP plans for the addition of 1,685 MW of storage capacity, 1,405 MW of solar capacity, 700 MW of wind capacity, 500 MW of transmission capacity, and 400 MW of capacity from demand response. As noted in the 2021 IRP, there is uncertainty surrounding the resource sufficiency estimates and project completion dates, including uncertainty around the timing and extent of third-party development of renewable resources, fuel commodity prices, the actual completion date of the Boardman-to-Hemingway transmission project, and the economics and logistics of coal-fired plant conversions and retirements. These uncertainties, as well as others, may result in changes to the desirability of the preferred portfolio and adjustments to the timing and nature of anticipated and actual actions in the 2021 IRP. In November 2022, and January 2023, respectively, the IPUC and OPUC issued orders acknowledging Idaho Power's 2021 IRP. In preparing its 2023 IRP, Idaho Power intends to analyze the potential acceleration of the timing of construction of the Gateway West transmission project and the potential conversion of additional coal-fired generation units to natural gas. Idaho Power expects to complete and file its 2023 IRP with the IPUC and OPUC in June 2023. Additional information on Idaho Power's 2021 IRP is included in Part I, Item 1 - "Business - Resource Planning" in this report. Defined Benefit Pension Plan Contributions and Recovery Idaho Power contributed $40 million to its defined benefit pension plan in each of 2022 and 2021. Idaho Power estimates that it has no minimum required contribution to be made during 2023. Depending on market conditions and cash flow considerations, Idaho Power could contribute up to $40 million to the pension plan during 2023. Idaho Power's contributions are made in a continued effort to balance the regulatory collection of these expenditures with the amount and timing of contributions to 58 Table of Contents mitigate the cost of being in an underfunded position. Beyond 2023, Idaho Power expects continuing contributions under the pension plan could be significant. Refer to Note 11 – “Benefit Plans” to the consolidated financial statements included in this report for information relating to those obligations. Idaho Power defers its Idaho-jurisdiction pension expense as a regulatory asset until recovered from Idaho customers. At December 31, 2022 and 2021, Idaho Power's deferral balance associated with the Idaho jurisdiction was $250 million and $234 million, respectively. Deferred pension costs are amortized to expense to match the revenues received when contributions are recovered through rates. Idaho Power only records a carrying charge on the unrecovered balance of cash contributions. The IPUC has authorized Idaho Power to recover and amortize $17 million of deferred pension costs annually, and has applied $68 million against the deferred amount under its Idaho sharing mechanisms since 2011. The primary impact of pension contributions is on the timing of cash flows, as cost recovery lags behind the timing of contributions. Additional information on the regulatory assets related to Idaho Power's pension and postretirement programs can be found in Note 3 - "Regulatory Matters" to the consolidated financial statements included in this report. Contractual Obligations IDACORP’s and Idaho Power’s contractual cash obligations as of December 31, 2022, include long-term debt, interest payments, purchase obligations, pension and post-retirement benefit plans, and other long-term liabilities specific to IDACORP, most of which are discussed throughout this MD&A. Refer to Note 9 – “Commitments” to the consolidated financial statements included in this report for additional information relating to purchase obligations and other long-term liabilities. Dividends The amount and timing of dividends paid on IDACORP’s common stock are within the discretion of IDACORP’s board of directors. IDACORP's board of directors reviews the dividend rate periodically to determine its appropriateness in light of IDACORP’s current and long-term financial position and results of operations, capital requirements, rating agency considerations, contractual and regulatory restrictions, legislative and regulatory developments affecting the electric utility industry in general and Idaho Power in particular, competitive conditions, and any other factors the board of directors deems relevant. The ability of IDACORP to pay dividends on its common stock is generally dependent upon dividends paid to it by its subsidiaries, primarily Idaho Power. IDACORP has a dividend policy that provides for a target long-term dividend payout ratio of between 60 percent and 70 percent of sustainable IDACORP earnings, with the flexibility to achieve that payout ratio over time and to adjust the payout ratio or to deviate from the target payout ratio from time to time based on the various factors that drive IDACORP's board of directors' dividend decisions. Notwithstanding the dividend policy adopted by IDACORP's board of directors, the dividends IDACORP pays remain in the discretion of the board of directors who, when evaluating the dividend amount, will continue to take into account the factors above, among others. In September of 2022 and 2021, IDACORP's board of directors voted to increase the quarterly dividend to $0.79 per share and $0.75 per share of IDACORP common stock, respectively. IDACORP's dividends during 2022 were 59.5 percent of actual 2022 earnings. For additional information relating to IDACORP and Idaho Power dividends, including restrictions on IDACORP’s and Idaho Power’s payment of dividends, see Note 6 – “Common Stock” to the consolidated financial statements included in this report. Contingencies and Proceedings IDACORP and Idaho Power are involved in a number of litigation, alternative dispute resolution, and administrative proceedings, and are subject to claims and legal actions arising in the ordinary course of business that could affect their future results of operations and financial condition. In many instances IDACORP and Idaho Power are unable to predict the outcomes of the matters or estimate the impact the proceedings may have on their financial positions, results of operations, or cash flows. Idaho Power is also actively monitoring various environmental regulations that may have a significant impact on its future operations. Given uncertainties regarding the outcome, timing, and compliance plans for these environmental matters, Idaho Power is unable to determine the financial impact of potential new regulations but does believe that future capital investment for infrastructure and modifications to its electric generating facilities to comply with these regulations could be significant. 59 Table of Contents Off-Balance Sheet Arrangements Idaho Power guarantees its portion of reclamation activities and obligations at BCC, of which IERCo owns a one-third interest. This guarantee, which is renewed annually with the Wyoming Department of Environmental Quality (WDEQ), was $48.2 million at December 31, 2022, representing IERCo's one-third share of BCC's total reclamation obligation of $144.7 million. BCC has a reclamation trust fund set aside and specifically for the purpose of paying these reclamation costs. At December 31, 2022, the value of the reclamation trust fund totaled $196.1 million. During 2022, the reclamation trust fund made $3.9 million of distributions for reclamation activity costs associated with the BCC surface mine. BCC periodically assesses the adequacy of the reclamation trust fund and its estimate of future reclamation costs. To ensure that the reclamation trust fund maintains adequate reserves, BCC has the ability to, and does, add a per-ton surcharge to coal sales, all of which are made to the Jim Bridger plant. Because of the existence of the fund and the ability to apply a per-ton surcharge, the estimated fair value of this guarantee is minimal. REGULATORY MATTERS Introduction Idaho Power is under the jurisdiction (as to rates, service, accounting, and other general matters of utility operation) of the IPUC, the OPUC, and the FERC. The IPUC and OPUC determine the rates that Idaho Power is authorized to charge to its retail customers. Idaho Power is also under the regulatory jurisdiction of the IPUC, the OPUC, and the WPSC as to the issuance of debt and equity securities. As a public utility under the Federal Power Act (FPA), Idaho Power has authority to charge market-based rates for wholesale energy sales under its FERC tariff and to provide transmission services under its OATT. Additionally, the FERC has jurisdiction over Idaho Power's sales of transmission capacity and wholesale electricity, hydropower project relicensing, and system reliability, among other items. Idaho Power develops its regulatory filings taking into consideration short-term and long-term needs for rate relief and several other factors that can affect the structure and timing of those filings. These factors include in-service dates of major capital investments, the timing and magnitude of changes in major revenue and expense items, and customer growth rates, as well as other factors. Idaho Power's most recent general rate cases in Idaho and Oregon were filed during 2011, and in 2012, large single-issue rate cases for the Langley Gulch power plant resulted in the resetting of base rates in both Idaho and Oregon. Idaho Power also reset its base-rate power supply expenses in the Idaho jurisdiction for purposes of updating the collection of costs through retail rates in 2014 but without a resulting net increase in rates. The IPUC and OPUC have also approved base rate changes in single-issue cases subsequent to 2014. Between general rate cases, Idaho Power relies upon customer growth, a FCA mechanism, power cost adjustment mechanisms, wildfire mitigation plan cost deferrals, project-specific cases, tariff riders, and other mechanisms to mitigate the impact of regulatory lag, which refers to the period of time between making an investment or incurring an expense and recovering that investment or expense and earning a return. Management's regulatory focus in recent years has been largely on regulatory settlement stipulations and the design of rate mechanisms. With Idaho Power’s anticipated significant infrastructure investments, including those that are intended to help meet projected near-term capacity deficits, Idaho Power believes it is likely that it will file a general rate case in Idaho during 2023, as early as June 2023, with a general rate case filing in Oregon likely to follow in 2024. Several factors impact Idaho Power’s timing and need to file general rate cases, including the expected increase in costs associated with rate-base eligible assets as they are placed into service in the future, increased costs associated with the capital expenditures Idaho Power has made since its last general rate case filed in 2011, the expected financing costs for capital expenditures in a higher interest-rate environment, and inflationary pressures on other O&M expenses described above. 60 Table of Contents Notable Retail Rate Changes in Idaho and Oregon The table below presents notable rate changes during 2022 and 2021 that affected Idaho Power's results for the periods or that will likely affect future periods. Note 3 - "Regulatory Matters" to the consolidated financial statements included in this report also provides a description of regulatory mechanisms and associated orders of the IPUC and OPUC, and should be read in conjunction with the discussion of regulatory matters in this MD&A. Description Effective Date Estimated Annualized Rate Impact (millions) (1) 2022 Idaho PCA 6/1/2022 $ 95 2022 Idaho FCA 6/1/2022 (3) Idaho Bridger rate base adjustment and recovery 6/1/2022 19 2021 Idaho PCA 6/1/2021 39 2021 Idaho FCA 6/1/2021 3 Idaho Boardman plant closure 1/1/2021 (4) (1) The annual amount collected or refunded in rates is typically not recovered or refunded on a linear basis (i.e., 1/12th per month), and is instead recovered or refunded in proportion to retail sales volumes. The rate changes for the Idaho PCA and FCA are applicable only for one-year periods and represent the net change to the deferral balance from the prior year's filing, as well as a forecast component for the PCA. Idaho and Oregon General Rate Cases Effective January 1, 2012, Idaho Power implemented new Idaho base rates resulting from the regulatory settlement of a general rate case filing Idaho Power made in 2011. In the general rate case, the IPUC approved a settlement stipulation that provided for an overall 7.86 percent authorized rate of return on an Idaho-jurisdiction rate base of approximately $2.36 billion. The settlement stipulation resulted in a $34.0 million overall increase in Idaho Power's annual Idaho-jurisdictional base rate revenues. Neither the IPUC's order nor the settlement stipulation specified an authorized rate of return on equity. Effective March 1, 2012, Idaho Power implemented new Oregon base rates resulting from its receipt of an order from the OPUC approving a settlement stipulation in its general rate case proceedings that provided for a $1.8 million base rate revenue increase, a rate of return on equity of 9.9 percent, and an overall rate of return of 7.757 percent in the Oregon jurisdiction. Idaho and Oregon base rates were subsequently adjusted again in 2012, in connection with Idaho Power's completion of the Langley Gulch power plant. In June 2012, the IPUC issued an order approving a $58.1 million increase in annual Idaho-jurisdiction base rate revenues, effective July 1, 2012, for inclusion of the investment and associated costs of the plant in rates. The order also provided for a $335.9 million increase in Idaho rate base. In September 2012, the OPUC issued an order approving a $3.0 million increase in annual Oregon jurisdiction base rate revenues, effective October 1, 2012, for inclusion of the investment and associated costs of the plant in Oregon rates. Additionally, in October 2020, the OPUC approved an increase in Oregon customer rates of $0.4 million annually associated with amortization of deferred Langley Gulch power plant revenue requirement variances, effective November 1, 2020, through October 31, 2024. Other Notable Regulatory Matters May 2018 Idaho Tax Reform Settlement Stipulation: In December 2017, the Tax Cuts and Jobs Act was signed into law, which, among other things, lowered the corporate federal income tax rate from 35 percent to 21 percent and modified or eliminated certain federal income tax deductions for corporations. In March 2018, Idaho House Bill 463 was signed into law reducing the Idaho state corporate income tax rate from 7.4 percent to 6.925 percent. In May 2018, the IPUC issued an order approving a settlement stipulation (May 2018 Idaho Tax Reform Settlement Stipulation) related to income tax reform. Beginning June 1, 2018, the settlement stipulation provides an annual (a) $18.7 million reduction to Idaho customer base rates and (b) $7.4 million amortization of existing regulatory deferrals for specified items or future amortization of other existing or future unspecified regulatory deferrals that would otherwise be a future regulatory asset recoverable from Idaho customers. The May 2018 Idaho Tax Reform Settlement Stipulation provides for the extension of a prior 2014 settlement stipulation beyond the initial termination date of December 31, 2019, with modified terms related to the ADITC and revenue sharing mechanism that became effective January 1, 2020, with no defined end date. The May 2018 Idaho Tax Reform Settlement Stipulation does not impose a moratorium on Idaho Power filing a general rate case or other form of rate proceeding in Idaho 61 Table of Contents during its term and includes provisions for the accelerated amortization of ADITC to help achieve a minimum 9.4 percent (9.5 percent prior to 2020) Idaho ROE. In addition, under the May 2018 Idaho Tax Reform Settlement Stipulation, minimum Idaho ROE would revert back to 95 percent of the authorized return on equity in the next general rate case. IDACORP and Idaho Power believe that the terms allowing amortization of additional ADITC in the May 2018 Idaho Tax Reform Settlement Stipulation provide the companies with a greater degree of earnings stability than would be possible without the terms of the stipulation in effect. In 2022, Idaho Power recorded no provision against current revenue for sharing with customers, as its full-year Idaho ROE was between 9.4 percent and 10.0 percent. Idaho Power recorded a $0.6 million provision against current revenue for sharing with customers in 2021, as its full-year ROE exceeded 10.0 percent. At December 31, 2022, the full $45 million of additional ADITC remained available for future use under the terms of the May 2018 Idaho Tax Reform Settlement Stipulation. Idaho Power recorded the following amounts for sharing with customers under the May 2018 Idaho Tax Reform Settlement Stipulation and its predecessor stipulations (in millions): Year Recorded as Refunds to Customers Recorded as a Pre-tax Charge to Pension Expense Total 2022 $ — $ — $ — 2021 0.6 — 0.6 2020 — — — 2011 - 2019 58.1 68.1 126.2 Total $ 58.7 $ 68.1 $ 126.8 For more information on the provisions of the 2018 Idaho Tax Reform Settlement Stipulations and its impacts on results, see Note 3 - "Regulatory Matters" to the consolidated financial statements included in this report. Valmy Base Rate Adjustment Settlement Stipulations: Idaho Power has settlement stipulations in place in Idaho and Oregon related to the planned early retirement of both units of its jointly-owned North Valmy coal-fired power plant. Idaho Power ceased coal-fired operations at unit 1 in 2019, as planned, and plans to cease coal-fired operations at unit 2 in 2025. Both commissions have approved this plan. The IPUC-approved settlement stipulation provides for (1) accelerated depreciation for the North Valmy plant to allow the coal-related plant assets to be fully depreciated and recovered by December 31, 2028, (2) Idaho Power to use prudent and commercially reasonable efforts to end its participation in coal-fired operations at North Valmy as described above, (3) a balancing account to track the incremental costs, benefits, and required regulatory accounting associated with ceasing participation in coal-fired operations at the North Valmy plant, and (4) increased customer rates related to the associated incremental annual levelized revenue requirement. If actual costs incurred differ from forecasted amounts included in the settlement stipulation, collection or refund of any differences would be subject to regulatory approval. In Oregon, the OPUC has also approved settlement stipulations that provide for the accelerated cost recovery of unit 1 through 2019 and unit 2 through 2025. The net rate impact of the Oregon settlement stipulations is immaterial. Jim Bridger Power Plant Rate Base Adjustment and Recovery: In June 2022, the IPUC issued an order approving, with modifications, Idaho Power’s amended application requesting authorization to (1) accelerate depreciation for the Jim Bridger plant, to allow the coal-related plant assets to be fully depreciated and recovered by December 31, 2030, (2) establish a balancing account to track the incremental costs, benefits, and required regulatory accounting associated with ceasing participation in coal-fired operations at the Jim Bridger plant, and (3) increase customer rates related to the associated incremental annual levelized revenue requirement (Bridger Order).The Bridger Order and associated accounting are described in Note 3 – “Regulatory Matters” to the consolidated financial statements included in this report. As a result of the Bridger Order, Idaho Power recorded the deferral of certain depreciation expense in 2022. Idaho Power plans to cease participation in all coal-related operations at the Jim Bridger plant by 2028. Idaho Power expects the Bridger Order to increase operating revenues, net depreciation expense, and income tax expense in future periods, and estimates the impacts of the order will increase after-tax net income by approximately $10 million in 2023. Idaho Power expects the ongoing annual benefit to net income from the Bridger Order to decline each year through 2030, primarily due to the annual decline in Jim Bridger plant coal-related rate base, which Idaho Power expects to be fully depreciated by December 31, 2030. Wildfire Mitigation Cost Deferral: In June 2021, the IPUC authorized Idaho Power to defer for future amortization incremental O&M and depreciation expense of certain capital investments necessary to implement the company's WMP. The IPUC also authorized Idaho Power to record these deferred expenses as a regulatory asset until the company can request amortization of the deferred costs in a future IPUC proceeding, at which time the IPUC will have the opportunity to review actual costs and 62 Table of Contents determine the amount of prudently incurred costs that Idaho Power can recover through retail rates. In its 2021 application with the IPUC, Idaho Power projected spending approximately $47 million in incremental wildfire mitigation-related O&M and roughly $35 million in wildfire mitigation system-hardening incremental capital expenditures over a five year period. The IPUC authorized a deferral period of five years, or until rates go into effect after Idaho Power's next general rate case, whichever is first. As of December 31, 2022, Idaho Power’s deferral of Idaho-jurisdiction costs related to the WMP was $27.1 million. During the 2021 and 2022 wildfire seasons, Idaho Power identified needs for expanded mitigation measures by gaining additional insights and knowledge on wildfires and wildfire mitigation activities. In October 2022, Idaho Power filed an updated WMP with the IPUC along with an application requesting authorization to defer an estimated $16 million of newly identified incremental costs expected to be incurred between 2022 and 2025 associated with expanded wildfire mitigation efforts. As of the date of this report, the application with the IPUC is pending. Fixed Cost Adjustment: The FCA mechanism, applicable to Idaho residential and small commercial customers, is designed to remove a portion of Idaho Power’s financial disincentive to invest in energy efficiency programs by separating (or decoupling) the recovery of fixed costs from the variable kilowatt-hour (kWh) charge and linking it instead to a set amount per customer. In May 2021, the IPUC ordered Idaho Power to work with interested parties and initiate a case to review the FCA mechanism and propose modifications it determines are appropriate. In December 2021, the IPUC approved Idaho Power's proposed modifications to the FCA mechanism to institute separate, and reduced, fixed cost tracking for customers added to Idaho Power's system after December 31, 2021. These modifications did not have a material impact on Idaho Power's operating revenues or consolidated financial statements. The FCA mechanism is described more fully in Note 3 - "Regulatory Matters" to the consolidated financial statements included in this report. Integrated Resource Plan and Resource Procurement Filings: Idaho Power filed its most recent IRP with the IPUC and OPUC in December 2021 and expects to file its next IRP during 2023, as described in Part 1, Item 1 - "Resource Planning and Renewable Energy Projects" in this report. The 2021 IRP, which was acknowledged by the IPUC in November 2022 and by the OPUC in January 2023, identified the need for resources to meet projected capacity deficits in the near-term. In December 2021, Idaho Power filed an application with the OPUC requesting a waiver of Oregon's competitive bidding rules for Idaho Power's procurement of resources to fill near-term capacity deficits. Specifically, Idaho Power requested that the OPUC issue an order waiving Idaho Power’s obligation to comply with the competitive bidding rules for its proposed resource procurement in favor of a modified competitive process and authorizing Idaho Power to move forward expeditiously with resource procurement to meet identified resource needs in 2023, 2024, and 2025. In March 2022, the OPUC issued an order denying Idaho Power's request to waive t he competitive bidding rules. However, as allowed by the OPUC in certain cases, Idaho Power is pursuing an exception for 2023 resource needs, and plans to pursue additional exceptions to the competitive bidding rules for certain projects to meet the identified resource needs in 2024 and 2025. In September 2022, in accordance with the OPUC's competitive bidding rules, Idaho Power filed an application requesting the OPUC open a docket for approval of a solicitation process and appoint an independent evaluator to oversee the process for Idaho Power to procure resources to meet identified potential energy and capacity needs in 2026 and 2027. In December 2022, the OPUC issued an order appointing an independent evaluator. Customer-Owned Generation Filing: Customer-owned generation enables customers to install solar panels or other on-site energy-generating resources and connect them to Idaho Power’s grid. If a customer requires more energy than its system generates, it uses energy supplied by Idaho Power’s grid and infrastructure. If a customer's system generates more energy than the customer uses, the energy is transferred to the grid and Idaho Power applies a corresponding kWh credit to the customer’s bill. In May 2018, the IPUC issued an order authorizing the creation of two new customer classes for residential and small commercial customers who install their own on-site generation, with no change to pricing or compensation. Idaho Power has initiated several cases with the IPUC related to studying the costs and benefits of customer-owned generation on Idaho Power’s system, and exploring potential modifications to the customer-owned generation pricing structure. The IPUC issued orders in December 2019 and February 2020 directing Idaho Power to (1) complete additional studies related to the costs and benefits of customer generation before changes to the compensation structure are implemented, and (2) continue to allow residential and small commercial customers with on-site generation installed prior to December 20, 2019, to be subject to the compensation and billing structure in place on that date until December 20, 2045. In December 2020, the IPUC issued an order establishing a 25-year grandfathering term for large commercial, industrial, and irrigation customers, similar to the terms approved for the residential and small commercial customer classes. In June 2021, Idaho Power filed an application requesting that the IPUC initiate the multi-phase process for a comprehensive study of the costs and benefits of on-site generation as directed by previous IPUC orders. In December 2021, the IPUC issued 63 Table of Contents an order requiring Idaho Power to complete the comprehensive study on the costs and benefits of on-site generation based on the IPUC’s study framework findings and conclusions. In June 2022, Idaho Power filed the comprehensive study and in December 2022, the IPUC issued an order that acknowledged the company's study and directed Idaho Power to file a new case requesting to implement changes to the structure and design of its on-site generation program. Filings for Certificates of Public Convenience and Necessity In April 2022, Idaho Power filed an application with the IPUC requesting that the IPUC issue a Certificate of Public Convenience and Necessity (CPCN) authorizing Idaho Power to install, own, and operate two battery storage facilities. The 120 MW combined capacity of the two projects is planned to help meet peak energy needs in the summer of 2023 and beyond. The CPCN was intended to allow the IPUC to review the need for the project prior to Idaho Power incurring the bulk of the associated expenses. In December 2022, the IPUC issued an order: (1) granting Idaho Power's request for a CPCN; (2) requiring that Idaho Power change the battery storage account depreciation rate to 5 percent and reflect all available investment tax credits for the battery storage projects; and (3) absent additional evidence of the prudence of expenditures in a subsequent recovery case, limiting recovery of costs to approximately $50 million and $100 million, respectively, for the 40 MW and 80 MW battery storage projects. In September 2022 and January 2023, respectively, Idaho Power filed petitions with the OPUC and the IPUC requesting that the OPUC and the IPUC issue CPCNs authorizing Idaho Power to construct the 300-mile Boardman-to-Hemingway high-voltage transmission line. Oregon law requires utilities proposing to construct transmission lines to petition the OPUC for a CPCN if a transmission line will necessitate condemnation of land or an interest in land. As of the date of this report, the OPUC and IPUC decisions in these matters are pending. Large Customer Rate Proceedings Speculative High-Density Load : In June 2022, the IPUC approved Idaho Power's application to create a new customer class that would be applicable to commercial and industrial cryptocurrency mining operations, or any other speculative high-density load customers of less than 20 MW. Idaho Power has received approximately 2,000 MW of potential customer interest from this industry and believes new system resources may be necessary to serve this speculative customer load, which could create a financial risk for Idaho Power and its customers if the underlying economics of cryptocurrency mining change. Idaho Power believes that the financial and system risks of speculative high-density load could be mitigated through use of a rate design for this customer class that prices energy at a marginal rate, and through a requirement that speculative high-density load customers be interruptible at Idaho Power's discretion from June 15 through September 15, Idaho Power's summer peak season. In October 2022, after a third party requested reconsideration of the matter, the IPUC affirmed its June 2022 order establishing the new customer class and ordered Idaho Power to file an application by December 31, 2022, to determine the amount of compensation, if any, that is fair, just, and reasonable under the interruptability provision of the new speculative high-density load customer class. In December 2022, Idaho Power filed an application to either establish the interruption compensation for Schedule 20 or defer implementation of any compensation structure for the mandatory interruption requirement of Schedule 20 until evaluation of cost assignment is completed at a general rate case. As of the date of this report, the IPUC's decision in this matter is pending. Clean Energy Your Way Program : In December 2021, Idaho Power filed an application with the IPUC requesting to expand optional customer clean energy offerings through its new Clean Energy Your Way Program. Specifically, Idaho Power is seeking authority to: (1) rename its existing green power program; (2) maintain and expand procurement options for the renewable energy credits (REC); (3) establish a regulatory framework for a future voluntary subscription green power service program; (4) offer a tailored renewable option for Idaho Power's largest customers; and (5) procure the associated additional resources outside of the IPUC's current competitive procurement requirements. As of the date of this report, the IPUC's decision in this matter is pending. Brisbie, LLC (Brisbie) Data Center : In December 2021, Idaho Power filed an application with the IPUC for approval of a special contract for electric service for a new large load customer, Brisbie, LLC (Brisbie), for a new 960,000 square-foot enterprise data center. Brisbie is a wholly-owned subsidiary of Meta Platforms, Inc. Idaho regulations require any utility customer with an average load exceeding 20 MW to enter into a special contract with Idaho Power. Brisbie, in addition to its large load service requirements in excess of 20 MW, has a sustainability objective to support 100 percent of its operations with new renewable resources. Under the proposed special contract, Idaho Power would procure enough renewable resources to provide Brisbie with 100 percent renewable energy on an annual basis for Brisbie’s facility. In its application, Idaho Power requested authority to procure the necessary resources contemplated within its agreement with Brisbie without seeking IPUC approval for each such procurement and requested assurance from the IPUC that each such resource procurement would receive 64 Table of Contents the same ratemaking treatment outlined in the case, unless otherwise modified in a subsequent proceeding. As of the date of this report, the IPUC's decision in this matter is pending. In November 2022, Idaho Power filed an application with the IPUC requesting approval for an arrangement under which Brisbie would purchase from Idaho Power energy generated by a to-be-constructed 200 MW solar facility pursuant to a long-term power purchase agreement between Idaho Power and a third party. The solar facility is scheduled to begin operating as early as March 2025. The application is modeled after the Clean Energy Your Way program described above. As of the date of this report, the IPUC's decision in this matter is pending. Micron Dedicated Renewable Resource : In March 2022, Idaho Power filed an application with the IPUC requesting approval of a revised special contract for electric service between Idaho Power and an existing industrial customer, Micron Technology (Micron). The application included an arrangement under which Micron would be the purchaser from Idaho Power of the energy generated by a to-be-constructed 40-MW solar facility pursuant to a 20-year power purchase agreement between Idaho Power and a third party. The solar facility is scheduled to begin operating as early as June 2023. Idaho Power also requested in the application revised electric service rates for Micron that include new energy rates that incorporate the solar generation and compensation for capacity value and excess renewable energy generation. The application is modeled after Clean Energy Your Way program described above. In August 2022, the IPUC issued an order approving Idaho Power’s application, with modifications. In December 2022, Idaho Power made a compliance filing requesting approval of Idaho Power's proposed payment structure for Micron's renewable capacity credit. As of the date of this report, the IPUC's decision in this matter is pending. Deferred Net Power Supply Costs Deferred (accrued) power supply costs represent certain differences between Idaho Power's actual net power supply costs and the costs included in its retail rates, the latter being based on annual forecasts of power supply costs. Deferred (accrued) power supply costs are recorded on the balance sheets for future recovery (refund) through customer rates. Idaho Power's power cost adjustment mechanisms in its Idaho and Oregon jurisdictions provide for annual adjustments to the rates charged to retail customers. The power cost adjustment mechanisms and associated financial impacts are described in "Results of Operations" in this MD&A and in Note 3 - "Regulatory Matters" to the consolidated financial statements included in this report. Factors that have influenced power cost adjustment rate changes in recent years include year-to-year volatility in hydropower generation conditions, market energy prices and the volume of wholesale energy sales, power purchase costs from renewable energy projects, income tax reform, and revenue sharing under Idaho regulatory settlement stipulations. From year to year, these factors can vary significantly, which can result in significant accruals and deferrals under the power cost adjustment mechanisms. The power cost adjustment rate changes reflected in the table under the heading "Notable Retail Rate Changes in Idaho and Oregon" in this MD&A are illustrative of the volatility of net power supply costs and the impact on power cost adjustment rates. The following table summarizes the change in deferred (accrued) net power supply costs over last year (in millions): Idaho Oregon Total Balance at December 31, 2021 $ 33.8 $ (0.3) $ 33.5 Current period net power supply costs deferred 117.0 1.0 118.0 Prior amounts refunded through rates (17.6) 0.2 (17.4) SO 2 allowance and REC sales (7.0) (0.3) (7.3) Interest and other 2.5 — 2.5 Balance at December 31, 2022 $ 128.7 $ 0.6 $ 129.3 Open Access Transmission Tariff Rate Idaho Power uses a formula rate for transmission service provided under its OATT, which allows transmission rates to be updated annually based primarily on financial and operational data Idaho Power files with the FERC. In August 2022, Idaho Power filed its 2022 final transmission rate with the FERC, reflecting a transmission rate of $31.42 per "kW-year," to be effective for the period from October 1, 2022, to September 30, 2023. A "kW-year" is a unit of electrical capacity equivalent to 1 kilowatt of power used for 8,760 hours. Idaho Power's final rate was based on a net annual transmission revenue requirement of $132.7 million. The OATT rate in effect from October 1, 2021 to September 30, 2022, was $31.19 per kW-year based on a 65 Table of Contents net annual transmission revenue requirement of $127.3 mi llion. The increase in the OATT rate is largely attributable to increased transmission plant in service. Relicensing of Hydropower Projects Overview: Idaho Power, like other utilities that operate non-federal hydropower projects on qualified waterways, obtains licenses for its hydropower projects from the FERC. These licenses have a term of 30 to 50 years depending on the size, complexity, and cost of the project. The expiration dates for the FERC licenses for each of the facilities are included in Part I - Item 2 - "Properties" in this report. Costs for the relicensing of Idaho Power's hydropower projects are recorded in construction work in progress until new multi-year licenses are issued by the FERC, at which time the charges are transferred to electric plant in service. Idaho Power expects to seek recovery of relicensing costs and costs related to a new long-term license through the regulatory process. In April 2018, the IPUC approved a settlement stipulation signed by Idaho Power, the IPUC Staff, and a third-party intervenor and determined that $216.5 million in expenditures incurred for relicensing through December 31, 2015, were reasonably and prudently incurred, and therefore should be eligible for inclusion in customer rates at a later date. Relicensing costs o f $423.1 million (i ncluding AFUDC) for the HCC, Idaho Power's largest hydropower complex and a major relicensing effort, were included in construction work in progress at December 31, 2022. As of the date of this report, the IPUC authorizes Idaho Power to include in its Idaho jurisdiction rates approximately $8.8 million annually of AFUDC relating to the HCC relicensing project. Collecting these amounts currently will reduce future collections when the HCC relicensing costs are approved for recovery in base rates. As of December 31, 2022, Idaho Power's regulatory liability for collection of AFUDC relating to the HCC was $207.5 million. In addition to the discussion below, refer to "Environmental Matters" in this MD&A for a discussion of environmental compliance under FERC licenses for Idaho Power's hydropower generating plants. Hells Canyon Complex Relicensing: The HCC, located on the Snake River where it forms the border between Idaho and Oregon, provides approximately 70 percent of Idaho Power's hydropower generating nameplate capacity and 36 percent of its total generating nameplate capacity. In July 2003, Idaho Power filed an application with the FERC for a new license in anticipation of the July 2005 expiration of the then-existing license. Since the expiration of that license, Idaho Power has been operating the project under annual licenses issued by the FERC. In December 2004, Idaho Power and eleven other parties involved in the HCC relicensing process, including National Marine Fisheries Service (NMFS) and U.S. Fish and Wildlife Service (USFWS), entered into an interim agreement that addresses the effects of the ongoing operations of the HCC on Endangered Species Act (ESA)-listed species pending the relicensing of the project. The FERC staff issued a final environmental impact statement (EIS) in August 2007 which should aid the FERC in determining whether, and under what conditions, to issue a new license for the project. The final EIS informs the FERC, federal and state agencies, Native American tribes, and the public about the environmental effects of Idaho Power's operation of the HCC. Certain portions of the final EIS involve issues that may be influenced by water quality certifications for the project under Section 401 of the Clean Water Act (CWA) and formal consultations under the ESA. In connection with its relicensing efforts, Idaho Power filed annual water quality certification applications, required under Section 401 of the CWA, with the states of Idaho and Oregon requesting that each state certify that any discharges from the HCC comply with applicable state water quality standards. Challenges regarding how to meet water temperature standards below the HCC dam for spawning fall Chinook salmon, and a conflict in laws between Oregon and Idaho regarding the reintroduction and passage of fish above the HCC, delayed the issuance of the states' 401 certifications for several years. In November 2016, Idaho Power filed a petition with the FERC requesting that the FERC resolve the conflict between Oregon's and Idaho's conditions and declare that the FPA pre-empts the Oregon state law requiring reintroduction and passage. In January 2017, the FERC issued an order denying Idaho Power’s petition, stating that the petition for a declaratory order was premature, cannot realistically be considered separately from the issue of the states’ certification authority under the CWA Section 401, and raises issues that are beyond the FERC’s authority to decide. In February 2017, Idaho Power sought rehearing before the FERC on the January 2017 order, which the FERC denied. In February 2018, Idaho Power filed an appeal of the FERC's January 2017 order with the United States Court of Appeals for the District of Columbia Circuit, which is pending. In April 2019, the states of Idaho and Oregon, along with Idaho Power, reached a settlement pertaining to the CWA Section 401 certification that requires Idaho Power, among other measures, to increase the number of Chinook salmon it releases each year through expanded hatchery production. In May 2019, Oregon and Idaho issued final CWA Section 401 certifications which have been submitted to the FERC as part of the relicensing process. The CWA Section 401 certifications were challenged by three third parties in Oregon state court, and the Oregon Department of Environmental Quality subsequently resolved all challenges. In December 2019, Idaho Power filed an Offer of Settlement with the FERC requesting specific language be included in the new HCC license based upon the settlement among Idaho, Oregon, and Idaho Power. During the first quarter of 2020, the FERC received several comments opposing the Offer of Settlement, and its decision relating to the Offer of Settlement is pending as of the date of this report. 66 Table of Contents In July 2020, Idaho Power submitted to the FERC its supplement to the final license application that incorporated the settlement agreement reached between Idaho and Oregon on the CWA Section 401 certifications and provided feedback on proposed modification of the 2007 final EIS for the HCC. The July 2020 filing also contained an updated cost analysis of the HCC and a request for the FERC to issue a 50-year license and initiate a supplemental National Environmental Policy Act (NEPA) process at the FERC. Idaho Power prepared draft biological assessments in consultation with the USFWS and the NMFS and filed those with the FERC in October 2020. The draft biological assessments provide information to the USFWS and the NMFS that is necessary to issue their biological opinion as required under the ESA. Since December 2020, Idaho Power has responded to sixteen additional information requests issued by the FERC staff to aid in the FERC analysis. In June 2022, the FERC issued a notice of intent to prepare a supplemental EIS in accordance with NEPA. The FERC indicated that the supplemental EIS would address the new and revised measures proposed by the CWA 401 certification settlement, the conditions contained in the Oregon and Idaho water quality certificates, and the information provided in the draft biological assessments. The FERC also reinstated informal consultation with the USFWS and the NMFS under section 7 of the ESA. In the notice of intent, the FERC predicted that the draft supplemental EIS would be published in June 2023 and the final supplemental EIS in December 2023. As of the date of this report, Idaho Power believes issuance of a new HCC license by the FERC will be in 2024 or thereafter. Idaho Power is unable to predict the exact timing that the FERC will issue a new license order or the ultimate capital investment and ongoing operating and maintenance costs Idaho Power will incur in complying with a new license. As of the date of this report, Idaho Power estimates that the annual costs it will incur to obtain a new long-term license for the HCC, including AFUDC, are likely to range from $30 million to $40 million until issuance of the license. Subsequent to the issuance of a new license, Idaho Power expects to incur increased annual operating and maintenance costs to comply with the requirements of any new license and would seek to recover those increased costs through regulatory proceedings. American Falls Relicensing: In April 2020, the FERC formally initiated the relicensing of the American Falls hydropower facility, which is Idaho Power's largest hydropower facility outside of the HCC, with a generating capacity of 92.3 MW. Idaho Power owns the generation facility but not the structural dam itself, which is owned by the U.S. Bureau of Reclamation. The FERC recognized Idaho Power’s pre-application document, including a proposed process plan and schedule, and recognized Idaho Power’s intent to file an application for a license. In August 2022, Idaho Power filed a draft license application with the FERC and, following a public comment period, Idaho Power plans to file a final license application with the FERC in February 2023. The relicensing has begun the process of informal ESA Section 7 consultation with the USFWS and Section 106 of the National Historic Preservation Act consultation with the Idaho State Historic Preservation Office. American Falls' current license expires in 2025, and as of the date of this report, Idaho Power expects the FERC to issue a new license for this facility concurrent with or prior to the existing license's expiration. Renewable Energy Standards and Contracts Renewable Portfolio Standards: Many states have enacted legislation that would require electric utilities to obtain a specified percentage of their electricity from renewable sources. These requirements are commonly referred to as a "renewable portfolio standard" or "RPS." However, as of the date of this report no State of Idaho RPS is in effect. Idaho Power will be required to comply with either a five- or ten-percent RPS in Oregon beginning in 2025 (depending on loads at that time), and Idaho Power expects to meet either RPS requirement with RECs obtained from the purchase of energy from the Elkhorn Valley wind project. Pursuant to an IPUC order, Idaho Power is selling its near-term RECs and returning to customers their share (shared 95 percent with customers in the Idaho jurisdiction) of those proceeds through the PCA. For the years ended December 31, 2022 and 2021, Idaho Power's REC sales totaled $7.8 million and $4.7 million, respectively. Were Idaho Power to be subject to additional RPS legislation, it may cease in full or in part the sale of RECs it receives, seek to obtain RECs from additional projects, generate RECs from any REC-generating facilities it owns or may be required to construct in light of an RPS, or purchase RECs in the market. Historically, Idaho Power has generally not received the RECs associated with PURPA projects. However, an order issued by the IPUC in 2012 provides that Idaho Power will own a portion of the RECs generated by some PURPA projects. The required purchase of additional RECs to meet RPS requirements would increase Idaho Power's costs, which Idaho Power expects would be wholly or largely passed on to customers through rates and the power cost adjustment mechanisms. Renewable and Other Energy Contracts: Idaho Power has contracts for the purchase of electricity produced by third-party owned generation facilities, most of which produce energy with the use of renewable generation sources such as wind, solar, biomass, small hydropower, and geothermal. The majority of these contracts are entered into as mandatory purchases under 67 Table of Contents PURPA. As of December 31, 2022, Idaho Power had contracts to purchase energy from 129 on-line PURPA projects. An additional four contracts are with on-line non-PURPA projects, including the Elkhorn Valley wind project with a 101-MW nameplate capacity and the Jackpot solar project with a 120-MW nameplate capacity. Idaho Power also has contracts with PURPA and non-PURPA projects under development. On January 20, 2023, Idaho Power executed an additional non-PURPA power purchase agreement with an additional solar facility with a planned nameplate capacity of 100 MW, expected to be online in 2024. The following table sets forth, as of the date of this report, the resource type and nameplate capacity of Idaho Power's signed agreements for power purchases from PURPA and non-PURPA generating facilities. These agreements have original contract terms ranging from one to 35 years. Resource Type On-line megawatts (MW) Under Contract but not yet On-line (MW) Total Projects under Contract (MW) PURPA: Wind 627 — 627 Solar 316 74 390 Hydropower 150 1 151 Other 44 — 44 Total PURPA 1,137 75 1,212 Non-PURPA: Wind 101 — 101 Geothermal 35 — 35 Solar 120 340 460 Total non-PURPA 256 340 596 The projects not yet on-line include one PURPA-qualifying hydropower project that is currently scheduled to be on-line in 2023, two PURPA-qualifying solar projects scheduled to be on-line in 2023, and one PURPA-qualifying solar project scheduled to be on-line in 2024. The three non-PURPA-qualifying projects not yet on-line are solar projects that are scheduled to be on-line, one per year, in 2023, 2024, and 2025. In 2020, the FERC issued Order No. 872, which could affect how states determine PURPA project avoided cost rates for purchases of power generated from qualifying facilities (QF), which facilities are eligible for QF status, whether and when certain QFs can enter into purchase agreements with utilities, and how parties can contest the eligibility of a generation facility seeking QF status. As of the date of this report, Idaho Power is unable to determine the impact of these potential changes on the company's future obligations for new PURPA power purchase contracts. Further action by the state public utility commissions is required to implement many of the changes. Substantially all PURPA power purchase costs are recovered through base rates and Idaho Power's power cost adjustment mechanisms. ENVIRONMENTAL MATTERS Overview Idaho Power is subject to a broad range of federal, state, regional, and local laws and regulations designed to protect, restore, and enhance the environment, including the Clean Air Act (CAA), the CWA, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Comprehensive Environmental Response, Compensation and Liability Act, and the ESA, among other laws. These laws are administered by a number of federal, state, and local agencies. In addition to imposing continuing compliance obligations and associated costs, these laws and regulations provide authority to regulators to levy substantial penalties for noncompliance, injunctive relief, and other sanctions. Idaho Power's two co-owned coal-fired power plants and three wholly-owned natural gas-fired combustion turbine power plants are subject to many of these regulations. Idaho Power's 17 hydropower projects are also subject to a number of water discharge standards and other environmental requirements. 68 Table of Contents Compliance with current and future environmental laws and regulations may: • increase the operating costs of generating plants; • increase the construction costs and lead time for new facilities; • require the modification of existing generating plants, which could result in additional costs; • require the curtailment, fuel-switching, or shut-down of existing generating plants; • reduce the output from current generating facilities; or • require the acquisition of alternative sources of energy or storage technology, increased transmission wheeling, or require construction of additional generating facilities, which could result in higher costs. Current and future environmental laws and regulations could significantly increase the cost of operating fossil fuel-fired generation plants and constructing new generation and transmission facilities, in large part through the substantial cost of permitting activities and the required installation of additional pollution control devices. In many parts of the United States, some higher-cost, high-emission coal-fired plants have ceased operation or the plant owners have announced a near-term cessation of operation, as the cost of compliance makes the plants uneconomical to operate. The decision to cease operation of the Boardman power plant in October 2020 was based in part on the significant cost of compliance with environmental laws and regulations. The decision to pursue an end to participation in coal-fired operations at the North Valmy plant was also based primarily on the economics of continuing coal-fired generation at the plant. Beyond increasing costs generally, these environmental laws and regulations could affect IDACORP's and Idaho Power's results of operations and financial condition if the costs associated with these environmental requirements and early plant retirements cannot be fully recovered in rates on a timely basis. Part I, Item 1 - “Business - Utility Operations - Environmental Regulation and Costs” in this report includes a summary of Idaho Power's expected capital and operating expenditures for environmental matters during the period from 2023 to 2025. Given the uncertainty of future environmental regulations and technological advances, there is uncertainty around near-term estimates, and Idaho Power is also unable to predict its environmental-related expenditures beyond 2025, though they could be substantial. Furthermore, several executive orders issued since 2017 concerning environmental regulations, including executive orders issued by the current Presidential Administration to establish new federal environmental mandates, revoke several existing executive orders, and require agencies to review environmental regulations issued by the previous Presidential Administration, could result in significant changes in, and uncertainty with respect to, legislation, regulation, and government policy regarding environmental matters. The outcome of federal agencies' review of regulations covered by executive orders and revocation of executive orders is difficult to predict. Changes to or elimination of regulations may lower Idaho Power's costs of operating and maintaining fossil fuel-fired generation plants and transmission lines, due to the reduction of potential environmental infrastructure upgrades or conversions, or reduction or elimination of permitting requirements. More strict or robust regulations, or additional regulations, on the other hand, would likely increase Idaho Power's costs of operating and maintaining its facilities, and could impact Idaho Power's plans and pre-construction activities related to its major transmission projects, which could lead to substantially higher construction and permitting costs and could delay construction. Executive orders may be affected by Congressional action and challenged in court. Further, state and local governmental authorities could choose to challenge or replace the federal regulations or bolster or undermine environmental compliance and enforcement efforts at the local level. Therefore, as of the date of this report, and except as specifically described below in this MD&A, Idaho Power is uncertain whether and to what extent the orders, any future executive orders, and the implementation of these and any future executive orders could affect its business, results of operations, and financial condition. Idaho Power plans to continue to monitor actions associated with or resulting from executive orders. Endangered Species Act Matters Overview: The listing of a species of fish, wildlife, or plants as threatened or endangered under the ESA may have an adverse impact on Idaho Power's ability to construct power supply, transmission, or distribution facilities or relicense or operate its hydropower facilities. Over the past few years and as a result of changes in Presidential Administrations, regulatory developments and executive orders have called into question the existing requirements under the ESA. Subsequent federal court decisions have in some cases undermined the effectiveness of those regulations and orders. Given the continued uncertainty in the regulatory landscape, Idaho Power continues to operate under the ESA rules in effect prior to 2019. There are a number of threatened or endangered species within Idaho Power's service area located in waterways in which Idaho Power has hydropower facilities, and within or near proposed transmission line routes. To date, efforts to protect these species have not significantly affected generation levels or operating costs at any of Idaho Power's hydropower facilities. However, the 69 Table of Contents ongoing relicensing of the HCC presents endangered species and fisheries issues that may require operational adjustments and could adversely impact the amount of output from hydropower dams, potentially causing Idaho Power to rely on more expensive sources for power generation or market purchases. These ESA regulations could impact the timing and feasibility of the HCC relicensing project and the Gateway West and Boardman-to-Hemingway transmission projects and other infrastructure projects, which could lead to substantially higher construction, permitting, and licensing costs and could delay construction. Developments in Regulation of Sage Grouse Habitat: In 2016, a group of lawsuits were filed in federal court to challenge the BLM's sage grouse resource management and land use plan revisions that became effective in 2015 under the Federal Land Policy and Management Act. The lawsuits challenge the plans and associated EISs across the sage grouse range, including in Idaho and North Dakota, and allege that the plans fail to ensure that sage grouse populations and habitats will be protected and restored in accordance with the best available science and legal mandates. Further, the lawsuits challenge certain exemptions provided for the Boardman-to-Hemingway and Gateway West transmission line projects. Idaho Power has intervened in the proceedings in an effort to support the exemptions provided for in the BLM's plans. If the exemptions are overturned, Idaho Power may be required to re-route the projects, which could lead to substantially higher construction and permitting costs and could delay construction. In June 2017, the Secretary of the Interior issued an order directing the BLM to review the 2015 sage grouse resource management and land use plan revisions and to identify provisions that may require modification or rescission to address energy and other development of public lands. Following a series of interim measures, in February 2022, the BLM issued a notice of intent to amend its land use plans regarding sage grouse conservation and prepare associated EISs, soliciting public comments on the planning initiative. The BLM has indicated it anticipates issuing draft land use plan amendments and associated EISs in July 2023. As of the date of this report, the above lawsuits are stayed as the parties and the courts have agreed that the processes initiated by the BLM may result in further administrative actions that could remove the need for the lawsuits. Migratory Bird Treaty Act Matters: In September 2021, the USFWS announced that it revoked the previous Presidential Administration's interpretation of the Migratory Bird Treaty Act (MBTA) and implemented a new rule that reinstates the long-standing USFWS interpretation of the MBTA prohibiting the incidental take of migratory birds. The new rule was published in the Federal Register on October 4, 2021, and went into effect on December 3, 2021. Concurrently, the USFWS published an advanced notice of proposed rulemaking to determine whether and under what circumstances it could authorize an incidental take. Similar to the changes in the ESA regulations described above in this MD&A, these MBTA regulations could impact the timing and feasibility of the Gateway West and Boardman-to-Hemingway transmission projects and other infrastructure projects that may interfere with migratory birds in the vicinity of such projects, which could lead to substantially higher construction, permitting, and licensing costs and could delay construction. ESA Issues Related to Specific Projects: Hells Canyon Relicensing Project : In December 2004, Idaho Power and eleven other parties, including the NMFS and the USFWS, entered into an interim agreement that addresses the effects of the ongoing operations of the HCC on ESA listed species pending the relicensing of the project. In 2007, the FERC requested initiation of formal consultation under the ESA with the NMFS and the USFWS regarding potential effects of HCC relicensing on several listed aquatic and terrestrial species. Idaho Power prepared draft biological assessments in consultation with the USFWS and the NMFS and filed those with the FERC in October 2020. The draft biological assessments are intended to provide the necessary information to the USFWS and the NMFS to issue their biological opinion as required under the ESA. In June 2022, the FERC issued a notice of intent to prepare a draft supplemental EIS and a final supplemental EIS in accordance with NEPA. The FERC indicated that the supplemental EIS will address the new and revised measures proposed by the Section 401 certification settlement, the conditions contained in the Oregon and Idaho water quality certificates, and the information provided in the draft biological assessments. The FERC also reinstated informal consultation with the USFWS and NMFS under section 7 of the ESA. As of the date of this report, Idaho Power anticipates that the final biological opinions will likely be issued in 2024 after the FERC issues a final supplemental EIS, which is scheduled for December 2023 according to the FERC's notice of intent. Gateway West and Boardman-to-Hemingway Transmission Projects and Other Infrastructure - Slickspot Peppergrass and Washington Ground Squirrel Designations : In August 2016, the USFWS re-instated the threatened species status of slickspot peppergrass under the ESA. In July 2020, the USFWS published a revised proposed rule designating critical habitat for the species, most of which are located on federal land. Idaho Power expects the listing of the slickspot peppergrass and its existence within or near the proposed route for the Gateway West transmission line project and other transmission and distribution lines 70 Table of Contents to increase the cost and timing of permitting and construction of the projects, as it requires an ESA Section 7 consultation and potential mitigation. As of the date of this report, Idaho Power is uncertain whether such increases will be significant. The Washington ground squirrel inhabits various locations throughout two of the counties within the proposed routes for Boardman-to-Hemingway. It is not listed under the federal ESA, but it is considered endangered under Oregon law and the Boardman-to-Hemingway project will need to avoid ground squirrel colonies during construction. If colonies are found within the proposed site boundary during pre-construction surveys, re-siting the transmission would require additional permitting and would likely involve increased permitting costs and could further delay the in-service date of the project. Lower Snake River Hydroelectric Projects : In May 2016, the United States District Court for the District of Oregon issued an opinion finding that in the context of hydropower facilities owned and operated by the U.S. Army Corps of Engineers (USACE) and located on the lower Snake River, National Oceanic and Atmospheric Administration's National Marine Fisheries Service (NOAA Fisheries) violated the ESA by using improper standards, failing to consider adequately the impact of climate change on habitat conditions, and placing undue reliance on unproven, future federal habitat conservation measures, particularly to the degree that the success of the measures could be undermined by climate change. The court also found that other federal agencies violated the NEPA by failing to prepare a comprehensive EIS on implementation of the conservation measures ordered by NOAA Fisheries, including analysis of the measures directed by NOAA Fisheries and other reasonable alternatives. The court’s opinion and its emphasis on a climate change-driven analysis element, if generalized to other situations, could require ESA-driven avoidance, minimization, and compensatory mitigation efforts to incorporate surplus measures to ensure species’ protection, which could result in considerable increases in cost beyond the cost of additional analysis in the NEPA process. In September 2016, federal agencies initiated an EIS to examine hydropower dams on the lower Snake River. In September 2020, the federal agencies signed a record of decision on the EIS that will guide the operation of those dams and may expedite projects and reduce the number of actions subject to NEPA review. None of Idaho Power’s hydropower facilities are included in the studies. National Environmental Policy Act (NEPA) Matters NEPA is a federal law that requires federal agencies to consider the environmental impacts of their actions and decisions. NEPA applies to Idaho Power’s transmission and distribution lines that are located on federal land, as well as other company activities involving federal actions. In April 2022, the current Presidential Administration’s Council on Environmental Quality (CEQ) published a final rule that restores a prior NEPA requirement, eliminated under the previous Administration, that federal agencies consider all indirect and cumulative environmental impacts of infrastructure projects in their decision-making, among other things, which could delay and increase the cost of Idaho Power’s infrastructure projects. Also in April 2022, the current Presidential Administration announced that the CEQ will propose a second phase of changes to NEPA that are aimed at further climate change-related reform, which could cause similar cost and project delays. Climate Change and the Regulation of Greenhouse Gas Emissions Overview: Ongoing climate change could significantly affect Idaho Power's business in a variety of ways, including: • changes in temperature and precipitation could affect customer demand for electric power; • extreme weather events, wildfires, drought, and other natural phenomena and natural disasters could increase service interruptions, outages, maintenance costs, system damage, personal property damage, personal injuries and loss of life, legal liability, and the need for additional backup systems, and can affect the supply of, and demand for, electricity and natural gas, which may impact the price of those and other commodities; • changes in the amount and timing of snowpack and other precipitation and stream flows could affect hydropower generation; • legislative and/or regulatory developments related to climate change could affect power/generation plants and operations, including restrictions on the construction or addition of new power supply resources, the expansion of existing resources, or the operation of power supply resources; and • consumer preference for, and resource planning decisions requiring, renewable or low GHG-emitting sources of energy could impact usage of existing generation sources and require significant investment in new generation and transmission infrastructure. Federal and state regulations pertaining to GHG emissions under the CAA have raised uncertainty about the future viability of fossil fuels, most notably coal, as an economical energy source for new and existing electric generation facilities because many new technologies for reducing carbon dioxide (CO 2 ) emissions from coal, including carbon capture and storage, are still in the development stage and are not yet proven . Stringent emissions standards could result in significant increases in capital 71 Table of Contents expenditures and operating costs, which may accelerate the retirement of coal-fired units and create power system reliability issues. Some higher-cost, high-emission coal-fired plants have ceased operation or the plant owners have announced a near-term cessation of operation, as the cost of compliance makes the plants uneconomical to operate, particularly in light of continued low natural gas prices that decrease the cost to operate natural gas-fired power plants. As a result, Idaho Power ended its participation in coal-fired operations at the Boardman power plant in October 2020 and the North Valmy plant unit 1 in December 2019 . Idaho Power's 2021 IRP identifies a preferred resource portfolio and action plan that anticipates (1) ending Idaho Power's participation in coal-fired operations at the North Valmy plant unit 2 no later than the end of 2025; (2) converting two units from coal to natural gas at the Jim Bridger plant in 2024; and (3) ending Idaho Power's participation in the remaining two coal-fired units at the Jim Bridger plant by the end of 2028. As discussed above in the "Regulatory Matters" section of this MD&A, as of the date of this report, discussions among the IPUC Staff, Idaho Power, and the co-owner regarding this potential conversion and the environmental regulations related to the Jim Bridger plant are ongoing. A variety of factors contribute to the financial, regulatory, and logistical uncertainties related to GHG reductions. These include the specific GHG emissions limits imposed, the timing of implementation of these limits, the level of emissions allowances allocated and the level that must be purchased, the purchase price of emissions allowances, the development and commercial availability of technologies for renewable energy and for the reduction of emissions, the degree to which offsets may be used for compliance, provisions for cost containment (if any), the impact on coal and natural gas prices, and the timing and amount of cost recovery through rates. Accordingly, Idaho Power cannot predict the effect on its results of operations, financial condition, or cash flows of any GHG emissions or other climate change requirements that may be adopted, although the costs to implement and comply with any such requirements could be substantial. A more detailed discussion of legislative and regulatory developments related to climate change follows. National GHG Initiatives; Clean Power Plan/Affordable Clean Energy Rule: The EPA has been active in the regulation of GHGs. The EPA's endangerment finding in 2009 that GHGs threaten public health and welfare resulted in the enactment of a series of EPA regulations to address GHG emissions. In May 2010, the EPA issued the “Tailoring Rule,” which set thresholds for GHG emissions that define when permits are required for new and existing industrial facilities. While the rule is complex, Idaho Power believes that its owned and co-owned fossil fuel-fired generation plants are, as of the date of this report, in compliance with the GHG Tailoring Rule. In August 2015, the EPA promulgated the Clean Power Plan (CPP) under Section 111(d) of the CAA, which required states to adopt plans to collectively reduce 2005 levels of power sector CO 2 emissions by 32 percent by the year 2030. In June 2019, the EPA repealed the CPP and replaced it with the Affordable Clean Energy (ACE) rule under Section 111(d) of the CAA for existing electric utility generating units. In January 2021, the U.S. Court of Appeals for the District of Columbia Circuit vacated the EPA's repeal of the CPP and also vacated the ACE rule in its entirety, directing the EPA to create a new regulatory approach. In February 2021, the EPA issued a memorandum notifying states that it will not require states to submit plans to the EPA under Section 111(d) of the CAA because the circuit court vacated the ACE rule without reinstating the CPP. On June 30, 2022, the U.S. Supreme Court vacated the circuit court's decision and remanded the case for further proceedings, finding that the EPA does not have authority to devise emissions caps based on the generation-shifting approach identified in the CPP. Despite the status of the CAA 111(d) rulemaking, the EPA will continue to evaluate climate-related impacts of fossil fuel generation and, as of the date of this report, Idaho Power expects to continue with its planned retirements and other planned upgrades at generating facilities. State GHG Initiatives and Idaho Power’s Voluntary GHG Reduction Initiative: In August 2007, the Oregon legislature enacted legislation setting goals of reducing GHG levels to 10 percent below 1990 levels by 2020 and at least 75 percent below 1990 levels by 2050. Oregon legislation referred to as the Oregon Clean Electricity and Coal Transition Plan was also enacted in March 2016, and requires certain Oregon utilities to remove coal-fired generation from their Oregon retail rates by 2030. Oregon utilities would be permitted to sell the output of coal-fired plants into the wholesale market or reallocate such plants to other states. To the extent Idaho Power is subject to the legislation, it plans to seek recovery, through the ratemaking process, of operating and capitalized costs related to its coal-fired generation assets and removal of any of those assets from Oregon rate base. Idaho has not passed legislation specifically regulating GHGs. Wyoming and Nevada similarly have not enacted legislation to regulate GHG emissions and do not have a reporting requirement, but they are members of the Climate Registry, a national, voluntary GHG emissions reporting system. The Climate Registry is a collaboration aimed at developing and managing a common GHG emissions reporting system across states, provinces, and tribes to track GHG emissions nationally. All states for which Idaho Power has traditional fuel generating plants (i.e. Idaho, Oregon, Wyoming, and Nevada) are members of the 72 Table of Contents Climate Registry. Idaho Power is engaged in voluntary GHG emissions intensity reduction efforts, which is discussed in Part I, Item 1 - “Business - Utility Operations - Environmental Regulation and Costs ." Other Clean Air Act Matters In addition to the CAA developments related to GHG emissions described above, several other regulatory programs developed under the CAA apply to Idaho Power. These include the final Mercury and Air Toxics Standards (MATS), National Ambient Air Quality Standards (NAAQS), New Source Review / Prevention of Significant Deterioration Rules, and the Regional Haze Rule. The MATS rule under the CAA provides that sources must comply with emission limits by April 2015. Idaho Power and the co-owners of Jim Bridger and North Valmy coal-fired generating plants have installed mercury continuous emission monitoring systems on all coal-fired units at the plants, along with control technology to reduce mercury, acid gases, and particulate matter emissions for purposes of compliance with the MATS rule. Idaho Power believes that as of the date of this report, its jointly-owned coal-fired plants are in compliance with the MATS rule. The CAA requires the EPA to set ambient air quality standards for six "criteria" pollutants considered harmful to public health and the environment. These six pollutants are carbon monoxide, lead, ozone, particulate matter, nitrogen dioxide, and sulfur dioxide (SO 2 ). States are then required to develop emissions reduction strategies through State Implementation Plans (SIPs), based on attainment of these ambient air quality standards. Recent developments and pending actions related to certain of those items relevant to Idaho Power. However, as of the date of this report, Idaho Power does not expect the recent changes in the NAAQS to significantly impact its operations or materially increase Idaho Power’s capital and operating costs. In accordance with federal regional haze rules under the CAA, coal-fired utility boilers are subject to regional haze - best available retrofit technology (RH BART) if they were built between 1962 and 1977 and affect any "Class I" (wilderness) areas. This includes all units at the Jim Bridger plant, which are subject to regulation by both EPA and WDEQ. In April 2022, the EPA issued a proposed rule under the CAA called the Federal Implementation Plan Addressing Regional Ozone Transport for the 2015 National Ambient Air Quality Standards (Good Neighbor Rule) to establish NO x emissions budgets requiring fossil fuel-fired power plants to participate in an allowance-based ozone season trading program beginning in 2023. If the proposed Good Neighbor Rule were implemented, under certain conditions the company could have reduced ability to use the full available output at the North Valmy and Jim Bridger plants in order to comply with the Good Neighbor Rule limitations. As of the date of this report, Idaho Power is evaluating the specific impacts to both plants and how the Good Neighbor Rule would impact its operations. Clean Water Act Matters Definition of “Waters of the United States” Under the CWA : Since 2015, the EPA and USACE have been struggling to define the scope of "waters of the United States" (WOTUS) under the CWA. The WOTUS definition is fundamental to the application of the CWA because only those bodies of water designated as WOTUS are protected from unlawful discharge of pollutants under the CWA. In December 2022, after multiple rulemakings involving various Presidential Administrations and federal court reviews of those rules, the EPA and USACE most recently issued a final rule revising and expanding the definition of WOTUS under the CWA which goes into effect on March 20, 2023. Although Idaho Power expects the new rule may cause Idaho Power to incur additional permitting, regulatory requirements, and other associated costs, the aggregate amount of increased costs is unlikely to have a material adverse effect on Idaho Power's operations or financial condition, in part due to the relatively arid climate of Idaho Power's service area. Similarly, because the CWA applies to most of Idaho Power's facilities, including its hydropower plants, Idaho Power does not expect this new rule to materially impact Idaho Power's operations or financial condition. Section 401 Water Quality Certification: As described more fully under “Relicensing of Hydropower Projects” in the "Regulatory Matters" section of this MD&A, Idaho Power filed water quality certification applications, required under Section 401 of the CWA, with Idaho and Oregon requesting that each state certify that any discharges from the HCC comply with applicable state water quality standards. The states issued final certifications in May 2019. In July 2020, the EPA published a rule amending regulations intended to implement the CWA Section 401 water quality certification process. The rule has been subject to various legal challenges, and the EPA under the current Presidential 73 Table of Contents Administration has filed a notice of intent to repeal the July 2020 rule. While the EPA finalizes a new certification rule, Idaho Power plans to continue to operate under the current CWA Section 401 regulations as described above. The EPA’s new rule is expected to expand state and tribal authority over water quality certifications; however, such expanded authority would not likely impact the timing and cost of the HCC certification under the current approval process. CWA Permitting: Idaho Power's hydropower generation facilities are subject to compliance and permitting obligations under the CWA. Idaho Power has been engaged for several years with the EPA, and is now engaged with the Idaho Department of Environmental Quality (IDEQ), regarding Idaho Power's CWA permitting obligations and compliance status for those facilities. Idaho Power has in the past, and expects in the future, to incur costs and expenses associated with those permitting and compliance obligations, but as of the date of this report, Idaho Power is unable to estimate with any reasonable certainty those costs and expenses. Idaho Power also expects to incur additional expenses associated with the relicensing of its hydroelectric facilities, as discussed elsewhere in this report. In June 2022, Idaho Power and the IDEQ entered into a consent judgment in the district courts for the third, fourth, fifth, and sixth judicial districts of the State of Idaho to resolve a National Pollutant Discharge Elimination System permitting issue related to 15 of Idaho Power’s hydropower projects that required Idaho Power to pay a $1.1 million fine, implement interim measures for compliance, and ultimately submit applications for new permits at each of the dams subject to the consent judgment. As of the date of this report, Idaho Power has submitted new permit applications for 5 of the dams and anticipates completing all submissions by June 2024. Due to a misinterpretation of law, the EPA cancelled water discharge permits in the mid-1990’s, and Idaho Power recently determined that those permits are applicable for operation of the dams. However, Idaho Power believes that the dams would have been in compliance with the earlier permits had they remained in place. CRITICAL ACCOUNTING POLICIES AND ESTIMATES When preparing financial statements in accordance with the accounting principles generally accepted in the United States of America (GAAP), IDACORP’s and Idaho Power’s management must apply accounting policies and make estimates that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures. These estimates often involve judgment about factors that are difficult to predict and are beyond management’s control. Management adjusts these estimates based on historical experience and on other assumptions and factors that are believed to be reasonable under the circumstances. Actual amounts could materially differ from the estimates. Management believes the accounting policies and estimates discussed below are the most critical to the portrayal of their financial condition and results of operations and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Accounting for Rate Regulation Entities that meet specific conditions are required by GAAP to reflect the impact of regulatory decisions in their consolidated financial statements and to defer certain costs as regulatory assets until matching revenues can be recognized. Similarly, certain items must be deferred as regulatory liabilities. Idaho Power must satisfy three conditions to apply regulatory accounting: (1) an independent regulator must set rates; (2) the regulator must set the rates to cover specific costs of delivering service; and (3) the service area must lack competitive pressures to reduce rates below the rates set by the regulator. Idaho Power has determined that it meets these conditions, and its financial statements reflect the effects of the different rate-making principles followed by the jurisdictions regulating Idaho Power. The primary effect of this policy is that Idaho Power had recorded approximately $1.5 billion of regulatory assets and $0.9 billion of regulatory liabilities at December 31, 2022. Idaho Power expects to recover these regulatory assets from customers through rates and refund these regulatory liabilities to customers through rates, but recovery or refund is subject to final review by the regulatory bodies. If future recovery or refund of these amounts ceases to be probable, or if Idaho Power determines that it no longer meets the criteria for applying regulatory accounting, or if accounting rules change to no longer provide for regulatory assets and liabilities, Idaho Power could be required to eliminate those regulatory assets or liabilities, which could have a material effect on Idaho Power’s financial condition or results of operations. Refer to Note 3 - “Regulatory Matters” to the consolidated financial statements included in this report for additional information relating to regulatory matters. 74 Table of Contents Income Taxes IDACORP and Idaho Power use judgment and estimation in developing the provision for income taxes and the reporting of tax-related assets and liabilities. The interpretation of tax laws can involve uncertainty, since tax authorities may interpret such laws differently. Actual income taxes could vary from estimated amounts and may result in favorable or unfavorable impacts to net income, cash flows, and tax-related assets and liabilities. Idaho Power records deferred income taxes related to its plant assets for the difference between income tax depreciation and book depreciation used for financial statement purposes. Deferred income taxes for other items are recorded for the temporary differences between the income tax and financial accounting treatment of such items. Unless contrary to applicable income tax guidance, deferred income taxes are not recorded for those income tax temporary differences where the prescribed regulatory accounting methods, or flow-through, direct Idaho Power to recognize the tax impacts currently for rate making and financial reporting. Refer to Note 1 - “Summary of Significant Accounting Policies” and Note 2 - “Income Taxes” to the consolidated financial statements included in this report for additional information relating to income taxes. Pension and Other Postretirement Benefits Idaho Power maintains a tax-qualified, noncontributory defined benefit pension plan covering most employees, and two unfunded nonqualified deferred compensation plans for certain senior management employees and directors called the Security Plan for Senior Management Employees I and Security Plan for Senior Management Employees II, and a postretirement benefit plan (consisting of health care and death benefits). The costs IDACORP and Idaho Power record for these plans depend on the provisions of the plans, changing employee demographics, actual returns on plan assets, and several assumptions used in the actuarial valuations from which the expense is derived. The key actuarial assumptions that affect expense are the expected long-term return on plan assets and the discount rate used in determining future benefit obligations. Management evaluates the actuarial assumptions on an annual basis, taking into account changes in market conditions, trends, and future expectations. Estimates of future capital markets performance, changes in interest rates, and other factors used to develop the actuarial assumptions are uncertain, and actual results could vary significantly from the estimates. The assumed discount rate is based on reviews of market yields on high-quality corporate debt. Specifically, IDACORP and Idaho Power determined the discount rate for each plan through the construction of hypothetical portfolios of bonds selected from high-quality corporate bonds available as of December 31, 2022, with maturities matching the projected cash outflows of the plans. Based on the results of this analysis, the discount rate used to calculate the 2023 defined benefit plan pension expense increased to 5.45 percent from the 3.05 percent rate used in 2022. Rate-of-return projections for plan assets are based on historical risk/return relationships among asset classes. The primary measure is the historical risk premium each asset class has delivered versus the yield on the Moody's AA Corporate Bond Index. This historical risk premium is then added to the current yield on the Moody's AA Corporate Bond Index, and Idaho Power believes the result provides a reasonable prediction of future investment performance. Additional analysis is performed to measure the expected range of returns, as well as worst-case and best-case scenarios. The long-term rate of return used to calculate the 2023 pension expense will be 7.4 percent, the same assumption as used in 2022. Total net periodic pension and other postretirement benefit cost for these plans totaled $42.3 million and $65.6 million for the years ended December 31, 2022 and 2021, respectively, including amounts deferred as regulatory assets (see discussion below) and amounts allocated to capitalized labor. For 2023, total net periodic pension costs and other postretirement benefit costs are expected to total approximately $30.6 million, which takes into account the change in the discount rate noted above. 75 Table of Contents Had different actuarial assumptions been used, net periodic pension costs and other postretirement benefit costs could have varied significantly. The following table reflects the sensitivities associated with changes in the discount rate and rate-of-return on plan assets actuarial assumptions on historical and future net periodic pension costs and other postretirement benefit costs: Discount rate Rate of return 2023 2022 2023 2022 (millions of dollars) Effect of 0.5% rate increase on total net periodic pension costs and other postretirement benefit costs $ (2.4) $ (10.9) $ (4.3) $ (5.0) Effect of 0.5% rate decrease on total net periodic pension costs and other postretirement benefit costs 6.1 12.1 4.3 5.1 Additionally, a 0.5 percent increase in the plans' discount rates would have resulted in a $68.6 million decrease in the combined benefit obligations of the plans as of December 31, 2022. A 0.5 percent decrease in the plans' discount rates would have resulted in an $76.4 million increase in the combined benefit obligations of the plans as of December 31, 2022. The IPUC has authorized Idaho Power to account for its defined benefit pension plan expense on a cash basis, and to defer and account for accrued pension expense as a regulatory asset. The IPUC acknowledged that it is appropriate for Idaho Power to seek recovery in its revenue requirement of reasonable and prudently incurred pension expense based on actual cash contributions. In 2007, Idaho Power began deferring pension expense to a regulatory asset account to be matched with revenue when future pension contributions are recovered through rates. At December 31, 2022, a total of $250 million of expense was deferred as a regulatory asset. Idaho Power expects to defer approximately $3 million of expense in 2023. Idaho Power recorded pension expense on its consolidated statements of income related to its tax-qualified defined benefit pension plan of approximately $19 million in 2022 and 2021. Refer to Note 11 – “Benefit Plans” to the consolidated financial statements included in this report for additional information relating to pension and postretirement benefit plans. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS There have been no recently issued accounting pronouncements that have had or are expected to have a material impact on IDACORP's or Idaho Power's consolidated financial statements. See Note 1 - “Summary of Significant Accounting Policies” to the consolidated financial statements included in this report for a summary of significant accounting policies. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK IDACORP and Idaho Power are exposed to market risks, including changes in interest rates, changes in commodity prices, credit risk, and equity price risk. The following discussion summarizes these risks and the financial instruments, derivative instruments, and derivative commodity instruments sensitive to changes in interest rates, commodity prices, and equity prices that were held at December 31, 2022. Neither IDACORP nor Idaho Power have entered into any of these market-risk-sensitive instruments for trading purposes. Interest Rate Risk IDACORP and Idaho Power manages interest expense and short- and long-term liquidity through a combination of fixed rate and variable rate debt. Generally, the amount of each type of debt is managed through market issuance, but interest rate swap and cap agreements with highly-rated financial institutions may be used to achieve the desired combination. Variable Rate Debt : As of December 31, 2022, IDACORP and Idaho Power had $118.9 million and $135.4 million, respectively, in net floating rate debt, which approximated fair value. Assuming no change in financial structure, if variable interest rates were to average one percentage point higher than the average rate on December 31, 2022, IDACORP and Idaho Power's annual interest expense would increase and pre-tax earnings would decrease by approximately $1.2 million and $1.4 million, respectively. Fixed Rate Debt : As of December 31, 2022, both IDACORP and Idaho Power had $2.0 billion in fixed rate debt, with a fair market value of approximately $1.8 billion. These instruments are fixed rate and, therefore, do not expose the companies to a loss in earnings due to changes in market interest rates. However, the fair value of these instruments would increase by 76 Table of Contents approximately $196 million if market interest rates were to decline by one percentage point from their December 31, 2022 levels. Commodity Price Risk IDACORP's exposure to changes in commodity prices is related to Idaho Power's ongoing utility operations that produce electricity to meet the demand of its retail electric customers. To supplement its power supply resources and balance its supply of power with the demand of its retail customers, Idaho Power participates in the wholesale marketplace. Purchased power arrangements allow Idaho Power to respond to fluctuations in the demand for electricity and variability in generating plant operations. Idaho Power also enters into arrangements for the purchase of fuel for natural gas and coal-fired generating plants. These contracts for the purchase of power and fuel expose Idaho Power to commodity price risk. The effects of changes in commodity prices on Idaho Power's net income are mitigated in large part by Idaho Power's Idaho and Oregon power cost adjustment mechanisms. However, collection from customers or return to customers of most of the difference between actual power supply costs compared with those included in retail rates is deferred to a subsequent period, which can affect Idaho Power’s operating cash flow and liquidity until those costs are recovered from or returned to customers. A number of factors associated with the structure and operation of the energy markets influence the level and volatility of prices for energy commodities and related derivative products. The weather is a major uncontrollable factor affecting the local and regional demand for electricity and the availability and cost of power generation. Other factors include the occurrence and timing of demand peaks due to seasonal, daily, and hourly power demand; power supply; power transmission capacity; changes in federal and state regulation and compliance obligations; fuel supplies; and market liquidity. The primary objectives of Idaho Power’s energy purchase and sale activity are to meet the demand of retail electric customers, to maintain appropriate physical reserves to ensure reliability, and to make economic use of temporary surpluses that may develop. Idaho Power has adopted an energy risk management program, which has been reviewed and accepted by the Idaho Public Utilities Commission (IPUC), designed to reduce exposure to power supply cost-related uncertainty, further mitigating commodity price risk. Idaho Power’s Energy Risk Management Policy and associated standards implementing the Energy Risk Management Policy describe a collaborative process with customers and regulators via a committee called the Customer Advisory Group (CAG). The Risk Management Committee (RMC), composed of Idaho Power officers and senior managers, oversees the risk management program. The RMC is responsible for communicating the status of risk management activities to Idaho Power's Board of Directors and to the CAG, and Idaho Power’s Audit Committee is responsible for approving the Energy Risk Management Policy and associated standards. The RMC is also responsible for conducting an ongoing general assessment of the appropriateness of Idaho Power’s strategies for energy risk management activities. In its energy risk management process, Idaho Power considers both demand-side and supply-side options consistent with its Integrated Resource Plan. The primary tools for risk mitigation are physical and financial forward power transactions and fueling alternatives for utility-owned generation resources. Idaho Power only engages in a nominal amount of trading activity for non-retail purposes. The Energy Risk Management Policy and associated standards require monitoring monthly volumetric electricity position and total monthly dollar (net power supply cost) exposure on a rolling 18-month forward view. The power supply business unit produces and evaluates projections of the operating plan based on factors such as forecasted resource availability, stream flows, and load, and orders risk mitigating actions, including resource optimization and hedging strategies, dictated by the limits stated in the Energy Risk Management Policy and associated standards to bring exposures within pre-established risk guidelines. The RMC evaluates the actions initiated by the power supply unit for consistency and compliance with the Risk Management Policy and associated standards. Idaho Power representatives meet with the CAG at least annually to assess effectiveness of the limits. Changes to the limits can be endorsed by the CAG and referred to the board of directors for approval. Credit Risk IDACORP is subject to credit risk based on Idaho Power's activity with market counterparties. Idaho Power is exposed to this risk to the extent that a counterparty may fail to fulfill a contractual obligation to provide energy, purchase energy, or complete financial settlement for market activities. Idaho Power mitigates this exposure by actively establishing credit limits; measuring, monitoring, and reporting credit risk using appropriate contractual arrangements; and transferring of credit risk through the use of financial guarantees, cash, or letters of credit. Idaho Power maintains a current list of acceptable counterparties and credit limits. The use of performance assurance collateral in the form of cash, letters of credit, or guarantees is common industry practice. Idaho Power maintains margin agreements relating to its wholesale commodity contracts that allow performance assurance collateral to be requested of and/or posted with certain counterparties. As of December 31, 2022, Idaho Power had no 77 Table of Contents performance assurance collateral posted related to these contracts. Should Idaho Power experience a reduction in its credit rating on Idaho Power’s unsecured debt to below investment grade, Idaho Power could be subject to requests by its wholesale counterparties to post additional performance assurance collateral. Counterparties to derivative instruments and other forward contracts could request immediate payment or demand immediate ongoing full daily collateralization on derivative instruments and contracts in net liability positions. Based upon Idaho Power’s energy and fuel portfolio and market conditions as of December 31, 2022, the amount of collateral that could be requested upon a downgrade to below investment grade was approximately $113.3 million. To minimize capital requirements, Idaho Power actively monitors the portfolio exposure and the potential exposure to additional requests for performance assurance collateral calls through sensitivity analysis. Idaho Power is obligated to provide service to all electric customers within its service area. Credit risk for Idaho Power’s retail customers is managed by credit and collection policies that are governed by rules issued by the IPUC or OPUC. Idaho Power records a provision for uncollectible accounts, based upon historical experience, to provide for the potential loss from nonpayment by these customers. Idaho Power continuously monitors levels of nonpayment from customers and makes any necessary adjustments to its provision for uncollectible accounts accordingly. Idaho utility customer relations rules prohibit Idaho Power from terminating electric service during the months of December through February to any residential customer who declares that he or she is unable to pay in full for utility service and whose household includes children, elderly, or infirm persons. Idaho Power’s provision for uncollectible accounts could be affected by changes in future prices as well as changes in IPUC or OPUC regulations. Equity Price Risk IDACORP is exposed to price fluctuations in equity markets, primarily through Idaho Power's defined benefit pension plan assets, a mine reclamation trust fund owned by an equity-method investment of Idaho Power, and other equity security investments at Idaho Power. The equity securities held by the pension plan and in such accounts are diversified to achieve broad market participation and reduce the impact of any single investment, sector, or geographic region. Idaho Power has established asset allocation targets for the pension plan holdings, which are described in Note 11 - "Benefit Plans" to the consolidated financial statements included in this report. 78 Table of Contents ITEM 8. FINANCIAL STATEMENTS Index to Financial Statements and Financial Statement Schedules Consolidated Financial Statements Page IDACORP, Inc.: Consolidated Statements of Income 80 Consolidated Statements of Comprehensive Income 81 Consolidated Balance Sheets 82 Consolidated Statements of Cash Flows 84 Consolidated Statements of Equity 85 Idaho Power Company: Consolidated Statements of Income 86 Consolidated Statements of Comprehensive Income 87 Consolidated Balance Sheets 88 Consolidated Statements of Cash Flows 90 Consolidated Statements of Retained Earnings 91 Notes to the Consolidated Financial Statements 92 Reports of Independent Registered Public Accounting Firm - Deloitte & Touche LLP (PCAOB ID No. 34 ) 132 Financial Statement Schedules IDACORP, Inc. - Schedule I - Condensed Financial Information of Registrant 149 IDACORP, Inc. and Idaho Power Company - Schedule II - Consolidated Valuation and Qualifying Accounts 151 All other schedules have been omitted because they are not required, not applicable, or the required information is otherwise included. 79 Table of Contents IDACORP, Inc. Consolidated Statements of Income Year Ended December 31, 2022 2021 2020 (thousands of dollars except for per share amounts) Operating Revenues: Electric utility revenues $ 1,641,040 $ 1,455,410 $ 1,347,340 Other 2,941 2,674 3,389 Total operating revenues 1,643,981 1,458,084 1,350,729 Operating Expenses: Electric utility: Purchased power 544,345 393,691 297,417 Fuel expense 230,210 180,550 172,740 Power cost adjustment ( 100,659 ) ( 49,844 ) ( 33,708 ) Other operations and maintenance 399,375 361,297 352,071 Energy efficiency programs 33,197 29,920 42,478 Depreciation 170,077 175,555 171,648 Other electric utility operating expenses 37,325 34,673 35,914 Total electric utility expenses 1,313,870 1,125,842 1,038,560 Other 2,933 2,591 2,648 Total operating expenses 1,316,803 1,128,433 1,041,208 Operating Income 327,178 329,651 309,521 Nonoperating (Income) Expense: Allowance for equity funds used during construction ( 37,285 ) ( 31,537 ) ( 29,551 ) Earnings of unconsolidated equity-method investments ( 11,511 ) ( 11,435 ) ( 11,513 ) Interest on long-term debt 87,259 84,145 84,251 Other interest 16,030 14,546 14,753 Allowance for borrowed funds used during construction ( 13,914 ) ( 11,993 ) ( 11,578 ) Other (income) expense, net ( 10,805 ) 3,141 ( 3,509 ) Total nonoperating expense, net 29,774 46,867 42,853 Income Before Income Taxes 297,404 282,784 266,668 Income Tax Expense 37,844 36,912 28,700 Net Income 259,560 245,872 237,968 Adjustment for income attributable to noncontrolling interests ( 578 ) ( 322 ) ( 551 ) Net Income Attributable to IDACORP, Inc. $ 258,982 $ 245,550 $ 237,417 Weighted Average Common Shares Outstanding - Basic (000’s) 50,658 50,599 50,538 Weighted Average Common Shares Outstanding - Diluted (000’s) 50,699 50,645 50,572 Earnings Per Share of Common Stock: Earnings Attributable to IDACORP, Inc. - Basic $ 5.11 $ 4.85 $ 4.70 Earnings Attributable to IDACORP, Inc. - Diluted $ 5.11 $ 4.85 $ 4.69 The accompanying notes are an integral part of these statements. 80 Table of Contents IDACORP, Inc. Consolidated Statements of Comprehensive Income Year Ended December 31, 2022 2021 2020 (thousands of dollars) Net Income $ 259,560 $ 245,872 $ 237,968 Other Comprehensive Income: Unfunded pension liability adjustment, net of tax of $ 9,399 , $ 1,150 , and $( 2,452 ) 27,118 3,318 ( 7,074 ) Total Comprehensive Income 286,678 249,190 230,894 Comprehensive income attributable to noncontrolling interests ( 578 ) ( 322 ) ( 551 ) Comprehensive Income Attributable to IDACORP, Inc. $ 286,100 $ 248,868 $ 230,343 The accompanying notes are an integral part of these statements. 81 Table of Contents IDACORP, Inc. Consolidated Balance Sheets December 31, 2022 2021 (in thousands) Assets Current Assets: Cash and cash equivalents $ 177,577 $ 215,243 Receivables: Customer (net of allowance of $ 5,034 and $ 4,499 , respectively) 114,173 78,819 Other (net of allowance of $ 512 and $ 517 , respectively) 51,179 14,994 Income taxes receivable 13,734 14,770 Accrued unbilled revenues 84,862 74,843 Materials and supplies (at average cost) 92,461 77,552 Fuel stock (at average cost) 14,762 18,045 Prepayments 24,517 24,676 Current regulatory assets 80,049 71,223 Other 40,339 5,708 Total current assets 693,653 595,873 Investments 121,352 123,824 Property, Plant and Equipment: Utility plant in service 6,828,467 6,509,316 Accumulated provision for depreciation ( 2,465,279 ) ( 2,298,951 ) Utility plant in service - net 4,363,188 4,210,365 Construction work in progress 785,706 670,585 Utility plant held for future use 7,130 4,511 Other property, net of accumulated depreciation 16,946 16,361 Property, plant and equipment - net 5,172,970 4,901,822 Other Assets: Company-owned life insurance 73,944 67,343 Regulatory assets 1,421,912 1,462,431 Other 59,427 59,222 Total other assets 1,555,283 1,588,996 Total $ 7,543,258 $ 7,210,515 The accompanying notes are an integral part of these statements. 82 Table of Contents IDACORP, Inc. Consolidated Balance Sheets December 31, 2022 2021 (in thousands) Liabilities and Equity Current Liabilities: Accounts payable $ 292,719 $ 145,980 Taxes accrued 8,565 14,229 Interest accrued 24,060 23,959 Accrued compensation 59,265 55,666 Current regulatory liabilities 63,957 11,239 Advances from customers 72,222 43,472 Other 27,777 31,079 Total current liabilities 548,565 325,624 Other Liabilities: Deferred income taxes 873,916 842,375 Regulatory liabilities 796,644 781,695 Pension and other postretirement benefits 238,037 521,462 Other 77,336 63,485 Total other liabilities 1,985,933 2,209,017 Long-Term Debt 2,194,145 2,000,640 Commitments and Contingencies Equity: IDACORP, Inc. shareholders’ equity: Common stock, no par value ( 120,000 shares authorized; 50,562 and 50,516 shares issued, respectively) 882,189 874,896 Retained earnings 1,937,972 1,833,580 Accumulated other comprehensive loss ( 12,922 ) ( 40,040 ) Total IDACORP, Inc. shareholders’ equity 2,807,239 2,668,436 Noncontrolling interests 7,376 6,798 Total equity 2,814,615 2,675,234 Total $ 7,543,258 $ 7,210,515 The accompanying notes are an integral part of these statements. 83 Table of Contents IDACORP, Inc. Consolidated Statements of Cash Flows Year Ended December 31, 2022 2021 2020 (thousands of dollars) Operating Activities: Net income $ 259,560 $ 245,872 $ 237,968 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 173,555 179,444 175,941 Deferred income taxes and investment tax credits ( 511 ) 23,901 25,175 Changes in regulatory assets and liabilities ( 79,693 ) ( 33,705 ) ( 36,246 ) Pension and postretirement benefit plan expense 29,286 33,817 28,970 Contributions to pension and postretirement benefit plans ( 44,192 ) ( 44,220 ) ( 45,161 ) Earnings of equity-method investments ( 11,511 ) ( 11,435 ) ( 11,513 ) Distributions from equity-method investments 11,586 11,711 14,477 Allowance for equity funds used during construction ( 37,285 ) ( 31,537 ) ( 29,551 ) Other non-cash adjustments to net income, net 14,892 8,929 10,457 Change in: Accounts receivable and unbilled revenues ( 81,545 ) ( 9,434 ) ( 7,630 ) Prepayments ( 2,156 ) ( 6,581 ) ( 5,377 ) Materials, supplies, and fuel stock ( 11,626 ) 991 17,543 Accounts and wages payable 112,602 17,700 ( 356 ) Taxes accrued/receivable ( 4,628 ) ( 17,885 ) 8,950 Other assets and liabilities 22,951 ( 4,304 ) 4,484 Net cash provided by operating activities 351,285 363,264 388,131 Investing Activities: Additions to property, plant and equipment ( 432,589 ) ( 299,999 ) ( 310,938 ) Payments received from transmission project joint funding partners 17,778 5,876 3,197 Investments in affordable housing and other real estate tax credit projects ( 9,881 ) ( 15,148 ) ( 14,338 ) Distributions from equity-method investments, return of investment 8,489 14,439 1,073 Purchase of equity securities ( 45,572 ) ( 17,186 ) ( 33,382 ) Purchases of held-to-maturity securities ( 31,224 ) — — Proceeds from sale of equity securities 63,857 11,328 25,795 Purchases of short-term investments ( 25,000 ) ( 25,000 ) ( 25,000 ) Maturities of short-term investments 25,000 50,000 — Other 4,875 2,037 6,335 Net cash used in investing activities ( 424,267 ) ( 273,653 ) ( 347,258 ) Financing Activities: Issuance of long-term debt 198,000 — 310,000 Premium on issuance of long-term debt — — 31,384 Retirement of long-term debt ( 4,360 ) — ( 175,000 ) Dividends on common stock ( 154,287 ) ( 146,119 ) ( 137,813 ) Tax withholdings on net settlements of share-based awards ( 3,111 ) ( 3,031 ) ( 4,641 ) Make-whole premium on retirement of long-term debt — — ( 3,305 ) Debt issuance costs and other ( 926 ) ( 334 ) ( 3,636 ) Net cash provided by (used in) financing activities 35,316 ( 149,484 ) 16,989 Net (decrease) increase in cash and cash equivalents ( 37,666 ) ( 59,873 ) 57,862 Cash and cash equivalents at beginning of the year 215,243 275,116 217,254 Cash and cash equivalents at end of the year $ 177,577 $ 215,243 $ 275,116 Supplemental Disclosure of Cash Flow Information: Cash paid during the year for: Income taxes $ 45,885 $ 34,330 $ 9,975 Interest (net of amount capitalized) $ 85,985 $ 83,499 $ 81,074 Non-cash investing activities: Additions to property, plant and equipment in accounts payable $ 84,324 $ 53,690 $ 45,004 The accompanying notes are an integral part of these statements. 84 Table of Contents IDACORP, Inc. Consolidated Statements of Equity Year Ended December 31, 2022 2021 2020 (thousands of dollars) Common Stock: Balance at beginning of year $ 874,896 $ 869,235 $ 868,307 Share-based compensation expense 10,279 8,583 7,416 Tax withholdings on net settlements of share-based awards ( 3,111 ) ( 3,031 ) ( 4,641 ) Treasury shares issued — — ( 1,920 ) Other 125 109 73 Balance at end of year 882,189 874,896 869,235 Retained Earnings: Balance at beginning of year 1,833,580 1,734,103 1,634,525 Net income attributable to IDACORP, Inc. 258,982 245,550 237,417 Common stock dividends ($ 3.04 , $ 2.88 , and $ 2.72 per share, respectively) ( 154,590 ) ( 146,073 ) ( 137,839 ) Balance at end of year 1,937,972 1,833,580 1,734,103 Accumulated Other Comprehensive (Loss) Income: Balance at beginning of year ( 40,040 ) ( 43,358 ) ( 36,284 ) Unfunded pension liability adjustment (net of tax) 27,118 3,318 ( 7,074 ) Balance at end of year ( 12,922 ) ( 40,040 ) ( 43,358 ) Treasury Stock: Balance at beginning of year — — ( 1,920 ) Issued — — 1,920 Balance at end of year — — — Total IDACORP, Inc. shareholders’ equity at end of year 2,807,239 2,668,436 2,559,980 Noncontrolling Interests: Balance at beginning of year 6,798 6,476 5,925 Net income attributable to noncontrolling interests 578 322 551 Balance at end of year 7,376 6,798 6,476 Total equity at end of year $ 2,814,615 $ 2,675,234 $ 2,566,456 The accompanying notes are an integral part of these statements. 85 Table of Contents Idaho Power Company Consolidated Statements of Income Year Ended December 31, 2022 2021 2020 (thousands of dollars) Operating Revenues $ 1,641,040 $ 1,455,410 $ 1,347,340 Operating Expenses: Operation: Purchased power 544,345 393,691 297,417 Fuel expense 230,210 180,550 172,740 Power cost adjustment ( 100,659 ) ( 49,844 ) ( 33,708 ) Other operations and maintenance 399,375 361,297 352,071 Energy efficiency programs 33,197 29,920 42,478 Depreciation 170,077 175,555 171,648 Other operating expenses 37,325 34,673 35,914 Total operating expenses 1,313,870 1,125,842 1,038,560 Operating Income 327,170 329,568 308,780 Nonoperating (Income) Expense: Allowance for equity funds used during construction ( 37,285 ) ( 31,537 ) ( 29,551 ) Earnings of unconsolidated equity-method investments ( 10,211 ) ( 10,211 ) ( 10,102 ) Interest on long-term debt 87,259 84,145 84,251 Other interest 15,693 14,511 14,716 Allowance for borrowed funds used during construction ( 13,914 ) ( 11,993 ) ( 11,578 ) Other (income) expense, net ( 9,147 ) 3,171 ( 2,739 ) Total nonoperating expense, net 32,395 48,086 44,997 Income Before Income Taxes 294,775 281,482 263,783 Income Tax Expense 39,908 38,257 30,548 Net Income $ 254,867 $ 243,225 $ 233,235 The accompanying notes are an integral part of these statements. 86 Table of Contents Idaho Power Company Consolidated Statements of Comprehensive Income Year Ended December 31, 2022 2021 2020 (thousands of dollars) Net Income $ 254,867 $ 243,225 $ 233,235 Other Comprehensive Income: Unfunded pension liability adjustment, net of tax of $ 9,399 , $ 1,150 , and $( 2,452 ) 27,118 3,318 ( 7,074 ) Total Comprehensive Income $ 281,985 $ 246,543 $ 226,161 The accompanying notes are an integral part of these statements. 87 Table of Contents Idaho Power Company Consolidated Balance Sheets December 31, 2022 2021 (in thousands) Assets Current Assets: Cash and cash equivalents $ 108,933 $ 60,075 Receivables: Customer (net of allowance of $ 5,034 and $ 4,499 , respectively) 114,173 78,819 Other (net of allowance of $ 512 and $ 517 , respectively) 50,754 14,134 Income taxes receivable 13,108 15,328 Accrued unbilled revenues 84,862 74,843 Materials and supplies (at average cost) 92,461 77,552 Fu