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The following discussion summarizes these risks and the financial instruments, derivative instruments, and derivative commodity instruments sensitive to changes in interest rates, commodity prices, and equity prices that were held at December 31, 2023.
−Removed: Neither IDACORP nor Idaho Power have entered into any of these market-risk-sensitive instruments for trading purposes.
+Added: Neither IDACORP nor Idaho Power have entered into any of these market-risk-sensitive instruments for speculative purposes.
Interest Rate Risk
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Variable Rate Debt :
−Removed: As of December 31, 2022, IDACORP and Idaho Power had $118.9 million and $135.4 million, respectively, in net floating rate debt, which approximated fair value.
−Removed: Assuming no change in financial structure, if variable interest rates were to average one percentage point higher than the average rate on December 31, 2022, IDACORP and Idaho Power's annual interest expense would increase and pre-tax earnings would decrease by approximately $1.2 million and $1.4 million, respectively.
+Added: As of December 31, 2023, IDACORP and Idaho Power had no net variable rate debt, as the carrying value of short-term investments exceeded the carrying value of outstanding variable rate debt.
Fixed Rate Debt :
−Removed: As of December 31, 2022, both IDACORP and Idaho Power had $2.0 billion in fixed rate debt, with a fair market value of approximately $1.8 billion.
+Added: As of December 31, 2023, both IDACORP and Idaho Power had $2.8 billion in fixed rate debt, with a fair value of approximately $2.7 billion.
These instruments are fixed rate and, therefore, do not expose the companies to a loss in earnings due to changes in market interest rates.
−Removed: However, the fair value of these instruments would increase by
−Removed: approximately $196 million if market interest rates were to decline by one percentage point from their December 31, 2022 levels.
+Added: However, the fair value of these instruments would increase by approximately $343 million if market interest rates were to decline by one percentage point from their December 31, 2023 levels.
Commodity Price Risk
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The primary objectives of Idaho Power’s energy purchase and sale activity are to meet the demand of retail electric customers, to maintain appropriate physical reserves to ensure reliability, and to make economic use of temporary surpluses that may develop.
−Removed: Idaho Power has adopted an energy risk management program, which has been reviewed and accepted by the Idaho Public Utilities Commission (IPUC), designed to reduce exposure to power supply cost-related uncertainty, further mitigating commodity price risk.
−Removed: Idaho Power’s Energy Risk Management Policy and associated standards implementing the Energy Risk Management Policy describe a collaborative process with customers and regulators via a committee called the Customer Advisory Group (CAG).
−Removed: The Risk Management Committee (RMC), composed of Idaho Power officers and senior managers, oversees the risk management program.
−Removed: The RMC is responsible for communicating the status of risk management activities to Idaho Power's Board of Directors and to the CAG, and Idaho Power’s Audit Committee is responsible for approving the Energy Risk Management Policy and associated standards.
−Removed: The RMC is also responsible for conducting an ongoing general assessment of the appropriateness of Idaho Power’s strategies for energy risk management activities.
−Removed: In its energy risk management process, Idaho Power considers both demand-side and supply-side options consistent with its Integrated Resource Plan.
−Removed: The primary tools for risk mitigation are physical and financial forward power transactions and fueling alternatives for utility-owned generation resources.
+Added: Idaho Power has adopted an energy risk management program, overseen by the risk management committee (RMC), and described in Idaho Power’s Energy Risk Management Policy and associated standards (ERMP).
+Added: The ERMP has been reviewed and accepted by the IPUC, designed to reduce exposure to power supply cost-related uncertainty, further mitigating commodity price risk.
+Added: The RMC, composed of Idaho Power officers and senior managers, oversees the risk management program.
+Added: The RMC is responsible for communicating the status of risk management activities to Idaho Power's board of directors.
+Added: In its energy risk management process, Idaho Power considers both demand-side and supply-side options consistent with its IRP.
+Added: The primary tools for risk mitigation are physical and financial forward power transactions and fueling alternatives
+Added: for utility-owned generation resources.
Idaho Power only engages in a nominal amount of trading activity for non-retail purposes.
−Removed: The Energy Risk Management Policy and associated standards require monitoring monthly volumetric electricity position and total monthly dollar (net power supply cost) exposure on a rolling 18-month forward view.
−Removed: The power supply business unit produces and evaluates projections of the operating plan based on factors such as forecasted resource availability, stream flows, and load, and orders risk mitigating actions, including resource optimization and hedging strategies, dictated by the limits stated in the Energy Risk Management Policy and associated standards to bring exposures within pre-established risk guidelines.
−Removed: The RMC evaluates the actions initiated by the power supply unit for consistency and compliance with the Risk Management Policy and associated standards.
−Removed: Idaho Power representatives meet with the CAG at least annually to assess effectiveness of the limits.
−Removed: Changes to the limits can be endorsed by the CAG and referred to the board of directors for approval.
+Added: The ERMP require monitoring monthly volumetric electricity position and total monthly dollar (net power supply cost) exposure on a rolling 18-month forward view.
+Added: The power supply business unit produces and evaluates projections of the operating plan based on factors such as forecasted resource availability, stream flows, and load, and orders risk mitigating actions, including resource optimization and hedging strategies, dictated by the limits stated in the ERMP to bring exposures within pre-established risk guidelines.
+Added: The RMC evaluates the actions initiated by the power supply unit for consistency and compliance with the ERMP.
IDACORP is subject to credit risk based on Idaho Power's activity with market counterparties.
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Idaho Power maintains margin agreements relating to its wholesale commodity contracts that allow performance assurance collateral to be requested of and/or posted with certain counterparties.
−Removed: As of December 31, 2022, Idaho Power had no
−Removed: performance assurance collateral posted related to these contracts.
+Added: As of December 31, 2023, Idaho Power posted $53 million of performance assurance collateral related to these contracts.
Should Idaho Power experience a reduction in its credit rating on Idaho Power’s unsecured debt to below investment grade, Idaho Power could be subject to requests by its wholesale counterparties to post additional performance assurance collateral.
Counterparties to derivative instruments and other forward contracts could request immediate payment or demand immediate ongoing full daily collateralization on derivative instruments and contracts in net liability positions.
−Removed: Based upon Idaho Power’s energy and fuel portfolio and market conditions as of December 31, 2022, the amount of collateral that could be requested upon a downgrade to below investment grade was approximately $113.3 million.
+Added: Based upon Idaho Power’s energy and fuel portfolio and then existing market conditions as of December 31, 2023, the amount of additional collateral that could have been requested upon a downgrade to below investment grade was approximately $23 million.
To minimize capital requirements, Idaho Power actively monitors the portfolio exposure and the potential exposure to additional requests for performance assurance collateral calls through sensitivity analysis.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.