IDACORP INC 10-K

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 Fuel stock (at average cost) 14,762 18,045 Prepayments 24,396 24,558 Current regulatory assets 80,049 71,223 Other 40,339 5,708 Total current assets 623,837 440,285 Investments 78,791 77,108 Property, Plant and Equipment: Plant in service 6,828,467 6,509,316 Accumulated provision for depreciation ( 2,465,279 ) ( 2,298,951 ) Plant in service - net 4,363,188 4,210,365 Construction work in progress 785,706 670,585 Plant held for future use 7,130 4,511 Other property 4,558 3,647 Property, plant and equipment, net 5,160,582 4,889,108 Other Assets: Company-owned life insurance 73,944 67,343 Regulatory assets 1,421,912 1,462,431 Other 52,038 54,564 Total other assets 1,547,894 1,584,338 Total $ 7,411,104 $ 6,990,839 The accompanying notes are an integral part of these statements. 88 Table of Contents Idaho Power Company Consolidated Balance Sheets December 31, 2022 2021 (in thousands) Liabilities and Equity Current Liabilities: Accounts payable $ 292,616 $ 145,871 Accounts payable to affiliates 56,338 2,159 Taxes accrued 9,101 14,316 Interest accrued 24,060 23,959 Accrued compensation 58,959 55,491 Current regulatory liabilities 63,957 11,239 Advances from customers 72,222 43,472 Other 26,199 19,117 Total current liabilities 603,452 315,624 Other Liabilities: Deferred income taxes 870,692 844,871 Regulatory liabilities 796,644 781,695 Pension and other postretirement benefits 238,037 521,462 Other 76,471 62,245 Total other liabilities 1,981,844 2,210,273 Long-Term Debt 2,194,145 2,000,640 Commitments and Contingencies Equity: Common stock, $ 2.50 par value ( 50,000 shares authorized; 39,151 shares outstanding) 97,877 97,877 Premium on capital stock 712,258 712,258 Capital stock expense ( 2,097 ) ( 2,097 ) Retained earnings 1,836,547 1,696,304 Accumulated other comprehensive loss ( 12,922 ) ( 40,040 ) Total equity 2,631,663 2,464,302 Total $ 7,411,104 $ 6,990,839 The accompanying notes are an integral part of these statements. 89 Table of Contents Idaho Power Company Consolidated Statements of Cash Flows Year Ended December 31, 2022 2021 2020 (thousands of dollars) Operating Activities: Net income $ 254,867 $ 243,225 $ 233,235 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 172,976 178,847 175,334 Deferred income taxes and investment tax credits ( 11,744 ) ( 7,682 ) 1,149 Changes in regulatory assets and liabilities ( 79,693 ) ( 33,705 ) ( 36,246 ) Pension and postretirement benefit plan expense 29,269 33,804 28,955 Contributions to pension and postretirement benefit plans ( 44,175 ) ( 44,207 ) ( 45,146 ) Earnings of equity-method investments ( 10,211 ) ( 10,211 ) ( 10,102 ) Distributions from equity-method investments 10,211 10,211 12,627 Allowance for equity funds used during construction ( 37,285 ) ( 31,537 ) ( 29,551 ) Other non-cash adjustments to net income, net 4,493 346 3,041 Change in: Accounts receivable and unbilled revenues ( 81,163 ) ( 8,345 ) ( 9,476 ) Prepayments ( 2,153 ) ( 6,589 ) ( 5,368 ) Materials, supplies, and fuel stock ( 11,626 ) 991 17,543 Accounts and wages payable 166,635 17,690 ( 292 ) Taxes accrued/receivable ( 2,995 ) ( 15,899 ) 12,685 Other assets and liabilities 22,876 ( 4,233 ) 4,600 Net cash provided by operating activities 380,282 322,706 352,988 Investing Activities: Additions to utility plant ( 432,430 ) ( 299,972 ) ( 310,937 ) Payments received from transmission project joint funding partners 17,778 5,876 3,197 Distributions from equity-method investments, return of investment 8,489 14,439 1,073 Purchase of equity securities ( 43,953 ) ( 15,823 ) ( 33,382 ) Purchases of held-to-maturity securities ( 31,224 ) — — Proceeds from the sale of equity securities 63,857 11,328 25,795 Other 7,605 2,231 6,305 Net cash used in investing activities ( 409,878 ) ( 281,921 ) ( 307,949 ) 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 ( 114,447 ) ( 146,076 ) ( 137,885 ) Make-whole premium on retirement of long-term debt — — ( 3,305 ) Other ( 739 ) ( 238 ) ( 3,579 ) Net cash provided by (used in) financing activities 78,454 ( 146,314 ) 21,615 Net increase (decrease) in cash and cash equivalents 48,858 ( 105,529 ) 66,654 Cash and cash equivalents at beginning of the year 60,075 165,604 98,950 Cash and cash equivalents at end of the year $ 108,933 $ 60,075 $ 165,604 Supplemental Disclosure of Cash Flow Information: Cash paid to IDACORP related to income taxes $ 2,532 $ 64,003 $ 32,118 Cash paid for interest (net of amount capitalized) $ 85,648 $ 83,464 $ 81,037 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. 90 Table of Contents Idaho Power Company Consolidated Statements of Retained Earnings Year Ended December 31, 2022 2021 2020 (thousands of dollars) Retained Earnings, Beginning of Year $ 1,696,304 $ 1,599,155 $ 1,503,805 Net Income 254,867 243,225 233,235 Dividends on Common Stock ( 114,624 ) ( 146,076 ) ( 137,885 ) Retained Earnings, End of Year $ 1,836,547 $ 1,696,304 $ 1,599,155 The accompanying notes are an integral part of these statements. 91 Table of Contents IDACORP, INC. AND IDAHO POWER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This Annual Report on Form 10-K is a combined report of IDACORP, Inc. (IDACORP) and Idaho Power Company (Idaho Power). Therefore, these Notes to the Consolidated Financial Statements apply to both IDACORP and Idaho Power. However, Idaho Power makes no representation as to the information relating to IDACORP’s other operations. Nature of Business IDACORP is a holding company formed in 1998 whose principal operating subsidiary is Idaho Power. Idaho Power is an electric utility engaged in the generation, transmission, distribution, sales, and purchase of electric energy and capacity with a service area covering approximately 24,000 square miles in southern Idaho and eastern Oregon. Idaho Power is regulated primarily by the state utility regulatory commissions of Idaho and Oregon and the Federal Energy Regulatory Commission (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. IDACORP’s other notable wholly-owned 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). Principles of Consolidation IDACORP’s and Idaho Power’s consolidated financial statements include the assets, liabilities, revenues, and expenses of each company and its wholly-owned subsidiaries listed above, as well as any variable interest entity (VIE) for which the respective company is the primary beneficiary. Investments in VIEs for which the companies are not the primary beneficiaries, but have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method of accounting. IDACORP also consolidates one VIE, Marysville Hydro Partners (Marysville), which is a joint venture owned 50 percent by Ida-West and 50 percent by Environmental Energy Company (EEC). At December 31, 2022, Marysville had approximately $ 14.9 million of assets, primarily a hydropower plant, which are eliminated in consolidation. EEC has borrowed amounts from Ida-West to fund a portion of its required capital contributions to Marysville. The loans are payable from EEC’s share of distributions from Marysville and are secured by the stock of EEC and EEC’s interest in Marysville. Ida-West is identified as the primary beneficiary because the combination of its ownership interest in the joint venture with the intercompany note and the EEC note result in Ida-West's ability to control the activities of the joint venture. The BCC joint venture is also a VIE, but because the power to direct the activities that most significantly impact the economic performance of BCC is shared with the joint venture partner, Idaho Power is not the primary beneficiary. The carrying value of Idaho Power's investment in BCC was $ 14.2 million at December 31, 2022, and Idaho Power's maximum exposure to loss is the carrying value, any additional future contributions to BCC, and a $ 48.2 million guarantee for mine reclamation costs. BCC has a reclamation trust fund set aside specifically for the purpose of paying the reclamation costs, the market value of which exceeded the total estimated reclamation obligation at December 31, 2022. The guarantee, reclamation obligation, and reclamation trust are discussed further in Note 9 - "Commitments." IFS's affordable housing limited partnership and other real estate tax credit investments are also VIEs for which IDACORP is not the primary beneficiary. IFS's limited partnership interests range from 4 to 100 percent and were acquired between 2003 and 2021. As a limited partner, IFS does not control these entities and they are not consolidated. IFS’s maximum exposure to loss in these developments is limited to its net carrying value, which was $ 29.5 million at December 31, 2022. Ida-West's other investments in PURPA facilities, Idaho Power's investment in BCC, and IFS's investments are accounted for under the equity method of accounting (see Note 14 - "Investments"). Except for amounts related to sales of electricity by Ida-West's PURPA projects to Idaho Power, all intercompany transactions and balances have been eliminated in consolidation. 92 Table of Contents The accompanying consolidated financial statements include Idaho Power's proportionate share of utility plant and related operations resulting from its interests in jointly-owned plants (see Note 12 - "Property, Plant and Equipment and Jointly-Owned Projects"). Regulation of Utility Operations As a regulated utility, many of Idaho Power's fundamental business decisions are subject to the approval of governmental agencies, including the prices that Idaho Power is authorized to charge for its electric service. These approvals are a critical factor in determining IDACORP's and Idaho Power's results of operations and financial condition. Idaho Power meets the requirements under accounting principles generally accepted in the United States of America (GAAP) to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. IDACORP’s and Idaho Power’s financial statements reflect the effects of the different ratemaking principles followed by the jurisdictions regulating Idaho Power. 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; operation and maintenance expense; depreciation expense; and income tax expense. The application of accounting principles related to regulated operations sometimes results 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. Regulatory assets represent incurred costs that have been deferred because it is probable they will be recovered from customers through future rates. Regulatory liabilities represent obligations to make refunds to customers for previous collections, or represent amounts collected in advance of incurring an expense. The effects of applying these regulatory accounting principles to Idaho Power’s operations are discussed in more detail in Note 3 - "Regulatory Matters." Management Estimates Management makes estimates and assumptions when preparing financial statements in conformity with GAAP. These estimates and assumptions include those related to rate regulation, retirement benefits, contingencies, asset impairment, income taxes, unbilled revenues, and bad debt. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates involve judgments with respect to, among other things, future economic factors that are difficult to predict and are beyond management’s control. Accordingly, actual results could differ from those estimates. System of Accounts The accounting records of Idaho Power conform to the Uniform System of Accounts prescribed by the FERC and adopted by the public utility commissions of Idaho, Oregon, and Wyoming. Cash and Cash Equivalents Cash and cash equivalents include cash on-hand and highly liquid temporary investments that mature within 90 days of the date of acquisition. Receivables and Allowance for Uncollectible Accounts Customer receivables are recorded at the invoiced amounts and do not bear interest. A late payment fee of one percent per month may be assessed on account balances after 30 days. An allowance is recorded for potential uncollectible accounts. The measurement of expected credit losses on Idaho Power accounts receivable is based on historical experience, current economic conditions, and forecasted information that may affect collections on the outstanding balance. Generally, this includes adjustments based upon a combination of historical write-off experience, aging of accounts receivable, an analysis of specific customer accounts, and an evaluation of whether there are current or forecasted economic conditions that might cause variation in collection from the historical experience. Adjustments are charged to income. Customer accounts receivable balances that remain outstanding after reasonable collection efforts are written off. 93 Table of Contents The following table provides a rollforward of the allowance for uncollectible accounts related to customer receivables (in thousands of dollars): Year Ended December 31, 2022 2021 Balance at beginning of period $ 4,499 $ 4,766 Additions to the allowance 3,265 2,017 Write-offs, net of recoveries ( 2,730 ) ( 2,284 ) Balance at end of period $ 5,034 $ 4,499 Allowance for uncollectible accounts as a percentage of customer receivables 4.2 % 5.4 % Other receivables, primarily notes receivable from business transactions, are also reviewed for impairment periodically, based upon transaction-specific facts. When it is probable that IDACORP or Idaho Power will be unable to collect all amounts due according to the contractual terms of the agreement, an allowance is established for the estimated uncollectible portion of the receivable and charged to income. There were no impaired receivables without related allowances at December 31, 2022 and 2021. Once a receivable is determined to be impaired, any further interest income recognized is fully reserved. Derivative Financial Instruments Financial instruments such as commodity futures, forwards, options, and swaps are used to manage exposure to commodity price risk in the electricity and natural gas markets. All derivative instruments are recognized as either assets or liabilities at fair value on the balance sheet unless they are designated as normal purchases and normal sales. With the exception of forward contracts for the purchase of natural gas for use at Idaho Power's natural gas generation facilities and a nominal number of power transactions, Idaho Power’s physical forward contracts are designated as normal purchases and normal sales. Because of Idaho Power’s regulatory accounting mechanisms, Idaho Power records the unrealized changes in fair value of derivative instruments related to power supply as regulatory assets or liabilities. Revenues Operating revenues are generally recorded when service is rendered or energy is delivered to customers. Idaho Power accrues estimated unbilled revenues for electric services delivered to customers but not yet billed at year-end. Idaho Power does not report any collections of franchise fees and similar taxes related to energy consumption on the income statement. In addition, regulatory mechanisms in place in Idaho and Oregon affect the reported amount of revenue. The effects of applying these regulatory mechanisms are discussed in more detail in Note 4 - "Revenues." Property, Plant and Equipment and Depreciation The cost of utility plant in service represents the original cost of contracted services, direct labor and material, allowance for funds used during construction (AFUDC), and indirect charges for engineering, supervision, and similar overhead items. Repair and maintenance costs associated with planned major maintenance are expensed as the costs are incurred, as are maintenance and repairs of property and replacements and renewals of items determined to be less than units of property. For utility property replaced or renewed, the original cost plus removal cost less salvage is charged to accumulated provision for depreciation, while the cost of related replacements and renewals is added to property, plant and equipment. All utility plant in service is depreciated using the straight-line method at rates approved by regulatory authorities. Annual depreciation provisions as a percent of average depreciable utility plant in service approximated 2.7 percent in 2022, and 2.9 percent in 2021 and 2020. During the period of construction, costs expected to be included in the final value of the constructed asset, and depreciated once the asset is complete and placed in service, are classified as construction work in progress on the consolidated balance sheets. If the project becomes probable of being abandoned, these costs are expensed in the period such determination is made. Idaho Power may seek recovery of these costs in customer rates, although there can be no guarantee such recovery would be granted. 94 Table of Contents Long-lived assets are periodically reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the undiscounted expected future cash flows from an asset is less than the carrying value of the asset, impairment is recognized in the financial statements. There were no material impairments of long-lived assets in 2022, 2021, or 2020. Allowance for Funds Used During Construction AFUDC represents the cost of financing construction projects with borrowed funds and equity funds. With one exception, for the Hells Canyon Complex (HCC) relicensing project, cash is not realized currently from such allowance; it is realized under the ratemaking process over the service life of the related property through increased revenues resulting from a higher rate base and higher depreciation expense. The component of AFUDC attributable to borrowed funds is included as a reduction to total interest expense. Idaho Power’s weighted-average monthly AFUDC rate was 7.4 percent for 2022, and 7.5 percent for 2021 and 2020. Income Taxes IDACORP and Idaho Power account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method (commonly referred to as normalized accounting), deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. In general, deferred income tax expense or benefit for a reporting period is recognized as the change in deferred tax assets and liabilities from the beginning to the end of the period. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date unless Idaho Power's primary regulator, the Idaho Public Utilities Commission (IPUC), orders direct deferral of the effect of the change in tax rates over a longer period of time. Consistent with orders and directives of the IPUC, unless contrary to applicable income tax guidance, Idaho Power does not record 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 such amounts will be recovered from or returned to customers in future rates. IDACORP and Idaho Power use judgment, estimation, and historical data in developing the provision for income taxes and the reporting of tax-related assets and liabilities, including development of current year tax depreciation, capitalized repair costs, capitalized overheads, and other items. Income taxes can be impacted by changes in tax laws and regulations, interpretations by taxing authorities, changes to accounting guidance, and actions by federal or state public utility regulators. 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. In compliance with the federal income tax requirements for the use of accelerated tax depreciation, 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 are recorded for other temporary differences unless accounted for using flow-through. Investment tax credits earned on regulated assets are deferred and amortized to income over the estimated service lives of the related properties. Income taxes are discussed in more detail in Note 2 - "Income Taxes." Other Accounting Policies Debt discount, expense, and premium are deferred and amortized over the terms of the respective debt issuances. Losses on reacquired debt and associated costs are amortized over the life of the associated replacement debt, as allowed under regulatory accounting. 95 Table of Contents Reclassifications IDACORP and Idaho Power changed the presentation of their respective consolidated statements of cash flows for the year ended December 31, 2022, from one acceptable presentation to another, to increase transparency. Prior year respective consolidated statements of cash flows have been reclassified to conform with current year presentation. The reclassification includes certain lines of changes in assets and liabilities, presented in operating activities, and does not affect prior year net cash provided by operating activities in the respective consolidated statements of cash flows. New and Recently Adopted 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. 2. INCOME TAXES A reconciliation between the statutory federal income tax rate and the effective tax rate is as follows: IDACORP Idaho Power 2022 2021 2020 2022 2021 2020 (thousands of dollars) Federal income tax expense at statutory rate $ 62,333 $ 59,317 $ 55,885 $ 61,903 $ 59,111 $ 55,394 Change in taxes resulting from: AFUDC ( 10,752 ) ( 9,141 ) ( 8,637 ) ( 10,752 ) ( 9,141 ) ( 8,637 ) Capitalized interest 1,633 1,077 1,044 1,633 1,077 1,044 Investment tax credits ( 3,119 ) ( 2,866 ) ( 2,906 ) ( 3,119 ) ( 2,866 ) ( 2,906 ) Removal costs ( 4,900 ) ( 3,302 ) ( 3,148 ) ( 4,900 ) ( 3,302 ) ( 3,148 ) Capitalized overhead costs ( 3,150 ) ( 8,190 ) ( 7,560 ) ( 3,150 ) ( 8,190 ) ( 7,560 ) Capitalized repair costs ( 19,320 ) ( 17,430 ) ( 18,480 ) ( 19,320 ) ( 17,430 ) ( 18,480 ) Bond redemption costs — — ( 726 ) — — ( 726 ) State income taxes, net of federal benefit 18,139 11,359 8,804 18,352 11,633 9,052 Depreciation 11,897 14,233 13,589 11,897 14,233 13,589 Excess deferred income tax reversal ( 11,405 ) ( 8,958 ) ( 4,885 ) ( 11,405 ) ( 8,958 ) ( 4,885 ) Income tax return adjustments ( 2,692 ) 3,169 ( 2,552 ) ( 2,827 ) 1,759 ( 2,508 ) Real Estate-related tax credits ( 6,362 ) ( 6,245 ) ( 5,315 ) — — — Real Estate-related investment distributions ( 812 ) ( 1,010 ) ( 13 ) — — — Real Estate-related investment amortization 4,355 4,095 3,754 — — — Other, net 1,999 804 ( 154 ) 1,596 331 319 Total income tax expense $ 37,844 $ 36,912 $ 28,700 $ 39,908 $ 38,257 $ 30,548 Effective tax rate 12.7 % 13.1 % 10.8 % 13.5 % 13.6 % 11.6 % 96 Table of Contents The items comprising income tax expense are as follows: IDACORP Idaho Power 2022 2021 2020 2022 2021 2020 (thousands of dollars) Income taxes current: Federal $ 31,668 $ 15,210 $ 7,800 $ 37,696 $ 40,525 $ 30,464 State 5,474 6,630 3,215 11,715 12,932 6,409 Total 37,142 21,840 11,015 49,411 53,457 36,873 Income taxes deferred: Federal ( 13,696 ) ( 1,787 ) 11,543 ( 13,127 ) ( 21,737 ) ( 4,905 ) State 4,087 1,154 ( 1,414 ) ( 2,202 ) ( 5,295 ) ( 4,241 ) Total ( 9,609 ) ( 633 ) 10,129 ( 15,329 ) ( 27,032 ) ( 9,146 ) Investment tax credits: Deferred 8,945 14,698 5,727 8,945 14,698 5,727 Restored ( 3,119 ) ( 2,866 ) ( 2,906 ) ( 3,119 ) ( 2,866 ) ( 2,906 ) Total 5,826 11,832 2,821 5,826 11,832 2,821 Real estate-related investments at IFS 4,485 3,873 4,735 — — — Total income tax expense $ 37,844 $ 36,912 $ 28,700 $ 39,908 $ 38,257 $ 30,548 The components of the net deferred tax liability are as follows: IDACORP Idaho Power 2022 2021 2022 2021 (thousands of dollars) Deferred tax assets: Regulatory liabilities $ 94,946 $ 96,880 $ 94,946 $ 96,880 Deferred compensation 24,495 23,333 24,495 23,333 Deferred revenue 53,418 48,318 53,418 48,318 Tax credits 44,727 41,896 44,727 35,781 Partnership investments 15,259 12,265 15,259 11,949 Retirement benefits 38,687 110,997 38,687 110,997 Other 19,657 17,066 19,526 16,893 Total 291,189 350,755 291,058 344,151 Deferred tax liabilities: Property, plant and equipment 249,452 272,530 249,452 272,530 Regulatory assets 739,689 721,276 739,689 721,276 Power cost adjustments 33,116 9,015 33,116 9,015 Partnership investments 3,355 2,824 — — Retirement benefits 80,777 138,154 80,777 138,154 Other 58,716 49,331 58,716 48,047 Total 1,165,105 1,193,130 1,161,750 1,189,022 Net deferred tax liabilities $ 873,916 $ 842,375 $ 870,692 $ 844,871 IDACORP's tax allocation agreement provides that each member of its consolidated group compute its income taxes on a separate company basis. Amounts payable or refundable are settled through IDACORP and are reported as taxes accrued or income taxes receivable, respectively, on the consolidated balance sheets of Idaho Power. See Note 1 - "Summary of Significant Accounting Policies" for further discussion of accounting policies related to income taxes. Tax Credit Carryforwards As of December 31, 2022, IDACORP had $ 44.7 million of Idaho investment tax credit carryforwards, which expire from 2026 to 2036. 97 Table of Contents Uncertain Tax Positions IDACORP and Idaho Power believe that they have no material income tax uncertainties for 2022 and prior tax years. Both companies recognize interest accrued related to unrecognized tax benefits as interest expense and penalties as other expense. IDACORP and Idaho Power are subject to examination by their major tax jurisdictions - United States federal and the State of Idaho. The open tax years for examination are 2020-2022 for federal and 2016-2022 for Idaho. The Idaho State Tax Commission began its examination of the 2016-2018 tax years in March of 2020. In May 2009, IDACORP formally entered the U.S. Internal Revenue Service (IRS) Compliance Assurance Process (CAP) program for its 2009 tax year and has remained in the CAP program for all subsequent years. The CAP program provides for Internal Revenue Service (IRS) examination and issue resolution throughout the current year with the objective of return filings containing no contested items. IDACORP was in the bridge phase of CAP for both the 2020 and 2021 tax years. The IRS moved IDACORP from the bridge phase of CAP to the maintenance phase for the 2022 tax year. Inflation Reduction Act 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. 3. REGULATORY MATTERS IDACORP’s and Idaho Power’s financial statements reflect the effects of the different ratemaking principles followed by the jurisdictions regulating Idaho Power. Included below is a summary of Idaho Power's regulatory assets and liabilities, as well as a discussion of notable regulatory matters. Regulatory Assets and Liabilities The application of accounting principles related to regulated operations sometimes results in Idaho Power recording some expenses and revenues in a different period than when an unregulated enterprise would record those expenses and revenues. Regulatory assets represent incurred costs that have been deferred because it is probable they will be recovered from customers through future rates. Regulatory liabilities represent obligations to make refunds to customers for previous collections, or represent amounts collected in advance of incurring an expense. 98 Table of Contents The following table presents a summary of Idaho Power’s regulatory assets and liabilities (in thousands of dollars): As of December 31, 2022 Remaining Amortization Period Earning a Return (1) Not Earning a Return Total as of December 31, Description 2022 2021 Regulatory Assets: Income taxes (2) $ — $ 739,689 $ 739,689 $ 721,276 Unfunded postretirement benefits (3) — 70,254 70,254 315,011 Pension expense deferrals (4) 220,648 28,855 249,503 234,437 Energy efficiency program costs (5) 3,767 — 3,767 7,622 Power supply costs (6) 2023-2024 145,321 ( 16,012 ) 129,309 33,529 Fixed cost adjustment (6) 2023-2024 24,859 17,042 41,901 54,944 North Valmy plant settlements (6) 2023-2028 90,747 — 90,747 97,852 Jim Bridger plant settlement (6) 2023-2030 76,392 4,139 80,531 — Asset retirement obligations (7) — 28,780 28,780 22,585 Wildfire Mitigation Plan deferral (6) — 27,078 27,078 6,075 Long-term service agreement 2023-2043 13,363 8,751 22,114 23,273 Other 2023-2056 2,790 15,498 18,288 17,050 Total $ 577,887 $ 924,074 $ 1,501,961 $ 1,533,654 Regulatory Liabilities: Income taxes (8) $ — $ 94,946 $ 94,946 $ 96,880 Depreciation-related excess deferred income taxes (9) 158,634 — 158,634 170,039 Removal costs (7) — 180,087 180,087 184,670 Investment tax credits — 115,285 115,285 109,460 Deferred revenue-AFUDC (10) 159,001 48,527 207,528 187,717 Energy efficiency program costs (5) 154 — 154 — Settlement agreement sharing mechanism (6) 2023 — — — 569 Mark-to-market liabilities — 59,544 59,544 8,581 Tax reform accrual for future amortization (11) — 32,793 32,793 24,522 Other 6,553 5,077 11,630 10,496 Total $ 324,342 $ 536,259 $ 860,601 $ 792,934 (1) Earning a return includes either interest or a return on the investment as a component of rate base at the allowed rate of return. (2) Represents flow-through income tax accounting differences which have a corresponding deferred tax liability disclosed in Note 2 - "Income Taxes." (3) Represents the unfunded obligation of Idaho Power’s pension and postretirement benefit plans, which are discussed in Note 11 - "Benefit Plans." (4) Idaho Power records a regulatory asset for the difference between net periodic pension cost and pension cost considered for rate-making purposes relating to Idaho Power's defined benefit pension plan. In its Idaho jurisdiction, Idaho Power’s inclusion of pension costs for the establishment of retail rates is based upon contributions made to the pension plan. This regulatory asset account represents the difference between cumulative cash contributions and amounts collected in rates. Deferred costs are amortized into expense as the amounts are provided for in Idaho retail revenues. (5) The energy efficiency asset and liability represent the separate Idaho and Oregon jurisdiction balances at December 31, 2022. (6) This item is discussed in more detail in this Note 3 - "Regulatory Matters." (7) Asset retirement obligations and removal costs are discussed in Note 13 - "Asset Retirement Obligations (ARO)." (8) Represents the tax gross-up related to the depreciation-related excess deferred income taxes and investment tax credits included in this table and has a corresponding deferred tax asset disclosed in Note 2 - "Income Taxes." (9) In 2017, income tax reform reduced deferred income tax assets and liabilities. For depreciation-related temporary differences under the normalized tax accounting method, the resulting excess deferred taxes will flow back to customers ratably over the remaining regulatory lives of Idaho Power's plant assets under the alternative method provided in the statute. (10) Idaho Power is collecting revenue in the Idaho jurisdiction for AFUDC on HCC relicensing costs but is deferring revenue recognition of the amounts collected until the license is issued and the asset is placed in service under the new license. (11) Represents amount accrued under the May 2018 Idaho Tax Reform Settlement Stipulation (described below) for the future amortization of existing or future unspecified regulatory deferrals that would otherwise be a future liability recoverable from Idaho customers. Idaho Power’s regulatory assets and liabilities are typically amortized over the period in which they are reflected in customer rates. In the event that recovery of Idaho Power’s costs through rates becomes unlikely or uncertain, regulatory accounting would no longer apply to some or all of Idaho Power’s operations and the items above may represent stranded investments. If 99 Table of Contents not allowed full recovery of these items, Idaho Power would be required to write off the applicable portion, which could have a materially adverse financial impact. Power Cost Adjustment Mechanisms and Deferred Power Supply Costs In both its Idaho and Oregon jurisdictions, Idaho Power's power cost adjustment mechanisms address the volatility of power supply costs and provide for annual adjustments to the rates charged to its retail customers. The power cost adjustment mechanisms compare Idaho Power's actual net power supply costs (primarily fuel and purchased power less wholesale energy sales) against net power supply costs being recovered in Idaho Power's retail rates. Under the power cost adjustment mechanisms, certain differences between actual net power supply costs incurred by Idaho Power and costs being recovered in retail rates are recorded as a deferred charge or credit on the balance sheets for future recovery or refund. The power supply costs deferred primarily result from changes in the levels of Idaho Power's own hydroelectric generation, changes in contracted power purchase prices and volumes, changes in wholesale market prices and transaction volumes, and changes in fuel prices. Idaho Jurisdiction Power Cost Adjustment Mechanism: In the Idaho jurisdiction, the annual power cost adjustment (PCA) consists of (a) a forecast component, based on a forecast of net power supply costs in the coming year as compared with net power supply costs included in base rates; and (b) a balancing component that trues up the difference between the previous year’s actual net power supply costs and the costs collected in the previous year's forecast component. The latter component ensures that, over time, the actual collection or refund of net power supply costs matches the amounts authorized. The PCA mechanism 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 exceptions of expenses associated with PURPA power purchases and demand response incentive payments, which are allocated 100 percent to customers; and • a sales-based adjustment intended to ensure that power supply expense recovery resulting solely from sales volume changes does not distort the results of the mechanism. The Idaho deferral period or Idaho-jurisdiction 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. The table below summarizes the three most recent Idaho-jurisdiction PCA rate adjustments, which also include non-PCA-related rate adjustments as ordered by the IPUC: Effective Date $ Change (millions) Notes June 1, 2022 $ 94.9 The $94.9 million increase in PCA rates reflects a forecasted reduction in low-cost hydroelectric generation as well as higher costs associated with market energy prices and natural gas prices. The rate also reflects $0.6 million of 2021 earnings shared with customers under the May 2018 Idaho Tax Reform Settlement Stipulation described below. June 1, 2021 $ 39.1 The net increase in PCA rates reflects a forecasted reduction in low-cost hydroelectric generation as well as higher costs associated with forecasted PURPA power purchases. The net increase in PCA revenues also reflects a smaller credit to customers through the true-up component. June 1, 2020 $ 58.7 The $58.7 million increase in PCA rates reflects a return to a more normal level of power supply costs as wholesale market energy prices came down from unusually high levels in the previous year's PCA and a forecasted reduction in low-cost hydropower generation. Oregon Jurisdiction Power Cost Adjustment Mechanism: Idaho Power’s power cost recovery mechanism in Oregon has two components: an annual power cost update (APCU) and a power cost adjustment mechanism (PCAM). The APCU allows Idaho Power to reestablish its Oregon base net power supply costs annually, separate from a general rate case, and to forecast net power supply costs for the upcoming water year. The PCAM is a true-up filed annually in February. The filing calculates the deviation between actual net power supply expenses incurred for the preceding calendar year and the net power supply expenses recovered through the APCU for the same period. Actual 2022 Oregon-jurisdiction power supply costs exceeded the amount recovered through the APCU, resulting in a $ 1.1 million deferral of costs for future recovery. Oregon jurisdiction power supply cost changes during 2021 and 2020 did not have a material impact on the companies' financial statements. 100 Table of Contents Notable Idaho Base Rate Adjustments Idaho base rates were most recently established through a general rate case in 2012, and adjusted in 2014, 2017, 2018, and 2019. January 2012 and June 2014 Idaho Base Rate Adjustments: Effective January 1, 2012, Idaho Power implemented new Idaho base rates resulting from IPUC approval of a settlement stipulation that provided for a 7.86 percent authorized overall rate of return on an Idaho-jurisdiction rate base of approximately $ 2.36 billion. The settlement stipulation resulted in a 4.07 percent, or $ 34.0 million, overall increase in Idaho Power's annual Idaho-jurisdiction base rate revenues. Idaho 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 rates, effective July 1, 2012. The order also provided for a $ 335.9 million increase in Idaho rate base. Neither the settlement stipulation nor the IPUC orders adjusting base rates specified an authorized rate of return on equity or imposed a moratorium on Idaho Power filing a general rate case at a future date. The IPUC issued a March 2014 order approving Idaho Power's request for an increase in the normalized or "base level" net power supply expense to be used to update base rates and in the determination of the PCA rate that became effective June 1, 2014. 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 provided 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 also provided for the indefinite extension, with modifications, of a previous settlement stipulation beyond its termination date of December 31, 2019. The May 2018 settlement stipulation provides Idaho Power the ability to earn a minimum Idaho-Jurisdiction return on year-end equity (Idaho ROE) of 9.4 percent by amortizing up to $ 25 million of additional ADITC in any calendar year, so long as the cumulative amount of additional accumulated deferred investment tax credits (ADITC) used does not exceed $ 45 million; however, Idaho Power may seek approval from the IPUC to replenish the total amount of additional ADITC it is permitted to amortize and if there are no remaining amounts of additional ADITC authorized to be amortized, the remainder of the revenue sharing provisions below would not be applicable until additional ADITC is replenished. If Idaho Power’s annual Idaho ROE in any year exceeds 10.0 percent, the amount of earnings exceeding 10.0 percent and up to and including 10.5 percent will be allocated 80 percent to Idaho Power’s Idaho customers as a rate reduction to be effective at the time of the subsequent year’s PCA, and 20 percent to Idaho Power. If Idaho Power’s annual Idaho ROE in any year exceeds 10.5 percent, the amount of earnings exceeding a 10.5 percent Idaho ROE will be allocated 55 percent to Idaho Power’s Idaho customers as a rate reduction to be effective at the time of the subsequent year’s PCA, 25 percent to Idaho Power’s Idaho customers in the form of a reduction to the pension regulatory asset balancing account (to reduce the amount to be collected in the future from Idaho customers) and 20 percent to Idaho Power. In the event the IPUC approves a change to Idaho Power's allowed annual Idaho ROE as part of a general rate case proceeding effective on or after January 1, 2020, the Idaho ROE thresholds will be adjusted on a prospective basis as follows: (a) the Idaho ROE under which Idaho Power will be permitted to amortize an additional amount of ADITC will be set at 95 percent of the newly authorized Idaho ROE, (b) sharing with customers on an 80 percent basis as a customer rate reduction will begin at the newly authorized Idaho ROE, and (c) sharing with customers on an 80 percent basis but allocated 55 percent to a rate reduction, and 25 percent to a pension expense deferral regulatory asset, will begin at 105 percent of the newly authorized Idaho ROE. The May 2018 Idaho Tax Reform Settlement Stipulation did not impose a moratorium on Idaho Power filing a general rate case or other form of rate proceeding in Idaho during its respective term. 101 Table of Contents In 2022, Idaho Power recorded no provision against current revenue for sharing with customers or additional amortization of ADITC, as its full-year Idaho ROE was between 9.4 percent and 10.0 percent. In 2021, Idaho Power recorded a $ 0.6 million provision against current revenue for sharing with customers, as its Idaho ROE exceeded 10.0 percent. Accordingly, 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. 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. 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 allows for regulatory accounting entries and establishes balancing accounts (recorded as regulatory assets or liabilities on Idaho Power’s and IDACORP’s consolidated balance sheets) to track differences between amounts recovered in rates and actual incremental costs and benefits associated with Idaho Power’s cessation of coal-fired operations at the Jim Bridger plant. The incremental costs and benefits include the revenue requirement associated with the incremental Jim Bridger plant coal-related investments made from 2012 through the end of 2020, forecasted coal-related investments, and near-term decommissioning costs, offset by other operations and maintenance (O&M) cost savings. The Bridger Order deemed all coal-related investments at the Jim Bridger plant from 2012 through 2020 to be prudent for recovery. In the Bridger Order, the IPUC reduced Idaho Power's requested rate increase from 2.1 percent in its amended filing to 1.5 percent, a reduction from a requested $ 27.1 million to $ 18.8 million annually. The Bridger Order provides that any uncollected amount resulting from the reduction in the rate increase will be recorded in the balancing account for future recovery with no carrying charge. Idaho Power anticipates making future filings with the IPUC that may result in periodic adjustments to rates to true up variances between revenue collections and actual revenue requirement amounts. The Bridger Order allows Idaho Power to earn a return on and recover through 2030 the net book value of coal-related assets at the Jim Bridger plant as of December 31, 2020, as well as forecasted coal-related investments, which resulted in Idaho Power's deferral of certain depreciation expense during the full year of 2022. The deferral and impacts of the Bridger Order resulted in an increase in net income for 2022 of approximately $ 20 million. Other Notable Idaho Regulatory Matters Fixed Cost Adjustment: The Idaho jurisdiction fixed cost adjustment (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. Under Idaho Power's current rate design, recovery of a portion of fixed costs is included in the variable kWh charge, which may result in over-collection or under-collection of fixed costs. To return over-collection to customers or to collect under-collection from customers, the FCA mechanism allows Idaho Power 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 during the year. The IPUC has discretion to cap the annual increase in the FCA recovery at 3 percent of base revenue, with any excess deferred for collection in a subsequent year. 102 Table of Contents The following table summarizes FCA amounts approved for collection in the prior three FCA years: FCA Year Period Rates in Effect Annual Amount (in millions) 2021 June 1, 2022-May 31, 2023 $ 35.2 2020 June 1, 2021-May 31, 2022 $ 38.3 2019 June 1, 2020-May 31, 2021 $ 35.5 Wildfire Mitigation Cost Recovery: In June 2021, the IPUC authorized Idaho Power to defer for future amortization incremental O&M and depreciation expense for certain capital investments necessary to implement Idaho Power's Wildfire Mitigation Plan (WMP). The IPUC also authorized Idaho Power to record these deferred expenses as a regulatory asset until Idaho Power 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 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 from 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. Notable Oregon Regulatory Matters Oregon Base Rate Changes: Oregon base rates were most recently established in a general rate case in 2012. In February 2012, the Public Utility Commission of Oregon (OPUC) issued an order approving a settlement stipulation that provided for a $ 1.8 million base rate increase, a return on equity of 9.9 percent, and an overall rate of return of 7.757 percent in the Oregon jurisdiction. New rates in conformity with the settlement stipulation were effective March 1, 2012. Subsequently, in September 2012, the OPUC issued an order approving an approximately $ 3.0 million increase in annual Oregon jurisdiction base rates, effective October 1, 2012, for inclusion of the Langley Gulch power plant in Idaho Power's Oregon rate base. 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. In May 2018, the OPUC issued an order approving a settlement stipulation that provides for an annual $ 1.5 million reduction to Oregon customer base rates beginning June 1, 2018 through May 31, 2020, related to income tax reform. In May 2020, the OPUC issued an order to approve the quantification of $ 1.5 million in annualized Oregon jurisdictional benefits associated with federal and state income tax changes resulting from tax reform and adjusting customer rates to reflect this amount, effective June 1, 2020, until its next general rate case or other proceeding where the tax-related revenue requirement components are reflected in rates. The OPUC has also approved settlement stipulations that provide for the accelerated cost recovery of jointly-owned North Valmy unit 1 through 2019 and unit 2 through 2025. The net rate impact of the Oregon settlement stipulations is immaterial. Federal Regulatory Matters - Open Access Transmission Tariff Rates Idaho Power uses a formula rate for transmission service provided under its OATT, which allows transmission rates to be updated annually based primarily on actual financial and operational data Idaho Power files with the FERC and allows Idaho 103 Table of Contents Power to recover costs associated with its transmission system. Idaho Power's OATT rates submitted to the FERC in Idaho Power's four most recent annual OATT Final Informational Filings were as follows: Applicable Period OATT Rate (per kW-year) October 1, 2022 to September 30, 2023 $ 31.42 October 1, 2021 to September 30, 2022 $ 31.19 October 1, 2020 to September 30, 2021 $ 29.95 October 1, 2019 to September 30, 2020 $ 27.32 Idaho Power's current OATT rate is based on a net annual transmission revenue requirement of $ 132.7 million, which represents the OATT formulaic determination of Idaho Power's net cost of providing OATT-based transmission service. 4. REVENUES The following table provides a summary of electric utility operating revenues for IDACORP and Idaho Power (in thousands): Year Ended December 31, 2022 2021 2020 Electric utility operating revenues: Revenue from contracts with customers $ 1,557,974 $ 1,382,653 $ 1,286,637 Alternative revenue programs and derivative revenues 83,066 72,757 60,703 Total electric utility operating revenues $ 1,641,040 $ 1,455,410 $ 1,347,340 Revenues from Contracts with Customers Revenues from contracts with customers are primarily related to Idaho Power’s regulated tariff-based sales of energy or related services. Generally, tariff-based sales do not involve a written contract, but are classified as revenues from contracts with customers. Idaho Power assesses revenues on a contract-by-contract basis to determine the nature, amount, timing, and uncertainty, if any, of revenues being recognized. 104 Table of Contents The following table presents revenues from contracts with customers disaggregated by revenue source (in thousands): Year Ended December 31, 2022 2021 2020 Revenues from contracts with customers: Retail revenues: 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 Less: FCA mechanism revenues (1) ( 23,517 ) ( 36,242 ) ( 35,952 ) 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 from contracts with customers 28,490 27,804 27,133 Total revenues from contracts with customers $ 1,557,974 $ 1,382,653 $ 1,286,637 (1) The FCA mechanism is an alternative revenue program in the Idaho jurisdiction 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 $ 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. Retail Revenues: Idaho Power’s retail revenues primarily relate to the sale of electricity to customers based on regulated tariff-based prices. Idaho Power recognizes retail revenues in amounts for which it has the right to invoice the customer in the period when energy is delivered or services are provided to customers. The total energy price generally has a fixed component related to having service available and a usage-based component related to the demand, delivery, and consumption of energy. The revenues recognized reflect the consideration Idaho Power expects to be entitled to in exchange for energy and services. Retail customers are classified as residential, commercial, industrial, or irrigation. 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 retail customer rates are based on Idaho Power’s cost of service and are determined through general rate case proceedings, settlement stipulations, and other filings with the IPUC and OPUC. Changes in rates and changes in customer demand are typically the primary causes of fluctuations in retail revenue from period to period. The primary influences on changes in customer demand for electricity are weather, economic conditions (including growth in the number of Idaho Power customers), and energy efficiency. Idaho Power's utility revenues are not earned evenly during the year. Retail revenues are billed monthly based on meter readings taken throughout the month. Payments for amounts billed are generally due from the customer within 15 days of billing. Idaho Power accrues estimated unbilled revenues for energy or related services delivered to customers but not yet billed at period-end based on actual meter readings at period-end and estimated rates. Residential Customers : Idaho Power’s energy sales to residential customers typically peak during the summer cooling season and winter heating season. Extreme temperatures increase sales to residential customers who use electricity for cooling and heating, compared with normal temperatures. Idaho Power's rate structure provides for higher rates during the summer when overall system loads are at their highest, and includes tiers such that rates increase as a customer's consumption level increases. These seasonal and tiered rate structures contribute to the seasonal fluctuations in revenues and earnings. Economic and demographic conditions can also affect residential customer demand; strong job growth and population growth in Idaho Power’s service area have led to higher customer growth in recent years. Residential demand is also impacted by energy efficiency initiatives. Idaho Power’s FCA mechanism mitigates some of the fluctuations caused by weather and energy efficiency initiatives. 105 Table of Contents Commercial Customers : Most businesses are included in Idaho Power's commercial customer class, as are small industrial companies, and public street and highway lighting accounts. Idaho Power’s commercial customers are less influenced by weather conditions than residential customers, although weather does still affect commercial customer energy use. Economic conditions, including manufacturing activity levels, and energy efficiency initiatives also affect energy use of commercial customers. Industrial Customers : Industrial customers consist of large industrial companies, including special contract customers. Energy use of industrial customers is primarily driven by economic conditions, with weather having little impact on this customer class. Irrigation Customers : Irrigation customers use electricity to operate irrigation pumps, primarily during the agricultural growing season. The amount and timing of precipitation as well as temperature levels affect the timing and amounts of sales to irrigation customers, with increased precipitation during the agricultural growing season generally resulting in decreased sales. Provision for Sharing : Idaho Power has regulatory settlement stipulations in Idaho that provide for the potential sharing between Idaho Power and its Idaho customers of Idaho-jurisdictional earnings in excess of 10.0 percent of Idaho ROE. Based on full-year 2022 Idaho ROE, Idaho Power recorded no provision against current revenues for sharing of earnings with customers for 2022. Idaho Power recorded $ 0.6 million of sharing of earnings with customers during 2021 and no provision during 2020. The regulatory settlement stipulations are described further in Note 3 - "Regulatory Matters." Wholesale Energy Sales: As a public utility under the Federal Power Act (FPA), Idaho Power has the authority to charge market-based rates for wholesale energy sales under its FERC tariff. Idaho Power’s wholesale electricity sales are primarily to utilities and power marketers and are predominantly short-term and consist of a single performance obligation satisfied as energy is transferred to the counterparty. Idaho Power's wholesale energy sales depend largely on the availability of generation resources in excess of the amount necessary to serve customer loads as well as adequate market power prices and demand at the time when those resources are available. A reduction in any of those factors may lead to lower wholesale energy sales. Transmission Wheeling-Related Revenues: As a public utility under the FPA, Idaho Power has the authority to provide cost-based wholesale and retail access transmission services under its OATT. Services under the OATT are offered on a nondiscriminatory basis such that all potential customers have an equal opportunity to access the transmission system. Idaho Power’s transmission revenue is primarily related to third parties reserving capacity on Idaho Power’s transmission system to transmit electricity through Idaho Power’s service area. Reservations are predominantly short-term contracts or on-demand when available, but may be part of a long-term capacity contract. Transmission wheeling-related revenues consist of a single performance obligation satisfied as capacity on Idaho Power’s transmission system is provided to the third party. Transmission wheeling-related revenues are affected by changes in Idaho Power’s OATT rate and customer demand. Demand for transmission services can be affected by regional market factors, such as loads and generation of utilities in Idaho Power’s region. Energy Efficiency Program Revenues: Idaho Power collects most of its energy efficiency program costs through an energy efficiency rider on customer bills. The rider collections are deferred until expenditures are incurred. Energy efficiency program expenditures funded through the rider are reported as an operating expense with an equal amount recognized in revenues, resulting in no net impact on earnings. Fewer energy efficiency projects were completed in 2021 and 2022 due mostly to impacts of the COVID-19 public health crisis and other economic conditions which decreased energy efficiency program revenues compared with prior years. The cumulative variance between expenditures and amounts collected through the rider is recorded as a regulatory asset or liability. 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. Alternative Revenue Programs and Other Revenues While revenues from contracts with customers make up most of Idaho Power’s revenues, the IPUC has authorized the use of an additional regulatory mechanism, the Idaho FCA mechanism, which may increase or decrease tariff-based customer rates. The Idaho FCA mechanism is described in Note 3 - "Regulatory Matters." The FCA mechanism revenues include only the initial recognition of FCA revenues when they meet the regulator-specified conditions for recognition. Revenue from contracts with customers excludes the portion of the tariff price representing FCA revenues that Idaho Power initially recorded in prior periods when revenues met regulator-specified conditions. When Idaho Power includes those amounts in the price of utility service and billed to customers, Idaho Power records such amounts as recovery of the associated regulatory asset or liability and not as revenues. 106 Table of Contents Derivative revenues include gains from settled electricity swaps and sales of electricity under forward sales contracts that are bundled with renewable energy credits. Related to these forward sales, Idaho Power simultaneously enters into forward purchases of electricity for the same quantity at the same location, which are recorded in purchased power on the consolidated statements of income. For more information on settled electricity swaps, see Note 15 - "Derivative Financial Instruments." The table below presents the FCA mechanism revenues and derivative revenues (in thousands): Year Ended December 31, 2022 2021 2020 Alternative revenue programs and derivative revenues: FCA mechanism revenues $ 23,517 $ 36,242 $ 35,952 Derivative revenues 59,549 36,515 24,751 Total alternative revenue programs and derivative revenues $ 83,066 $ 72,757 $ 60,703 IDACORP's Other Operating Revenues Other operating revenues on IDACORP's consolidated statements of income are primarily comprised of revenues from IDACORP’s subsidiary, Ida-West. Ida-West operates small hydropower generation projects that satisfy the requirements of PURPA. 107 Table of Contents 5. LONG-TERM DEBT The following table summarizes IDACORP's and Idaho Power's long-term debt at December 31 (in thousands of dollars): 2022 2021 First mortgage bonds: 2.50 % Series due 2023 $ 75,000 $ 75,000 1.90 % Series due 2030 80,000 80,000 6.00 % Series due 2032 100,000 100,000 4.99 % Series due 2032 23,000 — 5.50 % Series due 2033 70,000 70,000 5.50 % Series due 2034 50,000 50,000 5.875 % Series due 2034 55,000 55,000 5.30 % Series due 2035 60,000 60,000 6.30 % Series due 2037 140,000 140,000 6.25 % Series due 2037 100,000 100,000 4.85 % Series due 2040 100,000 100,000 4.30 % Series due 2042 75,000 75,000 5.06 % Series due 2042 25,000 — 4.00 % Series due 2043 75,000 75,000 3.65 % Series due 2045 250,000 250,000 4.05 % Series due 2046 120,000 120,000 4.20 % Series due 2048 450,000 450,000 Total first mortgage bonds 1,848,000 1,800,000 Pollution control revenue bonds: 1.45 % Series due 2024 (1) 49,800 49,800 1.70 % Series due 2026 (1) 116,300 116,300 Variable Rate Series 2000 (redeemed in 2022) — 4,360 Total pollution control revenue bonds 166,100 170,460 Floating Rate Term Loan Facility due 2024 150,000 — American Falls Variable Rate bond guarantee due 2025 19,885 19,885 Unamortized premium/discount and issuance costs 10,160 10,295 Total IDACORP and Idaho Power outstanding debt (2) 2,194,145 2,000,640 Current maturities of long-term debt — — Total long-term debt $ 2,194,145 $ 2,000,640 (1) Humboldt County and Sweetwater County Pollution Control Revenue Bonds are secured by the first mortgage bonds, bringing the total first mortgage bonds outstanding at December 31, 2022, to $ 2.014 billion . (2) At December 31, 2022 and 2021, the overall effective cost rate of Idaho Power's outstanding debt was 4.60 percent and 4.40 percent, respectively. At December 31, 2022, the maturities for the aggregate amount of IDACORP and Idaho Power long-term debt outstanding were as follows (in thousands of dollars): 2023 2024 2025 2026 2027 Thereafter $ 75,000 $ 199,800 $ 19,885 $ 116,300 $ — $ 1,773,000 Long-Term Debt Issuances, Maturities, and Redemptions On its consolidated balance sheet as of December 31, 2022, Idaho Power classified the $ 75 million in principal amount of 2.50% first mortgage bonds, Series I, maturing on April 1, 2023, as long-term debt based upon Idaho Power's intent and ability to refinance the bonds on a long-term basis. 108 Table of Contents On December 22, 2022, Idaho Power entered into a Bond Purchase Agreement (Bond Purchase Agreement) with certain institutional purchasers relating to the sale by Idaho Power of $ 170 million of first mortgage bonds secured medium-term-term notes, Series N (Series N Notes), as described in more detail below. At December 31, 2022, $ 48 million in principal amount of Series N Notes had been issued and was out standing. On December 1, 2022, Idaho Power redeemed at par $ 4.36 million in principal amount of variable-rate pollution control revenue bonds due in 2027. On March 4, 2022, Idaho Power entered into a floating rate term loan credit agreement (Term Loan Facility). The Term Loan Facility is a two-year senior unsecured term loan facility. It provided for the issuance of loans not to exceed the aggregate principal amount of $ 150 million with a maturity date of March 4, 2024. The interest rates for the floating rate advances under the Term Loan Facility were based on the highest of (1) the prime commercial lending rate of the lender acting as administrative agent, (2) the federal funds rate, plus 0.5 percent, (3) Term Secured Overnight Financing Rate administered by the Federal Reserve Bank of New York (SOFR) (as defined in the Term Loan Facility) for a one-month tenor that is published by CME Group Benchmark Administration limited (or the successor administrator of such rate), plus 1 percent, and (4) zero percent. The interest rates for SOFR Advances (as defined in the Term Loan Facility) were based on the Term SOFR rate for the borrower-selected period plus the Applicable Margin. The “Applicable Margin” is based on Idaho Power's senior unsecured non-credit enhanced long-term indebtedness credit rating, as set forth on a schedule to the Term Loan Facility. At December 31, 2022, $ 150 million in principal amount of one month term SOFR advances had been drawn and was outstanding on the Term Loan Facility. 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. Authority from the IPUC is effective through May 31, 2025, subject to extensions upon request to the IPUC. The OPUC's and WPSC's orders do not impose a time limitation for issuances, but the OPUC order does impose a number of other conditions, including a requirement that the interest rates for the debt securities or first mortgage bonds fall within either (a) designated spreads over comparable U.S. Treasury rates or (b) a maximum interest rate limit of 8.0 percent. At December 31, 2022, $1.15 billion remains available for debt issuance under the regulatory orders, prior to the commitment to draw the remaining $122 million of Series N Notes in March 2023. In May 2022, Idaho Power filed a shelf registration statement with the SEC, which became effective upon filing, for the offer and sale of an unspecified principal amount of its first mortgage bonds. The issuance of first mortgage bonds requires that Idaho Power meet interest coverage and security provisions set forth in Idaho Power's Indenture of Mortgage and Deed of Trust, dated as of October 1, 1937, as amended and supplemented from time to time (Indenture). Future issuances of first mortgage bonds are subject to satisfaction of covenants and security provisions set forth in the Indenture, market conditions, regulatory authorizations, and covenants contained in other financing agreements. In June 2022, Idaho Power entered into a selling agency agreement with six banks named in the agreement in connection with the potential issuance and sale from time to time of up to $1.2 billion aggregate principal amount of first mortgage bonds, secured medium term notes, Series M (Series M Notes), under Idaho Power’s Indenture. Also in June 2022, Idaho Power entered into the Fiftieth Supplemental Indenture, dated effective as of June 30, 2022, to the Indenture (Fiftieth Supplemental Indenture). The Fiftieth Supplemental Indenture provides for, among other items, the issuance of up to $1.2 billion in aggregate principal amount of Series M Notes pursuant to the Indenture. In October 2022, Idaho Power entered into the Fifty-first Supplemental Indenture to increase the limit of the amount of first mortgage bonds at any one time outstanding to $ 3.5 billion as provided in the Indenture. The amount issuable is also restricted by property, earnings, and other provisions of the Indenture and supplemental indentures to the Indenture. The Indenture requires that Idaho Power's net earnings be at least twice the annual interest requirements on all outstanding debt of equal or prior rank, including the bonds that Idaho Power may propose to issue. Under certain circumstances, the net earnings test does not apply, including the issuance of refunding bonds to retire outstanding bonds that mature in less than two years or that are of an equal or higher interest rate, or prior lien bonds. In December 2022, Idaho Power entered into the Bond Purcha se Agreement with certain institutional purchasers, relating to the sale by Idaho Power of $ 170 million in aggregate principal amount of Series N Notes. Also in December 2022, Idaho Power entered into the Fifty-second Supplemental Indenture, dated effective as of December 30, 2022, to the Indenture (Fifty-second 109 Table of Contents 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: • $ 23 million in aggregate principal amount of Idaho Power’s 4.99% first mortgage bonds due 2032, Series N Notes, Tranche 1 (Tranche 1 Bonds); • $ 25 million in aggregate principal amount of Idaho Power’s 5.06% first mortgage bonds due 2042, Series N Notes, Tranche 2 (Tranche 2 Bonds); • $ 60 million in aggregate principal amount of Idaho Power’s 5.06% first mortgage bonds due 2043, Series N Notes, Tranche 3 (Tranche 3 Bonds); and • $ 62 million in aggregate principal amount of Idaho Power’s 5.20% first mortgage bonds due 2053, Series N Notes, Tranche 4 (Tranche 4 Bonds). The Tranche 1 Bonds and Tranche 2 Bonds were issued on December 22, 2022, and Idaho Power has a commitment to issue the Tranche 3 Bonds and Tranche 4 Bonds on March 8, 2023, each under the Indenture . The mortgage of the Indenture secures all bonds issued under the Indenture equally and ratably, without preference, priority, or distinction. First mortgage bonds issued in the future will also be secured by the mortgage of the Indenture. The lien constitutes a first mortgage on all the properties of Idaho Power, subject only to certain limited exceptions including liens for taxes and assessments that are not delinquent and minor excepted encumbrances. Certain of the properties of Idaho Power are subject to easements, leases, contracts, covenants, workmen's compensation awards, and similar encumbrances and minor defects common to properties. The mortgage of the Indenture does not create a lien on revenues or profits, or notes or accounts receivable, contracts or choses in action, except as permitted by law during a completed default, securities, or cash, except when pledged, or merchandise or equipment manufactured or acquired for resale. The mortgage of the Indenture creates a lien on the interest of Idaho Power in property subsequently acquired, other than excepted property, subject to limitations in the case of consolidation, merger, or sale of all or substantially all of the assets of Idaho Power. The Indenture requires Idaho Power to spend or appropriate 15 percent of its annual gross operating revenues for maintenance, retirement, or amortization of its properties. Idaho Power may, however, anticipate or make up these expenditures or appropriations within the 5 years that immediately follow or precede a particular year. As of December 31, 2022, the maximum amount of additional first mortgage bonds Idaho Power could issue, which excludes commitments to issue that have not already funded, is approximately $ 1.5 billion, though as of the date of this report the amount is limited to the $1.15 billion amount authorized by the IPUC, OPUC, and WPSC. Separately, the Indenture also limits the amount of additional first mortgage bonds that Idaho Power may issue to the sum of (a) the principal amount of retired first mortgage bonds and (b) 60 percent of total unfunded property additions, as defined in the Indenture. As of December 31, 2022, Idaho Power could issue approximately $ 2.3 billion of additional first mortgage bonds based on retired first mortgage bonds and total unfunded property additions. 6. COMMON STOCK IDACORP Common Stock The following table summarizes IDACORP common stock transactions during the last three years and shares reserved at December 31, 2022: Shares issued Shares reserved 2022 2021 2020 December 31, 2022 Balance at beginning of year 50,516,479 50,461,885 50,420,017 Continuous equity program (inactive) — — — 3,000,000 Dividend reinvestment and stock purchase plan — — — 2,840,117 Employee savings plan — — — 3,567,954 Long-term incentive and compensation plan (1) 45,413 54,594 41,868 1,214,854 Balance at end of year 50,561,892 50,516,479 50,461,885 (1) During 2022, 2021, and 2020, IDACORP granted 73,131 , 76,147 , and 75,030 restricted stock unit awards, respectively, to employees and 12,021 , 14,025 , and 10,296 shares of common stock, respectively, to directors. During 2022, 2021, and 2020 IDACORP issued 45,413 , 54,594 , and 41,868 shares of common stock, respectively, using original issuances of shares pursuant to the IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan, including 8,674 , 12,784 , and 8,938 shares of common stock, respectively, issued to members of the board of directors. 110 Table of Contents Restrictions on Dividends Idaho Power’s ability to pay dividends on its common stock held by IDACORP and IDACORP’s ability to pay dividends on its common stock are limited to the extent payment of such dividends would violate the covenants in their respective Credit Facilities or Idaho Power’s Revised Code of Conduct. A covenant under IDACORP’s credit facility and Idaho Power’s credit facility requires IDACORP and Idaho Power to maintain leverage ratios of consolidated indebtedness to consolidated total capitalization, as defined therein, of no more than 65 percent at the end of each fiscal quarter. At December 31, 2022, the leverage ratios for IDACORP and Idaho Power were 45 percent and 46 percent, respectively. Based on these restrictions, IDACORP’s and Idaho Power’s dividends were limited to $ 1.6 billion and $ 1.4 billion, respectively, at December 31, 2022. There are additional facility covenants, subject to exceptions, that prohibit or restrict the sale or disposition of property without consent and any agreements restricting dividend payments to IDACORP and Idaho Power from any material subsidiary. At December 31, 2022, IDACORP and Idaho Power were in compliance with those covenants. Idaho Power’s Revised Policy and Code of Conduct relating to transactions between and among Idaho Power, IDACORP, and other affiliates, which was approved by the IPUC in April 2008, provides that Idaho Power will not pay any dividends to IDACORP that will reduce Idaho Power’s common equity capital below 35 percent of its total adjusted capital without IPUC approval. At December 31, 2022, Idaho Power's common equity capital was 55 percent of its total adjusted capital. Further, Idaho Power must obtain approval from the OPUC before it can directly or indirectly loan funds or issue notes or give credit on its books to IDACORP. Idaho Power’s articles of incorporation contain restrictions on the payment of dividends on its common stock if preferred stock dividends are in arrears. As of the date of this report, Idaho Power has no preferred stock outstanding. In addition to contractual restrictions on the amount and payment of dividends, the FPA prohibits the payment of dividends from "capital accounts." The term "capital account" is undefined in the FPA or its regulations, but Idaho Power does not believe the restriction would limit Idaho Power's ability to pay dividends out of current year earnings or retained earnings. 7. SHARE-BASED COMPENSATION IDACORP has one share-based compensation plan — the 2000 Long-Term Incentive and Compensation Plan (LTICP). The LTICP (for officers, key employees, and directors) permits the grant of stock options, restricted stock and restricted stock units, performance shares and performance-based units, and several other types of share-based awards. At December 31, 2022, the maximum number of shares available under the LTICP was 350,763 . Restricted Stock Unit and Performance-Based Unit Awards Restricted stock unit awards have three -year vesting periods, entitle the recipients to dividend equivalents, and units do not have voting rights until the units are vested and settled in shares. Unvested awards are restricted as to disposition and subject to forfeiture under certain circumstances. The fair value of these awards is based on the closing market price of common stock on the grant date and is charged to compensation expense over the vesting period, reduced for any forfeitures during the vesting period. Performance-based unit awards have three-year vesting periods and do not have voting rights until the units are vested and settled in shares. Unvested awards are restricted as to disposition, subject to forfeiture under certain circumstances, and subject to the attainment of specific performance conditions over the three-year vesting period. The performance conditions are two equally-weighted metrics, cumulative earnings per share (CEPS) and total shareholder return (TSR) relative to a peer group. Depending on the level of attainment of the performance conditions and the year issued, the final number of shares awarded can range from zero to 200 percent of the target award. Dividend equivalents are accrued during the vesting period and paid out based on the final number of shares awarded. The grant-date fair value of the CEPS portion is based on the closing market value at the date of grant, reduced by the loss in time-value of the estimated future dividend payments. The fair value of this portion of the awards is charged to compensation expense over the requisite service period based on the estimated achievement of performance targets, reduced for any forfeitures during the vesting period. The grant-date fair value of the TSR portion is estimated using the market value at the date of grant and a statistical model that incorporates the probability of meeting performance targets based on historical returns relative to the peer group. The fair value of this portion of the awards is charged to compensation expense over the requisite service period, provided the requisite service period is rendered, regardless of the level of TSR metric attained. 111 Table of Contents A summary of restricted stock units and performance-based units award activity is presented below. Idaho Power unit amounts represent the portion of IDACORP amounts related to Idaho Power employees: IDACORP Idaho Power Number of Units Weighted-Average Grant Date Fair Value Number of Units Weighted-Average Grant Date Fair Value Nonvested units at January 1, 2022 175,256 $ 99.61 174,209 $ 99.61 Units granted 88,512 100.76 87,685 100.76 Units forfeited ( 8,791 ) 97.35 ( 8,144 ) 97.29 Units vested ( 66,509 ) 100.59 ( 65,934 ) 100.59 Nonvested units at December 31, 2022 188,468 $ 99.92 187,816 $ 99.91 The total fair value of shares vested was $ 6.9 million in 2022, $ 6.7 million in 2021, and $ 10.5 million in 2020. At December 31, 2022, IDACORP had $ 8.3 million of total unrecognized compensation cost related to nonvested share-based compensation, nearly all of which was Idaho Power's share. These costs are expected to be recognized over a weighted-average period of 1.7 years. IDACORP uses original issue shares for these awards. In 2022, a total of 12,021 shares were awarded to directors at an average grant date fair value of $ 103.95 per share. Directors elected to defer receipt of 4,616 of these shares, which are being held as deferred stock units with dividend equivalents reinvested in additional stock units. Compensation Expense: The following table shows the compensation cost recognized in income and the tax benefits resulting from the LTICP, as well as the amounts allocated to Idaho Power for those costs associated with Idaho Power’s employees (in thousands of dollars): IDACORP Idaho Power 2022 2021 2020 2022 2021 2020 Compensation cost $ 10,279 $ 8,583 $ 7,416 $ 10,204 $ 8,497 $ 7,339 Income tax benefit 2,646 2,209 1,909 2,627 2,187 1,889 No equity compensation costs have been capitalized. These costs are primarily reported within "Other operations and maintenance" expense on the consolidated statements of income. 8. EARNINGS PER SHARE The following table presents the computation of IDACORP’s basic and diluted earnings per share for the years ended December 31, 2022, 2021, and 2020 (in thousands, except for per share amounts): Year Ended December 31, 2022 2021 2020 Numerator: Net income attributable to IDACORP, Inc. $ 258,982 $ 245,550 $ 237,417 Denominator: Weighted-average common shares outstanding - basic 50,658 50,599 50,538 Effect of dilutive securities 41 46 34 Weighted-average common shares outstanding - diluted 50,699 50,645 50,572 Basic earnings per share $ 5.11 $ 4.85 $ 4.70 Diluted earnings per share $ 5.11 $ 4.85 $ 4.69 112 Table of Contents 9. COMMITMENTS Purchase Obligations At December 31, 2022, Idaho Power had the following long-term commitments relating to purchases of energy, capacity, transmission rights, and fuel (in thousands of dollars): 2023 2024 2025 2026 2027 Thereafter Cogeneration and power production $ 321,321 $ 327,054 $ 319,588 $ 319,852 $ 322,043 $ 2,597,922 Fuel 144,856 31,559 8,239 8,492 8,659 50,884 As of December 31, 2022, Idaho Power had 1,137 megawatt (MW) nameplate capacity of PURPA-related projects on-line, with an additional 75 MW nameplate capacity of projects projected to be on-line by 2024. The power purchase contracts for these projects have original contract terms ranging from one to 35 years. Idaho Power's expenses associated with PURPA-related projects were approximately $ 189 million in 2022, $ 200 million in 2021, and $ 194 million in 2020. In January 2023, Idaho Power entered into an additional new non-PURPA-qualifying solar facility power purchase contract, subject to regulatory approval, which increased Idaho Power's contractual purchase obligations by approximately $ 228 million over the 25-year term of the contract. The facility is scheduled to be online in June 2024. As of December 31, 2022, Idaho Power had a remaining $ 95 million commitment related to two contracts to acquire and own battery storage systems expected to be in service in 2023. Also, in January 2023, Idaho Power entered into a commitment to acquire and own a 60 MW battery storage system for $ 129 million, due upon its expected completion in 2024. Idaho Power also has the following long-term commitments (in thousands of dollars): 2023 2024 2025 2026 2027 Thereafter Joint-operating agreement payments (1) $ 3,243 $ 3,243 $ 3,243 $ 3,243 $ 3,243 $ 16,217 Easements and other payments 2,075 2,119 2,163 2,209 2,255 12,005 Maintenance, service, and materials agreements (1) 174,619 11,931 9,652 7,623 11,660 38,729 FERC and other industry-related fees (1) 17,402 15,619 15,562 15,839 15,348 75,272 (1) Approximately $ 34 million, $ 18 million, and $ 152 million of the obligations included in joint-operating agreement payments, maintenance, service, and materials agreements, and FERC and other industry-related fees, respectively, have contracts that do not specify terms related to expiration. As these contracts are presumed to continue indefinitely, ten years of information, estimated based on current contract terms, has been included in the table for presentation purposes. At IDACORP, long-term purchase commitments of $ 2 million are mostly comprised of other long-term liabilities at Ida-West. At December 31, 2022, IDACORP had a commitment to invest an additional $ 7.5 million into a private market investment fund, which is expected to occur over the next few years. IDACORP’s expense for operating leases was not material for the years ended 2022, 2021, and 2020. Guarantees 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, 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 specifically for the purpose of paying these reclamation costs. At December 31, 2022, the value of the reclamation trust fund was $ 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. IDACORP and Idaho Power enter into financial agreements and power purchase and sale agreements that include indemnification provisions relating to various forms of claims or liabilities that may arise from the transactions contemplated by these agreements. Generally, a maximum obligation is not explicitly stated in the indemnification provisions and, therefore, the overall maximum amount of the obligation under such indemnification provisions cannot be reasonably estimated. IDACORP 113 Table of Contents and Idaho Power periodically evaluate the likelihood of incurring costs under such indemnities based on their historical experience and the evaluation of the specific indemnities. As of December 31, 2022, management believes the likelihood is remote that IDACORP or Idaho Power would be required to perform under such indemnification provisions or otherwise incur any significant losses with respect to such indemnification obligations. Neither IDACORP nor Idaho Power has recorded any liability on their respective consolidated balance sheets with respect to these indemnification obligations. 10. CONTINGENCIES IDACORP and Idaho Power have in the past and expect in the future to become involved in various claims, controversies, disputes, and other contingent matters, some of which involve litigation and regulatory or other contested proceedings. The ultimate resolution and outcome of litigation and regulatory proceedings is inherently difficult to determine, particularly where (a) the remedies or penalties sought are indeterminate, (b) the proceedings are in the early stages or the substantive issues have not been well developed, or (c) the matters involve complex or novel legal theories or a large number of parties. In accordance with applicable accounting guidance, IDACORP and Idaho Power, as applicable, establish an accrual for legal proceedings when those matters proceed to a stage where they present loss contingencies that are both probable and reasonably estimable. If the loss contingency at issue is not both probable and reasonably estimable, IDACORP and Idaho Power do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable. As of the date of this report, IDACORP's and Idaho Power's accruals for loss contingencies are not material to their financial statements as a whole; however, future accruals could be material in a given period. IDACORP's and Idaho Power's determination is based on currently available information, and estimates presented in financial statements and other financial disclosures involve significant judgment and may be subject to significant uncertainty. For matters that affect Idaho Power's operations, Idaho Power intends to seek, to the extent permissible and appropriate, recovery through the ratemaking process of costs incurred, although there is no assurance that such recovery would be granted. IDACORP and Idaho Power are parties to legal claims and legal, tax, and regulatory actions and proceedings in the ordinary course of business and, as noted above, record an accrual for associated loss contingencies when they are probable and reasonably estimable. In connection with its utility operations, Idaho Power is subject to claims by individuals, entities, and governmental agencies for damages for alleged personal injury, property damage, and economic losses, relating to the company’s provision of electric service and the operation of its generation, transmission, and distribution facilities. Some of those claims relate to electrical contacts, service quality, property damage, and wildfires. In recent years, utilities in the western United States have been subject to significant liability for personal injury, loss of life, property damage, trespass, and economic losses, and in some cases, punitive damages and criminal charges, associated with wildfires that originated from utility property, most commonly transmission and distribution lines. Idaho Power has also regularly received claims by governmental agencies and private landowners for damages for fires allegedly originating from Idaho Power’s transmission and distribution system. As of the date of this report, the companies believe that resolution of existing claims will not have a material adverse effect on their respective consolidated financial statements. Idaho Power is also actively monitoring various pending environmental regulations and executive orders related to environmental matters 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 estimate the financial impact of these regulations. 11. BENEFIT PLANS Idaho Power sponsors defined benefit and other postretirement benefit plans that cover the majority of its employees. Idaho Power also sponsors a defined contribution 401(k) employee savings plan and provides certain post-employment benefits. Pension Plans Idaho Power has pension plans–a noncontributory defined benefit pension plan (pension plan) and two nonqualified defined benefit pension plans for certain senior management employees called the Security Plan for Senior Management Employees I and Security Plan for Senior Management Employees II (together, SMSP). Idaho Power also has a nonqualified defined benefit pension plan for directors that was frozen in 2002. Remaining vested benefits from that plan are included with the SMSP in the disclosures below. The benefits under these plans are based on years of service and the employee's final average earnings. 114 Table of Contents The following table summarizes the changes in benefit obligations and plan assets of these plans (in thousands of dollars): Pension Plan SMSP 2022 2021 2022 2021 Change in projected benefit obligation: Benefit obligation at January 1 $ 1,346,530 $ 1,337,395 $ 133,012 $ 134,791 Service cost 52,025 54,202 1,185 813 Interest cost 39,670 37,317 3,897 3,557 Actuarial (gain) loss ( 438,297 ) ( 35,833 ) ( 32,009 ) 33 Benefits paid ( 46,159 ) ( 46,551 ) ( 6,109 ) ( 6,182 ) Projected benefit obligation at December 31 953,769 1,346,530 99,976 133,012 Change in plan assets: Fair value at January 1 984,464 871,603 — — Actual return on plan assets ( 138,577 ) 119,412 — — Employer contributions 40,000 40,000 — — Benefits paid ( 46,159 ) ( 46,551 ) — — Fair value at December 31 839,728 984,464 — — Funded status at end of year $ ( 114,041 ) $ ( 362,066 ) $ ( 99,976 ) $ ( 133,012 ) Amounts recognized in the balance sheet consist of: Other current liabilities $ — $ — $ ( 6,514 ) $ ( 6,226 ) Noncurrent liabilities ( 114,041 ) ( 362,066 ) ( 93,462 ) ( 126,786 ) Net amount recognized $ ( 114,041 ) $ ( 362,066 ) $ ( 99,976 ) $ ( 133,012 ) Amounts recognized in accumulated other comprehensive income consist of: Net loss $ 83,263 $ 322,908 $ 15,127 $ 51,365 Prior service cost 37 43 2,408 2,687 Subtotal 83,300 322,951 17,535 54,052 Less amount recorded as regulatory asset (1) ( 83,300 ) ( 322,951 ) — — Net amount recognized in accumulated other comprehensive income $ — $ — $ 17,535 $ 54,052 Accumulated benefit obligation $ 837,377 $ 1,120,036 $ 93,995 $ 121,591 (1) Changes in the funded status of the pension plan that would be recorded in accumulated other comprehensive income for an unregulated entity are recorded as a regulatory asset for Idaho Power as Idaho Power believes it is probable that an amount equal to the regulatory asset will be collected through the setting of future rates. The actuarial gains reflected in the benefit obligations for the pension and SMSP plans in 2022 are due primarily to increases in the assumed discount rates of both plans from December 31, 2021, to December 31, 2022. The actuarial gains reflected in the benefit obligations for the pension and SMSP plans in 2021 are due primarily to increases in the assumed discount rates of both plans from December 31, 2020 to December 31, 2021. For more information on discount rates, see “Plan Assumptions” below in this Note 11. As a non-qualified plan, the SMSP has no plan assets. However, Idaho Power has a Rabbi trust designated to provide funding for SMSP obligations. The Rabbi trust holds investments in marketable securities and corporate-owned life insurance. The recorded value of these investments was approximately $ 134.2 million and $ 117.1 million at December 31, 2022 and 2021, respectively, and is reflected in Investments and in Company-owned life insurance on the consolidated balance sheets. 115 Table of Contents The following table shows the components of net periodic pension cost for these plans (in thousands of dollars). For purposes of calculating the expected return on plan assets, the market-related value of assets is equal to the fair value of the assets. Pension Plan SMSP 2022 2021 2020 2022 2021 2020 Service cost $ 52,025 $ 54,202 $ 42,987 $ 1,185 $ 813 $ 213 Interest cost 39,670 37,317 40,013 3,897 3,557 4,350 Expected return on assets ( 72,348 ) ( 64,090 ) ( 56,239 ) — — — Amortization of net loss 12,273 23,796 17,325 4,229 4,205 3,734 Amortization of prior service cost 6 6 6 279 296 290 Net periodic pension cost 31,626 51,231 44,092 9,590 8,871 8,587 Regulatory deferral of net periodic pension cost (1) ( 30,197 ) ( 48,962 ) ( 42,042 ) — — — Previously deferred pension cost recognized (1) 17,154 17,154 17,154 — — — Net periodic pension cost recognized for financial reporting (1)(2) $ 18,583 $ 19,423 $ 19,204 $ 9,590 $ 8,871 $ 8,587 (1) Net periodic pension costs for the pension plan are recognized for financial reporting based upon the authorization of each regulatory jurisdiction in which Idaho Power operates. Under IPUC order, the Idaho portion of net periodic pension cost is recorded as a regulatory asset and is recognized in the income statement as those costs are recovered through rates. (2) Of total net periodic pension cost recognized for financial reporting $ 19.0 million, $ 17.8 million, and $ 15.9 million respectively, was recognized in "Other operations and maintenance" and $ 9.2 million, and $ 10.5 million, and $ 11.9 million respectively, was recognized in "Other (income) expense, net" on the consolidated statements of income of the companies for the twelve months ended December 31, 2022, 2021, and 2020. The following table shows the components of other comprehensive income (loss) for the plans (in thousands of dollars): Pension Plan SMSP 2022 2021 2020 2022 2021 2020 Actuarial (loss) gain during the year $ 227,372 $ 91,156 $ ( 107,399 ) $ 32,009 $ ( 33 ) $ ( 13,420 ) Plan amendment service cost — — — — — ( 130 ) Reclassification adjustments for: Amortization of net (gain) loss 12,273 23,796 17,325 4,229 4,205 3,734 Amortization of prior service cost 6 6 6 279 296 290 Adjustment for deferred tax effects ( 61,686 ) ( 29,590 ) 23,184 ( 9,399 ) ( 1,150 ) 2,452 Adjustment due to the effects of regulation ( 177,965 ) ( 85,368 ) 66,884 — — — Other comprehensive income (loss) recognized related to pension benefit plans $ — $ — $ — $ 27,118 $ 3,318 $ ( 7,074 ) The following table summarizes the expected future benefit payments of these plans (in thousands of dollars): 2023 2024 2025 2026 2027 2026-2030 Pension Plan $ 47,477 $ 48,972 $ 50,666 $ 52,490 $ 54,209 $ 298,823 SMSP 6,514 6,558 6,656 6,695 6,725 35,197 Idaho Power’s funding policy for the pension plan is to contribute at least the minimum required under the Employee Retirement Income Security Act of 1974 (ERISA) but not more than the maximum amount deductible for income tax purposes. In 2022, 2021, and 2020, Idaho Power elected to contribute more than the minimum required amounts in order to bring the pension plan to a more funded position, to reduce future required contributions, and to reduce Pension Benefit Guaranty Corporation premiums. As of the date of this report, IDACORP and Idaho Power have no estimated minimum required contributions to the pension plan for 2023. Depending on market conditions and cash flow considerations in 2023, Idaho Power could contribute up to $ 40 million to the pension plan during 2023 in order to help balance the regulatory collection of these expenditures with the amount and timing of contributions and to mitigate the cost of being in an underfunded position. 116 Table of Contents Postretirement Benefits Idaho Power maintains a defined benefit postretirement benefit plan (consisting of health care and death benefits) that covers all employees who were enrolled in the active-employee group plan at the time of retirement as well as their spouses and qualifying dependents. Retirees hired on or after January 1, 1999, have access to the standard medical option at full cost, with no contribution by Idaho Power. Benefits for employees who retire after December 31, 2002, are limited to a fixed amount, which has limited the growth of Idaho Power’s future obligations under this plan. The following table summarizes the changes in benefit obligation and plan assets (in thousands of dollars): 2022 2021 Change in accumulated benefit obligation: Benefit obligation at January 1 $ 74,075 $ 80,952 Service cost 1,071 1,063 Interest cost 2,112 2,059 Actuarial gain ( 21,845 ) ( 5,805 ) Benefits paid (1) ( 4,379 ) ( 4,194 ) Plan amendments 8,065 — Benefit obligation at December 31 59,099 74,075 Change in plan assets: Fair value of plan assets at January 1 41,464 41,311 Actual return on plan assets ( 6,586 ) 6,308 Employer contributions (1) ( 1,934 ) ( 1,961 ) Benefits paid (1) ( 4,379 ) ( 4,194 ) Fair value of plan assets at December 31 28,565 41,464 Funded status at end of year (included in noncurrent liabilities) $ ( 30,534 ) $ ( 32,611 ) (1) Contributions and benefits paid are each net of $ 2.9 million and $ 3.0 million of plan participant contributions for 2022 and 2021, respectively. Amounts recognized in accumulated other comprehensive income consist of the following (in thousands of dollars): 2022 2021 Net gain $ ( 20,896 ) $ ( 8,020 ) Prior service cost 7,849 80 Subtotal ( 13,047 ) ( 7,940 ) Less amount recognized in regulatory assets 13,047 7,940 Net amount recognized in accumulated other comprehensive income $ — $ — The net periodic postretirement benefit cost was as follows (in thousands of dollars): 2022 2021 2020 Service cost $ 1,071 $ 1,063 $ 1,029 Interest cost 2,112 2,059 2,493 Expected return on plan assets ( 2,351 ) ( 2,395 ) ( 2,404 ) Immediate recognition of loss from temporary deviation (1) — 4,736 — Amortization of net loss ( 31 ) — — Amortization of prior service cost 295 47 47 Net periodic postretirement benefit cost $ 1,096 $ 5,510 $ 1,165 (1) In 2021, a loss associated with a temporary deviation from the cost-sharing provisions of the substantive plan was recognized in "Other (income) expense, net" on the consolidated statements of income of the companies. 117 Table of Contents The following table shows the components of other comprehensive income for the plan (in thousands of dollars): 2022 2021 2020 Actuarial gain (loss) during the year $ 12,908 $ 9,718 $ ( 6,515 ) Prior service cost arising during the year ( 8,065 ) — — Reclassification adjustments for: Amortization of net loss ( 31 ) — — Immediate recognition of loss from temporary deviation (1) — 4,736 — Reclassification adjustments for amortization of prior service cost 295 47 47 Adjustment for deferred tax effects ( 1,315 ) ( 2,514 ) 1,665 Adjustment due to the effects of regulation ( 3,792 ) ( 11,987 ) 4,803 Other comprehensive income related to postretirement benefit plans $ — $ — $ — (1) In 2021, a loss associated with a temporary deviation from the cost-sharing provisions of the substantive plan was recognized in "Other (income) expense, net" on the consolidated statements of income of the companies. The following table summarizes the expected future benefit payments of the postretirement benefit plan (in thousands of dollars): 2023 2024 2025 2026 2027 2028-2032 Expected benefit payments $ 4,736 $ 4,864 $ 4,959 $ 4,860 $ 4,693 $ 21,912 Plan Assumptions The following table sets forth the weighted-average assumptions used at the end of each year to determine benefit obligations for all Idaho Power-sponsored pension and postretirement benefits plans: Pension Plan SMSP Postretirement Benefits 2022 2021 2022 2021 2022 2021 Discount rate 5.45 % 3.05 % 5.50 % 3.00 % 5.45 % 2.95 % Rate of compensation increase (1) 4.49 % 4.49 % 4.75 % 4.75 % — — Medical trend rate — — — 6.7 % 6.3 % Dental trend rate — — — 3.5 % 3.5 % Measurement date 12/31/2022 12/31/2021 12/31/2022 12/31/2021 12/31/2022 12/31/2021 (1) The 2022 rate of compensation increase assumption for the pension plan includes an inflation component of 2.40 % plus a 2.09 % composite merit increase component that is based on employees' years of service. Merit salary increases are assumed to be 8.0 % for employees in their first year of service and scale down to 0.6 % for employees in their fortieth year of service and beyond. The following table sets forth the weighted-average assumptions used to determine net periodic benefit cost for all Idaho Power-sponsored pension and postretirement benefit plans: Pension Plan SMSP Postretirement Benefits 2022 2021 2020 2022 2021 2020 2022 2021 2020 Discount rate 3.05 % 2.80 % 3.60 % 3.00 % 2.70 % 3.65 % 2.95 % 2.70 % 3.60 % Expected long-term rate of return on assets 7.40 % 7.40 % 7.40 % — — — 6.00 % 6.00 % 6.50 % Rate of compensation increase 4.49 % 4.49 % 4.43 % 4.75 % 4.75 % 4.75 % — — % — % Medical trend rate — — — — — — 5.8 % 6.3 % 6.8 % Dental trend rate — — — — — — 3.5 % 3.5 % 4.0 % The assumed health care cost trend rate used to measure the expected cost of health benefits covered by the postretirement plan was 5.8 percent in 2022 and is assumed to increase to 6.7 percent in 2023, 7.1 percent in 2024, decrease to 6.5 percent in 2025, 118 Table of Contents and to gradually decrease to 3.8 percent by 2074. The assumed dental cost trend rate used to measure the expected cost of dental benefits covered by the plan was 3.5 percent, or equal to the medical trend rate if lower, for all years. Plan Assets Pension Asset Allocation Policy: The target allocation and actual allocations at December 31, 2022, for the pension asset portfolio by asset class is set forth below: Asset Class Target Allocation Actual Allocation December 31, 2022 Debt securities 24 % 24 % Equity securities 59 % 59 % Real estate 9 % 10 % Other plan assets 8 % 7 % Total 100 % 100 % Assets are rebalanced as necessary to keep the portfolio close to target allocations. The plan’s principal investment objective is to maximize total return (defined as the sum of realized interest and dividend income and realized and unrealized gain or loss in market price) consistent with prudent parameters of risk and the liability profile of the portfolio. Emphasis is placed on preservation and growth of capital along with adequacy of cash flow sufficient to fund current and future payments to plan participants. The three major goals in Idaho Power’s asset allocation process are to: • determine if the investments have the potential to earn the rate of return assumed in the actuarial liability calculations; • match the cash flow needs of the plan. Idaho Power sets bond allocations sufficient to cover approximately five years of benefit payments. Idaho Power then utilizes growth instruments (equities, real estate, venture capital) to fund the longer-term liabilities of the plan; and • maintain a prudent risk profile consistent with ERISA fiduciary standards. Allowable plan investments include stocks and stock funds, investment-grade bonds and bond funds, real estate funds, private equity funds, and cash and cash equivalents. With the exception of real estate holdings and private equity, investments must be readily marketable so that an entire holding can be disposed of quickly with only a minor effect upon market price. 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 Investors Service (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. Additional analysis is performed to measure the expected range of returns, as well as worst-case and best-case scenarios. Based on the current interest rate environment, current rate-of-return expectations are lower than the nominal returns generated over the past 30 years when interest rates were generally higher. Idaho Power’s asset modeling process also utilizes historical market returns to measure the portfolio’s exposure to a “worst-case” market scenario, to determine how much performance could vary from the expected “average” performance over various time periods. This “worst-case” modeling, in addition to cash flow matching and diversification by asset class and investment style, provides the basis for managing the risk associated with investing portfolio assets. 119 Table of Contents Fair Value of Plan Assets: Idaho Power classifies its pension plan and postretirement benefit plan investments using the three-level fair value hierarchy described in Note 16 - "Fair Value Measurements." The following table presents the fair value of the plans' investments by asset category (in thousands of dollars). Level 1 Level 2 Level 3 Total Assets at December 31, 2022 Cash and cash equivalents $ 11,679 $ — $ — $ 11,679 Intermediate bonds 33,305 166,530 — 199,835 Equity Securities: Large-Cap 85,617 — — 85,617 Equity Securities: Mid-Cap 90,049 — — 90,049 Equity Securities: Small-Cap 65,505 — — 65,505 Equity Securities: Micro-Cap 33,438 — — 33,438 Equity Securities: Global and International 52,876 — — 52,876 Equity Securities: Emerging Markets 6,964 — — 6,964 Plan assets measured at NAV (not subject to hierarchy disclosure) Commingled Fund: Equity Securities: Global and International 117,631 Commingled Fund: Equity Securities: Emerging Markets 42,119 Real estate 83,676 Private market investments 50,339 Total $ 379,433 $ 166,530 $ — $ 839,728 Postretirement plan assets (1) $ 2,009 $ 26,556 $ — $ 28,565 Level 1 Level 2 Level 3 Total Assets at December 31, 2021 Cash and cash equivalents $ 24,636 $ — $ — $ 24,636 Intermediate bonds 39,133 187,048 — 226,181 Equity Securities: Large-Cap 104,318 — — 104,318 Equity Securities: Mid-Cap 113,621 — — 113,621 Equity Securities: Small-Cap 85,244 — — 85,244 Equity Securities: Micro-Cap 42,915 — — 42,915 Equity Securities: Global and International 67,625 — — 67,625 Equity Securities: Emerging Markets 7,393 — — 7,393 Plan assets measured at NAV (not subject to hierarchy disclosure) Commingled Fund: Equity Securities: Global and International 134,752 Commingled Fund: Equity Securities: Emerging Markets 47,332 Real estate 73,958 Private market investments 56,489 Total $ 484,885 $ 187,048 $ — $ 984,464 Postretirement plan assets (1) $ 2,391 $ 39,073 $ — $ 41,464 (1) The postretirement benefits assets are primarily life insurance contracts. For the years ended December 31, 2022 and 2021, there were no material transfers into or out of Levels 1, 2, or 3. Fair Value Measurement of Level 2 Plan assets and Plan assets measured at net asset value(NAV): Level 2 Bonds : These investments represent United States government, agency bonds, and corporate bonds. The United States government and agency bonds, as well as the corporate bonds, are not traded on an exchange and are valued utilizing market prices for similar assets or liabilities in active markets. Level 2 Postretirement Asset: This asset represents an investment in a life insurance contract and is recorded at fair value, which is the cash surrender value, less any unpaid expenses. The cash surrender value of this insurance contract is contractually 120 Table of Contents equal to the insurance contract's proportionate share of the market value of an associated investment account held by the insurer. The investments held by the insurer's investment account are all instruments traded on exchanges with readily determinable market prices. Commingled Funds : These funds, made up of global, international and emerging markets equity securities are measured at NAV, are not publicly traded, and therefore no publicly quoted market price is readily available. The values of the commingled funds are presented at estimated fair value, which is determined based on the unit value of the fund. The values of these investments are calculated by the custodian for the fund company on a monthly or more frequent basis, and are based on market prices of the assets held by each of the commingled funds divided by the number of fund shares outstanding for the respective fund. The investments in commingled funds have redemption limitations that permit monthly redemption following notice requirements of 5 to 7 days. Real Estate : Real estate holdings represent investments in open-end and closed-end commingled real estate funds. As the property interests held in these real estate funds are not frequently traded, establishing the market value of the property interests held by the fund, and the resulting unit value of fund shareholders, is based on unobservable inputs including property appraisals by the fund companies, property appraisals by independent appraisal firms, analysis of the replacement cost of the property, discounted cash flows generated by property rents and changes in property values, and comparisons with sale prices of similar properties in similar markets. These real estate funds also furnish annual audited financial statements that are also used to further validate the information provided. Redemptions on the open-end funds are generally available on a quarterly basis, with 10 to 35 days written notice, depending on the individual fund. If the fund has sufficient liquidity, the redemption will be processed at the fund NAV or the fund’s estimate of fair value at the end of the quarter. If the fund does not have sufficient liquidity to honor the full redemption, the remainder will be set for redemption the following quarter on a pro-rata basis with other redemption requests. This same process will repeat until the redemption request has been completed. To protect other fund holders, real estate funds have no duty to liquidate or encumber funds to meet redemption requests. The closed-end funds are formed for a stated life of 7 to 10 years. The fund can be further extended with the approval of the limited partners. There are generally no redemption rights associated with these funds. The limited partner must hold the fund for the life of the fund or find a third-party buyer. Private Market Investments : Private market investments represent two categories: fund of hedge funds and venture capital funds. These funds are valued by the fund companies based on the estimated fair values of the underlying fund holdings divided by the fund shares outstanding or multiplied by the ownership percentages of the holder. Some hedge fund strategies utilize securities with readily available market prices, while others utilize less liquid investment vehicles that are valued based on unobservable inputs including cost, operating results, recent funding activity, or comparisons with similar investment vehicles. Redemptions are available on a quarterly basis with 70 days written notice. Redemptions will be processed at the quarterly NAV or fair value within 60 days following quarter end. In the event of a full redemption, a reserve amount of 5% to 10% of the redemption amount may be held in reserve until the audited financial statements of the fund are published. This allows the fund to adjust the redemption so that other fund holders are not adversely impacted. Venture capital fund investments are valued by the fund companies based on estimated fair value of the underlying fund holdings divided by the fund shares outstanding. Some venture capital investments have progressed to the point that they have readily available exchange-based market valuations. Early stage venture investments are valued based on unobservable inputs including cost, operating results, discounted cash flows, the price of recent funding events, or pending offers from other viable entities. These private market investments furnish annual audited financial statements that are also used to further validate the information provided. These funds are formed for a stated life of 10 to 15 years. The general partner can extend the fund life for 2 or 3 one-year periods. The fund can be further extended with the approval of the limited partners. There are generally no redemption rights associated with these funds. The limited partner must hold the fund for the life of the fund or find a third-party buyer. Employee Savings Plan Idaho Power has a defined contribution plan designed to comply with Section 401(k) of the Internal Revenue Code and that covers substantially all employees. Idaho Power matches specified percentages of employee contributions to the plan. Matching annual contributions were approximately $ 8.8 million, $ 8.2 million, and $ 7.9 million in 2022, 2021, and 2020, respectively. Post-employment Benefits Idaho Power provides certain benefits to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement, in addition to the health care benefits required under the Consolidated Omnibus Budget Reconciliation Act. These benefits include salary continuation, health care and life insurance for those employees found to be disabled under Idaho Power’s disability plans, and health care for surviving spouses and dependents. Idaho Power accrues a 121 Table of Contents liability for such benefits. The post-employment benefits included in other deferred credits on both IDACORP’s and Idaho Power’s consolidated balance sheets at December 31, 2022 and 2021, were approximately $ 2 million. 12. PROPERTY, PLANT AND EQUIPMENT AND JOINTLY-OWNED PROJECTS The following table presents the major classifications of Idaho Power’s utility plant in service, annual depreciation provisions as a percent of average depreciable balance, and accumulated provision for depreciation for the years ended December 31, 2022 and 2021 (in thousands of dollars): 2022 2021 Balance Avg Rate Balance Avg Rate Production $ 2,700,494 2.89 % $ 2,597,285 3.15 % Transmission 1,346,463 1.91 % 1,309,143 1.89 % Distribution 2,192,135 2.15 % 2,058,819 2.25 % General and Other 589,375 5.36 % 544,069 6.17 % Total in service 6,828,467 2.66 % 6,509,316 2.85 % Accumulated provision for depreciation ( 2,465,279 ) ( 2,298,951 ) In service - net $ 4,363,188 $ 4,210,365 At December 31, 2022, Idaho Power's construction work in progress balance of $ 785.7 million included relicensing costs of $ 423.1 million for the HCC, Idaho Power's largest hydropower complex. In 2022, 2021, and 2020, Idaho Power had IPUC authorization to include in its Idaho jurisdiction rates $ 6.5 million annually ($ 8.8 million when grossed-up for the effect of income taxes) of AFUDC relating to the HCC relicensing project. Collecting these amounts will reduce the amount collected in the future once the HCC relicensing costs are approved for recovery in base rates. At December 31, 2022, Idaho Power's regulatory liability for collection of AFUDC relating to the HCC was $ 207.5 million. Idaho Power's ownership interest in two jointly-owned generating facilities is included in the table above. Under the joint operating agreements for these facilities, each participating utility is responsible for financing its share of construction, operating, and leasing costs. Idaho Power's proportionate share of operating expenses for each facility is included in the Consolidated Statements of Income. These jointly-owned facilities, including balance sheet amounts and the extent of Idaho Power’s participation, were as follows at December 31, 2022 (in thousands of dollars): Name of Plant Location Utility Plant in Service Construction Work in Progress Accumulated Provision for Depreciation Ownership % MW (1)(2) Jim Bridger units 1-4 Rock Springs, WY $ 775,778 $ 19,258 $ 485,289 33 775 North Valmy unit 2 (2) Winnemucca, NV 259,099 1,233 210,467 50 145 (1) Idaho Power’s share of nameplate capacity. (2) 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 . IERCo, Idaho Power’s wholly-owned subsidiary, is a joint venturer in BCC. Idaho Power’s coal purchases from the joint venture were $ 60.4 million in 2022, $ 59.7 million in 2021, and $ 68.3 million in 2020. Idaho Power has contracts to purchase the energy from four PURPA qualifying facilities that are 50 percent owned by Ida-West. Idaho Power’s power purchases from these facilities were $ 7.9 million in 2022, $ 8.2 million in 2021, and $ 9.3 million in 2020. IDACORP's consolidated VIE, Marysville, owns a hydropower plant with a net book value of $ 13.3 million and $ 13.7 million at December 31, 2022 and 2021, respectively. 13. ASSET RETIREMENT OBLIGATIONS (ARO) The guidance relating to accounting for AROs requires that legal obligations associated with the retirement of property, plant, and equipment be recognized as a liability at fair value when incurred and when a reasonable estimate of the fair value of the liability can be made. Under the guidance, when a liability is initially recorded, the entity increases the carrying amount of the 122 Table of Contents related long-lived asset to reflect the future retirement cost. Over time, the liability is accreted to its estimated settlement value and paid, and the capitalized cost is depreciated over the useful life of the related asset. If, at the end of the asset’s life, the recorded liability differs from the actual obligations paid, a gain or loss would be recognized. As a rate-regulated entity, Idaho Power defers accretion, depreciation, and gains or losses as regulatory assets, as approved by the IPUC, until such asset retirement obligation costs are included in customer rates for collection. The regulatory assets recorded under this order do not earn a return on investment. Idaho Power’s recorded AROs relate to the reclamation and removal costs at its jointly-owned coal-fired generation facilities. Idaho Power also has additional AROs associated with its transmission system and generation facilities; however, due to the indeterminate removal date, the fair value of the associated liabilities currently cannot be estimated and no amounts are recognized in the consolidated financial statements. Idaho Power also collects removal costs in rates for certain assets that do not have associated AROs. Idaho Power is required to classify these removal costs as regulatory liabilities , see Note 3 - "Regulatory Matters" for the removal costs recorded as regulatory liabilities on IDACORP’s and Idaho Power’s consolidated balance sheets as of December 31, 2022 and 2021. The following table presents the changes in the carrying amount of AROs (in thousands of dollars): 2022 2021 Balance at beginning of year $ 36,698 $ 27,691 Accretion expense 1,106 1,021 Revisions in estimated cash flows 1,412 9,415 Liability settled ( 1,659 ) ( 1,429 ) Balance at end of year $ 37,557 $ 36,698 14. INVESTMENTS The table below summarizes IDACORP’s and Idaho Power’s investments as of December 31 (in thousands of dollars): 2022 2021 Idaho Power investments: Bridger Coal Company (equity method investment) $ 14,187 $ 22,677 Exchange traded short-term bond funds and cash equivalents 33,687 54,078 Held-to-Maturity securities 30,475 — Executive deferred compensation plan investments 442 353 Total Idaho Power investments 78,791 77,108 IFS investments in real estate tax credit projects, such as affordable housing developments 29,454 34,967 Ida-West joint ventures (equity method investments) 10,311 10,386 Other investments 2,796 1,363 Total IDACORP investments $ 121,352 $ 123,824 Equity Method Investments Idaho Power, through its subsidiary IERCo, is a 33 percent owner of BCC. Ida-West, through separate subsidiaries, owns 50 percent of three electric generation projects that are accounted for using the equity method: South Forks Joint Venture, Hazelton/Wilson Joint Venture, and Snow Mountain Hydro LLC. All projects are reviewed periodically for impairment. The table below presents IDACORP’s and Idaho Power’s earnings of unconsolidated equity-method investments (in thousands of dollars): 2022 2021 2020 Bridger Coal Company (Idaho Power) $ 10,211 $ 10,211 $ 10,102 Ida-West joint ventures 1,300 1,224 1,411 Total $ 11,511 $ 11,435 $ 11,513 123 Table of Contents Investments in Equity Securities Investments in equity securities are reported at fair value. Any unrealized gains or losses on equity securities are included in income. Unrealized gains and losses on equity securities were immaterial at December 31, 2022 and 2021. The following table summarizes sales of equity securities (in thousands of dollars): 2022 2021 2020 Proceeds from sales $ 63,857 $ 11,328 $ 25,795 Gross realized gains from sales — — — Held-to-Maturity Securities Idaho Power has a rabbi trust designated to provide funding for obligations related to the SMSP. During 2022, the rabbi trust purchased $ 31.2 million of held-to-maturity investments in corporate fixed-income and asset-backed debt securities. Substantially all of these debt securities mature between 2027 and 2037. Held-to-maturity investments are carried at amortized cost, reflecting Idaho Power’s ability and intent to hold the securities to maturity. Held-to-maturity investments are adjusted for the amortization or accretion of premiums or discounts, which are amortized or accreted over the life of the related held-to-maturity security. Such amortization and accretion are included in the “Other income, net” line in the consolidated statements of income. Due to increases in market interest rates in 2022, all held-to-maturity securities were in a gross unrealized holding loss position totaling $ 5.0 million at December 31, 2022. Based on ongoing credit evaluations of these holdings, Idaho Power does not expect payment defaults or delinquencies and has not recorded an allowance for credit losses for these securities as of December 31, 2022. IDACORP Financial Services Investments IFS invests primarily 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. IDACORP accounts for its equity-method investments in qualified real estate projects using the proportional amortization method and recognizes the net investment performance in the consolidated statements of income as a component of income tax expense. 15. DERIVATIVE FINANCIAL INSTRUMENTS Commodity Price Risk Idaho Power is exposed to market risk relating to electricity, natural gas, and other fuel commodity prices, all of which are heavily influenced by supply and demand. Market risk may be influenced by market participants’ nonperformance of their contractual obligations and commitments, which affects the supply of or demand for the commodity. Idaho Power uses derivative instruments, such as physical and financial forward contracts, for both electricity and fuel to manage the risks relating to these commodity price exposures. The primary objectives of Idaho Power’s energy purchase and sale activity are to meet the demand of retail electric customers, maintain appropriate physical reserves to ensure reliability, and make economic use of temporary surpluses that may develop. All of Idaho Power's derivative instruments have been entered into for the purpose of securing energy resources for future periods or economically hedging forecasted purchases and sales, though none of these instruments have been designated as cash flow hedges. Idaho Power offsets fair value amounts recognized on its balance sheet and applies collateral related to derivative instruments executed with the same counterparty under the same master netting agreement. Idaho Power does not offset a counterparty's current derivative contracts with the counterparty's long-term derivative contracts, although Idaho Power's master netting arrangements would allow current and long-term positions to be offset in the event of default. Also, in the event of default, Idaho Power's master netting arrangements would allow for the offsetting of all transactions executed under the master netting arrangement. These types of transactions may include non-derivative instruments, derivatives qualifying for scope exceptions, receivables and payables arising from settled positions, and other forms of non-cash collateral (such as letters of credit). These types of transactions are excluded from the offsetting presented in the derivative fair value and offsetting table that follows. 124 Table of Contents The table below presents the gains and losses on derivatives not designated as hedging instruments for the years ended December 31, 2022, 2021, and 2020 (in thousands of dollars): Location of Realized Gain/(Loss) on Derivatives Recognized in Income Gain/(Loss) on Derivatives Recognized in Income (1) 2022 2021 2020 Financial swaps Operating revenues $ ( 6,249 ) $ 1,046 $ 2,173 Financial swaps Purchased power 2,373 1,959 ( 3,531 ) Financial swaps Fuel expense 68,489 12,180 ( 4,791 ) Forward contracts Operating revenues 1,090 1,966 421 Forward contracts Purchased power ( 2,994 ) ( 1,099 ) ( 384 ) Forward contracts Fuel expense ( 136 ) ( 194 ) ( 36 ) (1) Excludes unrealized gains or losses on derivatives, which are recorded on the balance sheet as regulatory assets or regulatory liabilities. Settlement gains and losses on electricity swap contracts are recorded on the income statement in operating revenues or purchased power depending on the forecasted position being economically hedged by the derivative contract. Settlement gains and losses on contracts for natural gas are reflected in fuel expense. Settlement gains and losses on diesel derivatives are recorded in other O&M expense. See Note 16 - "Fair Value Measurements" for additional information concerning the determination of fair value for Idaho Power’s assets and liabilities from price risk management activities. Credit Risk At December 31, 2022, Idaho Power did not have material credit risk exposure from financial instruments, including derivatives. Idaho Power monitors credit risk exposure through reviews of counterparty credit quality, corporate-wide counterparty credit exposure, and corporate-wide counterparty concentration levels. Idaho Power manages these risks by establishing credit and concentration limits on transactions with counterparties and requiring contractual guarantees, cash deposits, or letters of credit from counterparties or their affiliates, as deemed necessary. Idaho Power’s physical power contracts are commonly under WSPP, Inc. agreements, physical gas contracts are usually under North American Energy Standards Board contracts, and financial transactions are usually under International Swaps and Derivatives Association, Inc. contracts. These contracts typically contain adequate assurance clauses requiring collateralization if a counterparty has debt that is downgraded below investment grade by at least one rating agency. Credit-Contingent Features Certain of Idaho Power's derivative instruments contain provisions that require Idaho Power's unsecured debt to maintain an investment grade credit rating from Moody's and Standard & Poor's Ratings Services. If Idaho Power's unsecured debt were to fall below investment grade, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position at December 31, 2022, was $ 15.7 million. Idaho Power did not post any cash collateral related to this amount. If the credit-risk-related contingent features underlying these agreements were triggered on December 31, 2022, Idaho Power would have been required to pay or post collateral to its counterparties up to an additional $ 66.1 million to cover open liability positions as well as completed transactions that have not yet been paid. 125 Table of Contents Derivative Instrument Summary The table below presents the fair values and locations of derivative instruments not designated as hedging instruments recorded on the balance sheets and reconciles the gross amounts of derivatives recognized as assets and as liabilities to the net amounts presented in the balance sheets at December 31, 2022 and 2021 (in thousands of dollars): Asset Derivatives Liability Derivatives Balance Sheet Location Gross Fair Value Amounts Offset Net Assets Gross Fair Value Amounts Offset Net Liabilities December 31, 2022 Current: Financial swaps Other current assets $ 72,548 $ ( 32,609 ) (1) $ 39,939 $ 13,982 $ ( 13,982 ) $ — Financial swaps Other current liabilities 132 ( 132 ) — 1,577 ( 132 ) 1,445 Forward contracts Other current assets 400 — 400 — — — Forward contracts Other current liabilities — — — 2,071 — 2,071 Long-term: Financial swaps Other assets 622 ( 43 ) 579 43 ( 43 ) — Financial swaps Other liabilities 644 ( 644 ) — 2,136 ( 644 ) 1,492 Forward contracts Other liabilities — — — 1,780 — 1,780 Total $ 74,346 $ ( 33,428 ) $ 40,918 $ 21,589 $ ( 14,801 ) $ 6,788 December 31, 2021 Current: Financial swaps Other current assets $ 10,599 $ ( 4,893 ) (2) $ 5,706 $ 2,910 $ ( 2,910 ) $ — Financial swaps Other current liabilities — — — 20 — 20 Forward contracts Other current assets 6 ( 4 ) 2 4 ( 4 ) — Forward contracts Other current liabilities — — — 1,970 — 1,970 Long-term: Financial swaps Other assets 899 ( 9 ) 890 9 ( 9 ) — Financial swaps Other liabilities — — — 14 — 14 Forward contracts Other liabilities — — — 3,743 — 3,743 Total $ 11,504 $ ( 4,906 ) $ 6,598 $ 8,670 $ ( 2,923 ) $ 5,747 (1) Current asset derivative amounts offset include $ 18.6 million of collateral payable at December 31, 2022. (2) Current asset derivative amounts offset include $ 2.0 million of collateral payable at December 31, 2021. The table below presents the volumes of derivative commodity forward contracts and swaps outstanding at December 31, 2022 and 2021 (in thousands of units): December 31, Commodity Units 2022 2021 Electricity purchases MWh 898 529 Electricity sales MWh 32 129 Natural gas purchases MMBtu 26,773 11,740 Natural gas sales MMBtu 310 — 16. FAIR VALUE MEASUREMENTS IDACORP and Idaho Power have categorized their financial instruments into a three-level fair value hierarchy, based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. 126 Table of Contents Financial assets and liabilities recorded on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows: • Level 1: Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that IDACORP and Idaho Power have the ability to access. • Level 2: Financial assets and liabilities whose values are based on the following: a) quoted prices for similar assets or liabilities in active markets; b) quoted prices for identical or similar assets or liabilities in non-active markets; c) pricing models whose inputs are observable for substantially the full term of the asset or liability; and d) pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability. IDACORP and Idaho Power Level 2 inputs for derivative instruments are based on quoted market prices adjusted for location using corroborated, observable market data. • Level 3: Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. IDACORP’s and Idaho Power’s assessment of a particular input's significance to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy. There were no transfers between levels or material changes in valuation techniques or inputs during the years ended December 31, 2022 and 2021. Certain instruments have been valued using NAV as a practical expedient. The NAV is generally not published and publicly available, nor are these instruments traded on an exchange. Instruments valued using NAV as a practical expedient are included in the fair value disclosures below; however, in accordance with GAAP are not classified within the fair value hierarchy levels. The following table presents information about IDACORP’s and Idaho Power’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021 (in thousands of dollars): December 31, 2022 December 31, 2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds and commercial paper IDACORP (1) $ 16,505 $ — $ — $ 16,505 $ 80,406 $ — $ — $ 80,406 Idaho Power 34,468 — — 34,468 10,393 — — 10,393 Derivatives 40,518 400 — 40,918 6,596 2 — 6,598 Equity securities 34,129 — — 34,129 54,431 — — 54,431 IDACORP assets measured at NAV (not subject to hierarchy disclosure) (1) — — — 2,796 — — — 1,363 Liabilities: Derivatives $ 2,937 $ 3,851 $ — $ 6,788 $ 34 $ 5,713 $ — $ 5,747 (1) Holding company only. Does not include amounts held by Idaho Power. Idaho Power’s derivatives are contracts entered into as part of its management of loads and resources. Electricity swap derivatives are valued on the Intercontinental Exchange with quoted prices in an active market. Electricity forward contract derivatives are valued using a blend of two electricity exchanges, adjusted for location basis, as specified in the forward contract. Natural gas and diesel derivatives are valued using New York Mercantile Exchange (NYMEX) and Intercontinental Exchange (ICE) pricing, adjusted for location basis, which are also quoted under NYMEX and ICE pricing. Equity securities at Idaho Power consist of employee-directed investments related to an executive deferred compensation plan and actively traded money market and exchange traded funds related to the SMSP. The investments are measured using quoted prices in active markets and are held in a rabbi trust. 127 Table of Contents The table below presents the carrying value and estimated fair value of financial instruments that are not reported at fair value, as of December 31, 2022 and 2021, using available market information and appropriate valuation methodologies (in thousands). December 31, 2022 December 31, 2021 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value (thousands of dollars) IDACORP Assets: Notes receivable (1) $ 3,871 $ 3,871 $ 3,804 $ 3,804 Held-to-maturity securities (1) 30,475 25,452 — — Liabilities: Long-term debt (including current portion) (1) 2,194,145 1,953,470 2,000,640 2,381,172 Idaho Power Assets: Held-to-maturity securities (1) $ 30,475 $ 25,452 $ — $ — Liabilities: Long-term debt (including current portion) (1) 2,194,145 1,953,470 2,000,640 2,381,172 (1) Notes receivable are categorized as Level 3 and held-to-maturity securities and long-term debt are categorized as Level 2 of the fair value hierarchy, as defined earlier in this Note 16 - "Fair Value Measurements." Notes receivable are related to Ida-West and are valued based on unobservable inputs, including forecasted cash flows, which are partially based on expected hydropower conditions. Held-to-maturity securities are held in a rabbi trust and are generally valued using quoted prices, which may be in non-active markets. Long-term debt is not traded on an exchange and is valued using quoted rates for similar debt in active markets. Carrying values for cash and cash equivalents, deposits, customer and other receivables, notes payable, accounts payable, interest accrued, and taxes accrued approximate fair value. 17. SEGMENT INFORMATION IDACORP’s only reportable segment is utility operations. The utility operations segment’s primary source of revenue is the regulated operations of Idaho Power. Idaho Power’s regulated operations include the generation, transmission, distribution, purchase, and sale of electricity. This segment also includes income from IERCo, a wholly-owned subsidiary of Idaho Power that is also subject to regulation and is a one-third owner of BCC, an unconsolidated joint venture. IDACORP’s other operating segments are below the quantitative and qualitative thresholds for reportable segments and are included in the “All Other” category in the table below. This category is comprised of IFS’s investments in affordable housing and other real estate tax credits, Ida-West’s joint venture investments in small hydropower generation projects, and IDACORP’s holding company expenses. 128 Table of Contents The table below summarizes the segment information for IDACORP’s utility operations and the total of all other segments, and reconciles this information to total enterprise amounts (in thousands): Utility Operations All Other Eliminations Consolidated Total 2022 Revenues $ 1,641,040 $ 2,941 $ — $ 1,643,981 Operating income 327,170 8 — 327,178 Other income, net 33,876 ( 187 ) — 33,689 Interest income 12,556 2,776 ( 931 ) 14,401 Equity-method income 10,211 1,300 — 11,511 Interest expense 89,038 1,268 ( 931 ) 89,375 Income before income taxes 294,775 2,629 — 297,404 Income tax expense (benefit) 39,908 ( 2,064 ) — 37,844 Income attributable to IDACORP, Inc. 254,867 4,115 — 258,982 Total assets 7,411,104 245,762 ( 113,608 ) 7,543,258 Expenditures for long-lived assets 432,430 159 — 432,589 2021 Revenues $ 1,455,410 $ 2,674 $ — $ 1,458,084 Operating income 329,568 83 — 329,651 Other income, net 21,243 ( 138 ) — 21,105 Interest income 7,123 216 ( 47 ) 7,292 Equity-method income 10,211 1,224 — 11,435 Interest expense 86,663 82 ( 47 ) 86,698 Income before income taxes 281,482 1,302 — 282,784 Income tax expense (benefit) 38,257 ( 1,345 ) — 36,912 Income attributable to IDACORP, Inc. 243,225 2,325 — 245,550 Total assets 6,990,839 281,999 ( 62,323 ) 7,210,515 Expenditures for long-lived assets 299,972 27 — 299,999 2020 Revenues $ 1,347,340 $ 3,389 $ — $ 1,350,729 Operating income 308,780 741 — 309,521 Other income, net 22,555 ( 8 ) — 22,547 Interest income 9,733 1,275 ( 496 ) 10,512 Equity-method income 10,102 1,411 — 11,513 Interest expense 87,389 533 ( 496 ) 87,426 Income before income taxes 263,783 2,885 — 266,668 Income tax expense (benefit) 30,548 ( 1,848 ) — 28,700 Income attributable to IDACORP, Inc. 233,235 4,182 — 237,417 Total assets 6,906,110 253,060 ( 63,926 ) 7,095,244 Expenditures for long-lived assets 310,937 1 — 310,938 129 Table of Contents 18. OTHER INCOME AND EXPENSE The following table presents the components of IDACORP’s other income (expense), net and Idaho Power's other income (expense), net (in thousands of dollars): IDACORP 2022 2021 2020 Interest and dividend income, net $ 5,952 $ 1,408 $ 3,813 Carrying charges on regulatory assets 7,032 5,034 7,063 Pension and postretirement non-service costs (1) ( 9,196 ) ( 15,249 ) ( 11,865 ) Income from life insurance investments 7,107 5,203 4,036 Other income (expense) ( 90 ) 463 462 Total other income (expense), net $ 10,805 $ ( 3,141 ) $ 3,509 Idaho Power Interest and dividend income, net $ 4,094 $ 1,241 $ 3,034 Carrying charges on regulatory assets 7,032 5,034 7,063 Pension and postretirement non-service costs (1) ( 9,196 ) ( 15,240 ) ( 11,862 ) Income from life insurance investments 7,012 5,203 4,036 Other income (expense) 205 591 468 Total other income (expense), net $ 9,147 $ ( 3,171 ) $ 2,739 (1) The 2021 pension and postretirement non-service costs includes $4.7 million of expense for a temporary deviation from the cost-sharing provisions of the substantive postretirement plan as described in Note 11 - "Benefit Plans." 19. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME Comprehensive income includes net income and amounts related to the SMSP. The table below presents changes in components of accumulated other comprehensive income (AOCI), net of tax, during the years ended December 31, 2022, 2021, and 2020 (in thousands of dollars). Items in parentheses indicate reductions to AOCI. Year Ended December 31, 2022 2021 2020 Defined benefit pension items Balance at beginning of period $ ( 40,040 ) $ ( 43,358 ) $ ( 36,284 ) Other comprehensive income before reclassifications, net of tax of $ 8,239 , $( 8 ), and $( 3,488 ) 23,770 ( 25 ) ( 10,062 ) Amounts reclassified out of AOCI to net income, net of tax of $ 1,160 , $ 1,158 , and $ 1,036 3,348 3,343 2,988 Net current-period other comprehensive income 27,118 3,318 ( 7,074 ) Balance at end of period $ ( 12,922 ) $ ( 40,040 ) $ ( 43,358 ) 130 Table of Contents The table below presents the effects on net income of amounts reclassified out of components of AOCI and the income statement location of those amounts reclassified during the years ended December 31, 2022, 2021, and 2020 (in thousands of dollars). Items in parentheses indicate increases to net income. Amount Reclassified from AOCI Year Ended December 31, 2022 2021 2020 Amortization of defined benefit pension items (1) Prior service cost $ 279 $ 296 $ 290 Net loss 4,229 4,205 3,734 Total before tax 4,508 4,501 4,024 Tax benefit (2) ( 1,160 ) ( 1,158 ) ( 1,036 ) Net of tax 3,348 3,343 2,988 Total reclassification for the period $ 3,348 $ 3,343 $ 2,988 (1) Amortization of these items is included in "Other (income) expense, net" in the consolidated income statements of both IDACORP and Idaho Power. (2) The tax benefit is included in "Income tax expense" in the consolidated income statements of both IDACORP and Idaho Power . 20. RELATED PARTY TRANSACTIONS IDACORP: Idaho Power performs corporate functions such as financial, legal, and management services for IDACORP and its subsidiaries. Idaho Power charges IDACORP for the costs of these services based on service agreements and other specifically identified costs. For these services, Idaho Power billed IDACORP $ 0.9 million in 2022, $ 0.8 million in 2021, and $ 0.7 million in 2020. At December 31, 2022 and 2021, Idaho Power had a $ 56.2 million and $ 2.0 million payable to IDACORP, respectively, which was included in its accounts payable to affiliates balance on its consolidated balance sheets, primarily related to income tax payments. At IDACORP, the receivable from Idaho Power is eliminated in consolidation. Ida-West: Idaho Power purchases all of the power generated by four of Ida-West’s hydropower projects located in Idaho. Idaho Power purchased $ 7.9 million in 2022, $ 8.2 million in 2021, and $ 9.3 million in 2020 of power from Ida-West. 131 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of IDACORP, Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of IDACORP, Inc. and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedules listed in the Index at Item 8 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Regulation of Utility Operations - Refer to Notes 1 and 3 to the financial statements Critical Audit Matter Description Idaho Power Company (Idaho Power), the principal operating subsidiary of the Company, is subject to rate regulation by the Federal Energy Regulatory Commission and the Idaho and Oregon Public Utility Commissions (the “Commissions”), which have jurisdiction with respect to the rates of electric distribution companies in Idaho and Oregon. Management has determined it 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. 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; operation and maintenance expense; depreciation expense; and income tax expense. 132 Table of Contents Idaho Power’s rates are subject to regulatory rate-setting processes. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered by rates. The Commissions’ regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. Decisions to be made by the Commissions in the future will impact the accounting for regulated operations, including decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that may be required. While the Company has indicated it expects Idaho Power to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of all amounts invested in the utility business and a reasonable return on that investment. Additionally, consistent with orders and directives of the Commissions, unless contrary to applicable income tax guidance, Idaho Power does not record 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 such amounts will be recovered from or returned to customers in future rates. We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impacted account balances and disclosures and the degree of subjectivity involved in assessing the impact of expected future regulatory orders on the financial statements. Management judgments include assessing the likelihood of (1) recovery in future rates of incurred costs and (2) a refund to customers for amounts collected prior to costs being incurred. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by the Commissions and the application of flow-through accounting for income taxes included the following, among others: • We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs capitalized as property, plant, and equipment (2) recovery of costs deferred as regulatory assets, and (3) a refund or a future reduction in rates that should be reported as regulatory liabilities. • We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments. • We read relevant regulatory orders issued by the Commissions for Idaho Power and evaluated whether such orders were appropriately reflected in the Company's financial statements. • For selected regulatory assets and liabilities, we evaluated whether management had determined such amounts in accordance with regulatory orders. • With the assistance of income tax specialists, we evaluated whether management had appropriately identified the income tax timing differences eligible for flow-through accounting and recorded such differences as adjustments to income tax expense and regulatory assets. We then assessed whether these regulatory assets were probable of being recovered through future rates by comparing methodology to current rate cases. /s/ DELOITTE & TOUCHE LLP Boise, Idaho February 16, 2023 We have served as the Company's auditor since 1932. 133 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholder and the Board of Directors of Idaho Power Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Idaho Power Company and subsidiary (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, retained earnings, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 8 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Regulation of Utility Operations - Refer to Notes 1 and 3 to the financial statements Critical Audit Matter Description The Company is subject to rate regulation by the Federal Energy Regulatory Commission and the Idaho and Oregon Public Utility Commissions (the “Commissions”), which have jurisdiction with respect to the rates of electric distribution companies in Idaho and Oregon. Management has determined it 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. 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; operation and maintenance expense; depreciation expense; and income tax expense. 134 Table of Contents The Company’s rates are subject to regulatory rate-setting processes. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered by rates. The Commissions’ regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. Decisions to be made by the Commissions in the future will impact the accounting for regulated operations, including decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that may be required. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the Commissions will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of all amounts invested in the utility business and a reasonable return on that investment. Additionally, consistent with orders and directives of the Commissions, unless contrary to applicable income tax guidance, the Company does not record 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, the Company's effective income tax rate is impacted as these differences arise and reverse. The Company recognizes such adjustments as regulatory assets or liabilities if it is probable that such amounts will be recovered from or returned to customers in future rates. We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impacted account balances and disclosures and the degree of subjectivity involved in assessing the impact of expected future regulatory orders on the financial statements. Management judgments include assessing the likelihood of (1) recovery in future rates of incurred costs and (2) a refund to customers for amounts collected prior to costs being incurred. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by the Commissions and the application of flow-through accounting for income taxes included the following, among others: • We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs capitalized as property, plant, and equipment (2) recovery of costs deferred as regulatory assets, and (3) a refund or a future reduction in rates that should be reported as regulatory liabilities. • We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments. • We read relevant regulatory orders issued by the Commissions for the Company and evaluated whether such orders were appropriately reflected in the Company's financial statements. • For selected regulatory assets and liabilities, we evaluated whether management had determined such amounts in accordance with regulatory orders. • With the assistance of income tax specialists, we evaluated whether management had appropriately identified the income tax timing differences eligible for flow-through accounting and recorded such differences as adjustments to income tax expense and regulatory assets. We then assessed whether these regulatory assets were probable of being recovered through future rates by comparing methodology to current rate cases. /s/ DELOITTE & TOUCHE LLP Boise, Idaho February 16, 2023 We have served as the Company's auditor since 1932. 135 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.