2 unchanged sentences
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.
−Removed: IDACORP and Idaho Power have not entered into any of these market-risk-sensitive instruments for trading purposes.
+Added: Neither IDACORP nor Idaho Power have entered into any of these market-risk-sensitive instruments for trading purposes.
Interest Rate Risk
−Removed: IDACORP and Idaho Power manage interest expense and short- and long-term liquidity through a combination of fixed rate and variable rate debt.
+Added: 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 :
−Removed: As of December 31, 2021, IDACORP had no net floating rate debt, as the carrying value of short-term investments exceeded the carrying value of outstanding variable-rate debt.
−Removed: As of December 31, 2021, Idaho Power had $13.9 million of net floating rate debt.
−Removed: The fair market value of this debt was $13.9 million.
−Removed: Assuming no change in financial structure, if variable interest rates were to average one percentage point higher than the average rate on December 31, 2021, annual interest expense would increase and pre-tax earnings would decrease by approximately $0.1 million for Idaho Power.
+Added: 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.
+Added: 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 :
1 unchanged sentence
These instruments are fixed rate and, therefore, do not expose the companies to a loss in earnings due to changes in market interest rates.
−Removed: However, the fair value of these instruments would increase by approximately $234.7 million if market interest rates were to decline by one percentage point from their December 31, 2021 levels.
+Added: However, the fair value of these instruments would increase by
+Added: approximately $196 million if market interest rates were to decline by one percentage point from their December 31, 2022 levels.
Commodity Price Risk
4 unchanged sentences
These contracts for the purchase of power and fuel expose Idaho Power to commodity price risk.
−Removed: The effects of changes in commodity prices on Idaho Power are mitigated in large part by Idaho Power's Idaho and Oregon power cost adjustment mechanisms.
+Added: 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.
+Added: 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.
7 unchanged sentences
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.
−Removed: Idaho Power has adopted an energy risk management program, which has been reviewed and accepted by the IPUC, designed to reduce exposure to power supply cost-related uncertainty, further mitigating commodity price risk.
+Added: 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.
−Removed: 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
−Removed: Policy and associated standards.
+Added: 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.
−Removed: In its energy risk management process, Idaho Power considers both demand-side and supply-side options consistent with its IRP.
+Added: 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.
13 unchanged sentences
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.
−Removed: As of December 31, 2021, Idaho Power had no performance assurance collateral posted related to these contracts.
+Added: As of December 31, 2022, Idaho Power had no
+Added: 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.
13 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.