Idacorp Inc (IDA) 2010 Q3 法說會逐字稿

Good day and welcome, everyone, to the IDACORP third quarter 2010 conference call. Today's call is being recorded and is being webcast live. A complete replay will also be available from the end of the day for a period of 12 months on the Company's website at www.IDACORPInc.com. (Operator Instructions).

At this time, I would like to turn the call over to the Director of Investor Relations, Mr. Lawrence Spencer. Please, go ahead, sir.

Thank you, Michael, and good afternoon, everyone. Welcome to our October 28th third quarter 2010 earnings release conference call. We issued earnings release before the markets opened today and that document, along with our SEC Form 10-Q, is now posted to our IDACORP website at www.IDACORPInc.com.

We will be using a few slides to supplement today's call, and these are also located at our IDACORP website. We will refer to specific slide numbers as we work our way through today's presentation.

Now, moving to Slide 2. On the call today we have LaMont Keen, IDACORP and Idaho Power, President and CEO, and Darrel Anderson, IDACORP and Idaho Power Executive Vice President of Administrative Services and CFO. We also have other individuals available to help answer your questions during the Q-and-A period.

Before turning the presentation over to LaMont I'll cover a few details with you. First, our safe harbor statement is on slide 3. Our presentation today contains forward-looking statements, and it is important to note that the Company's future results could differ materially from those discussed. While these forward-looking statements represent our current judgment of what the future holds, these statements are also subject to risk and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these forward-looking statements which reflect our opinion only as of today. A more complete discussion of factors that could cause future results to differ materially can be found in our filings with the Securities and Exchange Commission which we encourage you to review.

Referring to Slide 4, I'll briefly discuss the financial results from today's earnings press release. Third-quarter 2010 net income attributable to IDACORP was $67.1 million, $12.7 million more than last year's third-quarter. Year-to-date net income attributable to IDACORP was $122.4 million, $21.6 million more than the first nine months of 2009.

Idaho Power's third-quarter 2010 net income was $64.7 million compared to $51.1 million in the third quarter of 2009, while Idaho Power's year-to-date 2010 net income was $121.7 million, $25 million greater than the same period in 2009.

IDACORP earnings increased by $0.23 per diluted share quarter-over-quarter to $1.39 per diluted share, and by $0.40 per diluted share on a year-to-date basis relative to the same period in 2009 to $2.55 per diluted share.

As indicated in today's earnings press release, our current full year 2010 earnings guidance has increased from a range of $2.65 to $2.80 per diluted share to a range of $2.75 to $2.90 per diluted share.

I'll now turn the presentation over to LaMont.

Thanks, Larry, and welcome to our call participants. We thank you for your interest in IDACORP.

I am pleased with our continued earnings growth in the third quarter and for the year. Our commitment to fundamentals is the foundation of our success. Sound operations and purposeful regulatory and tax strategies all contributed to our recent financial performance.

In addition to the income tax benefits recorded in the third quarter, which Darrel will discuss in a few minutes, a significant component of the quarter's results originated in the Idaho jurisdictional rate settlement agreement finalized in January 2010. Throughout the first six months of the year, the most notable impact of the settlement was the moratorium on base rate increases until the annual power cost adjustment or PCA on June 1st.

The base rate increase side of the agreement was implemented with the PCA change. Therefore, the increased base rates were in effect during the third quarter and helped boost earnings. The settlement is an example of how we take the long-range view when it comes to financial stability and the success of IDACORP. And a long-range view is important when we consider that the local economy within our service territory remains relatively weak. However, a foundation exists for future growth, and as indicated in the 10-Q, a number of potential new customers have expressed interest in obtaining service with loads greater than 1 megawatt from Idaho Power Company.

While unemployment rates are presently high relative to historical levels and growth in the number of customers has been slow relative to prior years, we anticipate that residential, commercial and industrial customer growth rates will increase when economic conditions within the service area improve.

Mild weather combined with continued slow economic conditions resulted in decreased power demand in the service area. The notable exception was for energy sales to irrigation customers where we saw an increase of 9% for the quarter compared to the same period in 2009.

Moving over to the supply side of things, Idaho Power is currently developing additional generation and transmission facilities to meet our customers' electrical energy needs. Langley Gulch, our 300-megawatt natural gas-fired power plant, will be one of the foundational pieces supplying the energy needed to power our communities. Construction of the plant commenced in July and the project is progressing on schedule.

We continue to diversify our generation portfolio in a number of other ways to improve reliability and prepare us to address renewable portfolio standards that may be enacted.

Our purchase agreements with solar and geothermal PERPA projects, such as the 20-megawatt Grand View Solar Project and the 22 megawatt-Neo Hot Springs Geothermal Project, have been approved by the Idaho Public Utilities Commission or IPUC. Recently, we also filed with the IPUC for approval to add the 80-megawatt Rockland Wind Project to our purchase power portfolio.

Idaho Power continues to analyze and pursue additional geothermal, wind, biomass and combined heat and power generation resource opportunities. Our diligence in the area of environmental stewardship has been recognized by the Maple Crop Climate Innovation Indices, which recently ranked IDACORP number 57 among 339 US companies -- up from number 68 a year ago -- that successfully innovate and manage climate related opportunities.

As always, we continue to operate the business with the focus on resourcefulness and sound management while making balanced decisions.

I'll now hand it off to Darrel Anderson who will update you on our financial results for the quarter.

Thanks, LaMont, and good afternoon, everyone. Today I will discuss our income tax projects relating to capitalized repair expenditures and uniform capitalization, the reconciliation of earnings from third quarter 2009 to third quarter 2010, our current liquidity positions at IDACORP and Idaho Power and 2010 key operating and financial metrics. After that, we look forward to taking your questions.

On Slide 5, we show the two tax method change projects with a summary of key provisions for each. The slide summarizes the accumulative impact of the changes through 2009, but does not include ongoing impacts relative to 2010 and beyond. For the first nine months of the year, we recorded tax benefits for the capitalized repairs method change of $53.3 million. The benefits are compromised of the cumulative benefit for the years 1999 through 2009 of 44.5 million, which is rounded to 45 million on Slide 5, and 8.8 million for the first nine months of the 2010 tax year.

The benefits were reduced by a liability for uncertain tax position of $14 million, resulting in a net benefit of $39.3 million. Of the $39.3 million, $28.8 million was recognized in the second quarter and $10.5 million was recognized in the third quarter.

With respect to the uniform capitalization method change, the Internal Revenue Service and Idaho Power reached agreement on the method change during the third quarter 2010. For the three months ended September 30th, 2010, Idaho Power recorded a tax benefit of $65.3 million for the tax years 1986 through 2009. However, until the US Congress Joint Committee on Taxation decides on this method, Idaho Power has provided a current uncertain tax position liability equal to the full $65.3 million tax benefit. We cannot predict exactly when such approval will be realized, but believe it is possible in the fourth quarter 2010 or more likely during 2011. Additional information relating to the tax project is included in our 10-Q filed earlier today.

The Company has, and will, realize federal and state cash benefits associated with the 2009 capitalized repairs and uniform capitalization method changes of $33 million and $42 million respectively. The majority of this cash benefit has been realized through reductions to cash payments that would otherwise been owed to the taxing authority for the 2009 tax year except for a federal refund of $24 million that is expected to be received in the fourth quarter of 2010. Approximately $9 million of state cash benefits are expected to be substantially realized to reduce tax payments for the 2010 tax year.

On Slide 6, we present a reconciliation of net income attributable to IDACORP from the third quarter 2009 to third quarter 2010. This shows an increase in net income from 54.5 million to $67.1 million. Increases to base rate and other regulatory changes, combined with the negative impact of reduced sales volume, accounted for a net $9.4 million increase in operating income. Sales volumes were lower largely due to mild weather, economic conditions and energy conservation.

Another change for the quarter was the $4 million net decrease in income tax expense, which is primarily due to net additional capitalized repairs method benefits that were recorded in the third quarter of 2010 that has been previously discussed.

I'll now discuss IDACORP's liquidity for the first nine months of 2010. Cash flow from operations for the year-to-date September 2010 was $223 million, the same as was generated for the same period in 2009. Movement in operating cash flow include changes in accounts receivable, unbilled revenues and accounts payable that provided approximately $50 million dollars in positive cash flow, offset by a $60 million contribution made to the defined benefit pension plan.

Collections under the PCA and PCAM improved operating cash flow by $11 million as compared to 2009. Cash used for investing activities increased approximately $83 million in the first nine months of 2010 relative to the same period in 2009.

Idaho Power's net expenditures for utility plant, which are the additions to utility plant less the proceeds from the sale of utility assets, accounted for the majority of the increase. Included in this increase were expenditures related to Langley Gulch Power Plant of approximately $87 million. From inception through September 30th, 2010, the Company has spent $140 million on the plant excluding $6 million of AFUDC. Construction expenditures were partially offset by proceeds from the sale of $19 million of transmission-related assets to PacifiCorp.

Key financing activities during the first nine months of 2010 included the issuance in August of $200 million of long-term debt comprised of $100 million, 3.4% 10-year first mortgage bond and $100 million of 4.85% 30-year first mortgage bond; the issuance of $38 million of common stock from our continuous equity program and employee plan in the net repayment by IDACORP of $50 million of commercial paper. As of September 30th, 2010, there are approximately 1.4 million shares remaining under the continuous equity program. Commercial paper outstanding as of September 30th, 2010, was $4 million at IDACORP and none at Idaho Power.

Current revolving credit facilities at IDACORP and Idaho Power are 100 million and $300 million respectively with $96 million available at IDACORP and $276 million available at Idaho Power at September 30th, 2010. Both of these facilities expire in April 2012.

Looking forward, Idaho Power has $120 million of first mortgage bonds that mature in the first quarter of 2011. The issuance of $200 million of long-term debt in August was done in anticipation of repaying these bonds.

I'll now update you on the key operating and financial metrics for 2010 on Slide 7. These are also shown in both the earnings release and our third quarter 2010 Form 10-Q which were both issued earlier today.

Expected hydroelectric generation range for 2010 tightened since our second quarter disclosure in early August. The new range of 7.0 to 7.5 million megawatt hours of hydroelectric generation now reflects actual data through September and our estimated range of generation for the remainder of 2010.

With the operating results to date, and the impact of the tax method change, we are now able to increase our 2010 earnings guidance from a range of $2.65 to $2.80 per diluted share up to a range of $2.75 to $2.90 per diluted share. This guidance incorporates the estimated net tax benefits from the capitalized repairs method change that was recorded in the second and third quarters, but does not include any potential benefit that could result from the uniform capitalization method change.

The earnings guidance incorporates an estimated return on equity that exceeds the 9.5% threshold under the Idaho settlement, but below the 10.5% threshold that would result in customer sharing. Based on the earnings guidance, no accumulated deferred investment tax credits are expected to be recognized in 2010.

While we are not expecting to initiate 2011 earnings guidance until our February 2011 earnings conference call, there are a couple of considerations we have previously identified that we wanted to remind you of when looking towards 2011.

The first is that under the 2010 Idaho settlement, we will have the ability to utilize up to $25 million of accumulated deferred investment tax credit up to a 9.5% return on earned equity in the Idaho jurisdiction.

Second, 2011 results will include a full year of the impact of the base rate increases and other rate and regulatory mechanisms that went into effect during 2010 in all of our jurisdictions including Idaho, Oregon, and the FERC.

This concludes my financial update. Now, we'd like to respond to your questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. The question and answer will be conducted electronically. (Operator Instructions). Your first question comes from the line of Paul Ridzon of KeyBanc. You may proceed.

Can you just remind us when your Idaho, Oregon, and FERC rates kicked in during 2010?

Yes, Paul, just a second. As you know, we had a lot of rate adjustments that played out in 2010. We have a schedule in our 10-Q that kind of summarizes those. I might just point to that. It's on Page 53, and in there it refers to -- there's about 10 or 11 different rate proceedings that are listed there and their various respective changes and impacts on annualized revenue. So that might be the best place to look, Paul. I could go through all of those, but there's quite a few of them.

That's okay. And can you kind of give us a sense of where you expect year-end 2010 utility equity to be under this -- for settlement purposes?

Paul, we can't actually -- you can get to that number if you take a look at the third-quarter equity number and kind of use your best estimate of where your expected earnings for Idaho Power are going to end up, and I guess I would suggest that would be your best way to get there.

As I indicated, we do expect to be between the 9.5 and the 10.5 within the Idaho jurisdiction piece of that. And the main thing there is -- the reason I can't really give you a better number for that is the allocation between jurisdiction moves around a little bit on a certain number of factors and it can be -- kind of range anywhere from like 91 to 95 to 96%, and so until we kind of get there, that's a bit of a moving target for us, too.

Okay. And then just this Congressional approval, is this on a case-by-case basis or does the entire concept have to be approved by Congress?

I'm going to let Steve kind of answer -- Steve Keen answer that question for you.

Hi, Paul. The Joint Committee approval is -- it's a fairly standardized process, but it has to do with the size of the refund, the combined changes are causing for the 2009 tax year. So any refund -- I believe it's over $2 million -- has to go through Joint Committee. So it is a process that happens quite a bit. And as we looked at this particular one, there just hasn't been anyone else with -- particularly with the second method that has been through that process.

How would you characterize the potential risk that this doesn't happen?

We're not really -- we're not going to put a handicap on it. I would say that the Joint Committee process is one that is -- it is, I think, it's up or down process. When we've been there before, we've been approved, but the size of this particular item and the fact that no one has actually gotten approval yet is what drove us to put the reserve on at this time.

But there are other cases ahead of you in line?

There's a variety of cases pending from what we've heard and that's -- we don't have perfect knowledge of everybody else's case. And as we moved through the year, we had different expectations. As it sits right now, we think we may not be the first in line, but we're certainly there with the crowd that is ready to go through, so more to come on that.

Paul, this is Darrel. I would just add to that -- as you know, we believe we followed the guidelines provided in the IDD that came out from the service. So I think from the standpoint of the method itself, we feel pretty good about where we stand, and I think just given the magnitude of the amount, we just felt until we have that final sign-up -- we have every other sign-up -- until we have that final sign-up, we felt it was prudent to put 100% reserve against the -- our estimates.

Okay. Thank you very much and congratulations on a good quarter.

Thank you.

Thanks, Paul.

Your next question comes from the line of Brian Russo of Ladenburg Thalman. You may proceed.

Good afternoon.

Hi, Brian.

Hey, I apologize, but I got a little distracted before and I missed your commentary on the uniform capitalization method change. Was anything recorded, meaning did it hit the income and cash flow statement, and you also created the deferred tax liability, or is that something still to come depending on the outcome of any Congressional approval?

Brian, this is Darrel. We did record the benefit, and then we then also offset it with an uncertain tax position 100% reserve against that, and it all flows basically through the tax provision line.

Okay. And even if you do get approval, would you still reserve against part of it or no?

We believe that under this particular one, different than the repairs, is that if this is -- if we have approval from the Joint Committee, then we would expect to reverse 100% of the reserve.

Okay. Any timeline through Congressional approval?

No. We shared with you our best estimate of when that process runs. We don't control that process. So in essence, like we said, we said it still could happen this year, but more likely probably 2011, but we really aren't in a position, like Steve said, to be able to handicap it today as to what that timing looks like.

Okay. So just the method for repair-related items that improved your shareholder equity balance which led to the increase in your 2010 guidance, that also carries over into a 2011 shareholder equity balance that you're just not ready to discuss further. And then, in addition, you have the uniform capitalization method change that's pending which would be an incremental boost to take cash in '11 and beyond.

Right. We believe both methods, once approved and through the various processes, would continue to have an impact on our cash provision should -- in most cases, should still continue to be a benefit going forward. But also just realize that at any point in time that we go back and reset base rates, these items would go into the determining the resetting of those base rates.

Understood. And when you go in for your next rate case in mid '11, are these ADITCs, if you don't use them, of course, are they still available to be used in future rate cases?

Our current agreement with the Commission is that these credits are good for us through 2011, and that's as far as we have gone with those credits at this point in time, and that's the current status of our 2010 settlement.

Right. But if you don't use them, do they -- I mean, do they just sit on the balance sheet or do they expire?

They still retain their value, their future value that's there. I mean, they have not -- will not have been utilized. So, yes, they still retain.

Okay. Thank you very much.

Brian, this is Steve. I just -- they do amortize, and there's a long-term amortization stream, so small amounts come out of that account on an annual basis, but it's a pretty long stream.

Thank you.

Thanks, Brian.

Your next question comes from the line of Emily Christy of RBC Capital Markets. You may proceed.

Good afternoon.

Hi, Emily.

I just want to make sure I understand the risk of this Committee. Is this a risk of magnitude or is this a risk of disallowance? I mean, is it -- could they haircut the 65 million or is it a yes or no?

Emily, this is Steve again. The way we look at that, the Committee itself wouldn't make a change. They could say no and then it would go back to exam for some further review or possible change or maybe a complete disallowance. We don't really know where it would go at that point.

I guess from our standpoint, we looked at it more as this is a critical item, it's a very large item, it has implications with our regulatory body, and we need to be sure that it is going to be allowed before we flow it through our income statement and have all those benefits go on from here.

So there are approaches just saying that we don't have final approval. And as we look beyond our own issue, we didn't find anybody else that we're aware of that has gotten final approval with this, and it is a bit of a deviation from where the service has been in the past. So I think we're just looking for more assurance before we would run something like that through our income statement.

Emily, this is Darrel again. I just want to kind of reemphasize the other thing. We continue -- I mean, we have completely followed the process that the service has set out. We have their agreement on the method change. We followed the letter of what -- the directive that came out. And so, again, because of the size and magnitude, it does need to go to Joint Committee, and so, again, we believe conservatively it made sense not to recognize the benefits at this time, but we have done everything exactly in accordance with what the service has requested with respect to this method change.

Okay. And then just switching gears for a bit, this week you filed an energy efficiency/demand-side management kind of restructuring application, I guess. Can you just tell me a little bit about how that came out? Was that a result of these workshops you've been holding? Is this expected by the Commission? How is that framed at this point?

Emily, we're going to have Greg Said, who heads up our regulatory area, kind of talk to you about that.

Thanks.

Yes.

There have been discussions going along for some time, mostly internal, but the Commission staff has been aware of our concern as to the balance of the DSM rider funding mechanism, and currently, all of the funding of our energy efficiency is recovered through our rider. And so the filing this week is really to address where that funding source comes from.

And so we've identified some energy efficiency demand response programs that we feel are related power supply expenses and could be recovered through our power cost adjustment mechanism rather than through the rider mechanism. So the filing generally is to just shift funding from one mechanism, the rider fund, to another mechanism, the PCA. The recovery from customers would be identical. It would just be a different funding source.

Emily, this is Darrel. Just to add to that, part of our effort there is because we are in the business -- I mean we have gotten into the business of energy efficiency and demand-side programs, that we wanted to treat some of the programs that we have no different than we would otherwise treat some of our supply side resource items. And that's why we believe that more than just cost recovery might be a more equitable -- for the level of investments that we're making in some of those programs. And that's why what you see is a switch from just straight cost recovery to some other opportunities in which to earn on some of those investments that we're making.

Okay. And do you think this will spark kind of a further discussion on the fixed-cost adjustment levels or is that for the separate filing later on?

The fixed-cost adjustment should be separate from this filing. There aren't risk related issues that cross over at least related to this filing.

Okay. Thank you.

Thanks, Emily.

Your next question comes from the line of James Bellessa of D.A. Davidson & Co. You may proceed.

Good afternoon.

Hi, Jim.

James Bellessa. In your press release you have this paragraph about tax accounting method for repair-related expenditures, and the figures changed from the second-quarter press release. What causes the change in the numbers?

Jim, this is Steve. What happened there is when we booked that item in the second quarter, we were making an estimation. We felt like we had enough facts in place that it was going to happen, and we made the best representation we could at the time for the number.

Third quarter, the actual amounts were final. Everything was put in the systems and had been run and actually put into the tax return, and we just had a final number that delivered more benefit. So it's really just a true-up to what the final calculation was for that method change.

In your slides just identify these two tax projects, and under the repair-related items, you have cash delivered $33 million and in your text, 32.6 and you've explained it's just rounding. Now, what do you mean by cash delivered? You haven't received the cash, have you? Do you expect to receive the cash? Somebody is going to deliver you cash? What's going to happen?

Jim, this is Darrel. What we've -- if you look on those slides, what we talked about in both of those projects on the cash delivered side of it, about $33 million or so on the repair side and another 42 million on the Unicap side. Total cash we expect is about $75 million is kind of our estimate. Of that $75 million, about $24 million we are anticipating in the form of a refund here in the fourth quarter.

We're also anticipating another approximately $9 million of refunds related to state benefit. We also -- there's about $25 million of other cash that we haven't had to pay out in the form of reduced payment to the service. That leaves you about $17 million of what, in essence, is cash we would have received. And then we also then had to reinstate tax credits because of credits that we had recognized in prior years. So the total number is about $75 million.

And we have received most -- recognized most of all the benefits of that with the exception of about the $33 million of cash to be received, 24 of it in this quarter and the other 9 million in possible state refunds later.

The cash, it's cash-cash. It's not taxable event or it doesn't have a tax effect to it. It goes right into your equity account?

That's correct.

And then it becomes the base for the year-end figure for calculating the ABITC in the State of Idaho.

Any benefits we've recognized that we will have recognized as part of the tax benefit, any earnings contributions coming in there will go into our Idaho Power equity that would then be used as part of the jurisdiction allocation for the earnings test to hit the 9.5.

Jim, I just wanted to point out, though, that cash is different than the earnings, and we wanted to make sure -- that's why we put the slide in -- that you would understand that 100% of the earnings didn't all turn into cash; the difference being some of that is a deferred tax change that came about as the method was applied.

But the cash that is there does -- we do have -- the part that we've already got in hand, it's in part of the operations. We're using it to fund the ongoing business of the Company, but it is different than the part that hit the equity side. The equity side really relates to the income numbers.

And I'd also point out that the cash claim on the uniform capitalization method is really based on -- we took advantage of the fact that that is the method we've been put on, but we're believing there's -- that won't be absolutely final and 100% our cash until that Joint Committee ruling that says it's okay. So if that were to go the other direction, that particular cash would have to be given back, but there wouldn't be any earnings adjustment at that time because we've reserved the entire amount.

Now, if you do over-earn 10.5% in the Idaho jurisdiction, you're saying you have to make a refund. Have you made a projection whether or not you're going to be above that level and a refund is possible during the next 12 to 18 months?

Jim, this is Darrel. All we have done really at this point in time is look -- we're looking at 2010, and as we sit here in 2010, we are not anticipate being in sharing as it stands right now. Again, timing of the Unicap and other things could dictate changes in that at this point in time, but right now, we have not assumed that in any of the earnings guidance information we've provided.

Now when you get to 2012, your rate moratorium is lifted and you can ask for rate relief, I would imagine. Is this kind of additions to equity kind of at play? Would the regulators disallow some of it or reduce your ROE or reduce your rate base or something of that ilk?

Jim, this is Darrel. I'll try to answer that question. I think, first of all, one of the things our focus is on is maintaining a balanced capital structure and at the same time, maintaining our credit quality, and we think the Commission is supportive of doing that. I think they're supportive in making sure that they've got a healthy utility company.

And so, whether -- whatever we're trying to do to bolster our balance sheet, and these are some of the things that we are trying to do to bolster that balance sheet to maintain our credit quality, I think that -- I can't speak directly for the Commission, but I think they will kind of take a look at it from the standpoint at where we are at the point in time that we would subsequently file.

I'm looking over at Greg and see if he has any kind of other comments to that effect. Greg, do you have any?

No, I don't have anything to add.

And, Jim, we've been just a slight -- probably where our target cap structure being 50-50, we've been a little bit light and we're continuing to kind of push to get to that number. We're getting closer, and these kind of projects where we've been able to grow some of that equity have been helpful.

Thank you very much.

Thanks, Jim.

Your next question comes from the line of Paul Ridzon of KeyBanc. You may proceed.

Sorry, I was on mute. Assuming this Congressional approval comes through, would you imagine that that would put the Board in a position to think more seriously about the dividend payout and yield here?

This is LaMont. At this point, we've not reflected the outcome of the -- or likely outcome or not of the tax decision in that equation. As you know, the dividend policy is strictly up to the Board of Directors of IDACORP, and they look at a number of things including our long-term financial position, results of operations, capital requirements, rating agency agreements, legislative and regulatory developments, competitive conditions and other factors.

Although our earnings profile has improved, the Board has not elected to increase the dividend thus far in light of the capital needs, again, the regulatory and economic environment and the desire to protect our credit quality. That said, they review it on an ongoing basis and would make adjustments as they deem appropriate.

If we get the Congressional approval, when would you envision kind of the earliest for any meaningful external equity?

Paul, this is Darrel. I think right now based on the -- our current investments of our capital requirement, we believe we don't have any significant needs for new equity. We have very -- what we think are modest needs for new equity as we go into 2011. And so, really, I mean, some of it will be dependent upon that, and if we are to recognize the Unicap method and be able to get that equity, I mean, that may provide us enough that we don't necessarily have -- we have to do very little going into 2011.

Okay. Thanks again.

Your next question comes from the line of John Ali of Decade Capital. You may proceed.

Hi, guys, good quarter. I know you're not giving guidance for '11, but is the right way to think about it somewhere between 9.5 and 10.5% ROE on the IDACORP equity?

I think what I would -- this is Darrel talking. And I think one thing you can do is we still are in the settlement, and the settlement suggests that we can utilize up to $25 million of additional ITCs in getting to the 9.5 within the Idaho jurisdiction, and I think that is one way you have to look at that.

And the 25 doesn't necessarily guarantee that you get to the 9.5; it's just up to 9.5, we can utilize up to 25 million. And so probably, beyond that -- I mean, one way you can look at that is where are we today, what's your estimates of what you think might be for the balance of the year, determine what you think that year-end equity number is and do your estimate to come up with a kind of a range there is one to go about it.

The one thing I would just say is the actual jurisdiction allocation is, like I said earlier, can move around a little bit between the low-to-mid 90s. So that's a bit of a wild card, too.

Sure. But at the end of the day, you have $0.50 of flexibility because of those ADITCs?

They can bring it up to the 9.5, and if we have -- like we had last year and like we did this year, we're not projecting to use any of the ITCs because we were able to have ongoing earnings contributions from ongoing operations and the tax projects are the things that have allowed us not to utilize any of the ITCs to date.

If you were to utilize -- I guess, got the Unicap deduction approved and used those earnings to kind of break above that 9.5% range and were not to utilize the ADITCs, you could kind of roll those into the next settlement or is that a possibility?

The settlement expires at the end of '11, but, I mean, they would be available if that were going to be part of our strategy which we really haven't spent a lot of time kind of focusing on that. We've got a lot of various regulatory things that we are considering that are out there today and that's just one piece of it.

Great. Thanks, guys.

Thanks.

(Operator Instructions). That concludes the question-and-answer session for today. Mr. Keen, I will turn the conference back to you.

Thank you all for participating on our call this afternoon. We hope to see many of you next week at the EEI Financial Conference in Palm Desert, California. Once again, thank you for your interest in IDACORP. Good day.

That concludes today's conference. Thank you for your participation.