UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
X |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2006
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
|
EXCHANGE ACT OF 1934 |
For the transition period from |
to |
Exact name of registrants as specified |
I.R.S. Employer |
||||
Commission File |
in their charters, address of principal |
Identification |
|||
Number |
executive offices, zip code and telephone number |
Number |
|||
1-14465 |
IDACORP, Inc. |
82-0505802 |
|||
1-3198 |
Idaho Power Company |
82-0130980 |
|||
1221 W. Idaho Street |
|||||
Boise, ID 83702-5627 |
|||||
(208) 388-2200 |
|||||
State of Incorporation: Idaho |
|||||
Websites: |
www.idacorpinc.com |
||||
www.idahopower.com |
|||||
None |
Former name, former address and former fiscal year, if
changed since last report.
Indicate by check mark
whether the registrants (1) have filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrants were required to
file such reports), and (2) have been subject to such filing requirements for
the past 90 days. Yes
X
No ___
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, or non-accelerated filers.
IDACORP, Inc.: |
||||||
Large accelerated filer |
X |
Accelerated filer |
Non-accelerated filer |
|||
Idaho Power Company: |
||||||
Large accelerated filer |
Accelerated filer |
Non-accelerated filer |
X |
Indicate by check mark
whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange
Act). Yes ___ No
X
Number of shares of Common
Stock outstanding as of September 30, 2006:
IDACORP, Inc.: |
42,932,144 |
Idaho Power Company: |
39,150,812, all held by IDACORP, Inc. |
This
combined Form 10-Q represents separate filings by IDACORP, Inc. and Idaho Power
Company. Information contained herein relating to an individual registrant is
filed by that registrant on its own behalf. Idaho Power Company makes no
representations as to the information relating to IDACORP, Inc.'s other
operations.
Idaho
Power Company meets the conditions set forth in General Instructions H(1)(a)
and (b) of Form 10-Q and is therefore filing this Form with the reduced
disclosure format.
COMMONLY USED TERMS |
|||
AFDC |
- |
Allowance for Funds Used During Construction |
|
Cal ISO |
- |
California Independent System Operator |
|
CalPX |
- |
California Power Exchange |
|
Energy Act |
- |
Energy Policy Act of 2005 |
|
EPS |
- |
Earnings per share |
|
ESA |
- |
Endangered Species Act |
|
FASB |
- |
Financial Accounting Standards Board |
|
FERC |
- |
Federal Energy Regulatory Commission |
|
FIN |
- |
Financial Accounting Standards Board Interpretation |
|
Fitch |
- |
Fitch Ratings |
|
FPA |
- |
Federal Power Act |
|
GAAP |
- |
Accounting Principles Generally Accepted in the United States of America |
|
Ida-West |
- |
Ida-West Energy, a subsidiary of IDACORP, Inc. |
|
IDWR |
- |
Idaho Department of Water Resources |
|
IE |
- |
IDACORP Energy, a subsidiary of IDACORP, Inc. |
|
IFS |
- |
IDACORP Financial Services, Inc., a subsidiary of IDACORP, Inc. |
|
IPC |
- |
Idaho Power Company, a subsidiary of IDACORP, Inc. |
|
IPUC |
- |
Idaho Public Utilities Commission |
|
IRP |
- |
Integrated Resource Plan |
|
ITI |
- |
IDACORP Technologies, Inc., a subsidiary of IDACORP, Inc. |
|
kW |
- |
Kilowatt |
|
maf |
- |
Million acre-feet |
|
MD&A |
- |
Management's Discussion and Analysis of Financial Condition and Results of |
|
Operations |
|||
Moody's |
- |
Moody's Investors Service |
|
MW |
- |
Megawatt |
|
MWh |
- |
Megawatt-hour |
|
NEPA |
- |
National Environmental Policy Act of 1996 |
|
NOx |
- |
Nitrogen Oxide |
|
OPUC |
- |
Oregon Public Utility Commission |
|
PCA |
- |
Power Cost Adjustment |
|
PM&E |
- |
Protection, Mitigation and Enhancement |
|
PURPA |
- |
Public Utility Regulatory Policies Act of 1978 |
|
RFP |
- |
Request for Proposal |
|
RTO |
- |
Regional Transmission Organization |
|
S&P |
- |
Standard & Poor's Ratings Services |
|
SFAS |
- |
Statement of Financial Accounting Standards |
|
SO 2 |
- |
Sulfur Dioxide |
|
Valmy |
- |
North Valmy Steam Electric Generating Plant |
|
VIEs |
- |
Variable Interest Entities |
TABLE OF CONTENTS
Page |
||||
Part I. Financial Information: |
||||
Item 1. Financial Statements (unaudited) |
||||
IDACORP, Inc.: |
||||
1-2 |
||||
3-4 |
||||
5 |
||||
6 |
||||
Idaho Power Company: |
||||
7-8 |
||||
9-10 |
||||
11 |
||||
12 |
||||
13 |
||||
14-33 |
||||
34-35 |
||||
Condition and Results of Operations |
36-63 |
|||
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
63-64 |
|||
64 |
||||
Part II. Other Information: |
||||
64 |
||||
65 |
||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
65 |
|||
65-71 |
||||
72 |
||||
73-74 |
||||
FORWARD-LOOKING
INFORMATION
This Form 10-Q contains "forward-looking
statements" intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995. Forward-looking
statements should be read with the cautionary statements and important factors
included in this Form 10-Q at Part I, Item 2, "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Forward-Looking
Information." Forward-looking statements are all statements other than
statements of historical fact, including without limitation those that are
identified by the use of the words "anticipates," "believes," "estimates," "expects,"
"intends," "plans," "predicts," "projects," "may result," "may continue" and
similar expressions.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
IDACORP, Inc.
Condensed Consolidated
Statements of Income
(unaudited)
Three months ended |
||||
September 30, |
||||
2006 |
2005 |
|||
(thousands of dollars except |
||||
for per share amounts) |
||||
Operating Revenues: |
||||
Electric utility: |
||||
General business |
$ |
179,411 |
$ |
207,237 |
Off-system sales |
39,692 |
34,105 |
||
Other revenues |
9,696 |
2,890 |
||
Total electric utility revenue |
228,799 |
244,232 |
||
Other |
1,733 |
1,675 |
||
Total operating revenues |
230,532 |
245,907 |
||
Operating Expenses: |
||||
Electric utility: |
||||
Purchased power |
98,926 |
81,396 |
||
Fuel expense |
34,933 |
28,018 |
||
Power cost adjustment |
(54,995) |
(9,670) |
||
Other operations and maintenance |
62,395 |
64,292 |
||
Gain on sale of emission allowances |
(22) |
- |
||
Depreciation |
25,289 |
25,726 |
||
Taxes other than income taxes |
4,057 |
5,115 |
||
Total electric utility operations |
170,583 |
194,877 |
||
Other |
3,293 |
3,125 |
||
Total operating expenses |
173,876 |
198,002 |
||
Operating Income (Loss): |
||||
Electric utility |
58,216 |
49,355 |
||
Other |
(1,560) |
(1,450) |
||
Total operating income |
56,656 |
47,905 |
||
Other Income |
4,431 |
3,610 |
||
Income (Losses) of Unconsolidated Equity-method Investments |
(444) |
872 |
||
Other Expenses |
2,669 |
1,759 |
||
Interest Expense: |
||||
Interest on long-term debt |
14,241 |
14,317 |
||
Other interest expense |
549 |
598 |
||
Total interest expense |
14,790 |
14,915 |
||
Income Before Income Taxes |
43,184 |
35,713 |
||
Income Tax Expense |
10,692 |
9,752 |
||
Income from Continuing Operations |
32,492 |
25,961 |
||
Income (Losses) from Discontinued Operations (net of tax) |
11,497 |
(2,344) |
||
Net Income |
$ |
43,989 |
$ |
23,617 |
Weighted Average Common Shares Outstanding - Basic (000's) |
42,678 |
42,287 |
||
Earnings Per Share of Common Stock (basic): |
||||
Income from Continuing Operations |
$ |
0.76 |
$ |
0.61 |
Income (Losses) from Discontinued Operations |
0.27 |
(0.05) |
||
Earnings Per Share of Common Stock (basic) |
$ |
1.03 |
$ |
0.56 |
Weighted Average Common Shares Outstanding - Diluted (000's) |
42,863 |
42,380 |
||
Earnings Per Share of Common Stock (diluted): |
||||
Income from Continuing Operations |
$ |
0.76 |
$ |
0.61 |
Income (Losses) from Discontinued Operations |
0.27 |
(0.05) |
||
Earnings Per Share of Common Stock (diluted) |
$ |
1.03 |
$ |
0.56 |
Dividends Paid Per Share of Common Stock |
$ |
0.30 |
$ |
0.30 |
The accompanying notes are an integral part of these statements. |
1
IDACORP, Inc.
Condensed Consolidated Statements of Income
(unaudited)
Nine months ended |
||||
September 30, |
||||
2006 |
2005 |
|||
(thousands of dollars except |
||||
Operating Revenues: |
for per share amounts) |
|||
Electric utility: |
||||
General business |
$ |
500,803 |
$ |
504,189 |
Off-system sales |
219,531 |
105,189 |
||
Other revenues |
16,587 |
25,429 |
||
Total electric utility revenue |
736,921 |
634,807 |
||
Other |
4,586 |
3,915 |
||
Total operating revenues |
741,507 |
638,722 |
||
Operating Expenses: |
||||
Electric utility: |
||||
Purchased power |
229,659 |
162,403 |
||
Fuel expense |
83,856 |
77,483 |
||
Power cost adjustment |
(6,928) |
(1,673) |
||
Other operations and maintenance |
193,909 |
185,108 |
||
Gain on sale of emission allowances |
(8,258) |
- |
||
Depreciation |
74,471 |
75,838 |
||
Taxes other than income taxes |
15,957 |
15,644 |
||
Total electric utility operations |
582,666 |
514,803 |
||
Other |
10,157 |
9,380 |
||
Total operating expenses |
592,823 |
524,183 |
||
Operating Income (Loss): |
||||
Electric utility |
154,255 |
120,004 |
||
Other |
(5,571) |
(5,465) |
||
Total operating income |
148,684 |
114,539 |
||
Other Income |
14,181 |
10,978 |
||
Income (Losses) of Unconsolidated Equity-method Investments |
(2,703) |
584 |
||
Other Expenses |
6,745 |
4,055 |
||
Interest Expense: |
||||
Interest on long-term debt |
42,525 |
42,683 |
||
Other interest expense |
2,753 |
1,879 |
||
Total interest expense |
45,278 |
44,562 |
||
Income Before Income Taxes |
108,139 |
77,484 |
||
Income Tax Expense |
26,019 |
13,287 |
||
Income from Continuing Operations |
82,120 |
64,197 |
||
Income (Losses) from Discontinued Operations (net of tax) |
7,201 |
(8,062) |
||
Net income |
$ |
89,321 |
$ |
56,135 |
Weighted Average Common Shares Outstanding - Basic (000's) |
42,569 |
42,245 |
||
Earnings Per Share of Common Stock (basic): |
||||
Income from Continuing Operations |
$ |
1.93 |
$ |
1.52 |
Income (Losses) from Discontinued Operations |
0.17 |
(0.19) |
||
Earnings Per Share of Common Stock (basic) |
$ |
2.10 |
$ |
1.33 |
Weighted Average Common Shares Outstanding - Diluted (000's) |
42,710 |
42,318 |
||
Earnings Per Share of Common Stock (diluted): |
||||
Income from Continuing Operations |
$ |
1.92 |
$ |
1.52 |
Income (Losses) from Discontinued Operations |
0.17 |
(0.19) |
||
Earnings Per Share of Common Stock (diluted) |
$ |
2.09 |
$ |
1.33 |
Dividends Paid Per Share of Common Stock |
$ |
0.90 |
$ |
0.90 |
The accompanying notes are an integral part of these statements. |
2
IDACORP, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
September 30, |
December 31, |
|||
2006 |
2005 |
|||
Assets |
(thousands of dollars) |
|||
Current Assets: |
||||
Cash and cash equivalents |
$ |
8,366 |
$ |
52,356 |
Receivables: |
||||
Customer |
62,907 |
94,469 |
||
Allowance for uncollectible accounts |
(7,100) |
(33,078) |
||
Employee notes |
2,668 |
2,951 |
||
Other |
13,356 |
21,377 |
||
Energy marketing assets |
11,590 |
23,859 |
||
Accrued unbilled revenues |
27,668 |
38,905 |
||
Materials and supplies (at average cost) |
37,011 |
30,451 |
||
Fuel stock (at average cost) |
15,014 |
11,739 |
||
Deferred income taxes |
26,399 |
23,922 |
||
Prepayments |
14,454 |
17,876 |
||
Regulatory assets |
881 |
3,064 |
||
Other |
2,462 |
2,956 |
||
Assets held for sale |
3,556 |
6,673 |
||
Total current assets |
219,232 |
297,520 |
||
Investments |
199,916 |
191,593 |
||
Property, Plant and Equipment: |
||||
Utility plant in service |
3,568,485 |
3,477,067 |
||
Accumulated provision for depreciation |
(1,410,615) |
(1,364,640) |
||
Utility plant in service - net |
2,157,870 |
2,112,427 |
||
Construction work in progress |
194,519 |
149,814 |
||
Utility plant held for future use |
2,810 |
2,906 |
||
Other property, net of accumulated depreciation |
28,776 |
29,294 |
||
Property, plant and equipment - net |
2,383,975 |
2,294,441 |
||
Other Assets: |
||||
American Falls and Milner water rights |
31,585 |
31,585 |
||
Company-owned life insurance |
34,020 |
35,401 |
||
Energy marketing assets - long-term |
2,768 |
22,189 |
||
Regulatory assets |
371,026 |
415,177 |
||
Long-term receivable (net of allowance of $1,878) |
3,832 |
4,015 |
||
Employee notes -long-term |
2,454 |
2,862 |
||
Other |
42,765 |
43,377 |
||
Assets held for sale |
19,852 |
25,966 |
||
Total other assets |
508,302 |
580,572 |
||
Total Assets |
$ |
3,311,425 |
$ |
3,364,126 |
The accompanying notes are an integral part of these statements |
3
IDACORP, Inc.
Condensed Consolidated
Balance Sheets
(unaudited)
September 30, |
December 31, |
|||
2006 |
2005 |
|||
Liabilities and Shareholders' Equity |
(thousands of dollars) |
|||
Current Liabilities: |
||||
Current maturities of long-term debt |
$ |
15,364 |
$ |
16,307 |
Notes payable |
32,690 |
60,100 |
||
Accounts payable |
66,448 |
80,324 |
||
Energy marketing liabilities |
11,945 |
24,093 |
||
Taxes accrued |
75,372 |
72,652 |
||
Interest accrued |
20,675 |
14,616 |
||
Other |
29,184 |
19,577 |
||
Liabilities held for sale |
1,536 |
5,916 |
||
Total current liabilities |
253,214 |
293,585 |
||
Other Liabilities: |
||||
Deferred income taxes |
497,661 |
519,563 |
||
Energy marketing liabilities - long-term |
2,829 |
22,189 |
||
Regulatory liabilities |
316,807 |
345,109 |
||
Other |
132,998 |
124,833 |
||
Liabilities held for sale |
7,666 |
10,051 |
||
Total other liabilities |
957,961 |
1,021,745 |
||
|
||||
Long-Term Debt |
1,013,692 |
1,023,545 |
||
|
||||
Commitments and Contingencies (Note 5) |
||||
Shareholders' Equity: |
||||
Common stock, no par value (shares authorized 120,000,000; |
||||
43,003,714 and 42,656,393 shares issued, respectively) |
604,823 |
598,706 |
||
Retained earnings |
488,155 |
437,284 |
||
Accumulated other comprehensive income (loss) |
(4,178) |
(3,425) |
||
Treasury stock (71,570 and 24,063 shares at cost, respectively) |
(2,242) |
(998) |
||
Unearned compensation |
- |
(6,316) |
||
Total shareholders' equity |
1,086,558 |
1,025,251 |
||
Total |
$ |
3,311,425 |
$ |
3,364,126 |
|
||||
The accompanying notes are an integral part of these statements. |
4
IDACORP, Inc.
Condensed Consolidated
Statements of Cash Flows
(unaudited)
Nine Months Ended |
||||
September 30, |
||||
2006 |
2005 |
|||
Operating Activities: |
(thousands of dollars) |
|||
Net income |
$ |
89,321 |
$ |
56,135 |
Adjustments to reconcile net income to net cash provided by |
||||
operating activities: |
||||
Unrealized (gains) losses from energy marketing activities |
(234) |
71 |
||
Depreciation and amortization |
90,928 |
93,069 |
||
Deferred income taxes and investment tax credits |
(16,467) |
(8,030) |
||
Changes in regulatory assets and liabilities |
6,111 |
2,974 |
||
Undistributed earnings of subsidiaries |
(7,944) |
(12,027) |
||
Provision for uncollectible accounts |
42 |
(167) |
||
Gain on sale of assets |
(25,242) |
(1,490) |
||
Other non-cash adjustments to net income |
(2,400) |
- |
||
Change in: |
||||
Accounts receivable and prepayments |
23,569 |
(8,875) |
||
Accounts payable and other accrued liabilities |
(14,252) |
(31,518) |
||
Taxes accrued |
2,720 |
19,774 |
||
Other current assets |
1,241 |
(3,535) |
||
Other current liabilities |
14,779 |
9,715 |
||
Other assets |
889 |
(4,455) |
||
Other liabilities |
6,787 |
9,542 |
||
Net cash provided by operating activities |
169,848 |
121,183 |
||
Investing Activities: |
||||
Additions to property, plant and equipment |
(168,185) |
(132,974) |
||
Sale of ITI |
21,469 |
- |
||
Investments in affordable housing |
- |
(3,752) |
||
Sale of emission allowances |
11,323 |
- |
||
Investments in unconsolidated affiliates |
(15,370) |
- |
||
Purchase of available-for-sale securities |
(14,358) |
(81,693) |
||
Sale of available-for-sale securities |
16,404 |
116,079 |
||
Purchase of held-to-maturity securities |
(2,730) |
(1,369) |
||
Maturity of held-to-maturity securities |
4,647 |
2,789 |
||
Other assets |
617 |
395 |
||
Net cash used in investing activities |
(146,183) |
(100,525) |
||
Financing Activities: |
||||
Issuance of long-term debt |
- |
64,992 |
||
Retirement of long-term debt |
(10,993) |
(76,166) |
||
Dividends on common stock |
(38,449) |
(38,001) |
||
Change in short-term borrowings |
(27,410) |
19,330 |
||
Issuance of common stock |
9,174 |
3,661 |
||
Acquisition of treasury stock |
(213) |
- |
||
Other assets |
(14) |
(4,388) |
||
Other liabilities |
250 |
(176) |
||
Net cash used in financing activities |
(67,655) |
(30,748) |
||
Net decrease in cash and cash equivalents |
(43,990) |
(10,090) |
||
Cash and cash equivalents at beginning of period |
52,356 |
23,403 |
||
Cash and cash equivalents at end of period |
$ |
8,366 |
$ |
13,313 |
Supplemental Disclosure of Cash Flow Information: |
||||
Cash paid during the period for: |
||||
Income taxes |
$ |
43,022 |
$ |
2,718 |
Interest (net of amount capitalized) |
$ |
35,520 |
$ |
36,361 |
Non-cash investing activities |
||||
Additions to property, plant and equipment |
$ |
9,226 |
$ |
12,757 |
The accompanying notes are an integral part of these statements. |
5
IDACORP, Inc.
Condensed Consolidated
Statements of Comprehensive Income
(unaudited)
Three Months Ended |
||||
September 30, |
||||
2006 |
2005 |
|||
(thousands of dollars) |
||||
Net Income |
$ |
43,989 |
$ |
23,617 |
Other Comprehensive Income (Loss): |
||||
Unrealized gains (losses) on securities: |
||||
Unrealized holding gains arising during the period, |
||||
net of tax of $673 and $196 |
1,141 |
214 |
||
Reclassification adjustment for gains included |
||||
in net income, net of tax of ($326) and ($321) |
(508) |
(500) |
||
Net unrealized gains (losses) |
633 |
(286) |
||
Total Comprehensive Income |
$ |
44,622 |
$ |
23,331 |
Nine Months Ended |
||||
September 30, |
||||
2006 |
2005 |
|||
(thousands of dollars) |
||||
Net Income |
$ |
89,321 |
$ |
56,135 |
Other Comprehensive Income (Loss): |
||||
Unrealized gains (losses) on securities: |
||||
Unrealized holding gains (losses) arising during the period, |
||||
net of tax of $608 and ($393) |
893 |
(929) |
||
Reclassification adjustment for gains included |
||||
in net income, net of tax of ($1,057) and ($714) |
(1,646) |
(1,111) |
||
Net unrealized gains (losses) |
(753) |
(2,040) |
||
Total Comprehensive Income |
$ |
88,568 |
$ |
54,095 |
The accompanying notes are an integral part of these statements. |
6
Idaho Power Company
Condensed Consolidated
Statements of Income
(unaudited)
Three months ended |
||||
September 30, |
||||
2006 |
2005 |
|||
(thousands of dollars) |
||||
Operating Revenues: |
||||
General business |
$ |
179,411 |
$ |
207,237 |
Off-system sales |
39,692 |
34,105 |
||
Other revenues |
9,696 |
2,161 |
||
Total operating revenues |
228,799 |
243,503 |
||
Operating Expenses: |
||||
Operation: |
||||
Purchased power |
98,926 |
81,396 |
||
Fuel expense |
34,933 |
28,018 |
||
Power cost adjustment |
(54,995) |
(9,670) |
||
Other |
46,999 |
50,486 |
||
Gain on sales of emission allowances |
(22) |
- |
||
Maintenance |
15,396 |
13,173 |
||
Depreciation |
25,289 |
25,726 |
||
Taxes other than income taxes |
4,057 |
5,115 |
||
Total operating expenses |
170,583 |
194,244 |
||
Income from Operations |
58,216 |
49,259 |
||
Other Income (Expense): |
||||
Allowance for equity funds used during construction |
1,711 |
1,158 |
||
Earnings of unconsolidated equity-method investments |
2,191 |
2,937 |
||
Other income |
2,460 |
3,069 |
||
Other expense |
(2,577) |
(2,462) |
||
Total other income |
3,785 |
4,702 |
||
Interest Expense: |
||||
Interest on long-term debt |
13,548 |
13,427 |
||
Other interest |
1,263 |
704 |
||
Allowance for borrowed funds used during construction |
(998) |
(668) |
||
Total interest expense |
13,813 |
13,463 |
||
Income Before Income Taxes |
48,188 |
40,498 |
||
Income Tax Expense |
17,799 |
19,529 |
||
Net Income |
$ |
30,389 |
$ |
20,969 |
The accompanying notes are an integral part of these statements. |
7
Idaho Power Company
Condensed Consolidated Statements of Income
(unaudited)
Nine months ended |
||||
September 30, |
||||
2006 |
2005 |
|||
(thousands of dollars) |
||||
Operating Revenues: |
||||
General business |
$ |
500,803 |
$ |
504,189 |
Off-system sales |
219,531 |
105,189 |
||
Other revenues |
16,587 |
23,473 |
||
Total operating revenues |
736,921 |
632,851 |
||
Operating Expenses: |
||||
Operation: |
||||
Purchased power |
229,659 |
162,403 |
||
Fuel expense |
83,856 |
77,483 |
||
Power cost adjustment |
(6,928) |
(1,673) |
||
Other |
143,079 |
137,119 |
||
Gain on sales of emission allowances |
(8,258) |
- |
||
Maintenance |
50,830 |
46,133 |
||
Depreciation |
74,471 |
75,838 |
||
Taxes other than income taxes |
15,957 |
15,644 |
||
Total operating expenses |
582,666 |
512,947 |
||
Income from Operations |
154,255 |
119,904 |
||
Other Income (Expense): |
||||
Allowance for equity funds used during construction |
4,821 |
3,702 |
||
Earnings of unconsolidated equity-method investments |
5,995 |
8,127 |
||
Other income |
8,376 |
8,691 |
||
Other expense |
(6,834) |
(6,191) |
||
Total other income |
12,358 |
14,329 |
||
Interest Expense: |
||||
Interest on long-term debt |
40,479 |
39,982 |
||
Other interest |
3,727 |
2,593 |
||
Allowance for borrowed funds used during construction |
(2,784) |
(2,060) |
||
Total interest expense |
41,422 |
40,515 |
||
Income Before Income Taxes |
125,191 |
93,718 |
||
Income Tax Expense |
48,169 |
38,364 |
||
Net Income |
$ |
77,022 |
$ |
55,354 |
The accompanying notes are an integral part of these statements. |
8
Idaho Power Company
Condensed Consolidated Balance Sheets
(unaudited)
|
September 30, |
December 31, |
||
2006 |
2005 |
|||
Assets |
(thousands of dollars) |
|||
|
|
|||
Electric Plant: |
||||
In service (at original cost) |
$ |
3,568,485 |
$ |
3,477,067 |
Accumulated provision for depreciation |
(1,410,615) |
(1,364,640) |
||
In service - net |
2,157,870 |
2,112,427 |
||
Construction work in progress |
194,519 |
149,814 |
||
Held for future use |
2,810 |
2,906 |
||
|
||||
Electric plant - net |
2,355,199 |
2,265,147 |
||
Investments and Other Property |
88,709 |
68,049 |
||
Current Assets: |
||||
Cash and cash equivalents |
4,406 |
49,335 |
||
Receivables: |
||||
Customer |
55,849 |
49,830 |
||
Allowance for uncollectible accounts |
(900) |
(833) |
||
Notes |
3,115 |
3,273 |
||
Employee notes |
2,668 |
2,951 |
||
Related parties |
733 |
637 |
||
Other |
9,372 |
7,399 |
||
Accrued unbilled revenue |
27,668 |
38,905 |
||
Materials and supplies (at average cost) |
37,011 |
30,451 |
||
Fuel stock (at average cost) |
15,014 |
11,739 |
||
Prepayments |
14,199 |
17,532 |
||
Regulatory assets |
881 |
3,064 |
||
Total current assets |
170,016 |
214,283 |
||
Deferred Debits: |
||||
American Falls and Milner water rights |
31,585 |
31,585 |
||
Company-owned life insurance |
34,020 |
35,401 |
||
Regulatory assets |
371,026 |
415,177 |
||
Employee notes |
2,454 |
2,862 |
||
Other |
41,631 |
42,187 |
||
|
||||
Total deferred debits |
480,716 |
527,212 |
||
|
||||
Total |
$ |
3,094,640 |
$ |
3,074,691 |
The accompanying notes are an integral part of these statements. |
9
Idaho Power Company
Condensed Consolidated Balance Sheets
(unaudited)
|
September 30, |
December 31, |
||
2006 |
2005 |
|||
Capitalization and Liabilities |
(thousands of dollars) |
|||
|
|
|||
Capitalization: |
|
|
||
Common stock equity: |
|
|
||
Common stock, $2.50 par value (50,000,000 shares |
|
|
||
authorized; 39,150,812 shares outstanding) |
$ |
97,877 |
$ |
97,877 |
Premium on capital stock |
483,707 |
483,707 |
||
Capital stock expense |
(2,097) |
(2,097) |
||
Retained earnings |
399,989 |
361,256 |
||
Accumulated other comprehensive loss |
(4,178) |
(3,425) |
||
Total common stock equity |
975,298 |
937,318 |
||
Long-term debt |
982,827 |
983,720 |
||
Total capitalization |
1,958,125 |
1,921,038 |
||
Current Liabilities: |
||||
Long-term debt due within one year |
1,064 |
- |
||
Notes payable |
27,190 |
- |
||
Accounts payable |
65,039 |
79,433 |
||
Notes and accounts payable to related parties |
1,251 |
153 |
||
Taxes accrued |
68,918 |
72,994 |
||
Interest accrued |
20,166 |
14,105 |
||
Deferred income taxes |
526 |
3,064 |
||
Other |
28,968 |
19,182 |
||
|
||||
Total current liabilities |
213,122 |
188,931 |
||
|
||||
Deferred Credits: |
||||
Deferred income taxes |
485,771 |
507,880 |
||
Regulatory liabilities |
316,807 |
345,109 |
||
Other |
120,815 |
111,733 |
||
Total deferred credits |
923,393 |
964,722 |
||
|
||||
Commitments and Contingencies (Note 5) |
||||
Total |
$ |
3,094,640 |
$ |
3,074,691 |
The accompanying notes are an integral part of these statements. |
10
Idaho Power Company
Condensed Consolidated Statements of Capitalization
(unaudited)
|
September 30, |
|
December 31, |
|
||
2006 |
% |
2005 |
% |
|||
(thousands of dollars) |
||||||
Common Stock Equity: |
|
|
|
|
||
Common stock |
$ |
97,877 |
$ |
97,877 |
||
Premium on capital stock |
483,707 |
483,707 |
||||
Capital stock expense |
(2,097) |
(2,097) |
||||
Retained earnings |
399,989 |
361,256 |
||||
Accumulated other comprehensive loss |
(4,178) |
(3,425) |
||||
Total common stock equity |
975,298 |
50 |
937,318 |
49 |
||
|
||||||
Long-Term Debt: |
||||||
First mortgage bonds: |
||||||
7.38% Series due 2007 |
80,000 |
80,000 |
||||
7.20% Series due 2009 |
80,000 |
80,000 |
||||
6.60% Series due 2011 |
120,000 |
120,000 |
||||
4.75% Series due 2012 |
100,000 |
100,000 |
||||
4.25% Series due 2013 |
70,000 |
70,000 |
||||
6 % Series due 2032 |
100,000 |
100,000 |
||||
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 |
||||
Total first mortgage bonds |
785,000 |
785,000 |
||||
|
||||||
Pollution control revenue bonds: |
||||||
Variable Auction Rate Series 2003 due 2024 |
49,800 |
49,800 |
||||
6.05% Series 1996A due 2026 |
68,100 |
68,100 |
||||
Variable Rate Series 1996B due 2026 |
24,200 |
24,200 |
||||
Variable Rate Series 1996C due 2026 |
24,000 |
24,000 |
||||
Variable Rate Series 2000 due 2027 |
4,360 |
4,360 |
||||
Total pollution control revenue bonds |
170,460 |
170,460 |
||||
American Falls bond guarantee |
19,885 |
19,885 |
||||
Milner Dam note guarantee |
11,700 |
11,700 |
||||
Note guarantee due within one year |
(1,064) |
- |
||||
Unamortized premium/discount - net |
(3,154) |
(3,325) |
||||
|
||||||
Total long-term debt |
982,827 |
50 |
983,720 |
51 |
||
|
||||||
Total Capitalization |
$ |
1,958,125 |
100 |
$ |
1,921,038 |
100 |
|
||||||
The accompanying notes are an integral part of these statements. |
11
Idaho Power Company
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
Nine Months Ended |
|||
|
September 30, |
|||
|
2006 |
2005 |
||
Operating Activities: |
(thousands of dollars) |
|||
Net income |
$ |
77,022 |
$ |
55,354 |
Adjustments to reconcile net income to net cash provided by |
|
|||
operating activities: |
||||
Depreciation and amortization |
77,596 |
80,917 |
||
Deferred income taxes and investment tax credits |
(15,882) |
(8,406) |
||
Changes in regulatory assets and liabilities |
6,111 |
2,974 |
||
Undistributed earnings of subsidiary |
(5,995) |
(10,982) |
||
Provision for uncollectible accounts |
42 |
(167) |
||
Other non-cash adjustments to net income |
(4,802) |
- |
||
Gain on sale of assets |
(10,979) |
- |
||
Change in: |
||||
Accounts receivables and prepayments |
2,552 |
3,085 |
||
Accounts payable |
(13,889) |
(29,768) |
||
Taxes accrued |
(4,076) |
24,801 |
||
Other current assets |
1,158 |
(3,192) |
||
Other current liabilities |
15,729 |
9,986 |
||
Other assets |
923 |
(4,760) |
||
Other liabilities |
8,016 |
6,340 |
||
Net cash provided by operating activities |
133,526 |
126,182 |
||
Investing Activities: |
||||
Additions to utility plant |
(166,309) |
(127,983) |
||
Purchase of available-for-sale securities |
(14,358) |
(81,693) |
||
Sale of available-for-sale securities |
16,404 |
116,078 |
||
Sale of emission allowances |
11,323 |
- |
||
Investments in unconsolidated affiliate |
(15,370) |
- |
||
Other assets |
525 |
532 |
||
Net cash used in investing activities |
(167,785) |
(93,066) |
||
Financing Activities: |
||||
Issuance of long-term debt |
- |
60,000 |
||
Retirement of long-term debt |
- |
(60,000) |
||
Dividends on common stock |
(38,289) |
(38,001) |
||
Change in short term borrowings |
27,190 |
- |
||
Other assets |
(14) |
(4,389) |
||
Other liabilities |
443 |
- |
||
Net cash used in financing activities |
(10,670) |
(42,390) |
||
Net decrease in cash and cash equivalents |
(44,929) |
(9,274) |
||
Cash and cash equivalents at beginning of period |
49,335 |
17,679 |
||
Cash and cash equivalents at end of period |
$ |
4,406 |
$ |
8,405 |
Supplemental Disclosure of Cash Flow Information: |
||||
Cash paid during the period for: |
||||
Income taxes paid to parent |
$ |
70,037 |
$ |
27,244 |
Interest (net of amount capitalized) |
$ |
33,717 |
$ |
32,377 |
Non-cash investing activities: |
||||
Additions to utility plant |
$ |
9,226 |
$ |
12,757 |
The accompanying notes are an integral part of these statements. |
12
Idaho Power Company
Condensed Consolidated Statements of
Comprehensive Income
(unaudited)
Three Months Ended |
||||
September 30, |
||||
2006 |
2005 |
|||
(thousands of dollars) |
||||
Net Income |
$ |
30,389 |
$ |
20,969 |
Other Comprehensive Income (Loss): |
||||
Unrealized gains (losses) on securities: |
||||
Unrealized holding gains arising during the period, |
||||
net of tax of $673 and $196 |
1,141 |
214 |
||
Reclassification adjustment for gains included |
||||
in net income, net of tax of ($326) and ($321) |
(508) |
(500) |
||
Net unrealized gains (losses) |
633 |
(286) |
||
Total Comprehensive Income |
$ |
31,022 |
$ |
20,683 |
Nine Months Ended |
||||
September 30, |
||||
2006 |
2005 |
|||
(thousands of dollars) |
||||
Net Income |
$ |
77,022 |
$ |
55,354 |
Other Comprehensive Income (Loss): |
||||
Unrealized gains (losses) on securities: |
||||
Unrealized holding gains (losses) arising during the period, |
||||
net of tax of $608 and ($393) |
893 |
(929) |
||
Reclassification adjustment for gains included |
||||
in net income, net of tax of ($1,057) and ($714) |
(1,646) |
(1,111) |
||
Net unrealized gains (losses) |
(753) |
(2,040) |
||
Total Comprehensive Income |
$ |
76,269 |
$ |
53,314 |
The accompanying notes are an integral part of these statements. |
13
IDACORP, INC. AND IDAHO
POWER COMPANY
(unaudited)
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
This Quarterly Report on Form
10-Q is a combined report of IDACORP, Inc. (IDACORP) and Idaho Power Company
(IPC). These Notes to the Condensed Consolidated Financial Statements apply to
both IDACORP and IPC. However, IPC 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 IPC. IDACORP is subject to the
provisions of the Public Utility Holding Company Act of 2005, which provides
certain access to books and records to the Federal Energy Regulatory Commission
(FERC) and state utility regulatory commissions and imposes certain record
retention and reporting requirements on IDACORP.
IPC is an electric utility
with a service territory covering approximately 24,000 square miles in southern
Idaho and eastern Oregon. IPC is regulated by the FERC and the state
regulatory commissions of Idaho and Oregon. IPC is the parent of Idaho Energy
Resources Co., a joint venturer in Bridger Coal Company, which supplies coal to
the Jim Bridger generating plant owned in part by IPC.
At September 30, 2006,
IDACORP's other subsidiaries included:
In the second quarter of
2006, IDACORP management designated the operations of IDACORP Technologies,
Inc. (ITI) and IDACOMM as assets held for sale, as defined by Statement of
Financial Accounting Standards No. 144. IDACORP's condensed consolidated
financial statements reflect the reclassification of the results of these businesses
as discontinued operations for all periods presented. Discontinued operations
are discussed in more detail in Note 10.
On July 20, 2006, IDACORP
completed the sale of all of the outstanding common stock of ITI to IdaTech UK
Limited, a wholly-owned subsidiary of Investec Group Investments (UK) Limited.
On October 12, 2006, IDACORP
entered into an agreement to sell all of the outstanding common stock of
IDACOMM to American Fiber Systems, Inc. IDACORP expects to complete the sale
as early as the end of the fourth quarter of 2006, subject to regulatory
approvals. IDACORP does not expect the sale to have a material effect on its
financial position, results of operations or cash flows.
Principles of
Consolidation
The condensed consolidated financial
statements of IDACORP and IPC include the accounts of each company and those
variable interest entities (VIEs) for which the companies are the primary
beneficiaries. All significant intercompany balances have been eliminated in
consolidation. Investments in business entities in which IDACORP and IPC 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.
14
Through
IFS, IDACORP also holds significant variable interests in VIEs for which it is
not the primary beneficiary. These VIEs are historic rehabilitation and
affordable housing developments in which IFS holds limited partnership
interests ranging from five to 99 percent. These investments were acquired
between 1996 and 2005. IFS' maximum exposure to loss in these developments was
$89 million at September 30, 2006.
Financial Statements
In the opinion of IDACORP and IPC, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to present
fairly their consolidated financial positions as of September 30, 2006, and
consolidated results of operations for the three and nine months ended
September 30, 2006 and 2005, and consolidated cash flows for the nine months
ended September 30, 2006 and 2005. These adjustments are of a normal and
recurring nature. These financial statements do not contain the complete
detail or footnote disclosure concerning accounting policies and other matters
that would be included in full-year financial statements and therefore they
should be read in conjunction with the audited consolidated financial
statements included in IDACORP's and IPC's Annual Report on Form 10-K for the
year ended December 31, 2005. The results of operations for the interim
periods are not necessarily indicative of the results to be expected for the
full year.
Stock-Based Compensation
Effective January 1, 2006, IDACORP
and IPC adopted Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" (SFAS 123R) using the modified
prospective application method. SFAS 123R changes measurement, timing and
disclosure rules relating to share-based payments, requiring that the fair
value of all share-based payments be expensed. The adoption of SFAS 123R did
not have a material impact on IDACORP's or IPC's financial statements for the
three and nine months ended September 30, 2006.
IDACORP's and IPC's Condensed
Consolidated Statements of Income for the three and nine months ended September
30, 2005 do not reflect any changes from the adoption of SFAS 123R. The
following table illustrates what net income and earnings per share would have
been had the fair value recognition provisions of SFAS 123 been applied to
stock-based employee compensation in 2005 (in thousands of dollars, except for
per share amounts):
|
Three months |
|
Nine months |
||||
|
ended |
|
ended |
||||
|
September 30, 2005 |
|
September 30, 2005 |
||||
IDACORP: |
|
||||||
Net income, as reported |
$ |
23,617 |
$ |
56,135 |
|||
Add: Stock-based employee compensation expense included in |
|||||||
reported net income, net of related tax effects |
275 |
597 |
|||||
Deduct: Total stock-based employee compensation expense determined |
|||||||
under fair value based method for all awards, net of related tax effects |
495 |
1,250 |
|||||
Pro forma net income |
$ |
23,397 |
$ |
55,482 |
|||
Earnings per share of common stock: |
|||||||
Basic and diluted - as reported |
$ |
0.56 |
$ |
1.33 |
|||
Basic and diluted - pro forma |
0.56 |
1.31 |
|||||
|
|
||||||
IPC: |
|
|
|
||||
Net income, as reported |
$ |
20,969 |
$ |
55,354 |
|||
Add: Stock-based employee compensation expense included in |
|||||||
reported net income, net of related tax effects |
167 |
311 |
|||||
Deduct: Total stock-based employee compensation expense determined |
|||||||
under fair value based method for all awards, net of related tax effects |
313 |
660 |
|||||
Pro forma net income |
$ |
20,823 |
$ |
55,005 |
|||
For purposes of these 2005
pro forma calculations, the estimated fair value of the options, restricted
stock and performance shares is amortized to expense over the vesting period.
The fair value of the restricted stock and performance shares was the market
price of the stock on the date of grant. The fair value of an option award was
estimated at the date of grant using a binomial option-pricing model. Expenses
related to forfeited awards were reversed in the period in which the forfeiture
occurred.
15
Earnings Per Share
The computation of diluted earnings
per share (EPS) differs from basic EPS only due to the inclusion of potentially
dilutive shares related to stock-based compensation awards.
The following table presents
the computation of IDACORP's basic and diluted earnings per share for the three
and nine months ended September 30, 2006 and 2005 (in thousands, except for per
share amounts):
|
|
Three months ended |
|
Nine months ended |
||||||||||||
|
|
September 30, |
|
September 30, |
||||||||||||
|
|
2006 |
|
2005 |
|
2006 |
|
2005 |
||||||||
Numerator: |
||||||||||||||||
Income from continuing operations |
$ |
32,492 |
$ |
25,961 |
$ |
82,120 |
$ |
64,197 |
||||||||
Denominator: |
||||||||||||||||
Weighted-average common shares |
||||||||||||||||
outstanding - basic* |
42,678 |
42,287 |
42,569 |
42,245 |
||||||||||||
Effect of dilutive securities: |
||||||||||||||||
Options |
125 |
69 |
87 |
51 |
||||||||||||
Restricted Stock |
60 |
24 |
54 |
22 |
||||||||||||
Weighted-average common shares |
||||||||||||||||
outstanding - diluted |
42,863 |
42,380 |
42,710 |
42,318 |
||||||||||||
Basic earnings per share from continuing operations |
$ |
0.76 |
$ |
0.61 |
$ |
1.93 |
$ |
1.52 |
||||||||
Diluted earnings per share from continuing operations |
$ |
0.76 |
$ |
0.61 |
$ |
1.92 |
$ |
1.52 |
||||||||
*Weighted average shares outstanding excludes non-vested shares issued under stock compensation plans. |
||||||||||||||||
The diluted EPS computation
excluded 463,600 and 643,600 common stock options for the three and nine months
ended September 30, 2006, respectively, because the options' exercise prices were
greater than the average market price of the common stock during those
periods. For the same periods in 2005, there were 824,500 and 1,014,437
options excluded from the diluted EPS computation for the same reason. In
total, 1,156,296 options were outstanding at September 30, 2006, with
expiration dates between 2010 and 2015.
Reclassifications
Certain prior year amounts have been
reclassified to conform to the current year presentation. Net income and
shareholders' equity were not affected by these reclassifications.
New Accounting
Pronouncements
FIN 48:
In June 2006, the Financial Accounting Standards
Board (FASB) issued FASB Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48), which
clarifies the accounting for uncertainty in tax positions. FIN 48 requires
that IDACORP and IPC recognize in their financial statements the impact of a
tax position if that position will more likely than not be sustained upon
examination, including resolution of any related appeals or litigation
processes, based on the technical merits of the position. The provisions of FIN
48 are effective for fiscal years beginning after December 15, 2006, with the
cumulative effect of the change in accounting principle recorded as an
adjustment to opening retained earnings. IDACORP and IPC are currently
evaluating the impact of adopting FIN 48 on their financial statements.
SFAS 157:
In September 2006, the FASB issued SFAS 157, "Fair
Value Measurements." SFAS 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. IDACORP and IPC are currently
evaluating the impact of adopting SFAS 157 on their financial statements.
16
SFAS 158: In September 2006, the FASB issued SFAS 158, "Employers' Accounting for Defined Benefit Pension Plans and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R)." SFAS 158 requires an employer that is a business entity and sponsors one or more single-employer defined benefit plans to:
IDACORP is required to initially recognize the funded
status of its defined benefit postretirement plan and to provide the required
disclosures in its December 31, 2006, financial statements. The requirement to
measure plan assets and benefit obligations as of the date of the employer's
fiscal year-end statement of financial position is effective for fiscal years
ending after December 15, 2008. When adopted in the fourth quarter of 2006,
the provisions of SFAS 158 will increase IDACORP's and IPC's liabilities and
reduce each company's common equity by approximately $80 million as of January
1, 2006, which is the amount by which the plans' benefit obligations exceeded
the plans' assets. IPC's common equity balance is one factor used in the
determination of retail rates. The decrease in common equity resulting from
the adoption of SFAS 158 would decrease rates, absent special ratemaking
treatment. IPC expects to pursue such treatment from the IPUC and OPUC, and if
received, the adoption of SFAS 158 is not expected to have a material effect on
IDACORP's or IPC's results of operations or cash flows.
SAB 108
: In September 2006, the Securities and Exchange
Commission (SEC) released Staff Accounting Bulletin No. 108, "Considering the
Effects of Prior Year Misstatements When Quantifying Misstatements in Current
Year Financial Statements" (SAB 108), in September 2006. SAB 108 provides
guidance on how the effects of the carryover or reversal of prior year
financial statement misstatements should be considered in quantifying a current
year misstatement. Prior practice allowed the evaluation of materiality on the
basis of (1) the error quantified as the amount by which the current year
income statement was misstated (rollover method) or (2) the cumulative error
quantified as the cumulative amount by which the current year balance sheet was
misstated (iron curtain method). Reliance on either method in prior years
could have resulted in misstatement of the financial statements. The guidance
provided in SAB 108 requires both methods to be used in evaluating
materiality. Immaterial prior year errors may be corrected with the first
filing of prior year financial statements after adoption. The cumulative
effect of the correction would be reflected in the opening balance sheet with
appropriate disclosure of the nature and amount of each individual error
corrected in the cumulative adjustment, as well as a disclosure of the cause of
the error and that the error had been deemed to be immaterial in the past. SAB
108 is effective for IDACORP's and IPC's opening balance sheet in 2007.
IDACORP and IPC are currently evaluating the impact SAB 108 might have on their
financial position or results of operations.
2. INCOME TAXES:
17
Income tax rate
In accordance with interim reporting requirements, IDACORP and IPC use an
estimated annual effective tax rate for computing their provisions for income
taxes. IDACORP's effective rate on continuing operations for the nine months
ended September 30, 2006, was 24.1 percent, compared to 17.1 percent for the
nine months ended September 30, 2005. IPC's effective tax rate for the nine
months ended September 30, 2006, was 38.5 percent, compared to 40.9 percent for
the nine months ended September 30, 2005.
The differences in estimated
annual effective tax rates are primarily due to the increase in pre-tax
earnings at IDACORP and IPC, the loss of IPC's simplified service cost method
tax deduction in 2005 and the adoption of a new uniform capitalization method
in 2006, timing and amount of IPC's regulatory flow-through tax adjustments,
settlement of a Bridger Coal Company partnership audit at IPC (discussed
below), and slightly lower tax credits from IFS.
Status of audit
proceedings
In March 2005, the Internal Revenue
Service (IRS) began its examination of IDACORP's 2001-2003 tax years. On
October 13, 2006, the IRS issued its examination report and assessment for
those years. With the exception of IPC's capitalized overhead costs method,
discussed below, the IRS and IDACORP were able to settle all issues. The
federal tax assessment for the settled issues will be paid in November 2006.
It is expected that associated interest charges and state income taxes will be
paid during 2007. Settlement of the agreed issues will not have a material
impact on IDACORP's 2006 results of operations or cash flows.
The IRS disallowed IPC's
capitalized overhead cost method for uniform capitalization (the simplified
service cost method) on the basis that IPC's self-constructed assets were not
produced on a "routine and repetitive" basis as defined by Rev. Rul. 2005-53.
The disallowance resulted in a federal tax assessment of $45 million. IDACORP
disagrees with this conclusion and will appeal the issue. Accordingly, in
November, 2006 IDACORP will file its formal protest, make a deposit of the
disputed tax with the IRS to stop the accrual of interest, and enter the
appeals process. Management cannot predict the timing or outcome of this
process, but believes that an adequate provision for income taxes and related
interest charges has been made for this issue.
The simplified service cost
method was also used for IPC's 2004 tax year. While 2004 is not currently
under examination, it is likely the IRS will take the same position for 2004 as
it did for 2001-2003; however, it is not likely that this position will result
in a federal income tax assessment primarily due to the mitigating effect of
accelerated tax depreciation.
On July 7, 2006, the IRS
issued its examination report for Bridger Coal Company's 2001-2003 tax years.
Bridger Coal is a partnership investment owned one-third by IPC. The audit
resulted in net favorable adjustments to Bridger Coal's tax returns for those
years. IPC's third quarter income tax expense decreased by $1.3 million as a
result of the settlement.
Capitalized overhead costs
Generally, section 263A of the
Internal Revenue Code of 1986, as amended, requires the capitalization of all direct
costs and indirect costs, including mixed service costs, which directly benefit
or are incurred by reason of the production of property by a taxpayer. The
simplified service cost method, a "safe harbor" method, is one of the methods
provided by the section 263A treasury regulations for the calculation of mixed
service cost capitalization. IPC adopted the simplified service cost method
for both the self-construction of utility plant and production of electricity
beginning with its 2001 federal income tax return.
On August 2, 2005, the IRS
and the Treasury Department issued guidance interpreting the meaning of "routine
and repetitive" for purposes of the simplified service cost and simplified
production methods of the Internal Revenue Code section 263A uniform
capitalization rules. The guidance was issued in the form of a revenue ruling
(Rev. Rul. 2005-53) which is effective for all open tax years ending prior to
August 2, 2005, and proposed and temporary regulations (the "Temporary
Regulations") which are effective for tax years ending on or after August 2,
2005. Both pieces of guidance take a more restrictive view of the definition
of self-constructed assets produced by a taxpayer on a "routine and repetitive"
basis than did treasury regulations in effect at the time IPC changed to the
simplified service cost method.
18
For IPC, the simplified
service cost method produced a current tax deduction for costs capitalized to
electricity production that are capitalized into fixed assets for financial
accounting purposes. Deferred income tax expense had not been provided for
this deduction because the prescribed regulatory tax accounting treatment does
not allow for inclusion of such deferred tax expense in current rates. Rate
regulated enterprises are required to recognize such adjustments as regulatory
assets if it is probable that such amounts will be recovered from customers in
future rates.
As discussed in "Status of Audit Proceedings" above, the IRS has disallowed IPC's
use of the simplified service cost method for the tax years 2001-2003 on the
basis of Rev. Rul. 2005-53. As a result, the IRS has assessed a $45 million
tax liability. IDACORP will appeal the IRS's assessment. Because of the
nature of the issue, IDACORP's exposure with respect to this matter may be less
than the tax assessed plus applicable interest charges. The resolution of this
matter could result in a one time charge to earnings; however, at this time
IDACORP is not in a position to quantify such amount. Additionally, after resolution
IDACORP will likely amend its 2005 federal income tax return and its 2005
method change application to account for the effects that such resolution has
on IPC's new uniform capitalization method (discussed below). This amendment
is not expected to have a negative impact on IDACORP's or IPC's consolidated
financial position, results of operations, or cash flows.
With respect to tax year 2005
and future tax years, the Temporary Regulations, as drafted, preclude IPC from
using the simplified service cost method for its self-constructed assets.
Under the Temporary Regulations, IPC is required to use another allowable
section 263A method for its indirect costs, including mixed service costs. As
a result of the Temporary Regulations, IPC made changes to its overall section
263A uniform capitalization method of accounting. In September 2006, the
changes were adopted with an automatic method change request included in
IDACORP's 2005 federal income tax return. The uniform capitalization
methodology adopted for 2005 and subsequent years involves the use of the
specific identification, burden rate, and step-allocation methods of
accounting. The methods used are allowable under both the final and temporary
section 263A regulations.
As with the simplified service
cost method, the new uniform capitalization methodology produces an annual tax
deduction for costs that are not required to be capitalized under section 263A
as well as costs capitalized into the production of electricity. The method,
while producing a beneficial result, is not as favorable as the simplified
service cost method. Changing the uniform capitalization method will result in
a net charge to IPC's 2006 income tax expense of $6.1 million, with $5.4
million being recorded in the third quarter. The estimated 2006 tax deduction
produces a $3.3 million tax benefit for the year, $2.5 million of which was
recorded at IPC in the third quarter. The change in method is not expected to
have a material effect on IDACORP's or IPC's 2006 cash flows. The accounting
and regulatory treatment for the new method is the same as previously used for
the simplified service cost method.
3. COMMON STOCK:
During the nine months ended
September 30, 2006, IDACORP entered into the following transactions involving
its common stock:
On January 1, 2006, IDACORP
adopted SFAS 123R. SFAS 123R requires that any amounts of unearned stock-based
compensation be charged against common equity. Prior to January 1, 2006,
IDACORP had aggregated its unearned compensation balances with treasury stock
on its consolidated balance sheets.
19
4. FINANCING:
The following table
summarizes IDACORP's long-term debt (in thousands of dollars):
September 30, |
|
December 31, |
|||||||
2006 |
|
2005 |
|||||||
First mortgage bonds: |
|||||||||
7.38% Series due 2007 |
$ |
80,000 |
$ |
80,000 |
|||||
7.20% Series due 2009 |
80,000 |
80,000 |
|||||||
6.60% Series due 2011 |
120,000 |
120,000 |
|||||||
4.75% Series due 2012 |
100,000 |
100,000 |
|||||||
4.25% Series due 2013 |
70,000 |
70,000 |
|||||||
6% Series due 2032 |
100,000 |
100,000 |
|||||||
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 |
|||||||
Total first mortgage bonds |
785,000 |
785,000 |
|||||||
Pollution control revenue bonds: |
|||||||||
Variable Auction Rate Series 2003 due 2024 (a) |
49,800 |
49,800 |
|||||||
6.05% Series 1996A due 2026 |
68,100 |
68,100 |
|||||||
Variable Rate Series 1996B due 2026 |
24,200 |
24,200 |
|||||||
Variable Rate Series 1996C due 2026 |
24,000 |
24,000 |
|||||||
Variable Rate Series 2000 due 2027 |
4,360 |
4,360 |
|||||||
Total pollution control revenue bonds |
170,460 |
170,460 |
|||||||
American Falls bond guarantee |
19,885 |
19,885 |
|||||||
Milner Dam note guarantee |
11,700 |
11,700 |
|||||||
Unamortized premium (discount) - net |
(3,154) |
(3,325) |
|||||||
Debt related to investments in affordable housing |
37,632 |
48,481 |
|||||||
Other subsidiary debt |
7,542 |
7,686 |
|||||||
Less: Liabilities held for sale |
(9) |
(35) |
|||||||
Total |
1,029,056 |
1,039,852 |
|||||||
Current maturities of long-term debt |
(15,364) |
(16,307) |
|||||||
Total long-term debt |
$ |
1,013,692 |
$ |
1,023,545 |
|||||
(a) |
Humboldt County Pollution Control Revenue bonds are secured by first mortgage bonds, bringing the total first mortgage bonds outstanding at September 30, 2006, to $834.8 million. |
||||||||
Long-Term Financing
IDACORP currently has $679 million
remaining on two shelf registration statements that can be used for the
issuance of unsecured debt (including medium-term notes) and preferred or
common stock. IPC currently has in place a registration statement that can be
used for the issuance of an aggregate principal amount of $240 million of first
mortgage bonds (including medium-term notes) and unsecured debt.
The amount of first mortgage
bonds issuable by IPC is limited to a maximum of $1.1 billion and by property,
earnings and other provisions of the mortgage and supplemental indentures
thereto. IPC may amend the indenture and increase this amount without consent
of the holders of the first mortgage bonds. The indenture requires that IPC's
net earnings must be at least twice the annual interest requirements on all
outstanding debt of equal or prior rank, including the bonds that IPC 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.
20
As of September 30, 2006, IPC
could issue under the mortgage approximately $452 million of additional first
mortgage bonds based on retired first mortgage bonds and $670 million of
additional first mortgage bonds based on unfunded property additions. As of
September 30, 2006, unfunded property additions were approximately $1.1
billion. Property additions consist of electric or gas property, or property
used in connection therewith. Property additions exclude securities, contracts
or choses in action, merchandise and equipment for consumption or resale,
materials and supplies, property used principally for production or gathering
of natural gas and any power sites and uncompleted works under Idaho state
permits. In determining net property additions, IPC deducts all retired funded
property from gross property additions except to the extent of certain credits
for released funded property.
The mortgage requires IPC to
spend or appropriate 15 percent of its annual gross operating revenues for
maintenance, retirement or amortization of its properties. IPC may, however,
anticipate or make up these expenditures or appropriations within the five
years that immediately follow or precede a particular year.
The mortgage secures all
bonds issued under the indenture equally and ratably, without preference,
priority or distinction. IPC may issue additional first mortgage bonds in the
future, and those first mortgage bonds will also be secured by the mortgage.
The lien of the indenture constitutes a first mortgage on all the properties of
IPC, 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 IPC are subject to easements, leases, contracts, covenants,
workmen's compensation awards and similar encumbrances and minor defects and
clouds common to properties. The mortgage 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 creates a lien on the interest of IPC 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 IPC.
At September 30, 2006, IFS
had $38 million of debt related to investments in affordable housing with
interest rates ranging from 3.65 percent to 8.38 percent, due between 2006 and
2010. The investments in affordable housing developments that collateralize
this debt had a net book value of $62 million at September 30, 2006. IFS' $13
million Series 2003-1 tax credit note is non-recourse to both IFS and IDACORP.
The $7 million Series 2003-2 tax credit note and other outstanding debt are
recourse only to IFS.
On October 3, 2006, IPC
completed a tax-exempt bond financing in which Sweetwater County, Wyoming
issued and sold $116,300,000 aggregate principal amount of its Pollution
Control Revenue Refunding Bonds (Idaho Power Company Project) Series 2006. The
bonds will mature on July 15, 2026. The $116.3 million proceeds were loaned by
Sweetwater County to IPC pursuant to a Loan Agreement, dated as of October 1,
2006, between Sweetwater County and IPC (the Loan Agreement) On October 10,
2006, the proceeds of the new bonds, together with certain other moneys of IPC,
were used to refund Sweetwater County's (i) Pollution Control Revenue Refunding
Bonds (Idaho Power Company Project) Series 1996A that were outstanding in the
aggregate principal amount of $68,100,000, (ii) Pollution Control Revenue
Refunding Bonds (Idaho Power Company Project) Series 1996B that were
outstanding in the aggregate principal amount of $24,200,000 and (iii)
Pollution Control Revenue Refunding Bonds (Idaho Power Company Project) Series
1996C that were outstanding in the aggregate principal amount of $24,000,000.
The regularly scheduled principal and interest payments on the bonds, and
principal and interest payments on the bonds upon mandatory redemption on
determination of taxability, are insured by a financial guaranty insurance
policy issued by AMBAC Assurance Corporation. IPC and AMBAC have entered into
an Insurance Agreement, dated as of October 3, 2006, pursuant to which IPC has
agreed, among other things, to pay certain premiums to AMBAC and to reimburse
AMBAC for any payments made under the policy.
In order to secure IPC's
obligation to make principal and interest payments on the loan made to IPC, IPC
issued and delivered to a trustee IPC's First Mortgage Bonds, Pollution Control
Series C, in a principal amount equal to the principal amount of the new bonds.
Credit Facilities
IDACORP has a $150 million five-year
credit facility that expires on March 31, 2010. At September 30, 2006, no
loans were outstanding on IDACORP's credit facility and $6 million of
commercial paper was outstanding.
21
At September 30, 2006, IPC
had regulatory authority to incur up to $250 million of short-term
indebtedness. IPC has a $200 million five-year credit facility that expires on
March 31, 2010. At September 30, 2006, no loans were outstanding on IPC's
credit facility and $26 million of commercial paper and $1 million of notes (outside
of the credit facility) were outstanding.
5. COMMITMENTS AND
CONTINGENCIES:
Off-Balance Sheet
Arrangements
The federal Surface Mining Control
and Reclamation Act of 1977 and similar state statutes establish operational,
reclamation and closure standards that must be met during and upon completion
of mining activities. These obligations mandate that mine property be restored
consistent with specific standards and the approved reclamation plan. The
mining operations at the Bridger Coal Company are subject to these reclamation
and closure requirements. IPC has agreed to guarantee the performance of
reclamation activities at Bridger Coal Company, of which Idaho Energy Resources
Co., a subsidiary of IPC, owns a one-third interest. This guarantee, which is
renewed each December, was $60 million at September 30, 2006. Bridger Coal has
a reclamation trust fund set aside specifically for the purpose of paying these
reclamation costs and expects that the fund will be sufficient to cover all
such costs. Because of the existence of the fund, the estimated fair value of
this guarantee is minimal.
Regional Transmission
Organization
Over the last several years, IPC has
spent funds supporting the development of Grid West, a Northwest regional
transmission organization (RTO). As of September 30, 2006, IPC had recorded
$1.1 million of loans to Grid West and $2.3 million of deferred internal costs
from participating in the development effort. These amounts were initially
deferred anticipating future recovery through Grid West tariffs. IPC ceased
funding Grid West after the first quarter of 2006 and Grid West was dissolved
on April 11, 2006. IPC no longer expects reimbursement of either amount from
Grid West. IPC's accumulation of Grid West development costs in a deferred
expense account is consistent with a 2004 accounting order that IPC received
from the FERC.
Grid West Deferral in Oregon:
On
April 4, 2006, IPC filed a request for an accounting order from the OPUC
addressing the deferral of costs related to the development of Grid West. On
August 22, 2006, the OPUC granted IPC's request for the deferral of the costs
of unrecoverable Grid West loans; however, the OPUC denied IPC's request to defer an immaterial amount of
internal costs incurred directly in the development of Grid West.
Grid West Deferral in Idaho:
On
April 4, 2006, IPC filed a request for an accounting order from the IPUC
addressing the deferral of costs related to the development of Grid West. The
total deferral request was $3.4 million. On June 29, 2006, the IPUC determined
that the case would be processed by modified procedure. IPC argued that it
should be allowed deferral of the principal and interest on the RTO loan
amounts, a carrying charge on the deferred balance and recovery of the
incremental internal costs it identified in its application. On October 24,
2006, the IPUC issued an order granting $1.1 million related to the principal
of the RTO loans over a five-year amortization beginning January 1, 2007 and
denying recovery of the remaining items. IPC has until November 14, 2006, to
petition the IPUC for reconsideration. Following a final decision from the
IPUC, IPC will make a filing with the FERC for recovery of Grid West costs.
If IPC is unsuccessful with
either the IPUC or with the FERC, some or all of the remaining costs will be
expensed.
LEGAL PROCEEDINGS
Reference is made to IDACORP's
and IPC's Annual Report on Form 10-K for the year ended December 31, 2005, and
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006, and June
30, 2006, for a discussion of all material pending legal proceedings to which
IDACORP and IPC and their subsidiaries are parties. The following discussion
provides a summary of material developments that occurred in those proceedings
during the period covered by this report and of any new material proceedings
instituted during the period covered by this report.
22
Proceedings Relating to
the Western Power Markets
IDACORP, IPC and/or IE are involved
in a number of proceedings which relate to the western power markets.
Public
Utility District No. 1 of Grays Harbor County, Washington
On July 25, 2006, the case was
dismissed with prejudice by the Honorable Robert H. Whaley, sitting by
designation in the U.S. District Court for the Southern District of California,
pursuant to an agreed resolution of the matter between Grays Harbor and
IDACORP, IPC and IE. The settlement did not have a material adverse effect on
IDACORP's consolidated financial position, results of operation or cash flows.
Port
of Seattle
On March 7, 2006, the U.S. Court of
Appeals for the Ninth Circuit heard argument on the Port of Seattle's appeal of the U.S. District Court for the Southern District of California's dismissal
of its complaint with prejudice. On March 30, 2006, the Ninth Circuit issued
an order denying the Port of Seattle's appeal and affirming the dismissal of
the entire case. The dismissal of the case, with prejudice, became final on
June 28, 2006, when the Port of Seattle elected not to file a certiorari
petition to the U.S. Supreme Court.
Wah Chang
Following the October 18, 2005,
consolidation of Wah Chang's appeal of the dismissal order to the U.S. Court of
Appeals for the Ninth Circuit with an identical order in Wah Chang v. Duke
Energy Trading and Marketing, IDACORP, IPC and IE filed an answering brief on
November 30, 2005. Wah Chang filed its reply brief on January 6, 2006. Wah
Chang's appeal to the U.S. Court of Appeals for the Ninth Circuit has now been
fully briefed; however, no date has yet been set for oral argument. IDACORP,
IPC and IE intend to vigorously defend their position in this proceeding and
believe this matter will not have a material adverse effect on their
consolidated financial positions, results of operations or cash flows.
City of Tacoma
The City of Tacoma's March 10, 2005,
appeal to the U.S. Court of Appeals for the Ninth Circuit of the dismissal of
the case by Judge Whaley has been fully briefed; however, no date has yet been
set for oral argument. IDACORP, IPC and IE intend to vigorously defend their
position in this proceeding and believe this matter will not have a material
adverse effect on their consolidated financial positions, results of operations
or cash flows.
Wholesale
Electricity Antitrust Cases I & II
In April 2002, several subsidiaries
of Reliant Energy, Inc. (Reliant) and Duke Energy Corporation (Duke) filed
cross-complaints against IE and IPC and numerous other participants in the California energy market. The cross-complaints sought indemnification for any liability
that may arise from original complaints filed against Reliant and Duke with
respect to charges of unlawful and unfair business practices in the California energy markets under California law. On November 9, 2005, both Duke and Reliant
submitted to the California Superior Court stipulations with IE and IPC to
conditionally dismiss, with prejudice, the cross-complaints, subject to
reinstatement if proposed settlements between Duke and Reliant and the
plaintiffs of the underlying actions were not approved by the court. Neither
IE nor IPC paid any amount to Duke or to Reliant to obtain these dismissals.
On
December 14, 2005, the court granted final approval of the Duke settlement with
the plaintiffs. The Court's order granting final approval of the Duke
settlement became final on March 14, 2006. On January 6, 2006, the court granted preliminary approval of the Reliant settlement.
On March 30, 2006, oppositions and objections to the Reliant settlement were
filed by certain parties under the
Eggers
case caption, including by the
States of Montana and Idaho. Neither IPC nor IE is a party to the
Eggers
case, which seeks to recover damages on behalf of consumers in western states
other than California. A hearing on final approval of the Reliant settlement
was held on April 28, 2006. At the hearing, the court ruled that the California class settlement would receive final approval contingent on a satisfactory
showing that the notice to those class members was adequate. As for the
Eggers
case, the court set a briefing schedule to provide evidence and oral argument
regarding the State of Montana's treatment by its class representative and
Montana's connection to the California energy market.
23
On May 30, 2006, the court
signed and approved the Judgment, Final Order, and Decree Granting Final Approval to the Reliant
settlement. The court also signed and approved the Order Granting Reliant's
Motion for Good Faith Settlement Determination. The order approving the
Reliant settlement became final on July
31, 2006. On July 14, 2006, the court
held a separate hearing to consider approval of the settlement of the
Eggers
action, and thereafter signed and approved
the Judgment, Final Order and Decree Granting Final Approval to the Class
Action Settlement in the
Eggers
case. All appeal periods have now
expired.
California
Refund
On February 17, 2006, IE and IPC
jointly filed with the California Parties (Pacific Gas & Electric Company,
San Diego Gas & Electric Company, Southern California Edison, the
California Public Utilities Commission, the California Electricity Oversight
Board, the California Department of Water Resources and the California Attorney
General) an Offer of Settlement at the FERC. Other parties had until March 9,
2006, to elect to become an additional settling party. The majority of other
parties chose to opt out of the settlement. After consideration of comments,
the FERC approved the settlement on May 22, 2006. Under the terms of the
settlement, IE and IPC assigned $24.25 million of the rights to accounts
receivable from the California Independent System Operator (Cal ISO) and
California Power Exchange (CalPX) to the California Parties to pay into an
escrow account for refunds to settling parties. Amounts from that escrow not
used for settling parties and $1.5 million of the remaining IE and IPC
receivables that are to be retained by the CalPX are available to fund, at
least partially, payment of the claims of any non-settling parties if they
prevail in the remaining litigation of this matter. Any excess funds remaining
at the end of the case are to be returned to IDACORP. Approximately $10.25
million of the remaining IE and IPC receivables was paid to IE and IPC under
the Settlement.
On June 21, 2006, the Port of
Seattle, Washington filed a request for rehearing of the FERC order approving
the Settlement. On July 10, 2006, IDACORP and the California Parties filed a
response to Port of Seattle's request for rehearing. On October 5, 2006, the
FERC issued an order denying the Port of Seattle's request for rehearing. The
time for seeking review of the FERC's Order will not expire until December 4,
2006. IDACORP is unable to predict at this time if any person will seek such
review or, if such review is sought, what the eventual outcome will be.
For some time the Ninth
Circuit Court of Appeals held in abeyance consolidated petitions for review (in
excess of 100) of FERC orders related to the California Refund proceeding. On
September 21, 2004, the Ninth Circuit convened case management proceedings on
these petitions and on October 22, 2004, severed a subset of issues for
briefing related to: (1) which parties are subject to the FERC's refund
jurisdiction under section 201(f) of the Federal Power Act; (2) the temporal
scope of refunds under section 206 of the Federal Power Act; and (3) which
categories of transaction are subject to refunds. Oral argument was held on
April 12-13, 2005. On September 6, 2005, the Ninth Circuit issued a decision
on the jurisdictional issues concluding that the FERC lacked refund authority
over wholesale electric energy sales made by governmental entities and
non-public utilities. On August 2, 2006, the Ninth Circuit issued its decision
on the appropriate temporal reach and the type of transactions subject to the
FERC refund orders and concluded, among other things, that all transactions at
issue in the case that occurred within or as a result of the CalPX and the Cal
ISO were the proper subject of refund proceedings; refused to expand the refund
proceedings into the bilateral markets including transactions with the
California Department of Water Resources; approved the refund effective date as
October 2, 2000, but also required the FERC to consider whether refunds,
including possibly market-wide refunds, should be required for an earlier time
due to claims that some market participants had violated governing tariff
obligations (although the decision did not specify when that time would start,
the California Parties generally had sought further refunds starting May 1, 2000);
and effectively expanded the scope of the refund proceeding to transactions
within the CalPX and Cal ISO markets outside the 24-hour spot market and energy
exchange transactions.
IDACORP believes that these
decisions should have no material effect on IDACORP under the terms of the
IDACORP Settlement with the California Parties approved by the FERC on May 22,
2006.
California
Power Exchange Chargeback
Based upon the Offer of Settlement
filed with the FERC on February 17, 2006, between the California Parties and IE
and IPC and discussed above in "California Refund", the California Parties
supported a motion filed by IE and IPC with the FERC seeking an Order Directing
Return of Chargeback Amounts currently held by the CalPX totaling $2.27
million. In the May 22, 2006, Order approving the Settlement, the FERC granted
the IE and IPC motion for return of chargeback funds held by the CalPX. On
June 1, 2006, IE received approximately $2.5 million from the CalPX
representing the return of $2.27 million in chargeback funds plus interest.
24
Market Manipulation
Pursuant to the Offer of Settlement
filed with the FERC on February 17, 2006, between the California Parties and IE
and IPC and discussed above in "California Refund", the requests for rehearing
of the California Parties and other settling parties of the FERC's approval of
an earlier settlement with the FERC staff regarding allegations of "gaming" are
deemed to be withdrawn. On May 22, 2006, the FERC issued an order approving
the February 17, 2006, Offer of Settlement. On October 11, 2006, the FERC
issued an Order denying rehearing of its earlier approval of the "gaming"
allegations, thereby effectively terminating the FERC investigations as to IPC
and IE regarding bidding behavior, physical withholding of power and "gaming"
without finding of wrongdoing. The time for seeking review of the FERC's Order
will not expire until December 11, 2006. IPC and IE are unable to predict at
this time if any person will seek such review or, if such review is sought,
what the eventual outcome will be.
Pacific Northwest Refund
On September 24, 2001, the FERC
Administrative Law Judge submitted recommendations and findings to the FERC
finding that prices in the Pacific Northwest during the December 25, 2000,
through June 20, 2001, time period should be governed by the Mobile-Sierra
standard of public interest rather than the just and reasonable standard, that
the Pacific Northwest spot markets were competitive and that no refunds should
be allowed. The FERC approved these recommendations on June 25, 2003, and
multiple parties then appealed to the Ninth Circuit Court of Appeals. IE and
IPC were parties in the FERC proceeding and are participating in the appeal.
Briefing on the appeal was completed on May 25, 2005, and oral argument has
been scheduled for January 8, 2007. The Settlement approved by the FERC on May
22, 2006, resolves all claims the California Parties have against IE and IPC in
the Pacific Northwest Refund proceeding. The settlement with Grays Harbor
resolves all claims Grays Harbor has against IE and IPC in this proceeding. IE
and IPC are unable to predict the outcome as to all other parties in this
proceeding.
Other Litigation
Shareholder Lawsuit
On March 29, 2006, the U.S. District
Court for the District of Idaho (Judge Edward J. Lodge) issued an Order in this
case (Powell v. IDACORP) adopting the Report and Recommendation of Magistrate
Judge Williams issued on September 14, 2005, granting the defendants' (IDACORP
and certain of its officers and directors) motion to dismiss because plaintiffs
failed to satisfy the pleading requirements for loss causation. However, Judge
Lodge modified the Report and Recommendation and ruled that plaintiffs had
until May 1, 2006, to file an amended complaint only as to the loss causation
element. On May 1, 2006, the plaintiffs filed an amended complaint. The
defendants filed a motion to dismiss the amended complaint on June 16, 2006,
asserting that the amended complaint still failed to satisfy the pleading
requirements for loss causation. Briefing on this most recent motion to
dismiss was completed on August 28, 2006. IDACORP and the other defendants
intend to defend themselves vigorously against the allegations. IDACORP
cannot, however, predict the outcome of these matters.
Western Shoshone National
Council
On April 10, 2006, the Western
Shoshone National Council (which purports to be the governing body of the
Western Shoshone Nation) and certain of its individual tribal members filed a
First Amended Complaint and Demand for Jury Trial in the U.S. District Court
for the District of Nevada, naming IPC and other unrelated entities as
defendants.
Plaintiffs
allege that IPC's ownership interest in certain land, minerals, water or other
resources was converted and fraudulently conveyed from lands in which the
plaintiffs had historical ownership rights and Indian title dating back to the
1860's or before. Although it is unclear from the complaint, it appears
plaintiffs' claims relate primarily to lands within the state of Nevada. Plaintiffs seek a judgment declaring their title to land and other resources,
disgorgement of profits from the sale or use of the land and resources, a
decree declaring a constructive trust in favor of the plaintiffs of IPC's
assets connected to the lands or resources, an accounting of money or things of
value received from the sale or use of the lands or resources, monetary damages
in an unspecified amount for waste and trespass and a judgment declaring that
IPC has no right to possess or use the lands or resources.
25
On
May 1, 2006, IPC filed an Answer to plaintiffs' First Amended Complaint denying
all liability to the plaintiffs and asserting certain affirmative defenses
including collateral estoppel and res judicata, preemption, impossibility and
impracticability, failure to join all real and necessary parties, and various
defenses based on untimeliness. On June 19, 2006, IPC filed a motion to
dismiss plaintiffs' First Amended Complaint, asserting, among other things,
that the Court lacks subject matter jurisdiction and that plaintiffs failed to
join an indispensable party (namely, the United States government). Briefing
on the motion to dismiss was completed on September 28, 2006. IPC intends to
vigorously defend its position in this proceeding, but is unable to predict the
outcome of this matter.
6. REGULATORY MATTERS:
General Rate Cases
Oregon:
On September 21, 2004, IPC
filed an application with the OPUC to increase general rates an average of 17.5
percent or approximately $4.4 million annually. A partial settlement resolved
most issues in a manner consistent with the results of the corresponding Idaho general rate case. The most significant issue in this proceeding was the appropriate
quantification of net power supply expenses for purposes of setting rates. The
OPUC staff proposed that net power supply expenses for IPC be set at a negative
number - meaning that IPC should be able to sell enough surplus energy to pay
for all fuel and purchased power expenses and still have revenue left over to
offset other costs. The bulk of IPC's rebuttal was directed at this position.
A hearing was conducted on May 23, 2005. The OPUC issued its order in July
2005 authorizing an increase of $0.6 million in annual revenues for an average
of 2.37 percent. The OPUC adopted the OPUC staff's argument for the negative
net power supply costs, thus reducing IPC's initial rate request of $4.4
million by $2.4 million with this one adjustment.
On September 26, 2005, IPC
filed a complaint with the Circuit Court of Marion County, Oregon asking the
court to reverse the portion of the OPUC's general rate case order related to
the determination of net power supply costs. Following a full review of the
matter, the court denied IPC's reversal
request on August 29, 2006. IPC has until November 13, 2006, to file an appeal
with the Oregon Court of Appeals.
Deferred (Accrued) Net
Power Supply Costs
IPC's deferred (accrued) net power
supply costs consisted of the following (in thousands of dollars):
Idaho
:
IPC has a
Power Cost Adjustment (PCA) mechanism that provides for annual adjustments to
the rates charged to its Idaho retail customers. These adjustments are based
on forecasts of net power supply costs, which are fuel and purchased power less
off-system sales, and the true-up of the prior year's forecast. During the
year, 90 percent of the difference between the actual and forecasted costs is
deferred with interest. The ending balance of this deferral, called the
true-up for the current year's portion and the true-up of the true-up for the
prior years' unrecovered portion, is then included in the calculation of the
next year's PCA.
On May 25, 2006, the IPUC
approved IPC's 2006-2007 PCA filing with an effective date of June 1, 2006.
The filing reduced the PCA component of customers' rates from the existing
level, which was recovering $76.7 million above then-existing base rates, to a
level that is $46.8 million below those base rates, a decrease of approximately
$123.5 million.
26
On April 13, 2006, IPC filed
testimony requesting review of one component of the PCA referred to as the load
growth adjustment rate, as agreed to in the stipulation of the parties settling
the 2005 general rate case. The load growth adjustment rate provides a
reduction to power supply expenses for PCA purposes when loads grow from levels
included in IPC's base rates. IPC maintains that this reduction to expenses
should be equal to the relative increase in revenues received as a result of
load growth. The IPUC Staff and other parties to the proceeding filed
testimony on September 15, 2006, advocating load growth adjustment rates above
both the existing rate and IPC's proposal. A hearing was held on October 30,
2006. The dollar impact of load growth adjustment rates is significant and
increasing, based on continuing growth within IPC's territory. Any increase in
the load growth adjustment rate as a result of this proceeding would magnify
the impact. In its rebuttal testimony, IPC estimated that the IPUC Staff
proposal, if implemented last year, would have resulted in $20 million of power
supply expense attributable to load growth from April 1, 2005 through March 31,
2006, that would not have been recoverable by IPC when compared to IPC's
proposal for full recovery of power supply expense attributable to load growth.
On June 1, 2005, IPC
implemented the 2005-2006 PCA, which held the PCA component of customers' rates
at the existing level, recovering $71 million above base rates. By IPUC order,
the PCA included $12 million in lost revenues and $2 million in related
interest resulting from IPC's Irrigation Load Reduction Program that was in
place in 2001. The PCA deferred recovery of approximately $28 million of power
supply costs, or 4.75 percent, for one year to help mitigate the impacts of
other rate increases. The $28 million was included in the 2006-2007 PCA
filing, and IPC earned a two percent carrying charge on the balance.
Oregon
:
On April
28, 2006, IPC filed for an accounting order with the OPUC to defer net power
supply costs for the period of May 1, 2006, through April 30, 2007, in
anticipation of higher than "normal" power supply expenses. In the Oregon
general rate case discussed above, "normal" power supply expenses were set at a
negative number (meaning that under normal water conditions IPC should be able
to sell enough surplus energy to pay for all fuel and purchased power expenses
and still have revenue left over to offset other costs). The forecasted system
net power supply expenses included in this deferral filing were $64 million,
which is $65.9 million higher than the normalized power supply expenses
established in the Oregon general rate case. IPC requested authorization to
defer an estimated $3.3 million, the Oregon jurisdictional share of the $65.9
million. IPC also requested that it earn its Oregon authorized rate of return
on the deferred balance and recover the amount through rates in future years,
as approved by the OPUC. The parties met
on September 20, 2006, and began negotiating for a PCA mechanism for IPC's Oregon jurisdiction, and agreed to suspend discussion of the deferral application while the
PCA negotiations are ongoing. The parties believe that any agreement regarding
a PCA mechanism may impact resolution of IPC's deferral application. The
parties are planning to meet again in early November 2006.
On March 2, 2005, IPC filed
for an accounting order with the OPUC to defer net power supply costs for the
period of March 2, 2005 through February 28, 2006, in anticipation of continued
low water conditions. The forecasted net power supply costs included in this
filing were $169 million, of which $3 million related to the Oregon
jurisdiction. IPC proposed to use the same methodology for this deferral
filing that was accepted in 2002 for Oregon's share of IPC's 2001 net power
supply expenses. On July 1, 2005, IPC, the OPUC staff, and the Citizen's
Utility Board entered into a stipulation requesting that the OPUC accept IPC's
proposed methodology. Under this methodology, IPC will earn its Oregon authorized rate of return on the deferred balance and will recover the amount
through rates in future years, as approved by the OPUC. The OPUC issued Order
05-870 on July 28, 2005, approving the stipulation. On April 19, 2006, IPC
filed a request for review and acknowledgement of its deferred net power supply
costs for the period of March 2, 2005, through February 28, 2006. The deferral
amount was quantified by IPC to be $2.7 million. On June 14, 2006, a
settlement conference was held; however, settlement is pending further staff
review.
The timing of future recovery
of Oregon power supply cost deferrals is subject to an Oregon statute that
specifically limits rate amortizations of deferred costs to six percent per
year. IPC is currently amortizing through rates power supply costs associated
with the western energy situation of 2001. Full recovery of the 2001 deferral
is not expected until 2009, at which time the rate amortization of the
2005-2006 deferral could begin. A 2006-2007 deferral would have to be
amortized sequentially following the full recovery of the authorized 2005-2006
deferral.
27
Emission Allowances
In June 2005, IPC filed
applications with the IPUC and OPUC requesting blanket authorization for the
sale of excess SO
2
emission allowances and an accounting order. The
IPUC issued Order 29852 on August 22, 2005, authorizing the sale and interim
accounting treatment. The OPUC issued Order 05-983 on September 13, 2005,
stating that IPC did not need a blanket order to sell emission allowances and
approved the interim accounting treatment.
As of September 30, 2006, IPC
has sold 78,000 SO
2
emission allowances for approximately $81.6
million (before income taxes and expenses) on the open market. After
subtracting transaction fees, the total amount of sales proceeds to be
allocated to the Idaho jurisdiction is approximately $76.8 million ($46.8
million net of tax, assuming a tax rate of approximately 39 percent). Through
allowance year 2006, IPC has approximately 32,000 excess allowances remaining.
Pursuant to the IPUC order,
the IPUC staff held several workshops and settlement discussions. On May 12,
2006, the IPUC approved a stipulation filed in April 2006 by IPC on behalf of
several parties. The stipulation allows IPC to retain ten percent, or
approximately $4.7 million after tax, of the emission allowance net proceeds as
a shareholder benefit. The remaining 90 percent of the sales proceeds ($69.1
million) plus a carrying charge will be recorded as a customer benefit and
included as a line-item in the PCA true-up. The carrying charge will be
calculated on $42.1 million, the net-of-tax amount allocable to Idaho jurisdiction customers. This customer benefit is included in IPC's PCA calculations
as a credit to the PCA true-up balance and will be reflected in PCA rates
during the June 1, 2007 through May 31, 2008 PCA rate year.
There is no current OPUC
proceeding with respect to SO
2
emission allowances, and IPC cannot
predict the outcome of any future OPUC ratemaking proceeding relating to this
issue.
7. INDUSTRY SEGMENT
INFORMATION:
IDACORP has identified two
reportable segments: utility operations and IFS. ITI and IDACOMM, which had
previously been identified as reportable segments, are now reported as
discontinued operations (see Note 10).
The utility operations
segment's primary sources of revenue are the regulated operations of IPC. IPC's
regulated operations include the generation, transmission, distribution,
purchase and sale of electricity. This segment also includes income from
Bridger Coal Company, an unconsolidated joint venture also subject to
regulation. The IFS segment represents that subsidiary's investments in
affordable housing developments and historic rehabilitation projects.
Operating segments not included above are below the quantitative thresholds for
reportable segments and are included in the "All Other" category. This
category is comprised of Ida-West's joint venture investments in small
hydroelectric generation projects, the remaining activities of energy marketer
IE, which wound down its operations in 2003, and IDACORP's holding company
expenses.
28
The following table
summarizes the segment information for IDACORP's utility operations and IFS and
the total of all other segments, and reconciles this information to total
enterprise amounts (in thousands of dollars):
8. BENEFIT PLANS:
The following table shows the
components of net periodic benefit costs for the three months ended September
30 (in thousands of dollars):
|
Deferred |
Postretirement |
||||||||||||
Pension Plan |
Compensation Plan |
Benefits |
||||||||||||
2006 |
2005 |
2006 |
2005 |
2006 |
2005 |
|||||||||
Service cost |
$ |
3,334 |
$ |
3,282 |
$ |
368 |
$ |
292 |
$ |
345 |
$ |
331 |
||
Interest cost |
5,145 |
5,282 |
582 |
538 |
809 |
804 |
||||||||
Expected return on plan assets |
(7,097) |
(7,423) |
- |
- |
(596) |
(591) |
||||||||
Amortization of net |
||||||||||||||
obligation at transition |
- |
(32) |
- |
78 |
482 |
485 |
||||||||
Amortization of prior service cost |
153 |
193 |
61 |
57 |
(126) |
(127) |
||||||||
Amortization of net loss |
29 |
- |
211 |
172 |
192 |
179 |
||||||||
Net periodic benefit cost |
$ |
1,564 |
$ |
1,302 |
$ |
1,222 |
$ |
1,137 |
$ |
1,106 |
$ |
1,081 |
||
29
The following table shows the
components of net periodic benefit costs for the nine months ended September 30
(in thousands of dollars):
|
Deferred |
Postretirement |
||||||||||||
Pension Plan |
Compensation Plan |
Benefits |
||||||||||||
2006 |
2005 |
2006 |
2005 |
2006 |
2005 |
|||||||||
Service cost |
$ |
10,857 |
$ |
9,846 |
$ |
1,105 |
$ |
877 |
$ |
1,097 |
$ |
1,044 |
||
Interest cost |
16,755 |
15,844 |
1,745 |
1,613 |
2,569 |
2,536 |
||||||||
Expected return on plan | ||||||||||||||
assets |
(23,113) |
(22,267) |
- |
- |
(1,892) |
(1,864) |
||||||||
Amortization of net |
||||||||||||||
obligation at transition |
- |
(94) |
- |
233 |
1,530 |
1,530 |
||||||||
Amortization of prior | ||||||||||||||
service cost |
498 |
578 |
184 |
171 |
(401) |
(401) |
||||||||
Amortization of net loss |
97 |
- |
633 |
517 |
609 |
565 |
||||||||
Net periodic benefit |
||||||||||||||
cost |
$ |
5,094 |
$ |
3,907 |
$ |
3,667 |
$ |
3,411 |
$ |
3,512 |
$ |
3,410 |
||
IDACORP and IPC have not
contributed and do not expect to contribute to their pension plan in 2006.
9. STOCK-BASED
COMPENSATION:
IDACORP has three share-based
compensation plans. IDACORP's employee plans are the 2000 Long-Term Incentive
and Compensation Plan (LTICP) and the 1994 Restricted Stock Plan (RSP). These
plans are intended to align employee and shareholder objectives related to
IDACORP's long-term growth. IDACORP also has one non-employee plan, the
Director Stock Plan (DSP). The purpose of the DSP is to increase directors'
stock ownership through stock-based compensation.
The LTICP for officers, key
employees and directors permits the grant of nonqualified stock options,
incentive stock options, stock appreciation rights, restricted stock,
restricted stock units, performance units, performance shares and other
awards. The RSP permits only the grant of restricted stock or
performance-based restricted stock. At September 30, 2006, the maximum number
of shares available under the LTICP and RSP were 1,688,562 and 104,325,
respectively. The following table shows the compensation cost recognized in
income and the tax benefits resulting from these plans, as well as the amounts
allocated to IPC for those costs associated with IPC's employees (in thousands
of dollars):
IDACORP |
IPC |
|||||||||
Nine months ended |
Nine months ended |
|||||||||
September 30, |
September 30, |
|||||||||
2006 |
2005 |
2006 |
2005 |
|||||||
Compensation cost |
$ |
2,124 |
$ |
981 |
$ |
1,016 |
$ |
511 |
||
Income tax benefit |
$ |
830 |
$ |
384 |
$ |
397 |
$ |
200 |
||
No equity compensation costs
have been capitalized.
Stock awards:
Restricted stock awards have vesting periods of up to
four years. Restricted stock awards entitle the recipients to dividends and
voting rights, and unvested shares are restricted to disposition and subject to
forfeiture under certain circumstances. The fair value of restricted stock
awards is measured based on the market price of the underlying common stock on
the date of grant and charged to compensation expense over the vesting period based
on the number of shares expected to vest.
30
Performance-based restricted
stock awards have vesting periods of three years. Performance awards entitle
the recipients to voting rights, and unvested shares are restricted to
disposition, subject to forfeiture under certain circumstances, and subject to
meeting specific performance conditions. Based on the attainment of the
performance conditions, the ultimate award can range from zero to 150 percent
of the target award. For awards granted prior to 2006, dividends were paid to
recipients at the time they were paid on the common stock. Beginning with the
2006 awards, dividends are accumulated and will be paid out only on shares that
eventually vest.
The performance goals for the
2006 awards are independent of each other and equally weighted, and are based
on two metrics, cumulative earnings per share (CEPS) and total shareholder
return (TSR) relative to a peer group. The fair value of the CEPS portion is
based on the market value at the date of grant, reduced by the loss in
time-value of the estimated future dividend payments, using an expected
quarterly dividend of $0.30. The fair value of the TSR portion is estimated
using a statistical model that incorporates the probability of meeting
performance targets based on historical returns relative to the peer group.
Both performance goals are measured over the three-year vesting period and are
charged to compensation expense over the vesting period based on the number of
shares expected to vest.
A summary of the status of
nonvested share awards as of September 30, 2006, and changes during the nine
months ended September 30, 2006, is presented below. IPC share amounts
represent the portion of IDACORP amounts related to IPC employees:
|
IDACORP |
|
IPC |
||||||
|
|
|
Weighted- |
|
|
|
Weighted- |
||
|
|
|
average |
|
|
|
average |
||
|
|
|
Grant date |
|
|
|
Grant date |
||
|
Shares |
|
Fair value |
|
Shares |
|
Fair value |
||
Nonvested shares at January 1, 2006 |
214,851 |
$ |
29.71 |
182,888 |
$ |
29.78 |
|||
Shares granted |
124,126 |
25.90 |
112,146 |
25.91 |
|||||
Shares forfeited |
(115,569) |
26.48 |
(91,538) |
26.14 |
|||||
Shares vested |
(19,200) |
30.39 |
(19,200) |
30.39 |
|||||
Nonvested shares at September 30, 2006 |
204,208 |
$ |
29.16 |
184,296 |
$ |
29.17 |
|||
At September 30, 2006,
IDACORP had $2.2 million of total unrecognized compensation cost related to
nonvested share-based compensation that was expected to vest. IPC's share of
this amount was $1.7 million. These costs are expected to be recognized over a
weighted-average period of 1.93 years. IDACORP uses original issue and/or
treasury shares for these awards.
Stock options:
Stock option awards are granted with exercise prices
equal to the market value of the stock on the date of grant. The options have
a term of 10 years from the grant date and vest over a five-year period. Upon adoption
of SFAS 123R on January 1, 2006, the fair value of each option is amortized
into compensation expense using graded-vesting. Beginning in 2006, stock
options are not a significant component of share-based compensation awards
under the LTICP.
The fair values of all stock
option awards have been estimated as of the date of the grant by applying a
binomial option pricing model. The application of this model involves
assumptions that are judgmental and sensitive in the determination of
compensation expense. The key assumptions used in determining the fair value
of options granted during the nine months ended September 30, 2006, were:
Dividend yield, based on current dividend and stock price on grant date |
3.7% |
Expected stock price volatility, based on IDACORP historical volatility |
18% |
Risk-free interest rate based on U.S. Treasury composite rate |
4.92% |
Expected term based on the SEC "simplified" method |
6.50 years |
31
Stock option activity during
the nine months ended September 30, 2006, was as follows:
|
|
|
Weighted |
|
|||
|
|
Weighted- |
Average |
Aggregate |
|||
|
Number |
Average |
Remaining |
Intrinsic |
|||
|
of |
Exercise |
Contractual |
Value |
|||
|
Shares |
Price |
Term |
(000s) |
|||
IDACORP |
|
|
|
|
|||
Outstanding at January 1, 2006 |
1,421,914 |
$ |
32.24 |
||||
Granted |
9,905 |
31.86 |
|||||
Exercised |
(91,215) |
27.08 |
|||||
Forfeited |
(162,632) |
28.43 |
|||||
Expired |
(21,676) |
34.31 |
|||||
Outstanding at September 30, 2006 |
1,156,296 |
$ |
33.14 |
5.66 |
$ |
6,119 |
|
Exercisable at September 30, 2006 |
894,972 |
$ |
34.31 |
5.59 |
$ |
5,279 |
|
IPC |
|
|
|
|
|||
Outstanding at January 1, 2006 |
1,094,137 |
$ |
32.03 |
||||
Granted |
- |
- |
|||||
Exercised |
(14,690) |
24.54 |
|||||
Forfeited |
(142,625) |
28.51 |
|||||
Expired |
(11,600) |
39.89 |
|||||
Outstanding at September 30, 2006 |
925,222 |
$ |
32.60 |
5.68 |
$ |
5,445 |
|
Exercisable at September 30, 2006 |
713,957 |
$ |
33.71 |
5.38 |
$ |
3,801 |
|
The following table presents
information about options granted and exercised during the nine months ended
September 30 (in thousands of dollars, except for weighted-average amounts):
|
IDACORP |
|
IPC |
||||||||
|
2006 |
|
2005 |
|
2006 |
|
2005 |
||||
Weighted-average grant-date fair value |
$ |
9.96 |
$ |
8.84 |
$ |
- |
$ |
8.81 |
|||
Fair value of options vested |
2,191 |
1,865 |
1,275 |
1,390 |
|||||||
Intrinsic value of options exercised |
888 |
- |
146 |
- |
|||||||
Cash received from exercise |
2,470 |
- |
361 |
- |
|||||||
Tax benefits realized from exercise |
346 |
- |
57 |
- |
As of September 30, 2006,
there was $0.5 million of total unrecognized compensation cost related to stock
options. These costs are expected to be recognized over a weighted average
period of 1.95 years. IDACORP uses original issue and/or treasury shares to
satisfy exercised options.
10. DISCONTINUED
OPERATIONS:
In the second quarter of
2006, IDACORP decided to seek buyers for its fuel cell technology subsidiary
ITI and its telecommunications subsidiary IDACOMM. IDACORP had been reviewing
strategic alternatives for ITI and IDACOMM in order to focus on its core
utility business. The planned disposals of these businesses meet the criteria
established for reporting them as assets held for sale as defined by SFAS 144.
SFAS 144 requires that a long-lived asset classified as held for sale be
measured at the lower of its carrying amount or fair value, less costs to sell,
and requires the holder to cease depreciation and amortization. Based on an
analysis of the fair value of each subsidiary, no adjustments to the carrying
values were required.
32
On July 20, 2006, IDACORP
completed the sale of all of the outstanding common stock of ITI to IdaTech UK
Limited, a wholly-owned subsidiary of Investec Group Investments (UK) Limited.
IDACORP recorded a gain of $11.8 million, net of tax, or $0.27 per diluted
share from this transaction in the third quarter of 2006.
On October 12, 2006, IDACORP entered into an agreement to sell all of the
outstanding common stock of IDACOMM to American Fiber Systems, Inc. IDACORP
expects to complete the sale as early as the end of the fourth quarter of 2006,
subject to regulatory approvals. IDACORP does not expect the sale to have a
material effect on its financial position, results of operations or cash flows.
The operating results of
these businesses have been separately classified and reported as discontinued
operations on IDACORP's condensed consolidated statements of income. A summary
of discontinued operations is as follows (in thousands of dollars):
|
|
Three months ended |
|
Nine months ended |
||||||||
|
|
September 30, |
|
September 30, |
||||||||
|
|
2006 |
|
2005 |
|
2006 |
|
2005 |
||||
Revenues |
$ |
2,036 |
$ |
3,235 |
$ |
10,740 |
$ |
12,073 |
||||
Operating expenses |
(2,969) |
(7,928) |
(18,416) |
(24,658) |
||||||||
Other income (expense) |
(61) |
142 |
(128) |
412 |
||||||||
Gain on disposal |
14,476 |
- |
14,476 |
- |
||||||||
Pre-tax income (losses) |
13,482 |
(4,551) |
6,672 |
(12,173) |
||||||||
Income tax (expense) benefit |
(1,985) |
2,207 |
529 |
4,111 |
||||||||
Income (losses) from discontinued operations |
$ |
11,497 |
$ |
(2,344) |
$ |
7,201 |
$ |
(8,062) |
||||
The results of operations for
the three and nine months ended September 30, 2006, do not include depreciation
expense of approximately $0.5 million and $0.7 million, respectively, that
would be recorded if the related assets were classified as held and used.
The assets and liabilities of
IDACOMM and ITI have been classified as held for sale on IDACORP's balance
sheets at September 30, 2006, and December 31, 2005. A summary of the
components of assets and liabilities held for sale on IDACORP's Consolidated
Balance Sheets is as follows (in thousands of dollars):
|
September 30, |
|
December 31, |
||||
|
2006 |
|
2005 |
||||
Assets |
|||||||
Current assets |
$ |
3,556 |
$ |
6,673 |
|||
Property and investments |
19,630 |
19,848 |
|||||
Other assets |
222 |
6,118 |
|||||
Total assets |
$ |
23,408 |
$ |
32,639 |
|||
Liabilities |
|||||||
Current liabilities |
$ |
1,536 |
$ |
5,916 |
|||
Other liabilities |
7,657 |
10,016 |
|||||
Long-term debt |
9 |
35 |
|||||
Total liabilities |
$ |
9,202 |
$ |
15,967 |
|||
33
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholders of IDACORP, Inc.
Boise, Idaho
We have reviewed the
accompanying condensed consolidated balance sheet of IDACORP, Inc. and
subsidiaries (the "Company") as of September 30, 2006, and the related
condensed consolidated statements of income and comprehensive income for the
three-month and nine-month periods ended September 30, 2006 and 2005, and the
condensed consolidated statements of cash flows for the nine-month periods ended
September 30, 2006 and 2005. These interim financial statements are the
responsibility of the Company's management.
We conducted our reviews in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). A review of interim financial information consists
principally of applying analytical procedures and making inquiries of persons
responsible for financial and accounting matters. It is substantially less in
scope than an audit conducted in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are
not aware of any material modifications that should be made to such condensed
consolidated interim financial statements for them to be in conformity with
accounting principles generally accepted in the United States of America.
We have previously audited,
in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheet of IDACORP, Inc. and
subsidiaries as of December 31, 2005, and the related consolidated statements
of income, comprehensive income, shareholders' equity, and cash flows for the
year then ended (not presented herein); and in our report dated March 6, 2006,
we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 2005 is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
DELOITTE & TOUCHE LLP
Boise, Idaho
November 1, 2006
34
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholder of Idaho Power Company
Boise, Idaho
We have reviewed the
accompanying condensed consolidated balance sheet and statement of capitalization
of Idaho Power Company and subsidiary (the "Company") as of September 30, 2006,
and the related condensed consolidated statements of income and comprehensive
income for the three-month and nine-month periods ended September 30, 2006 and
2005, and the condensed consolidated statements of cash flows for the
nine-month periods ended September 30, 2006 and 2005. These interim financial
statements are the responsibility of the Company's management.
We conducted our reviews in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). A review of interim financial information consists
principally of applying analytical procedures and making inquiries of persons
responsible for financial and accounting matters. It is substantially less in
scope than an audit conducted in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the objective of which is
the expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are
not aware of any material modifications that should be made to such condensed
consolidated interim financial statements for them to be in conformity with
accounting principles generally accepted in the United States of America.
We have previously audited,
in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheet and statement of
capitalization of Idaho Power Company and subsidiary as of December 31, 2005,
and the related consolidated statements of income, comprehensive income,
retained earnings, and cash flows for the year then ended (not presented
herein); and in our report dated March 6, 2006, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
and statement of capitalization as of December 31, 2005 is fairly stated, in
all material respects, in relation to the consolidated balance sheet and
statement of capitalization from which it has been derived.
DELOITTE
& TOUCHE LLP
Boise, Idaho
November 1, 2006
ITEM
2. MANAGEMENT'S
DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollar
amounts and megawatt-hours (MWh) are in thousands unless otherwise indicated.)
INTRODUCTION:
In Management's Discussion
and Analysis of Financial Condition and Results of Operations (MD&A), the
general financial condition and results of operations for IDACORP, Inc. and its
subsidiaries (collectively, IDACORP) and Idaho Power Company and its subsidiary
(collectively, IPC) are discussed.
IDACORP is a holding company
formed in 1998 whose principal operating subsidiary is IPC. IDACORP is subject
to the provisions of the Public Utility Holding Company Act of 2005, which
provides certain access to books and records to the Federal Energy Regulatory
Commission (FERC) and state utility regulatory commissions and imposes certain
record retention and reporting requirements on IDACORP.
IPC is an electric utility
with a service territory covering approximately 24,000 square miles in southern
Idaho and eastern Oregon. IPC is regulated by the FERC and the state
regulatory commissions of Idaho and Oregon. IPC is the parent of Idaho Energy
Resources Co., a joint venturer in Bridger Coal Company, which supplies coal to
the Jim Bridger generating plant owned in part by IPC.
At September 30, 2006,
IDACORP's other subsidiaries included:
In the second quarter of
2006, IDACORP management designated the operations of IDACORP Technologies,
Inc. (ITI) and IDACOMM as assets held for sale, as defined by Statement of
Financial Accounting Standards No. 144. IDACORP's condensed consolidated
financial statements reflect the reclassification of the results of these
businesses as discontinued operations for all periods presented. Discontinued
operations are discussed in more detail in Note 10 to IDACORP's and IPC's
Condensed Consolidated Financial Statements and later in the MD&A.
On July 20, 2006, IDACORP
completed the sale of all of the outstanding common stock of ITI to IdaTech UK
Limited, a wholly-owned subsidiary of Investec Group Investments (UK) Limited.
On October 12, 2006, IDACORP entered into an agreement to sell all of the
outstanding common stock of IDACOMM to American Fiber Systems, Inc. IDACORP
expects to complete the sale as early as the end of the fourth quarter of 2006,
subject to regulatory approvals. IDACORP does not expect the sale to have a
material effect on its financial position, results of operations or cash flows.
This MD&A should be read
in conjunction with the accompanying condensed consolidated financial
statements. This discussion updates the MD&A included in the Annual Report
on Form 10-K for the year ended December 31, 2005, and the Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2006, and June 30, 2006, and should
be read in conjunction with the discussions in those reports.
FORWARD-LOOKING
INFORMATION:
36
In connection with the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995
(Reform Act), IDACORP and IPC are hereby filing cautionary statements
identifying important factors that could cause actual results to differ
materially from those projected in forward-looking statements (as such term is
defined in the Reform Act) made by or on behalf of IDACORP or IPC in this
Quarterly Report on Form 10-Q, in presentations, in response to questions or
otherwise. Any statements that express, or involve discussions as to
expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of words or phrases such as
"anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts,"
"projects," "may result," "may continue" or similar expressions) are not
statements of historical facts and may be forward-looking. Forward-looking
statements involve estimates, assumptions and uncertainties and are qualified
in their entirety by reference to, and are accompanied by, the following
important factors, which are difficult to predict, contain uncertainties, are
beyond IDACORP's or IPC's control and may cause actual results to differ
materially from those contained in forward-looking statements:
37
Any forward-looking statement
speaks only as of the date on which such statement is made. New factors emerge
from time to time and it is not possible for management to predict all such
factors, nor can it assess the impact of any such factor on the business or the
extent to which any factor, or combination of factors, may cause results to
differ materially from those contained in any forward-looking statement.
EXECUTIVE OVERVIEW:
Third quarter 2006
financial results
IDACORP's earnings for the quarter
were $44 million, a $20 million increase over the same period in 2005. Basic
and diluted earnings per share were $1.03 in the third quarter of 2006 and
$0.56 in the same period of 2005. The gain on the sale of ITI and improved
results at IPC were the key drivers of IDACORP's increase. IDACORP recorded a
gain of $11.8 million, net of tax, or $0.27 per diluted share for the sale of
ITI.
IPC's earnings increased from
$21 million in 2005 to $30 million in 2006, mainly due to customer growth and
increased electricity usage. Key components of the increase in earnings
include the following:
IDACORP's non-regulated
subsidiaries and the holding company contributed earnings of $0.32 per diluted
share, compared to $0.06 per diluted share in the third quarter of 2005. The
increase is primarily a result of the gain on the sale of ITI.
Power Cost Adjustment
On June 1, 2006, IPC implemented its annual Power Cost Adjustment (PCA),
resulting in a $123.5 million reduction in the rates of Idaho customers. The
reduction in rates comes as a direct benefit of the above-average snow pack in
the mountains upstream of Brownlee Reservoir and lower-than-forecasted power
supply costs in the 2005-2006 PCA year. In years when water is plentiful and
IPC can fully utilize its extensive hydroelectric system, power production
costs are lower and IPC can pass those benefits to its customers in the form of
rate reductions. When water is in short supply, as it was from 2000 through
2005, the higher costs of supplying power by other means also are shared with
IPC's customers.
38
General rate case
settlement
On June 1, 2006, IPC implemented a
3.2 percent ($18 million annual) increase to its Idaho retail base rates. IPC
had filed a general rate case with the IPUC in October 2005, and the IPUC
approved a settlement agreement in May 2006. Base rates primarily reflect IPC's
cost of providing electrical service to its customers, including equipment,
vehicles and infrastructure. IPC's overall allowed rate of return in Idaho increased from 7.85 percent to 8.1 percent.
IRS audit proceedings
On October 13, 2006, the Internal
Revenue Service issued its examination report and assessment for IDACORP's
2001-2003 tax years. The IRS and IDACORP were able to settle all issues, with
the exception of IPC's capitalized overhead cost method. The federal tax
assessment for the settled issues will be paid in November 2006 and will not
have a material impact on IDACORP's 2006 results of operations or cash flows. The
disallowance of IPC's capitalized overhead cost method for uniform
capitalization (the simplified service cost method) resulted in a federal tax
assessment of $45 million. IDACORP disagrees with this conclusion and will
appeal the issue. In November 2006, IDACORP will file its formal protest, make
a deposit of the disputed tax with the IRS to stop the accrual of interest, and
enter the appeals process. Management cannot predict the timing or outcome of
this process, but believes that an adequate provision for income taxes and
related interest charges has been made for this issue (see "Income Taxes" for a
more detailed discussion).
June and July 2006 high
temperatures
IPC's service territory, along with
much of the western United States, experienced above-normal temperatures during
the months of June and July 2006. New records were set for cooling
degree-days, a measure of temperature impact on customer demand. Due to these
above-normal conditions, a new summer peak of 3,050 MW was first set on June
27, 2006, and was subsequently surpassed on July 24, 2006, when a new summer
peak of 3,084 MW was recorded. Since June 27, the previous system peak of
2,983 MW, which was set in 2002, has been met or exceeded 11 times. IPC was
able to meet all of its load requirements during these periods of increased
demand through its system generation and by increasing the amount of its
purchased power.
Integrated Resource Plan
IPC filed its 2006 Integrated
Resource Plan (IRP) with the IPUC in September 2006 and with the OPUC in
October 2006. The 2006 IRP previewed IPC's load and resource situation for the
next twenty years, analyzed potential supply-side and demand-side options and
identified near-term and long-term actions. IPC is reviewing the potential impact of
implementing the IRP on future construction expenditures and expects estimated
total construction expenditures for the years 2007 through 2009 to exceed the
2006 through 2008 estimate. Variations in the timing and amounts of capital
expenditures will result from regulatory and environmental factors, load growth
and other resource acquisition needs, including relicensing expenditures. See "REGULATORY
ISSUES - Integrated Resource Plan" for a discussion of IPC's 2006 IRP.
CRITICAL ACCOUNTING
POLICIES AND ESTIMATES:
IDACORP's and IPC's
discussion and analysis of their financial condition and results of operations
are based upon their condensed consolidated financial statements, which have
been prepared in accordance with GAAP. The preparation of these financial
statements requires IDACORP and IPC to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and expenses and related
disclosure of contingent assets and liabilities. On an ongoing basis, IDACORP
and IPC evaluate these estimates including those estimates related to rate
regulation, benefit costs, contingencies, litigation, impairment of assets,
income taxes, restructuring costs and bad debt. These estimates are based on
historical experience and on other assumptions and factors that are believed to
be reasonable under the circumstances, and are the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. IDACORP and IPC, based on their ongoing reviews,
make adjustments when facts and circumstances dictate.
IDACORP's and IPC's critical
accounting policies are reviewed by the Audit Committee of the Board of
Directors. These policies are discussed in more detail in the Annual Report on
Form 10-K for the year ended December 31, 2005, and have not changed materially
from that discussion.
39
RESULTS OF OPERATIONS:
This section of the MD&A
takes a closer look at the significant factors that affected IDACORP's and IPC's
earnings during the three and nine months ended September 30, 2006. In this
analysis, the results for 2006 are compared to the same period in 2005.
The following table presents
the earnings (losses) for IDACORP's segments as well as the holding company:
|
Three Months Ended |
|
|
Nine Months Ended |
||||||||
|
September 30, |
|
|
September 30, |
||||||||
|
2006 |
|
|
2005 |
|
|
2006 |
|
2005 |
|||
Continuing operations: |
||||||||||||
IPC - Utility operations |
$ |
30,389 |
$ |
20,969 |
$ |
77,022 |
$ |
55,354 |
||||
IDACORP Financial Services |
2,116 |
2,687 |
6,347 |
7,777 |
||||||||
Ida-West Energy |
1,079 |
888 |
2,441 |
1,714 |
||||||||
IDACORP Energy |
(54) |
(84) |
(166) |
(607) |
||||||||
Holding Company |
(1,038) |
1,501 |
(3,524) |
(41) |
||||||||
Income from continuing operations |
32,492 |
25,961 |
82,120 |
64,197 |
||||||||
Income (losses) from discontinued operations |
11,497 |
(2,344) |
7,201 |
(8,062) |
||||||||
Net income |
$ |
43,989 |
$ |
23,617 |
$ |
89,321 |
$ |
56,135 |
||||
Average common shares outstanding (diluted) |
42,863 |
42,380 |
42,710 |
42,318 |
||||||||
Diluted earnings (loss) per share: |
||||||||||||
Income from continuing operations |
$ |
0.76 |
$ |
0.61 |
$ |
1.92 |
$ |
1.52 |
||||
Income (losses) from discontinued | ||||||||||||
operations |
$ |
0.27 |
$ |
(0.05) |
$ |
0.17 |
$ |
(0.19) |
||||
Diluted earnings per share |
$ |
1.03 |
$ |
0.56 |
$ |
2.09 |
$ |
1.33 |
||||
Utility Operations
Operating environment:
IPC is one of the nation's few
investor-owned utilities with a predominantly hydroelectric generating base.
Because of its reliance on hydroelectric generation, IPC's generation
operations can be significantly affected by weather conditions. The
availability of hydroelectric power depends on the amount of snow pack in the
mountains upstream of IPC's hydroelectric facilities, springtime snow pack
run-off, rainfall and other weather and stream flow management considerations.
During low water years, when stream flows into IPC's hydroelectric projects are
reduced, IPC's hydroelectric generation is reduced. This results in less
generation from IPC's resource portfolio (hydroelectric, coal-fired and
gas-fired) available for off-system sales and, most likely, an increased use of
typically more expensive purchased power to meet load requirements. Both of
these situations - a reduction in profitable off-system sales and an increased
use of more expensive purchased power - result in increased net power supply
costs. During high water years, increased off-system sales and the decreased
need for purchased power reduce net power supply costs.
Operations plans are
developed during the year to provide guidance for generation resource
utilization and energy market activities (off-system sales and power
purchases). The plans incorporate forecasts for generation unit availability,
reservoir storage and stream flows, gas and coal prices, customer loads, energy
market prices and other pertinent inputs. Consideration is given to when to
use IPC's available resources to meet forecast loads and when to transact in
the energy market. The allocation of hydroelectric generation between
heavy-load and light-load hours or calendar periods is considered in
development of the operating plans. This allocation is intended to utilize the
flexibility of the hydroelectric system to shift generation to high value periods,
while operating within the constraints imposed on the system. IPC's energy
risk management policy, unit operating requirements and other obligations
provide the framework for the plans.
40
The following table presents
IPC's power supply for the three and nine month periods ended September 30:
|
|
MWh |
||||||||
|
|
Hydroelectric |
|
Thermal |
|
Total system |
|
Purchased |
|
|
|
|
Generation |
|
Generation |
|
Generation |
|
Power |
|
Total |
Three months ended: |
||||||||||
September 30, 2006 |
1,821 |
2,082 |
3,903 |
1,427 |
5,330 |
|||||
September 30, 2005 |
1,494 |
2,070 |
3,564 |
1,420 |
4,984 |
|||||
Nine months ended: |
||||||||||
September 30, 2006 |
7,687 |
5,020 |
12,707 |
4,130 |
16,837 |
|||||
September 30, 2005 |
4,818 |
5,409 |
10,227 |
3,104 |
13,331 |
|||||
The observed streamflow data
released on August 1, 2006, by the National Weather Service's Northwest River Forecast Center indicates that Brownlee reservoir inflow for April through
July 2006 was 8.95 million acre-feet (maf), or 142 percent of average. Storage
in selected federal reservoirs upstream of Brownlee as of October 29, 2006, was
126 percent of average. With current and forecasted stream flow conditions,
IPC expects to generate between 9.0 and 9.2 million MWh from its hydroelectric
facilities in 2006, compared to 6.2 million MWh in 2005.
Generation from thermal
plants during 2006 has been lower than 2005 due primarily to an unanticipated
outage at the Boardman plant, of which IPC owns a ten percent interest. The
unit returned to service in late June 2006. Additionally, the Bennett Mountain combustion turbine suffered a mechanical failure on July 11, 2006. IPC's
investigation has revealed that during construction a bolt was negligently
installed by a third party. The bolt came loose, causing extensive mechanical
damage. The plant was down from July 12 through September 6, 2006. Total
repair costs are estimated to be approximately $16 million. IPC anticipates
that insurance proceeds and recovery from the party or parties responsible for
the failure will result in substantial reimbursement of these costs. IPC
expects to generate approximately 6.9 million MWh from its thermal facilities
in 2006, compared to 7.3 million MWh in 2005.
IPC's system load peaks in
the summer and winter, with the larger peak demand occurring in the summer. IPC's
record system peak of 3,084 MW occurred on July 24, 2006. IPC was able to meet
system load requirements and off-system sales requirements and had sufficient
system reserves in place.
41
General business
revenue:
The following table presents IPC's general business revenues, MWh sales,
average number of customers and Boise, Idaho weather conditions for the three
and nine months ended September 30:
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||
|
|
2006 |
|
2005 |
|
2006 |
|
2005 |
||||||
Revenue |
||||||||||||||
Residential |
$ |
72,550 |
$ |
76,131 |
$ |
224,992 |
$ |
215,506 |
||||||
Commercial |
41,700 |
48,115 |
125,241 |
129,547 |
||||||||||
Industrial |
24,055 |
31,780 |
80,947 |
86,893 |
||||||||||
Irrigation |
41,106 |
51,211 |
69,623 |
72,243 |
||||||||||
Total |
$ |
179,411 |
$ |
207,237 |
$ |
500,803 |
$ |
504,189 |
||||||
MWh |
||||||||||||||
Residential |
1,249 |
1,141 |
3,689 |
3,424 |
||||||||||
Commercial |
1,009 |
965 |
2,794 |
2,719 |
||||||||||
Industrial |
875 |
880 |
2,597 |
2,548 |
||||||||||
Irrigation |
987 |
1,012 |
1,593 |
1,386 |
||||||||||
Total |
4,120 |
3,998 |
10,673 |
10,077 |
||||||||||
Customers (average, in thousands) |
||||||||||||||
Residential |
389,379 |
375,359 |
386,122 |
371,585 |
||||||||||
Commercial |
59,202 |
57,327 |
58,727 |
56,892 |
||||||||||
Industrial |
131 |
130 |
132 |
128 |
||||||||||
Irrigation |
18,219 |
18,013 |
18,093 |
17,930 |
||||||||||
Total |
466,931 |
450,829 |
463,074 |
446,535 |
||||||||||
Heating degree-days |
114 |
107 |
3,115 |
3,182 |
||||||||||
Cooling degree-days |
940 |
855 |
1,209 |
963 |
||||||||||
Precipitation (inches) |
0.42 |
0.34 |
8.62 |
8.14 |
Heating and cooling
degree-days are a common measure used in the utility industry to analyze the
demand for electricity and indicate when a customer would use electricity for
heating and air conditioning. A degree-day measures how much the average daily
temperature varies from 65 degrees. Each degree of temperature above 65
degrees is counted as one cooling degree-day, and each degree of temperature
below 65 degrees is counted as one heating degree-day.
General business revenue decreased $28 million for the quarter, due primarily to:
General business revenues decreased $3 million year-to-date, due primarily to:
42
Off-system sales:
Off-system sales consist primarily of long-term
sales contracts and opportunity sales of surplus system energy. The following
table presents IPC's off-system sales for the three and nine months ended
September 30:
Three months ended |
|
Nine months ended |
||||||||
September 30, |
|
September 30, |
||||||||
2006 |
|
2005 |
|
2006 |
|
2005 |
||||
Revenue |
$ |
39,692 |
$ |
34,105 |
$ |
219,531 |
$ |
105,189 |
||
MWh sold |
790 |
587 |
5,077 |
2,269 |
||||||
Revenue per MWh |
$ |
50.22 |
$ |
58.12 |
$ |
43.24 |
$ |
46.36 |
||
Improved streamflow
conditions increased total system generation and electricity available for
surplus sales. Revenues from higher sales volumes were moderated by lower
prices caused by abundant energy in the region. Additional sales activities
are the result of conforming to IPC's risk management policy, managing IPC's
energy portfolio to meet customer load, and reacting to changes in market
conditions to minimize net power supply costs.
Other revenues:
The following table presents the components of other
revenues for the three and nine months ended September 30:
Three months ended |
|
Nine months ended |
|||||||||
|
September 30, |
|
September 30, |
||||||||
|
2006 |
|
|
2005 |
|
2006 |
|
2005 |
|||
Transmission services and property rental |
$ |
10,210 |
$ |
9,951 |
$ |
27,639 |
$ |
28,503 |
|||
Rate case tax settlement |
100 |
(3,602) |
(4,745) |
(134) |
|||||||
Irrigation load reduction |
118 |
(4,188) |
(5,400) |
(5,296) |
|||||||
Provision for rate refund |
(732) |
- |
(907) |
400 |
|||||||
Total |
$ |
9,696 |
$ |
2,161 |
$ |
16,587 |
$ |
23,473 |
|||
From June 2005 to May 2006
IPC was collecting and recording in general business revenues, with a
corresponding reduction to other revenues, amounts related to a 2003 Idaho general rate case tax settlement and amounts related to an irrigation load reduction
program. Revenues for the rate case tax settlement were accrued from September
2004 to May 2005. The increase in other revenues as compared to the third
quarter of 2005 is due primarily to the completed recovery of these amounts
during the second quarter of 2006. Partially offsetting the increase is a
provision for rate refund associated with a revised Open Access Transmission
Tariff (OATT) filing with the FERC requesting an increase in transmission rates
(see "Regulatory Matters" for a more detailed discussion of the OATT filing).
Purchased power:
The following table presents IPC's purchased power
for the three and nine months ended September 30:
43
Three months ended |
|
Nine months ended |
||||||||
|
September 30, |
|
September 30, |
|||||||
|
2006 |
|
|
2005 |
|
2006 |
|
2005 |
||
Purchases |
$ |
98,926 |
$ |
81,396 |
$ |
229,659 |
$ |
162,403 |
||
MWh purchased |
1,427 |
1,420 |
4,130 |
3,104 |
||||||
Cost per MWh purchased |
$ |
69.33 |
$ |
57.32 |
$ |
55.61 |
$ |
52.32 |
The
increase in purchased power in the third quarter of 2006 was due primarily to
record high temperatures and electricity demand in July 2006, which led to
increased purchases during a period of high market prices. The year-to-date
increase was also impacted by early water year indications suggesting continued
drought conditions for 2006, which prompted IPC to make forward purchases in
conformance with its risk management policy. Additional purchase activities
were the result of managing IPC's energy portfolio to meet customer load and
reacting to changes in market conditions to minimize net power supply costs.
Fuel expense:
The following table presents IPC's fuel expenses and
generation at its thermal generating plants for the three and nine months ended
September 30:
|
Three months ended |
|
Nine months ended |
|||||||
|
September 30, |
|
September 30, |
|||||||
|
2006 |
|
|
2005 |
|
2006 |
|
2005 |
||
Fuel expense |
$ |
34,933 |
$ |
28,018 |
$ |
83,856 |
$ |
77,483 |
||
Thermal MWh generated |
2,082 |
2,070 |
5,020 |
5,409 |
||||||
Cost per MWh |
$ |
16.78 |
$ |
13.53 |
$ |
16.70 |
$ |
14.32 |
||
The increase in fuel expense
is due primarily to a $4 million increase in expense from higher coal and rail
transportation costs. The increased cost of coal is due primarily to higher
market demand, and the increased rail transportation costs are primarily driven
by higher diesel fuel costs, including an adjustable fuel surcharge. Higher
natural gas costs of $2 million also contributed to the increase. Natural gas
costs in the third quarter of 2005 were abnormally low as a result of credits
received for the sale-back of natural gas to the supplier at market price,
which was greater than the price as purchased for use at IPC's gas-fired
plants.
PCA:
PCA expense represents the effects of IPC's PCA
regulatory mechanism and Oregon deferrals of net power supply costs, which are
discussed in more detail below in "REGULATORY MATTERS - Deferred (Accrued) Net
Power Supply Costs."
In the third quarter of 2006,
higher electricity purchase prices, particularly in July, coupled with
increased coal and natural gas prices, caused a significant increase in net power
supply costs (fuel and purchased power less off-system sales) over the amounts
in the annual PCA forecasts. This increase in net power supply costs was
partially offset by increased hydroelectric generation in the first half of
2006, resulting in the deferral of costs which will be recovered in subsequent
rate years. As the deferred costs are recovered in rates, the deferred
balances are amortized.
The following table presents
the components of PCA expense for the three and nine months ended September 30:
Three months ended |
|
Nine months ended |
|||||||||
|
September 30, |
|
September 30, |
||||||||
|
2006 |
|
|
2005 |
|
2006 |
2005 |
||||
Current year power supply cost deferral |
$ |
(51,216) |
$ |
(12,833) |
$ |
(7,499) |
$ |
(25,378) |
|||
Amortization of prior year authorized balances |
(3,779) |
3,163 |
571 |
23,705 |
|||||||
Total power cost adjustment |
$ |
(54,995) |
$ |
(9,670) |
$ |
(6,928) |
$ |
(1,673) |
|||
44
Other operating and
maintenance expenses
: O&M
expenses decreased $2 million for the quarter and increased $9 million
year-to-date, compared to 2005. The third quarter decrease was primarily
attributable to a $3 million reversal of accrued FERC fees. IPC and several
other utilities contested whether certain federal agency charges could be
passed on to utilities through FERC fees. A judgment in favor of IPC and the
other utilities was finalized in September. The year-to-date increase
primarily resulted from a $4 million increase in labor-related expenses, a $4
million increase in electricity transmission expenses, a $2 million increase in
thermal plant expenses and a $1 million increase in electricity generation
expenses. These increases were partially offset by the reversal of accrued
FERC fees recorded in the third quarter of 2006. Total O&M expenses in
2006 are expected to be between $250 and $260 million.
Non-utility operations
IFS
IFS contributed $2.1 million in the
third quarter of 2006, compared to $2.7 million in the third quarter of 2005.
IFS' income is derived principally from the generation of federal income tax
credits and accelerated tax depreciation benefits related to its investments in
affordable housing and historic rehabilitation developments. IFS generated
$4.6 million of tax credits in the third quarter of 2006 ($13.8 million
year-to-date) and expects to continue delivering tax benefits at a level
commensurate with the ongoing needs of IDACORP.
Discontinued Operations
In the second quarter of 2006,
IDACORP management designated the operations of ITI and IDACOMM as assets held
for sale, as defined by Statement of Financial Accounting Standards No. 144.
The operations of these entities are presented as discontinued operations in
IDACORP's financial statements.
On July 20, 2006, IDACORP
completed the sale of all of the outstanding common stock of ITI to IdaTech UK
Limited, a wholly-owned subsidiary of Investec Group Investments (UK) Limited.
IDACORP recorded a gain of $11.8 million, net of tax, or $0.27 per diluted
share from this transaction in the third quarter of 2006.
On October 12, 2006, IDACORP
entered into an agreement to sell all of the outstanding common stock of
IDACOMM to American Fiber Systems, Inc. IDACORP expects to complete the sale
as early as the end of the fourth quarter of 2006, subject to regulatory
approvals. IDACORP does not expect the sale to have a material effect on its
financial position, results of operations or cash flows.
ITI lost $0.2 million in the
third quarter of 2006 and $3.6 million year-to-date, compared to losses of $2.5
million and $6.9 million for the same periods in 2005. IDACOMM lost $0.2 million
in the third quarter of 2006 and $0.6 million year-to-date, compared to losses
of $0.7 million and $1.0 million for the same periods in 2005.
INCOME TAXES:
Income tax rate
In accordance with interim reporting requirements, IDACORP and IPC use an estimated
annual effective tax rate for computing their provisions for income taxes.
IDACORP's effective rate on continuing operations for the nine months ended
September 30, 2006, was 24.1 percent, compared to 17.1 percent for the nine
months ended September 30, 2005. IPC's effective tax rate for the nine months
ended September 30, 2006, was 38.5 percent, compared to 40.9 percent for the
nine months ended September 30, 2005.
The differences in estimated
annual effective tax rates are primarily due to the increase in pre-tax
earnings at IDACORP and IPC, the loss of IPC's simplified service cost method
tax deduction in 2005 and the adoption of a new uniform capitalization method
in 2006, timing and amount of IPC's regulatory flow-through tax adjustments,
settlement of a Bridger Coal Company partnership audit at IPC (discussed
below), and slightly lower tax credits from IFS.
Status of audit
proceedings
In March 2005, the Internal Revenue
Service (IRS) began its examination of IDACORP's 2001-2003 tax years. On
October 13, 2006, the IRS issued its examination report and assessment for
those years. With the exception of IPC's capitalized overhead costs method,
discussed below, the IRS and IDACORP were able to settle all issues. The
federal tax assessment for the settled issues will be paid in November 2006.
It is expected that associated interest charges and state income taxes will be
paid during 2007. Settlement of the agreed issues will not have a material
impact on IDACORP's 2006 results of operations or cash flows.
45
The IRS disallowed IPC's
capitalized overhead cost method for uniform capitalization (the simplified
service cost method) on the basis that IPC's self-constructed assets were not
produced on a "routine and repetitive" basis as defined by Rev. Rul. 2005-53.
The disallowance resulted in a federal tax assessment of $45 million. IDACORP
disagrees with this conclusion and will appeal the issue. Accordingly, in
November, 2006 IDACORP will file its formal protest, make a deposit of the
disputed tax with the IRS to stop the accrual of interest, and enter the
appeals process. Management cannot predict the timing or outcome of this
process, but believes that an adequate provision for income taxes and related
interest charges has been made for this issue.
The simplified service cost
method was also used for IPC's 2004 tax year. While 2004 is not currently
under examination, it is likely the IRS will take the same position for 2004 as
it did for 2001-2003; however, it is not likely that this position will result
in a federal income tax assessment primarily due to the mitigating effect of
accelerated tax depreciation.
On July 7, 2006, the IRS
issued its examination report for Bridger Coal Company's 2001-2003 tax years.
Bridger Coal is a partnership investment owned one-third by IPC. The audit
resulted in net favorable adjustments to Bridger Coal's tax returns for those
years. IPC's third quarter income tax expense decreased by $1.3 million as a
result of the settlement.
IDACORP intends to vigorously
defend its tax positions. It is possible that material differences in actual
outcomes, costs and exposures relative to current estimates, or material
changes in such estimates, could have a material adverse effect on IDACORP's
and IPC's consolidated financial position, results of operations, or cash
flows.
Capitalized overhead costs
Generally, section 263A of the
Internal Revenue Code of 1986, as amended, requires the capitalization of all
direct costs and indirect costs, including mixed service costs, which directly
benefit or are incurred by reason of the production of property by a taxpayer.
The simplified service cost method, a "safe harbor" method, is one of the
methods provided by the section 263A treasury regulations for the calculation
of mixed service cost capitalization. IPC adopted the simplified service cost
method for both the self-construction of utility plant and production of
electricity beginning with its 2001 federal income tax return.
On August 2, 2005, the IRS
and the Treasury Department issued guidance interpreting the meaning of "routine
and repetitive" for purposes of the simplified service cost and simplified
production methods of the Internal Revenue Code section 263A uniform
capitalization rules. The guidance was issued in the form of a revenue ruling
(Rev. Rul. 2005-53) which is effective for all open tax years ending prior to
August 2, 2005, and proposed and temporary regulations (the "Temporary
Regulations") which are effective for tax years ending on or after August 2,
2005. Both pieces of guidance take a more restrictive view of the definition
of self-constructed assets produced by a taxpayer on a "routine and repetitive"
basis than did treasury regulations in effect at the time IPC changed to the
simplified service cost method.
For IPC, the simplified
service cost method produced a current tax deduction for costs capitalized to
electricity production that are capitalized into fixed assets for financial
accounting purposes. Deferred income tax expense had not been provided for
this deduction because the prescribed regulatory tax accounting treatment does
not allow for inclusion of such deferred tax expense in current rates. Rate
regulated enterprises are required to recognize such adjustments as regulatory
assets if it is probable that such amounts will be recovered from customers in
future rates.
As discussed in "Status of
Audit Proceedings" above, the IRS has disallowed IPC's use of the simplified
service cost method for the tax years 2001-2003 on the basis of Rev. Rul. 2005-53.
As a result, the IRS has assessed a $45 million tax liability. IDACORP will
appeal the IRS's assessment. Because of the nature of the issue, IDACORP's
exposure with respect to this matter may be less than the tax assessed plus
applicable interest charges. The resolution of this matter could result in a
one time charge to earnings; however, at this time IDACORP is not in a position
to quantify such amount. Additionally, after resolution IDACORP will likely
amend its 2005 federal income tax return and its 2005 method change application
to account for the effects that such resolution has on IPC's new uniform
capitalization method (discussed below). This amendment is not expected to
have a negative impact on IDACORP's or IPC's consolidated financial position,
results of operations, or cash flows.
46
With respect to tax year 2005
and future tax years, the Temporary Regulations, as drafted, preclude IPC from
using the simplified service cost method for its self-constructed assets.
Under the Temporary Regulations, IPC is required to use another allowable
section 263A method for its indirect costs, including mixed service costs. As
a result of the Temporary Regulations, IPC made changes to its overall section
263A uniform capitalization method of accounting. In September 2006, the
changes were adopted with an automatic method change request included in
IDACORP's 2005 federal income tax return. The uniform capitalization
methodology adopted for 2005 and subsequent years involves the use of the
specific identification, burden rate, and step-allocation methods of
accounting. The methods used are allowable under both the final and temporary
section 263A regulations.
As with the simplified
service cost method, the new uniform capitalization methodology produces an
annual tax deduction for costs that are not required to be capitalized under
section 263A as well as costs capitalized into the production of electricity.
The method, while producing a beneficial result, is not as favorable as the
simplified service cost method. Changing the uniform capitalization method
will result in a net charge to IPC's 2006 income tax expense of $6.1 million,
with $5.4 million being recorded in the third quarter. The estimated 2006 tax
deduction produces a $3.3 million tax benefit for the year, $2.5 million of
which was recorded at IPC in the third quarter. The change in method is not
expected to have a material effect on IDACORP's or IPC's 2006 cash flows. The
accounting and regulatory treatment for the new method is the same as
previously used for the simplified service cost method.
LIQUIDITY AND CAPITAL
RESOURCES:
Operating cash flows
IDACORP's and IPC's operating cash
flows for the nine months ended September 30, 2006, were $170 million and $134
million, respectively.
IDACORP's and IPC's operating
cash flows increased $49 million and $8 million, respectively, compared to
2005. The increase in IDACORP's operating cash flows was primarily the result
of activities at IE. IE collected $12 million of accounts receivable in 2006
resulting from the settlement of legal matters, and a $10 million margin
deposit made in 2005 was returned by the counterparty in 2006. The remaining
increase in cash flows resulted primarily from normal fluctuations in working
capital items.
In 2006 and 2007, net cash
provided by operating activities will continue to be driven by IPC, where
general business revenues, sales of excess energy to wholesale customers, and
costs to supply power to general business customers have the greatest impact on
operating cash flows. Additionally, in the fourth quarter of 2006, IDACORP
expects to make a $45 million federal tax deposit relating to the assessment by
the IRS on IPC's 2001 through 2003 federal income tax returns. IDACORP
disagrees with this assessment but is making the tax deposit to stop the
accrual of interest charges. See "INCOME TAXES - Status of audit proceedings"
for a discussion of this assessment.
Contractual obligations
There have been no material changes
in contractual obligations, outside of the ordinary course of business, since
December 31, 2005.
Credit ratings
Access to capital markets at a
reasonable cost is determined in large part by credit quality. The following
table outlines the current S&P, Moody's and Fitch ratings of IDACORP's and
IPC's securities:
47
These security ratings
reflect the views of the rating agencies. An explanation of the significance
of these ratings may be obtained from each rating agency. Such ratings are not
a recommendation to buy, sell or hold securities. Any rating can be revised
upward or downward or withdrawn at any time by a rating agency if it decides
that the circumstances warrant the change. Each rating should be evaluated
independently of any other rating.
Capital requirements
IDACORP's internal cash generation
after dividends is expected to provide less than the full amount of total
capital requirements for 2006 through 2008. The contribution from internal
cash generation is dependent primarily upon IPC's cash flows from operations,
which are subject to risks and uncertainties relating to weather and water
conditions, and IPC's ability to obtain rate relief to cover its operating
costs.
IDACORP's internally
generated cash after dividends is expected to provide approximately 44 percent
of 2006 capital requirements, where capital requirements are defined as utility
construction expenditures, excluding Allowance for Funds Used During
Construction (AFDC), plus other regulated and non-regulated investments. This
excludes mandatory or optional principal payments on debt obligations. IDACORP
and IPC expect to continue financing the utility construction program and other
capital requirements with internally generated funds and externally financed
capital.
The current expectation of
approximately 44 percent of 2006 capital requirements is a decrease from the 58
percent projected in IDACORP's and IPC's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006. This decrease is primarily due to a projected $45
million tax deposit that will be made with the IRS pending settlement of prior
year tax returns. Both the current and prior quarter estimates for 2006 also
include $28 million in income taxes paid by IPC in the first quarter of 2006
from the sale of excess SO
2
emission allowances in 2005. These tax
payments total $73 million and reduced IDACORP's 2006 forecast for internally
generated cash. Excluding these tax payments, IDACORP's internally generated
cash after dividends would have provided approximately 83 percent of 2006
capital requirements.
Utility construction
program
: Utility construction
expenditures were $166 million for the nine months ended September 30, 2006,
compared to $128 million for the nine months ended September 30, 2005 due
primarily to increases in transmission and distribution construction. IPC's
total construction expenditures are expected to be $720 million, excluding
AFDC, from 2006 through 2008. IPC has recently issued its 2006 Integrated
Resource Plan (IRP) and is reviewing the potential impact on its future
construction expenditures. It is expected that estimated total
construction expenditures for the years 2007 through 2009 will exceed the 2006
through 2008 estimate as a result of implementing the IRP. See "REGULATORY
ISSUES - Integrated Resource Plan" for a discussion of IPC's 2006 IRP.
Variations in the timing and amounts of capital expenditures will result from
regulatory and environmental factors, load growth and other resource
acquisition needs, including relicensing expenditures.
Other capital requirements
: Most of IDACORP's non-regulated capital
expenditures relate to IFS' investments in affordable housing developments that
help lower IDACORP's income tax liability.
Financing Programs
Credit facilities:
IDACORP has a
$150 million five-year credit agreement with various lenders (IDACORP Facility),
which is used for general corporate purposes and commercial paper back-up and
will terminate on March 31, 2010. The IDACORP
Facility provides for the
issuance of loans and standby letters of credit not to exceed the aggregate
principal amount of $150 million, provided that the aggregate amount of the
standby letters of credit may not exceed $75 million.
IPC has a $200 million
five-year credit agreement with various lenders (IPC Facility), which is used
for general corporate purposes and commercial paper back-up and will terminate
on March 31, 2010. The IPC Facility provides for the issuance of loans and
standby letters of credit not to exceed the aggregate principal amount of $200
million, provided that the aggregate amount of the standby letters of credit
may not exceed $100 million.
48
At September 30, 2006, no
loans were outstanding under the IDACORP Facility or IPC Facility.
The IDACORP Facility and the IPC Facility both contain a covenant requiring
each company to maintain a leverage ratio of consolidated indebtedness to
consolidated total capitalization of no more than 65 percent as of the end of
each fiscal quarter. At September 30, 2006, the leverage ratios for both
IDACORP and IPC were 49 and 51 percent, respectively. At September 30, 2006,
IDACORP was in compliance with all other covenants of the IDACORP Facility and
IPC was in compliance with all other covenants of the IPC Facility.
See "LIQUIDITY AND CAPITAL
RESOURCES - Financing Programs - Credit Facilities" in IDACORP's and IPC's Annual
Report on Form 10-K for the year ended December 31, 2005, for a discussion of
the terms of the IDACORP Facility and the IPC Facility.
Long-term financings:
In April 2005, with the goal of adding additional
common equity to its capital structure, IDACORP began using original issue
common stock in its Dividend Reinvestment and Stock Purchase Plan, rather than
purchasing this stock on the open market. Beginning in August 2005, IDACORP
also began using original issue common stock for its 401(k) plan. In the third
quarter of 2006, IDACORP issued 56,548 shares.
On October 3, 2006, IPC
completed a tax-exempt bond financing in which Sweetwater County, Wyoming
issued and sold $116,300,000 aggregate principal amount of its Pollution
Control Revenue Refunding Bonds (Idaho Power Company Project) Series 2006. The
bonds will mature on July 15, 2026. The $116.3 million proceeds were loaned by
Sweetwater County to IPC pursuant to a Loan Agreement, dated as of October 1,
2006, between Sweetwater County and IPC (the Loan Agreement) On October 10,
2006, the proceeds of the new bonds, together with certain other moneys of IPC,
were used to refund Sweetwater County's (i) Pollution Control Revenue Refunding
Bonds (Idaho Power Company Project) Series 1996A that were outstanding in the
aggregate principal amount of $68,100,000, (ii) Pollution Control Revenue
Refunding Bonds (Idaho Power Company Project) Series 1996B that were
outstanding in the aggregate principal amount of $24,200,000 and (iii)
Pollution Control Revenue Refunding Bonds (Idaho Power Company Project) Series
1996C that were outstanding in the aggregate principal amount of $24,000,000.
The regularly scheduled principal and interest payments on the bonds, and
principal and interest payments on the bonds upon mandatory redemption on
determination of taxability, are insured by a financial guaranty insurance
policy issued by AMBAC Assurance Corporation. IPC and AMBAC have entered into
an Insurance Agreement, dated as of October 3, 2006, pursuant to which IPC has agreed,
among other things, to pay certain premiums to AMBAC and to reimburse AMBAC for
any payments made under the policy.
In order to secure IPC's
obligation to make principal and interest payments on the loan made to IPC, IPC
issued and delivered to a trustee IPC's First Mortgage Bonds, Pollution Control
Series C, in a principal amount equal to the principal amount of the new bonds.
LEGAL AND ENVIRONMENTAL
ISSUES:
Legal and Other
Proceedings
Reference is made to IDACORP's
and IPC's Annual Report on Form 10-K for the year ended December 31, 2005, and
Quarterly Report on Form 10-Q for the quarters ended March 31, 2006, and June
30, 2006, for a discussion of all material pending legal proceedings to which
IDACORP and IPC and their subsidiaries are parties. The following discussion
provides a summary of material developments that occurred in those proceedings
during the period covered by this report and of any new material proceedings
instituted during the period covered by this report.
49
Shareholder Lawsuit:
On March 29, 2006, the U.S. District Court for the
District of Idaho (Judge Edward J. Lodge) issued an Order in this case (Powell
v. IDACORP) adopting the Report and Recommendation of Magistrate Judge Williams
issued on September 14, 2005, granting the defendants' (IDACORP and certain of
its officers and directors) motion to dismiss because plaintiffs failed to
satisfy the pleading requirements for loss causation. However, Judge Lodge
modified the Report and Recommendation and ruled that plaintiffs had until May
1, 2006, to file an amended complaint only as to the loss causation element.
On May 1, 2006, the plaintiffs filed an amended complaint. The defendants
filed a motion to dismiss the amended complaint on June 16, 2006, asserting
that the amended complaint still failed to satisfy the pleading requirements
for loss causation. Briefing on this most recent motion to dismiss was
completed on August 28, 2006. IDACORP and the other defendants intend to
defend themselves vigorously against the allegations. IDACORP cannot, however,
predict the outcome of these matters.
Wah Chang:
Following the October 18, 2005 consolidation of Wah
Chang's appeal of the dismissal order to the U.S. Court of Appeals for the
Ninth Circuit with an identical order in Wah Chang v. Duke Energy Trading and
Marketing, IDACORP, IPC and IE filed an answering brief on November 30, 2005.
Wah Chang filed its reply brief on January 6, 2006. Wah Chang's appeal to the
U.S. Court of Appeals for the Ninth Circuit has now been fully briefed;
however, no date has yet been set for oral argument. IDACORP, IPC and IE
intend to vigorously defend their position in this proceeding and believe this
matter will not have a material adverse effect on their consolidated financial
positions, results of operations or cash flows.
City of Tacoma:
The City of Tacoma's March 10, 2005, appeal to the
U.S. Court of Appeals for the Ninth Circuit of the dismissal of the case by
Judge Whaley has been fully briefed; however, no date has yet been set for oral
argument. IDACORP, IPC and IE intend to vigorously defend their position in
this proceeding and believe this matter will not have a material adverse effect
on their consolidated financial positions, results of operations or cash flows.
Wholesale
Electricity Antitrust Cases I & II
:
In April 2002, several subsidiaries of Reliant Energy, Inc. (Reliant) and Duke
Energy Corporation (Duke) filed cross-complaints against IE and IPC and
numerous other participants in the California energy market. The cross-complaints
sought indemnification for any liability that may arise from original
complaints filed against Reliant and Duke with respect to charges of unlawful
and unfair business practices in the California energy markets under California law. On November 9, 2005, both Duke and Reliant submitted to the California
Superior Court stipulations with IE and IPC to conditionally dismiss, with
prejudice, the cross-complaints, subject to reinstatement if proposed
settlements between Duke and Reliant and the plaintiffs of the underlying
actions were not approved by the court. Neither IE nor IPC paid any amount to
Duke or to Reliant to obtain these dismissals.
On December 14, 2005, the
court granted final approval of the Duke settlement with the plaintiffs. The
court's order granting final approval of the Duke settlement became final on
March 14, 2006. On January 6, 2006, the
court granted preliminary approval of the Reliant settlement. On March 30,
2006, oppositions and objections to the Reliant settlement were filed by
certain parties under the
Eggers
case caption, including by the States
of Montana and Idaho. Neither IPC nor IE is a party to the
Eggers
case,
which seeks to recover damages on behalf of consumers in western states other
than California. A hearing on final approval of the Reliant settlement was
held on April 28, 2006. At the hearing, the court ruled that the California class settlement would receive final approval contingent on a satisfactory
showing that the notice to those class members was adequate. As for the
Eggers
case, the court set a briefing schedule to provide evidence and oral argument
regarding the State of Montana's treatment by its class representative and
Montana's connection to the California energy market.
On May 30, 2006, the Court signed
and approved the Judgment, Final Order, and Decree
Granting Final Approval to the Reliant settlement. The Court also signed and
approved the Order Granting Reliant's Motion for Good Faith Settlement
Determination. The order approving the
Reliant settlement became final on July 31, 2006. On July 14, 2006, the Court held a separate hearing to
consider approval of the settlement of the
Eggers
action, and thereafter
signed and approved the Judgment, Final
Order and Decree Granting Final Approval to the Class Action Settlement in the
Eggers
case. All appeal periods have now expired.
Western Energy Proceedings
at the FERC
50
1. California Refund
On February 17, 2006, IE and IPC
jointly filed with the California Parties (Pacific Gas & Electric Company,
San Diego Gas & Electric Company, Southern California Edison, the
California Public Utilities Commission, the California Electricity Oversight
Board, the California Department of Water Resources and the California Attorney
General) an Offer of Settlement at the FERC. Other parties had until March 9,
2006, to elect to become an additional settling party. The majority of other
parties chose to opt out of the Settlement. After consideration of comments,
on May 22, 2006, the FERC approved the settlement. Under the terms of the
settlement, IE and IPC assigned $24.25 million of the rights to accounts
receivable from the California Independent System Operator (Cal ISO) and
California Power Exchange (CalPX) to the California Parties to pay into an
escrow account for refunds to settling parties. Amounts from that escrow not
used for settling parties and $1.5 million of the remaining IE and IPC
receivables which are to be retained by the CalPX are available to fund, at
least partially, payment of the claims of any non-settling parties if they
prevail in the remaining litigation of this matter. Any excess funds remaining
at the conclusion of the case are to be returned to IDACORP. Approximately
$10.25 million of the remaining IE and IPC receivables was paid to IE and IPC
under the Settlement.
On May 22, 2006, the FERC
issued an order approving, with certain conditions, the Offer of Settlement.
On June 21, 2006, the Port of Seattle, Washington filed a request for rehearing
of the FERC order approving the Settlement. On July 10, 2006, IDACORP and the
California Parties filed a response to Port of Seattle's request for
rehearing. On October 5, 2006, the FERC issued an order denying the Port of Seattle's request for rehearing. The time for seeking review of the FERC's Order
will not expire until December 4, 2006. IDACORP is unable to predict at this
time if any person will seek such review or, if such review is sought, what the
eventual outcome will be.
For some time the Ninth
Circuit Court of Appeals held in abeyance consolidated petitions for review (in
excess of 100) of FERC orders related to the California Refund proceeding. On
September 21, 2004, the Ninth Circuit convened case management proceedings on
these petitions and on October 22, 2004, severed a subset of issues for
briefing related to: (1) which parties are subject to the FERC's refund
jurisdiction under section 201(f) of the Federal Power Act; (2) the temporal
scope of refunds under section 206 of the Federal Power Act; and (3) which
categories of transaction are subject to refunds. Oral argument was held on
April 12-13, 2005. On September 6, 2005, the Ninth Circuit issued a decision
on the jurisdictional issues concluding that the FERC lacked refund authority
over wholesale electric energy sales made by governmental entities and
non-public utilities. On August 2, 2006, the Ninth Circuit issued its decision
on the appropriate temporal reach and the type of transactions subject to the
FERC refund orders and concluded, among other things, that all transactions at
issue in the case that occurred within or as a result of the CalPX and the Cal
ISO were the proper subject of refund proceedings; refused to expand the refund
proceedings into the bilateral markets including transactions with the
California Department of Water Resources; approved the refund effective date as
October 2, 2000, but also required the FERC to consider whether refunds,
including possibly market-wide refunds, should be required for an earlier time
due to claims that some market participants had violated governing tariff
obligations (although the decision did not specify when that time would start,
the California Parties generally had sought further refunds starting May 1,
2000); and effectively expanded the scope of the refund proceeding to
transactions within the CalPX and Cal ISO markets outside the 24-hour spot
market and energy exchange transactions.
IDACORP believes that these
decisions should have no material effect on IDACORP under the terms of the
IDACORP Settlement with the California Parties approved by the FERC on May 22,
2006.
2. Market Manipulation
Pursuant to the Offer of Settlement
filed with the FERC on February 17, 2006, between the California Parties and IE
and IPC and discussed above in "California Refund" the requests for rehearing
of the California Parties and other settling parties of the FERC's approval of
an earlier settlement with the FERC staff regarding allegations of "gaming" are
deemed to be withdrawn. On May 22, 2006, the FERC issued an order approving
the February 17, 2006, Offer of Settlement. On October 11, 2006, the FERC
issued an Order denying rehearing of its earlier approval of the "gaming"
allegations, thereby effectively terminating the FERC investigations as to IPC
and IE regarding bidding behavior, physical withholding of power and "gaming"
without finding of wrongdoing. The time for seeking review of the FERC's Order
will not expire until December 11, 2006. IPC and IE are unable to predict at
this time if any person will seek such review or, if such review is sought,
what the eventual outcome will be.
51
3. Pacific Northwest
Refund
On September 24, 2001, the FERC
Administrative Law Judge submitted recommendations and findings to the FERC
finding that prices in the Pacific Northwest during the December 25, 2000,
through June 20, 2001, time period should be governed by the Mobile-Sierra
standard of public interest rather than the just and reasonable standard, that
the Pacific Northwest spot markets were competitive and that no refunds should
be allowed. The FERC approved these recommendations on June 25, 2003, and
multiple parties then appealed to the Ninth Circuit Court of Appeals. IE and
IPC were parties in the FERC proceeding and are participating in the appeal.
Briefing on the appeal was completed on May 25, 2005, and oral argument has
been scheduled for January 8, 2007. The Settlement approved by the FERC on May
22, 2006, resolves all claims the California Parties have against IE and IPC in
the Pacific Northwest Refund proceeding. The settlement with Grays Harbor
resolves all claims Grays Harbor has against IE and IPC in this proceeding. IE
and IPC are unable to predict the outcome as to all other parties in this
proceeding.
Other Legal Proceedings:
IDACORP, IPC and/or IE are involved in lawsuits and
legal proceedings in addition to those discussed above and in Note 5 to IDACORP's
Condensed Consolidated Financial Statements. The companies believe they have
meritorious defenses to all lawsuits and legal proceedings where they have been
named as defendants. Resolution of any of these matters will take time, and
the companies cannot predict the outcome of any of these proceedings. The
companies believe that their reserves are adequate for these matters.
Idaho
Water Management Issues
Idaho experienced six consecutive years of below normal precipitation and
stream flows from 2000 through 2005. These conditions exacerbated a developing
water shortage in the state, which is manifested by a number of water issues
including declining Snake River base flows and declining levels in the Eastern
Snake Plain Aquifer, a large underground aquifer that has been estimated to
hold between 200 - 300 maf of water. These issues are of interest to IPC
because of their potential impacts on generation at IPC's hydroelectric
projects. With respect to base flows, observed records suggest that the base
flows in the Snake River, particularly between IPC's Twin Falls and Swan Falls projects, have been in decline for several decades. The yearly average flow
measured below Swan Falls declined at an average rate of 43 cubic feet per
second (cfs) per year during the period 1961-2003, and between Twin Falls and Lower Salmon Falls, which significantly contribute to base flow, declined at a rate of
approximately 27 cfs per year over the same period. Low flow in the Snake
River near Hagerman, Idaho continued to be observed during 2005, where several
river gauges in that area recorded the lowest January - March Snake River flows
since the early 1960's.
As a result of these declines
in river flows, in 2003 several surface water users filed delivery calls with
the Idaho Department of Water Resources (IDWR), demanding that it manage ground
water withdrawals pursuant to the prior appropriation doctrine of "first in
time is first in right" and curtail junior ground water rights that are
depleting the aquifer and affecting flows to senior surface water rights.
These delivery calls have resulted in several administrative actions before the
IDWR and judicial actions before the State District Court in Ada and Gooding
counties in Idaho challenging the constitutionality of state regulations used
by the IDWR to conjunctively administer ground and surface water rights. One
such action, filed in January 2005, involves seven surface water irrigation
entities from above Milner Dam that submitted a delivery call letter to the
Director of the IDWR requesting that the Director administer and deliver their
senior natural flow and storage water rights pursuant to Idaho law. The
irrigation entities contend that existing data reflects that senior surface
water rights above Milner Dam have been reduced by approximately 600,000
acre-feet, a 30 percent reduction, over the past six years, due in part to
junior groundwater pumping from the Eastern Snake Plain Aquifer, and that these
reductions have resulted in cumulative shortages in natural flow and storage
water accrual in American Falls Reservoir, a U.S. Bureau of Reclamation
reservoir that supplies a portion of their senior water rights. The Idaho Ground
Water Appropriators, Inc., an Idaho non-profit corporation organized to promote
and represent the interests of groundwater users, and the U.S. Bureau of
Reclamation, the owner of American Falls Reservoir, petitioned to intervene in
the delivery call action. Both petitions were granted.
52
Since IPC holds water rights
that are dependent on the Snake River, spring flows and the overall condition
of the Eastern Snake Plain Aquifer, IPC continues to participate in actions, as
necessary, to protect its water rights. One such action relates to the
constitutionality of the Conjunctive Management Rules (CMR) that were developed
by the IDWR to administer connected ground and surface water rights. In August
2005, the surface water irrigation entities that initiated the delivery call
filed an action against the IDWR in the state district court in Gooding County, Idaho for a declaratory judgment regarding the validity and
constitutionality of the CMR. IPC intervened in the action as a
plaintiff/intervenor. The Idaho Ground Water Appropriators intervened as a
defendant. In October 2005, the plaintiffs in the case filed a motion for
summary judgment, contending that the CMR were unconstitutional and violated
the doctrine of prior appropriation as applied in Idaho. After briefing and
argument, on June 2, 2006, the district court issued a memorandum decision
granting summary judgment to the plaintiffs and holding that the CMR are
unconstitutional because the rules failed to protect senior water rights from
injury by junior water right diversions. On July 11, 2006, the IDWR appealed
the court's order to the Idaho Supreme Court and subsequently filed a motion
with the district court asking the court to stay the effect of its order until
the conclusion of the appeal. On September 27, 2006, the Idaho Supreme Court
entered an order denying the stay and expediting the appeal. The Court set an
expedited briefing schedule and scheduled oral argument for December 8, 2006.
IPC is participating in the appeal.
IPC, together with other
interested water users and state interests, also continues to explore and
encourage the development of a long-term management plan that will protect the
aquifer and the river from further depletion. One management option being
explored is aquifer recharge, or using surface water supplies to increase
ground water supplies by allowing the water to percolate into the aquifer in
porous locations. Under certain circumstances aquifer recharge may impact
senior water rights, including water rights held by IPC for hydropower
purposes, and therefore conflict with state law. For that reason, IPC
continues to participate in the processes that are considering solutions, such
as aquifer recharge, to the conflict between ground and surface water interests
in an effort to protect its existing hydroelectric generation water rights.
In February 2006, at the
request of senior surface water interests, IPC entered into discussions with
the State of Idaho, through the Office of the Governor, and senior surface
water interests to explore opportunities for engaging in some limited aquifer
recharge in 2006, provided any adverse impact to IPC's hydropower generation
and its customers is adequately addressed. These discussions led to a proposal
to implement a recharge pilot program in 2006. However, before that proposal
could be finalized, on March 17, 2006, the House of Representatives of the
State of Idaho passed House Bill 800, which proposed to repeal certain
provisions of the Idaho Code that governed the use of natural water flow to
recharge the Eastern Snake Plain Aquifer and would have subordinated certain
hydropower water rights held by IPC to aquifer recharge. The introduction of
House Bill 800 effectively concluded the discussions between IPC, senior
surface water interests and the Governor's Office to implement a pilot recharge
project.
IPC strongly opposed House
Bill 800 because, if it had become law, IPC's hydroelectric generation could
have been reduced and IPC would have to rely on more expensive generation or
purchased power to meet customers' needs. This would have resulted in higher
costs to IPC's customers. On March 30, 2006, the Senate defeated House Bill
800 by a vote of 21 to 14.
At the conclusion of the
legislative session, the Senate passed Senate Concurrent Resolution 136
directing the Idaho Water Resource Board (IWRB) to develop a comprehensive
aquifer management plan for the Eastern Snake Plain Aquifer (ESPA) and to
receive public input regarding the goals, objectives, and methods of management
for the ESPA from affected water right holders, cities, counties, the general
public and state and federal agencies. The IWRB initiated a public process for
the development of an aquifer management plan in June 2006. IPC is
participating in that process. The IWRB is expected to report to the Idaho
Legislature in 2007 on the progress of the planning effort.
On April 11, 2006, IPC and
the State of Idaho entered into a stipulation agreement regarding two water
right permits. The permits allow for limited aquifer recharge and are held by
the IWRB. The two water right permits were issued in the early 1980's, prior
to the 1984 Swan Falls Agreement. IPC entered into the Swan Falls Agreement
with the Governor and Attorney General of Idaho in October 1984 to resolve
litigation relating to IPC's water rights at the Swan Falls project. In the
early 1980's, IPC filed an action identifying approximately 7,500 water
licenses and permits that had the potential to adversely impact IPC's
hydropower water rights at the Swan Falls project. The Swan Falls Agreement
resolved that litigation. One provision of the Swan Falls Agreement provided
that the action against the 7,500 water licenses and permits would be dismissed
with prejudice and that IPC's hydropower water rights on the middle Snake River
would be subordinate to those water rights dismissed. In the stipulation, IPC
and the state recognized that the two water right permits referred to above
were named in the action brought by IPC and were subject to the Swan Falls
Agreement and that IPC's water rights are therefore subordinate to these water
right permits. IPC cannot determine the financial impact of the stipulation
upon IPC and its customers until such time, if ever, that recharge programs
under the two water permits are established, but IPC believes that the
potential maximum impact in a median water year may be approximately $30
million.
Air
Quality Issues
IPC owns two natural gas combustion
turbine power plants and co-owns three coal-fired power plants that are subject
to air quality regulation. The natural gas-fired plants, Danskin and Bennett Mountain, are located in Idaho. The coal-fired plants are: Jim Bridger (33 percent
interest) located in Wyoming; Boardman (ten percent interest) located in Oregon; and North Valmy (50 percent interest) located in Nevada.
53
Clean Air:
The Environmental Protection Agency (EPA) issued SO
2
allowances, as defined in the Clean Air Act amendments of 1990, based on coal
consumption during established baseline years. IPC currently has more than a
sufficient amount of SO
2
allowances to provide compliance for
emissions attributable to IPC at all three of its jointly-owned coal-fired
facilities and both of its natural gas-fired facilities.
The Clean Air Interstate Rule
(CAIR) will cap emissions of SO
2
and nitrogen oxides in 28 eastern
states and the District of Columbia. The CAIR does not impose any restrictions
on emissions from any IPC facilities and, therefore, IPC does not foresee any
adverse effects upon its operations as a result of CAIR.
Clean Air Mercury Rule:
The Clean Air Mercury Rule (CAMR) will limit mercury
emissions from new and existing coal-fired power plants and creates a
market-based cap-and-trade program that will permanently cap utility mercury
emissions in two phases (2010 - 2017, and 2018 and beyond). Mercury emission
allocations have been set at the state level, but the states are currently
working to allocate the allowances to individual power plants. States have
until November 17, 2006, to submit to the EPA mercury plans establishing
mercury emission standards and allowances for the power plants within their
jurisdictions. Mercury continuous emission monitoring systems (CEMS) are
required to be installed and operational on each coal-fired unit by January 1,
2009. IPC is actively monitoring developments on state mercury plans in Idaho, Wyoming, Nevada, and Oregon.
On October 10, 2006, the
Wyoming Environmental Quality Commission approved the Wyoming Department of
Environmental Quality's (WDEQ) recommended Wyoming regulation to implement
CAMR. This rule will allocate mercury allowances to each plant based on
heat-input and hold back 10 percent of the allocated allowances for new
sources. This rule will also allow the plant to participate in the national
cap-and-trade program. Mercury CEMS are planned to be installed at the Jim
Bridger plant in 2007 and 2008 at an estimated cost of $0.7 million (IPC
share). Until the mercury CEMS are installed and operational, the amount of
mercury emissions is not definitively known. It is not possible to determine
the effect of the allowance allocation rule on future operations and costs at
the plant.
Oregon has started a rulemaking process that may result in
the adoption of mercury reduction requirements that are stricter than those of
the EPA. The Oregon Department of Environmental Quality (ODEQ) has held public
meetings and workshops to discuss the CAMR for Oregon. During the public
hearing held on August 16, 2006, the ODEQ preliminarily recommended a mercury
emission limit for the Boardman plant of 0.6lb/TBtu (which would require a
reduction in current mercury emission levels of approximately 90 percent). If
the ODEQ recommended mercury limit is adopted, it will be one of the most
stringent limits in the West. The ODEQ is scheduled to provide a final
recommendation to the Oregon Environmental Quality Commission (OEQC) by the end
of 2006. IPC estimates that capital expenditures for mercury controls at
Boardman will be $9.2 million (IPC's share) with an annual incremental
operations and maintenance cost of up to $0.8 million (IPC's share). IPC has
filed testimony urging the OEQC to grant mercury allocation credits to Boardman
in order to defray the costs.
The Nevada Department of
Environmental Protection has adopted a state CAMR that will provide mercury
allowances to each plant based on actual emissions until 2018, at which time
the allowance allocations will be reduced to meet the federal cap. To meet the
reduced allocations in the year 2018, mercury controls are expected to be
installed. Mercury CEMS are planned to be installed at the North Valmy plant
in 2007 and 2008 at an estimated cost of $0.4 million (IPC's share).
IPC anticipates that the CAMR
will require additional emission controls and expenses at all of its
jointly-owned coal-fired facilities, although impacts on future plant
operations, operating costs and generating capacity are not known at this time.
The Idaho DEQ has proposed
two new rules to the Idaho Environmental Quality Commission: a proposed rule to
opt out of the federal mercury cap-and-trade program, and a proposed rule to
prohibit the construction and operation of a coal-fired power plant in Idaho. The rules will be presented for adoption by the Board of Environmental Quality at
its November 16, 2006, meeting in Boise. If approved by the Board, the rules
will be sent to the Idaho Legislature for review and approval during its 2007
session.
54
Regional Haze - Best
Available Retrofit Technology:
In
accordance with new federal regional haze rules, the WDEQ and ODEQ are
conducting an assessment of emission sources pursuant to a Regional Haze Best
Available Retrofit Technology (RH BART) process. Coal-fired utility boilers
are subject to RH BART if they were built between 1962 and 1977 and affect any
Class I areas. This includes all four units at the Jim Bridger and Boardman
plants. The two units at the North Valmy plant were constructed after 1977 and
are not subject to the federal regional haze rule.
On October 2, 2006, the Jim
Bridger plant was formally notified that is it subject to RH BART and will have
to provide a compliance strategy with the WDEQ before the end of January 2007.
The WDEQ has proposed regulations to comply with the federal RH BART standard
and anticipates that the rulemaking process will be completed in December
2006. During the acquisition of PacifiCorp by MidAmerican Energy Holdings
Company (MEHC), MEHC committed to install additional pollution control
equipment at most of PacifiCorp's facilities. This includes additional low NOx
burners and scrubber upgrades at the Jim Bridger plant. Over the next three
years, upgrade expenditures are estimated at $9 million (IPC's share), with
total project costs estimated at $15 million (IPC's share).
In Oregon, a demonstration analysis
for identified haze sources, utilizing modeling techniques, began in 2006 and
is currently in progress. Those sources which are determined to cause, or
contribute to, visibility impairment at protected areas will be subject to an
RH BART determination. In January 2006, IPC volunteered to participate in an
ODEQ pilot project that will analyze information about air emissions from the
Boardman plant to determine the effect on visibility in the region,
particularly in wilderness and scenic areas. The pilot project is expected to
be completed by the end of 2006.
Greenhouse Gases:
IPC continues to monitor and evaluate the possible
adoption of national, regional, or state greenhouse gas (GHG) requirements.
New GHG bills were introduced in the U.S. Senate and House of Representatives
during 2006. On April 4, 2006, the U.S. Senate Committee on Energy and Natural
Resources sponsored a day-long hearing on the subject of global climate
change. National, regional or state GHG requirements, if enacted and applicable,
could result in significant costs to IPC to comply with restrictions on carbon
dioxide or other GHG emissions.
REGULATORY MATTERS:
General Rate Cases
Idaho:
On May 12, 2006, the IPUC
issued an order approving a settlement of IPC's general rate case filed in
October 2005. The order approves an average increase of 3.2 percent in base
rates, or $18 million in revenues, effective June 1, 2006.
On February 27, 2006, IPC,
the IPUC staff and representatives of customer groups had filed a stipulation
with the IPUC that became the basis for the final order.
IPC's original filing had
asked for an annual increase to its Idaho retail base rates of $44 million, a
7.8 percent average increase. The rate case filing was made with six months of
actual operating expenses and six months of projected expenses. The actual
increase in rates was lower than the requested amount due to three factors:
(1) 2005 actual expenses were significantly less than those forecasted; (2) the
overall rate of return agreed to was 8.1 percent compared to the 8.42 percent
IPC requested (no specific return on equity was determined); and (3) net power
supply costs were kept at levels currently existing in rates.
Oregon
:
On
September 21, 2004, IPC filed an application with the OPUC to increase general
rates an average of 17.5 percent or approximately $4.4 million annually. A
partial settlement resolved most issues in a manner consistent with the results
of the corresponding Idaho general rate case. The most significant issue in
this proceeding was the appropriate quantification of net power supply expenses
for purposes of setting rates. The OPUC staff proposed that net power supply
expenses for IPC be set at a negative number - meaning that IPC should be able
to sell enough surplus energy to pay for all fuel and purchased power expenses
and still have revenue left over to offset other costs. The bulk of IPC's
rebuttal was directed at this position. A hearing was conducted on May 23,
2005. The OPUC issued its order in July 2005 authorizing an increase of $0.6
million in annual revenues for an average of 2.37 percent. The OPUC adopted
the OPUC staff's argument for the negative net power supply costs, thus
reducing IPC's initial rate request of $4.4 million by $2.4 million with this
one adjustment.
55
On September 26, 2005, IPC
filed a complaint with the Circuit Court of Marion County, Oregon asking the
court to reverse the portion of the OPUC's general rate case order related to
the determination of net power supply costs. IPC has until November 13, 2006, to file an appeal with the Oregon
Court of Appeals.
Deferred (Accrued) Net Power Supply Costs
IPC's deferred (accrued) net power supply costs consisted of the following
(in thousands of dollars):
Idaho
:
IPC has a
PCA mechanism that provides for annual adjustments to the rates charged to its Idaho retail customers. These adjustments are based on forecasts of net power supply
costs, which are fuel and purchased power less off-system sales, and the
true-up of the prior year's forecast. During the year, 90 percent of the
difference between the actual and forecasted costs is deferred with interest.
The ending balance of this deferral, called the true-up for the current year's
portion and the true-up of the true-up for the prior years' unrecovered
portion, is then included in the calculation of the next year's PCA.
The true-up of the true-up
portion of the PCA provides a tracking of the collection or the refund of
true-up amounts. Each month, the collection or the refund of the true-up
amount is quantified based upon the true-up portion of the PCA rate and the
consumption of energy by customers. At the end of the PCA year, the total
collection or refund is compared to the previously determined amount to be
collected or refunded. Any difference between authorized amounts and amounts
actually collected or refunded are then reflected in the following PCA year,
which becomes the true-up of the true-up. Over time, the actual collection or
refund of authorized true-up dollars matches the amounts authorized.
On
May 25, 2006, the IPUC approved IPC's 2006-2007 PCA filing with an effective
date of June 1, 2006. The filing reduced the PCA component of customers' rates
from the existing level, which was recovering $76.7 million above then-existing
base rates, to a level that is $46.8 million below those base rates, a decrease
of approximately $123.5 million.
On
April 13, 2006, IPC filed testimony requesting review of one component of the
PCA referred to as the load growth adjustment rate, as agreed to in the
stipulation of the parties settling the 2005 general rate case. The load
growth adjustment rate provides a reduction to power supply expenses for PCA
purposes when loads grow from levels included in IPC's base rates. IPC
maintains that this reduction to expenses should be equal to the relative
increase in revenues received as a result of load growth. The IPUC Staff and
other parties to the proceeding filed testimony by September 15, 2006. A
hearing was held on October 30, 2006. The dollar impact of load growth
adjustment rates is significant and increasing, based on continuing growth
within IPC's territory. Any increase in the load growth adjustment rate as a
result of this proceeding would magnify the impact. In its rebuttal testimony,
IPC estimated that the IPUC Staff proposal, if implemented last year, would
have resulted in $20 million of power supply expense attributable to load
growth from April 1, 2005 through March 31, 2006, that would not have been
recoverable by IPC when compared to IPC's proposal for full recovery of power
supply expense attributable to load growth.
On
June 1, 2005, IPC implemented the 2005-2006 PCA, which held the PCA component
of customers' rates at the existing level recovering $71 million above base rates.
By IPUC order, the PCA included $12 million in lost revenues and $2 million in
related interest resulting from IPC's Irrigation Load Reduction Program that
was in place in 2001. The PCA deferred recovery of approximately $28 million
of power supply costs, or 4.75 percent, for one year to help mitigate the
impacts of other rate increases. The $28 million was included in the 2006-2007
PCA filing, and IPC earned a two percent carrying charge on the balance.
56
Oregon:
On April 28, 2006, IPC filed for an accounting order
with the OPUC to defer net power supply costs for the period of May 1, 2006,
through April 30, 2007, in anticipation of higher than "normal" power supply
expenses. In the Oregon general rate case discussed above, "normal" power
supply expenses were set at a negative number (meaning that under normal water
conditions IPC should be able to sell enough surplus energy to pay for all fuel
and purchased power expenses and still have revenue left over to offset other
costs). The forecasted system net power supply expenses included in this
deferral filing were $64 million, which is $65.9 million higher than the
normalized power supply expenses established in the Oregon general rate case.
IPC requested authorization to defer an estimated $3.3 million, the Oregon jurisdictional share of the $65.9 million. IPC also requested that it earn its Oregon authorized rate of return on the deferred balance and recover the amount through
rates in future years, as approved by the OPUC. The parties met on September 20, 2006, and began negotiating for a PCA
mechanism for IPC's Oregon jurisdiction. The parties agreed to suspend
discussion of the deferral application while the PCA negotiations are ongoing.
The parties believe that any agreement regarding a PCA mechanism may impact
resolution of IPC's deferral application. The parties are planning to meet
again in early November 2006.
On March 2, 2005, IPC filed for an accounting order with the OPUC to defer net
power supply costs for the period of March 2, 2005, through February 28, 2006,
in anticipation of continued low water conditions. The forecasted net power
supply costs included in this filing were $169 million, of which $3 million
related to the Oregon jurisdiction. IPC proposed to use the same methodology
for this deferral filing that was accepted in 2002 for Oregon's share of IPC's
2001 net power supply expenses. On July 1, 2005, IPC, the OPUC staff, and the
Citizen's Utility Board entered into a stipulation requesting that the OPUC
accept IPC's proposed methodology. Under this methodology, IPC will earn its Oregon authorized rate of return on the deferred balance and will recover the amount
through rates in future years, as approved by the OPUC. The OPUC issued Order
05-870 on July 28, 2005, approving the stipulation. On April 19, 2006, IPC
filed a request for review and acknowledgement of its deferred net power supply
costs for the period of March 2, 2005 through February 28, 2006. The deferral
amount was quantified by IPC to be $2.7 million. On June 14, 2006, a
settlement conference was held; however, settlement is pending further staff
review.
The timing of future recovery
of Oregon power supply cost deferrals is subject to an Oregon statute that
specifically limits rate amortizations of deferred costs to six percent per
year. IPC is currently amortizing through rates power supply costs associated
with the western energy situation. Full recovery of the 2001 deferral is not
expected until 2009, at which time the rate amortization of the 2005-2006
deferral could begin. A 2006-2007 deferral would have to be amortized
sequentially following the full recovery of the authorized 2005-2006 deferral.
Emission Allowances
In June 2005, IPC filed
applications with the IPUC and OPUC requesting blanket authorization for the
sale of excess SO
2
emission allowances and an accounting order. The
IPUC issued Order 29852 on August 22, 2005, authorizing the sale and interim
accounting treatment. The OPUC issued Order 05-983 on September 13, 2005,
stating that IPC did not need a blanket order to sell emission allowances and
approved the interim accounting treatment.
As of September 30, 2006, IPC
has sold 78,000 SO
2
emission allowances for approximately $81.6
million (before income taxes and expenses) on the open market. After
subtracting transaction fees, the total amount of sales proceeds to be
allocated to the Idaho jurisdiction is approximately $76.8 million ($46.8
million net of tax, assuming a tax rate of approximately 39 percent). Through
allowance year 2006, IPC has approximately 32,000 excess allowances remaining.
Pursuant to the IPUC order,
the IPUC staff held several workshops and settlement discussions. On May 12,
2006, the IPUC approved a stipulation filed in April 2006 by IPC on behalf of
several parties. The stipulation allows IPC to retain ten percent, or
approximately $4.7 million after tax, of the emission allowance net proceeds as
a shareholder benefit. The remaining 90 percent of the sales proceeds ($69.1
million) plus a carrying charge will be recorded as a customer benefit and
included as a line-item in the PCA true-up. The carrying charge will be
calculated on $42.1 million, the net-of-tax amount allocable to Idaho jurisdiction customers. This customer benefit is included in IPC's PCA calculations
as a credit to the PCA true-up balance and will be reflected in PCA rates
during the June 1, 2007 through May 31, 2008 PCA rate year.
57
There is no current OPUC
proceeding with respect to SO
2
emission allowances, and IPC cannot
predict the outcome of any future OPUC ratemaking proceeding relating to this
issue.
Fixed Cost Adjustment Mechanism (FCA)
On January 27, 2006, IPC filed with the IPUC for authority to implement a rate
adjustment mechanism that would adjust rates downward or upward to recover
fixed costs independent from the volume of IPC's energy sales. This filing is
a continuation of a 2004 case that was opened to investigate the financial
disincentives to investment in energy efficiency by IPC. This true-up
mechanism would be applicable only to residential and small general service
customers. The first FCA rate change under this proposal would occur on June
1, 2007, coincident with IPC's PCA rate change. The accounting for the FCA
will be separate from the PCA. As part of the filing, IPC proposes a three
percent cap on any rate increase to be applied at the discretion of the IPUC.
On March 6, 2006, the IPUC
reviewed IPC's proposal and acknowledged the intent of IPC and the IPUC Staff
to initiate and engage in settlement discussions. The first workshop was held
on May 17, 2006. The IPUC Staff presented an alternate view of IPC's
proposal. A second workshop was held August 31, 2006. The parties are
attempting to resolve this case through settlement.
Regional
Transmission Organization
Over the last several years, IPC has
spent funds supporting the development of Grid West, a Northwest regional
transmission organization (RTO). As of September 30, 2006, IPC had recorded
$1.1 million of loans to Grid West and $2.3 million of deferred internal costs
from participating in the developmental effort. These amounts were initially
deferred anticipating future recovery through Grid West tariffs. IPC ceased
funding Grid West after the first quarter of 2006 as Grid West was dissolved
April 11, 2006. IPC no longer expects reimbursement of either amount from Grid
West. IPC's accumulation of Grid West development costs in a deferred expense
account is consistent with a 2004 accounting order that IPC received from the
FERC.
Grid West Deferral in Oregon:
On
April 4, 2006, IPC filed a request for an accounting order from the OPUC
addressing the deferral of costs related to the development of Grid West. On
August 22, 2006, the OPUC granted IPC's request for the deferral of the costs
of unrecoverable Grid West loans; however, the OPUC denied IPC's request to defer an immaterial amount of
internal costs incurred directly in the development of Grid West.
Grid
West Deferral in Idaho:
On April 4, 2006, IPC filed a request for an
accounting order from the IPUC addressing the deferral of costs related to the
development of Grid West. The total deferral request was $3.4 million. On
June 29, 2006, the IPUC determined that the case would be processed by modified
procedure. IPC argued that it should be allowed deferral of the principal and
interest on the RTO loan amounts, a carrying charge on the deferred balance and
recovery of the incremental internal costs it identified in its application.
On October 24, 2006, the IPUC issued an order granting $1.1 million related to
the principal of the RTO loans over a five-year amortization beginning January
1, 2007 while denying recovery of the remaining items. IPC has until November
14, 2006, to petition the IPUC for reconsideration. Following a final decision
from the IPUC, IPC will make a filing with the FERC for recovery of Grid West
costs.
If
IPC is unsuccessful with either the IPUC or with the FERC, some or all of the
remaining costs will be expensed.
58
FERC
Proceedings
On March 24, 2006, IPC submitted a
revised Open Access Transmission Tariff (OATT) filing with the FERC requesting
an increase in transmission rates. The purpose of the filing was to implement
formula rates for the IPC OATT in order to more adequately reflect the costs
that IPC incurs in providing transmission service. In the filing IPC proposed
to move from a fixed rate to a formula rate, which allows for transmission
rates to be updated each year based on FERC Form 1 data. The formula rate
request included a rate of return on equity of 11.25 percent. The proposed
rates would have produced an annual revenue increase of approximately $13
million based on 2004 test year data. On May 31, 2006, the FERC accepted IPC's
rates, effective June 1, 2006, subject to adjustment to conform to FASB 109 tax
accounting requirements, which ultimately resulted in lowering the estimated
annual revenues to approximately $11 million. IPC has complied with this
directive and on August 28, 2006, the FERC issued an order accepting IPC's
compliance filing and ordering that this new rate be used, subject to refund as
discussed below. As a result, IPC has made refunds with interest for June and
July amounts billed, and started billing the new rate beginning in August. The
rates are being collected subject to refund pending the outcome of the FERC
hearing process scheduled for May 2007 with an initial decision expected to be
issued in August 2007.
Cassia Wind Farm Complaint
On September 13, 2006, Cassia Gulch Wind Park, LLC and Cassia Wind Farm,
LLC (collectively Cassia) filed a complaint against IPC with the IPUC
requesting an IPUC declaration and determination that, as a matter of law and
policy, the cost responsibility for specified transmission system upgrades to
meet contingency planning conditions should not be assigned to PURPA qualifying
facilities connecting to the system, but rather should be rolled into IPC's
plant-in-service rate base and recovered through rates to retail and
transmission customers. The estimated costs of transmission system upgrades
included in this complaint that relate to connecting Cassia to IPC's system are
$60 million. Cassia requested that the IPUC process its request for an order
under modified procedure. The IPUC Staff contends that the policy issue raised
by Cassia is one of generic consequence and has, therefore, provided copies of
Cassia's complaint to both PacifiCorp and Avista and recommended that those
utilities also be provided the opportunity to address the issue raised by
Cassia. A schedule for oral arguments has not yet been set.
Integrated Resource Plan
IPC filed its 2006 IRP with the IPUC
in September 2006 and with the OPUC in October 2006. The 2006 IRP previewed
IPC's load and resource situation for the next twenty years, analyzed potential
supply-side and demand-side options and identified near-term and long-term
actions. The two primary goals of the 2006 IRP were to: (1) identify
sufficient resources to reliably serve the growing demand for energy service
within IPC's service area throughout the 20-year planning period and (2) ensure
that the portfolio of resources selected balances cost, risk and environmental
concerns. In addition, there were four secondary goals: (1) to give equal and
balanced treatment to both supply-side resources and demand-side measures; (2)
to involve the public in the planning process in a meaningful way; (3) to
explore transmission alternatives; and (4) to investigate and evaluate advanced
coal technologies.
The IRP is filed every two
years with both the IPUC and the OPUC. IPC's IRP process utilizes an Advisory
Council consisting of representatives from the IPUC Staff, OPUC Staff, as well
as representatives from customer, governmental, environmental and other
interested groups and is the starting point for demonstrating prudence in IPC's
resource decisions. The 20-year 2006 IRP includes the following supply-side
resources:
Year |
Resource |
MW |
2008 |
Wind (2005 RFP) 1 |
100 |
2009 |
Geothermal (2006 RFP) 1 |
50 |
2010 |
Combined Heat & Power |
50 |
2012 |
Wind |
150 |
2012 |
Transmission Capacity |
225 |
2013 |
Pulverized Coal |
250 |
2017 |
Regional Integrated Gasification Combined-Cycle Coal |
250 |
2019 |
Transmission Capacity |
60 |
2020 |
Combined Heat & Power |
100 |
2021 |
Geothermal |
50 |
2022 |
Geothermal |
50 |
2023 |
Nuclear 2 |
250 |
1
IPC is currently negotiating a Power Purchase Agreement
with the successful bidder on the 100 MW wind RFP (see Wind RFP section). The
RFP for 100 MW of geothermal-powered generation was released on June 2, 2006.
IPC is in the process of evaluating bids and expects to identify a successful
bidder in February 2007.
2
The 250-MW of nuclear generation is anticipated to be
acquired through a Power Purchase Agreement for output from the Idaho National
Laboratory's planned Next Generation Nuclear Project.
In addition to the
supply-side resources identified above, the 2006 IRP also includes demand-side
programs designed to reduce average energy needs by 88 MW and peak-hour needs
by 187 MW. To reach these totals, existing demand-side programs will be
expanded and new programs will be implemented over the 20-year planning period.
59
Peaking Resource:
On January 9, 2006, IPC selected a
Siemens-Westinghouse combustion turbine project in response to a request for
proposal for construction of a natural gas-fired power plant, as identified in
the 2004 IRP. The plant will be located at the Evander Andrews Power Complex
near Mountain Home, Idaho and is planned to be online prior to the summer of
2008. The unit will provide approximately 166 MW of capacity to help meet
summer load peaks and can provide greater capacity during cooler times of the
year. On April 14, 2006, IPC filed an application for a Certificate of
Convenience and Necessity with the IPUC with a commitment estimate of $60
million. The application also requests
confirmation that IPC can expect to include in rate base the prudent capital
costs for the project and recover prudent fuel costs through its PCA mechanism.
The application is based on a signed
contract with Siemens Power Generation, Inc. to construct the plant valued at
$50 million. The contract is contingent upon approval of the application by
the IPUC. The IPUC Staff and intervening parties filed testimony on the matter
on October 10, 2006. Technical hearings are scheduled for November 20-21,
2006, and IPC anticipates a conclusion before year end. Related transmission
interconnection and line upgrades will be constructed by IPC at an estimated
cost of $23 million.
PURPA Wind Projects:
As of September 2006, three wind projects, with a
total nameplate capacity of 20 MW, are selling energy to IPC under approved
PURPA agreements. An additional thirteen wind projects, comprising 187 MW of
wind generation, for a total of 207 MW, have approved PURPA agreements and are
scheduled to come online during 2007.
Wind RFP:
IPC has selected Horizon Wind Energy (Horizon) as the
successful bidder in IPC's RFP for renewable wind-powered generation issued on
January 13, 2005. IPC is currently negotiating the power purchase agreement
with Horizon. IPC and Horizon intend to file a signed agreement with the IPUC
later this fall. The Horizon proposal is for a 100 MW project located near La
Grande, Oregon, and is expected to be online by the end of 2007. The northeast
Oregon location for the Horizon project is different from IPC's existing and
proposed PURPA wind projects, which are located along the Snake River in
southern Idaho, and should complement the energy from the existing wind
projects.
Relicensing of
Hydroelectric Projects
IPC, like other utilities that
operate nonfederal hydroelectric projects on qualified waterways, obtains
licenses for its hydroelectric projects from the FERC. These licenses last for
30 to 50 years depending on the size, complexity, and cost of the project. IPC
is actively pursuing the relicensing of the Hells Canyon Complex and Swan Falls projects, a process that may continue for the next ten to fifteen years. Middle
Snake project licenses were issued in 2004 and, as discussed below, a legal
proceeding contesting the licenses was recently concluded.
Hells Canyon
Complex:
The
most significant ongoing relicensing effort is the Hells Canyon Complex, which
provides approximately two-thirds of IPC's hydroelectric generating capacity
and 40 percent of its total generating capacity. The current license for the
Hells Canyon Complex expired at the end of July 2005. Until the new multi-year
license is issued, IPC will operate the project under an annual license issued
by the FERC. IPC developed the license application for the Hells Canyon
Complex through a collaborative process involving representatives of state and
federal agencies and business, environmental, tribal, customer, local
government and local landowner interests. The license application was filed in
July 2003 and accepted by the FERC for filing in December 2003.
60
On October 28, 2005, the FERC
issued its Notice of Ready for Environmental Analysis, which requires the
federal and state agencies, Native American tribes and other participants in
the relicensing process to file preliminary comments, recommendations, terms,
conditions and prescriptions under the FPA, the National Environmental Policy
Act of 1969, as amended (NEPA), the Energy Policy Act and other applicable
federal laws. NEPA requires that the FERC independently evaluate the
environmental effects of relicensing the Hells Canyon Complex as proposed under
the final license application (the proposed action) and also consider
reasonable alternatives to the proposed action. Consistent with the
requirements of NEPA, the FERC Staff will prepare an environmental impact
statement (EIS) for the Hells Canyon project, which the FERC will use to
determine whether, and under what conditions, to issue a new license for the
project. The EIS will describe and evaluate the probable effects, if any, of
the proposed action and the other alternatives considered. Section 241 of the
Energy Policy Act modifies the existing hydroelectric relicensing process under
the FPA and requires federal resource agencies with authority to impose
mandatory conditions on licenses under Sections 4(e) or 18 of the FPA
(conditions that the FERC must include in the license) to provide license
applicants, and other parties to the licensing process, with evidentiary
hearings on disputed issues of material fact related to proposed conditions.
It also requires that such agencies accept more cost effective alternative
conditions proposed by license applicants, or other parties, provided that the
proposed alternative conditions will be no less protective of the resource or
the reservation than the original condition recommended by the agency.
The federal and state agencies, Native American tribes and other interested
parties filed their preliminary comments, recommendations, terms, conditions
and prescriptions with the FERC on January 26, 2006. Consistent with the
provisions of the FPA, IPC filed reply comments to these filings on April 11,
2006. Federal agencies with mandatory conditioning authority under sections
4(e) and 18 of the FPA also filed their preliminary terms and conditions under
those sections with the FERC on January 26, 2006. The Energy Policy Act of
2005, and the interim final rules issued on November 17, 2005, to implement the
Act, require IPC, within 30 days of the agency's filing of their preliminary
terms and conditions with the FERC, to file requests for evidentiary hearings
on disputed issues of material fact relied upon by the federal agency for
support of any term or condition and also file any proposed alternative
conditions. On February 27, 2006, IPC filed requests for hearing on Section
4(e) conditions filed by the Department of the Interior through the Bureau of
Land Management (BLM) and the Department of Agriculture through the U. S.
Forest Service (USFS). IPC also filed proposed alternative conditions with the
agencies. The hearing requests related to travel and access management, law
enforcement and emergency services, and recreation and land management
conditions proposed by the BLM, and sediment supply and sandbar maintenance and
restoration, wildlife habitat mitigation and management, noxious weed control,
recreation resource management, and cultural resource management conditions
filed by the USFS. Each of the agencies responded to the hearing requests and
referred the requests to the hearings division within the respective agencies
for assignment to an administrative law judge (ALJ). Hearings were
subsequently set before a Department of Interior ALJ for June 12, 2006, on the
requests for hearing on the BLM conditions and a Department of Agriculture ALJ
for June 19, 2006, on the USFS requests for hearing. While IPC was preparing
for the evidentiary hearings, IPC continued to engage in discussions with the
respective agencies regarding possible settlements.
Through these discussions,
IPC was able to resolve the disputed issues associated with the pending hearing
requests. On May 10, 2006, IPC and the USFS filed a stipulation with the
Department of Agriculture ALJ, and revised preliminary terms and conditions
with the FERC, resolving all issues associated with the pending USFS hearing
requests except for the issues associated with the USFS condition relating to
sediment supply and sandbar maintenance. These issues remained subject to
hearing on June 19, 2006. On May 15, 2006, IPC and the BLM filed a stipulation
with the Department of Interior ALJ and revised preliminary terms and
conditions with the FERC resolving all issues associated with the pending BLM
hearing requests. Through subsequent settlement discussions with the USFS, IPC
resolved all disputed issues associated with the hearing request on the USFS
condition relating to sediment supply and sandbar maintenance.
All of these hearing requests
were resolved through stipulations between IPC and the USFS and BLM,
respectively, providing for the withdrawal of IPC's requests for hearing and the
filing of revised preliminary terms and conditions with the FERC with
provisions that were acceptable to IPC.
On July 28, 2006, the FERC
released the draft EIS, and comments are due November 3, 2006. The draft EIS
is prepared by the FERC staff, pursuant to NEPA and applicable federal
regulations, to inform the FERC Commissioners, the public, state and federal
agencies and the tribes about the potential adverse and beneficial
environmental effects of licensing of the project as proposed by the IPC in its
license application and provide a review of other reasonable alternatives or
measures that might be included in a license for the project. Based upon the
draft EIS, the subsequent comments received, the license application and other
material in the FERC record, the FERC Commissioners will decide whether to
license the Hells Canyon Complex and what conditions to include in the license
to address project effects. IPC is in the process of reviewing the draft EIS
and will prepare comments for filing with the FERC on or before November 3,
2006. Because this is a draft EIS, containing only FERC staff conclusions, it
cannot be relied upon to accurately predict what measures will be included in
the final EIS or the outcome of the relicensing process. IPC's review of the
draft EIS indicates that the FERC staffs' conclusions with regard to the
effects of the project and the measures necessary to address those effects are
in many respects consistent with the license application filed by IPC. In its
comments on the draft EIS, IPC will identify those areas where IPC believes
that the FERC staff may have misinterpreted the information relating to an
issue or included proposed measures that may be inconsistent with information
in the record before the FERC. To the extent new information is available with
regard to an issue addressed by the draft EIS, IPC will also supplement the
record with that information.
61
In connection with the
issuance of the draft EIS, the FERC held public meetings in Boise, Weiser and
Lewiston, Idaho and Halfway, Oregon from September 7 through September 13,
2006, to take public comments on the draft EIS. Transcripts of the public
meetings are filed in the FERC record. The FERC will consider these comments,
in addition to the written comments received by November 3, 2006, in connection
with the preparation of the final EIS. The FERC's updated schedule indicates
issuance of a final EIS by February 26, 2007.
On August 1, 2006, the FERC
requested formal consultation with the National Marine Fisheries Service
(NMFS), pursuant to section 7 of the Endangered Species Act (ESA), advising the
NMFS that the FERC staff, in the draft EIS, had concluded that the licensing of
the Hells Canyon Complex was likely to adversely affect the Snake River fall
Chinook salmon (threatened species), Snake River spring/summer Chinook salmon
(threatened species), Snake River Sockeye salmon (endangered species) and Snake
River Steelhead (threatened species), along with the critical habitat for these
species. On September 7, 2006, NMFS sent a letter to the FERC advising that
the draft EIS did not meet the information requirements for initiation of
formal consultation under section 7 of the ESA because the draft EIS did not
fully describe the action alternative that was to be subject to consultation.
The NFMS advised that several processes were still underway that may affect the
action alternative, including the section 10(j) process under the Federal Power
Act, the outcome of the section 401 certification process under the Clean Water
Act that is pending before the Departments of Environmental Quality of Idaho
and Oregon, and discussions with IPC intended to craft measures to address ESA
issues. For these reasons NMFS suggested that consultation should be initiated
at a later time. NMFS suggested that NMFS, USFWS and IPC work cooperatively to
address ESA issues as the NEPA process continues so as to assure that the
licensing process is not delayed due to ESA consultation.
On August 1, 2006, the FERC
requested formal consultation with the USFWS, pursuant to section 7 of the ESA,
advising the USFWS that FERC staff, in the draft EIS, had concluded that the
licensing of the Hells Canyon Complex was likely to adversely affect the bull
trout (threatened species), and its critical habitat and the bald eagle
(threatened species). On August 31, 2006, USFWS sent a letter to the FERC
advising that the draft EIS did not meet the information requirements for
initiation of formal consultation under section 7 of the ESA because the draft
EIS did not fully describe the action alternative that was to be subject to
consultation. The USFWS advised the FERC that elements relating to a new
license were still under development in processes involving IPC and state and
federal agencies, one such process being section 401 certification under the
Clean Water Act, which is currently pending before the Departments of
Environmental Quality of Idaho and Oregon. The USFWS further advised that it
was also still in the process of preparing comments to the draft EIS and that
the FERC had yet to complete the processes necessary under the Federal Power
Act with regard to the federal agencies section 10(j) recommendations. For
these reasons, USFWS suggested that the USFWS, NMFS, and IPC work cooperatively
to address ESA issues as the NEPA process continues so as to assure that the
licensing process is not delayed due to ESA consultation.
IPC is cooperatively working
with the USFWS, NMFS and FERC in an effort to address ESA concerns.
At September 30, 2006, $84
million of Hells Canyon Complex relicensing costs were included in construction
work in progress. The relicensing costs are recorded and held in construction
work in progress until a new multi-year license is issued by the FERC, at which
time the charges are transferred to electric plant in service. Relicensing
costs and costs related to a new license will be submitted to regulators for
recovery through the ratemaking process.
Swan
Falls Project:
The license for the Swan Falls hydroelectric project expires in 2010. On March
10, 2005, IPC issued a Formal Consultation Package with agencies, Native
American tribes and the public regarding the relicensing of the Swan Falls project. IPC is in the process of compiling information and performing studies
in preparation for filing an application for a new license with the FERC in
2008.
At September 30, 2006, $2
million of Swan Falls project relicensing costs were included in construction
work in progress. The relicensing costs are recorded and held in construction
work in progress until a new multi-year license is issued by the FERC, at which
time the charges are transferred to electric plant in service. Relicensing
costs and costs related to a new license will be submitted to regulators for
recovery through the ratemaking process.
62
Middle Snake River
Projects:
IPC's middle Snake River
projects consist of the Bliss, Upper Salmon Falls, Lower Salmon Falls, Shoshone Falls and CJ Strike projects. On August 4, 2004, IPC received the FERC license
orders for each of the middle Snake River projects. On September 2, 2004, two
conservation groups, American Rivers and Idaho Rivers United, filed petitions
for rehearing of the orders issuing the licenses for the middle Snake River projects. These petitions asked the FERC to vacate the licensing orders and
request a determination from the USFWS that the middle Snake River projects
jeopardize the listed snail species. On October 4, 2004, the FERC issued an
Order Granting Rehearing for Further Consideration to provide additional time
to consider the matters raised by the rehearing requests. On March 4, 2005,
the FERC issued an order denying the conservation groups' rehearing request.
On April 28, 2005, American Rivers and Idaho Rivers United appealed this order
to the U.S. Court of Appeals for the Ninth Circuit. IPC filed a motion to
intervene in the appeal and the USFWS filed a motion to be designated a
respondent-intervenor. On June 15, 2005, the court granted these motions. On
July 12, 2006, the Ninth Circuit issued a memorandum decision denying the
conservation groups' appeal. American Rivers' and Idaho Rivers United's appeal
period ended on October 10, 2006, with no action by either group. The new
licenses for the middle Snake River projects are in full effect and IPC is complying
with their provisions.
Shoshone Falls
Expansion
On August 17, 2006, IPC filed a
License Amendment Application with the FERC, which would allow IPC to upgrade
the Shoshone Falls project from 12 MW to 62.5 MW. The FERC is currently
evaluating the application and, on October 10, 2006, requested additional
information on eleven items. IPC is in the process of complying with this
request. In addition, on October 3, 2006, IPC filed a Water Right Application
with the Idaho Department of Water Resources for rights to additional water for
this potential project expansion. IPC is awaiting further action on these
applications.
OTHER MATTERS:
Adopted Accounting
Pronouncements
Effective January 1, 2006, IDACORP
and IPC adopted Statement of Financial Accounting Standards No. 123 (revised
2004), "Share-Based Payment," (SFAS 123R)
using the modified prospective application method. Prior to adopting SFAS
123R, the companies accounted for stock-based employee compensation under the
recognition and measurement principles of Accounting Principles Board Opinion
25, "Accounting for Stock Issued to Employees," and related interpretations.
From 2003 through 2005, total
compensation expense recorded for these plans was less than $1 million
annually. IDACORP and IPC did not modify outstanding stock options prior to
the adoption of SFAS 123R, and the fair value estimation model for options did
not differ significantly.
Since 2001, IDACORP and IPC
have granted a mix of performance restricted stock, time-vesting restricted
stock and stock options. In 2006, IDACORP and IPC granted cumulative earnings
per share- and total shareholder return-based performance shares, and
time-vesting restricted stock and granted only a minimal amount of stock
options. The adoption of SFAS 123R did not have a material effect on IDACORP's
and IPC's financial statements, and, based on current levels of awards, is not
expected to have a material effect in the future.
New Accounting
Pronouncements
See Note 1 to IDACORP's and IPC's
Condensed Consolidated Financial Statements for a discussion of recently issued
accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
IDACORP and IPC are exposed
to market risks, including changes in interest rates, changes in commodity
prices, credit risk and equity price risk. The following discussion summarizes
these risks and the financial instruments, derivative instruments and
derivative commodity instruments sensitive to changes in interest rates,
commodity prices and equity prices that were held at September 30, 2006.
63
Interest Rate Risk
IDACORP and IPC manage interest
expense and short- and long-term liquidity through a combination of fixed rate
and variable rate debt. Generally, the amount of each type of debt is managed
through market issuance, but interest rate swap and cap agreements with highly
rated financial institutions may be used to achieve the desired combination.
Variable Rate Debt:
As of September 30, 2006, IDACORP and IPC had $152
million and $147 million, respectively, in floating rate debt, net of temporary
investments. Assuming no change in either company's financial structure, if
variable interest rates were to average one percentage point higher than the
average rate on September 30, 2006, interest expense for the year ending
December 31, 2006, would increase and pre-tax earnings would decrease by
approximately $1.5 million for IDACORP and $1.5 million for IPC.
Fixed Rate Debt:
As of September 30, 2006, IDACORP and IPC had
outstanding fixed rate debt of $910 million and $865 million, respectively.
The fair market value of this debt was $908 million and $863 million,
respectively. These instruments are fixed rate, and therefore do not expose
IDACORP or IPC to a loss in earnings due to changes in market interest rates.
However, the fair value of these instruments would increase by approximately
$77 million for IDACORP and $76 million for IPC if interest rates were to
decline by one percentage point from their September 30, 2006, levels.
Commodity Price Risk
Utility:
IPC's commodity price risk
has not changed materially from that reported in the Annual Report on Form 10-K
for the year ended December 31, 2005.
Credit Risk
Utility:
IPC's credit risk has not
changed materially from that reported in the Annual Report on Form 10-K for the
year ended December 31, 2005.
Energy:
As part of the sale of its forward book of
electricity trading contracts, IE had entered into an Indemnity Agreement with
Sempra Energy Trading guaranteeing the performance of one of the counterparties
through 2009. The maximum amount payable by IE under the Indemnity Agreement
was $20 million. During the second quarter this guarantee terminated and IE
was refunded all outstanding margin deposits.
Equity Price Risk
IDACORP's and IPC's equity price risk
has not changed materially from that reported in the Annual Report on Form 10-K
for the year ended December 31, 2005.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and
procedures:
IDACORP:
The Chief Executive Officer and the
Chief Financial Officer of IDACORP, based on their evaluation of IDACORP's
disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e))
as of September 30, 2006, have concluded that IDACORP's disclosure controls and
procedures are effective.
IPC:
The Chief Executive Officer and the
Chief Financial Officer of IPC, based on their evaluation of IPC's disclosure
controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of
September 30, 2006, have concluded that IPC's disclosure controls and
procedures are effective.
Changes in internal
control over financial reporting:
There have been no changes in
IDACORP's or IPC's internal control over financial reporting during the quarter
ended September 30, 2006, that have materially affected, or are reasonably
likely to materially affect, IDACORP's or IPC's internal control over financial
reporting.
PART II - OTHER
INFORMATION
Reference is made to Note 5
to the Condensed Consolidated Financial Statements in this Quarterly Report on
Form 10-Q.
ITEM 1A. RISK FACTORS
The Risk Factors included in
IDACORP's and IPC's Annual Report on Form 10-K for the year ended December 31,
2005 have not changed materially.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND
USE OF PROCEEDS
Restrictions on Dividends:
A covenant under the IDACORP and IPC
Credit Facilities requires IDACORP and IPC to maintain leverage ratios of
consolidated indebtedness to consolidated total capitalization of no more than
65 percent at the end of each fiscal quarter. See "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND
CAPITAL RESOURCES - Financing Programs - Credit Facilities." IPC'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 cause their leverage ratios to exceed 65 percent. At September
30, 2006, the leverage ratios for IDACORP and IPC were 49 percent and 51
percent, respectively.
IPC's articles of
incorporation contain restrictions on the payment of dividends on its common
stock if preferred stock dividends are in arrears. IPC has no preferred stock
outstanding.
Issuer Purchases of Equity
Securities:
IDACORP, Inc. Common Stock
|
|
|
|
(d) Maximum Number |
||
|
|
|
(c) Total Number of |
(or Approximate |
||
|
(a) Total |
(b) |
Shares Purchased |
Dollar Value) of |
||
|
Number of |
Average |
as Part of Publicly |
Shares that May Yet |
||
|
Shares |
Price Paid |
Announced Plans or |
Be Purchased Under |
||
Period |
Purchased 1 |
per Share |
Programs |
the Plans or Programs |
||
|
|
|
|
|||
July 1 - July 31, 2006 |
- |
$ |
- |
- |
- |
|
August 1 - August 31, 2006 |
122 |
|
38.42 |
- |
- |
|
September 1 - September 30, 2006 |
- |
|
- |
- |
- |
|
Total |
122 |
$ |
38.42 |
- |
- |
|
1 These shares were withheld for taxes upon vesting of restricted stock |
||||||
65
ITEM 6. EXHIBITS
*Previously Filed and Incorporated Herein by Reference
71
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrants have duly caused this
report to be signed on their behalf by the undersigned thereunto duly
authorized.
IDACORP, Inc. |
(Registrant) |
Date |
November 2, 2006 |
By: |
/s/ J. LaMont Keen |
J. LaMont Keen |
|||
President and Chief Executive Officer |
|||
Date |
November 2, 2006 |
By: |
/s/ Darrel T. Anderson |
Darrel T. Anderson |
|||
Senior Vice President - Administrative Services |
|||
and Chief Financial Officer |
IDAHO POWER COMPANY |
(Registrant) |
Date |
November 2, 2006 |
By: |
/s/ J. LaMont Keen |
J. LaMont Keen |
|||
President and Chief Executive Officer |
|||
Date |
November 2, 2006 |
By: |
/s/ Darrel T. Anderson |
Darrel T. Anderson |
|||
Senior Vice President - Administrative Services |
|||
and Chief Financial Officer |
72
EXHIBIT INDEX
Exhibit Number |
|
10(h)(i) 1 |
Idaho Power Company Security Plan for Senior Management Employees I - a non-qualified, deferred compensation plan, amended and restated effective December 31, 2004. |
10(h)(iii) 1 |
IDACORP, Inc. Restricted Stock Plan, as amended July 20, 2006. |
10(h)(vi) 1 |
IDACORP, Inc. Restricted Stock Plan - Form of Restricted Stock Agreement (time-vesting) (July 20, 2006). |
10(h)(vii) 1 |
IDACORP, Inc. Restricted Stock Plan - Form of Performance Stock Agreement (July 20, 2006). |
10(h)(viii) 1 |
The Revised Security Plan for Board of Directors - a non-qualified, deferred compensation plan, as amended and restated effective July 20, 2006. |
10(h)(x)1 |
Form of Change in Control Agreement between IDACORP, Inc. and Officers of IDACORP and IPC (senior vice president and higher), as amended July 20, 2006. |
10(h)(xi) 1 |
Form of Change in Control Agreement between IDACORP, Inc. and Officers of IDACORP and IPC (below senior vice president), as amended July 20, 2006. |
10(h)(xii) 1 |
IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan, as amended July 20, 2006. |
10(h)(xvi)1 |
IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan - Form of Stock Option Award Agreement (July 20, 2006). |
10(h)(xvii)1 |
IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan - Form of Restricted Stock Award Agreement (time vesting) (July 20, 2006). |
10(h)(xviii)1 |
IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan - Form of Restricted Stock Award Agreement (performance vesting) (July 20, 2006). |
10(h)(xix)1 |
Form of Officer Indemnification Agreement for Officers of IDACORP, Inc. and IPC, as amended July 20, 2006. |
10(h)(xx)1 |
Form of Director Indemnification Agreement for Directors of IDACORP, Inc., as amended July 20, 2006. |
10(h)(xxxiii)1 |
IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan - Form of Performance Share Award Agreement (performance with two goals) (July 20, 2006). |
10(h)(xxxv)1 |
Idaho Power Company Security Plan for Senior Management Employees II, a non-qualified, deferred compensation plan, effective January 1, 2005, as amended July 20, 2006. |
10(h)(xxxvi)1 |
Idaho Power Company Executive Deferred Compensation Plan, as amended July 20, 2006. |
12 |
Statement Re: Computation of Ratio of Earnings to Fixed Charges. (IDACORP, Inc.) |
12(a) |
Statement Re: Computation of Supplemental Ratio of Earnings to Fixed Charges. (IDACORP, Inc.) |
12(b) |
Statement Re: Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements. (IDACORP, Inc.) |
12(c) |
Statement Re: Computation of Supplemental Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements. (IDACORP, Inc.) |
12(d) |
Statement Re: Computation of Ratio of Earnings to Fixed Charges. (IPC) |
12 (e) |
Statement Re: Computation of Supplemental Ratio of Earnings to Fixed Charges. (IPC) |
15 |
Letter Re: Unaudited Interim Financial Information. |
31(a) |
IDACORP, Inc. Rule 13a-14(a) certification. |
31(b) |
IDACORP, Inc. Rule 13a-14(a) certification. |
31(c) |
IPC Rule 13a-14(a) certification. |
31(d) |
IPC Rule 13a-14(a) certification. |
32(a) |
IDACORP, Inc. Section 1350 certification. |
32(b) |
IPC Section 1350 certification. |
99 |
Earnings press release for third quarter 2006. |
74
Exhibit 10(h)(i)
IDAHO POWER COMPANY
SECURITY PLAN FOR
SENIOR MANAGEMENT EMPLOYEES I
Amended and Restated
Effective December 31, 2004
TABLE OF CONTENTS
ARTICLE I PURPOSE; EFFECTIVE DATE1
ARTICLE II DEFINITIONS2
2.1 Actuarial Equivalent2
2.2 Administrative Committee2
2.3 Affiliate2
2.4 Beneficiary3
2.5 Board3
2.6 Change in Control3
2.7 Change in Control Period4
2.8 Company4
2.9 Compensation Committee4
2.10 Compensation5
2.11 Disability5
2.12 Early Retirement Date5
2.13 Employer5
2.14 Final Average Monthly Compensation6
2.15 Frozen Retirement Benefit6
2.16 Frozen Survivor Benefit7
2.17 Normal Form of Benefit7
2.18 Normal Retirement Date7
2.19 Participant8
2.20 Plan Year8
2.21 Retirement8
2.22 Retirement Plan8
2.23 Security Plan Retirement Benefit8
2.24 Target Retirement Percentage8
2.25 Termination Date8
2.26 Years of Participation9
ARTICLE III PARTICIPATION AND VESTING10
3.1 Eligibility and Participation10
3.2 Vesting10
3.3 Change in Employment Status10
3.4 Non-Participating Affiliate10
ARTICLE IV BENEFIT ELECTION11
4.1 Benefit Election11
4.2 Commencement of Benefits11
ARTICLE V SURVIVOR BENEFITS12
5.1 Pre-retirement Survivor Benefits12
5.2 Post-termination Survivor Benefit13
5.3 Survivor Benefit Election for Participants Prior to December 1, 199413
5.4 Suicide14
ARTICLE VISECURITY PLAN RETIREMENT BENEFITS15
6.1 Normal Retirement Benefit15
6.2 Early Retirement Benefit15
6.3 Early Retirement Factor16
6.4 Early Termination Benefits17
6.5 Termination After Change in Control18
6.6 Form of Payment18
ARTICLE VII OTHER RETIREMENT PROVISIONS19
7.1 Disability19
7.2 Withholding Payroll Taxes19
7.3 Payment to Guardian19
7.4 Accelerated Distribution20
ARTICLE VIII BENEFICIARY DESIGNATION21
8.1 Beneficiary Designation for Participant Not Eligible for Frozen Survivor Benefit21
8.2 Beneficiary Designation for Participant Eligible for Frozen Survivor Benefit22
8.3 Beneficiary Designation at Commencement of Benefits24
8.4 Effect of Payment24
ARTICLE IX ADMINISTRATION25
9.1 Administrative Committee Duties25
9.2 Indemnity of Administrative Committee26
ARTICLE X CLAIMS PROCEDURE27
10.1 Claim27
10.2 Denial of Claim27
10.3 Review of Claim27
10.4 Final Decision28
ARTICLE XI TERMINATION, SUSPENSION OR AMENDMENT29
11.1 Termination, Suspension or Amendment of Plan29
11.2 Change in Control29
ARTICLE XII MISCELLANEOUS30
12.1 Unfunded Plan30
12.2 Unsecured General Creditor30
12.3 Trust Fund31
12.4 Nonassignability31
12.5 Not a Contract of Employment31
12.6 Governing Law32
12.7 Validity32
12.8 Notice32
12.9 Successors32
IDAHO POWER COMPANY
SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES I
AMENDED AND RESTATED
EFFECTIVE DECEMBER 31, 2004
ARTICLE I
The purpose of this Security Plan for Senior Management Employees I (the "Plan") is to provide supplemental retirement benefits for certain key employees of Idaho Power Company, its subsidiaries and affiliates. It is intended that the Plan will aid in attracting individuals of exceptional ability and retain those critical to the operation of the Company by providing them with these benefits. The effective date of this restatement shall be December 31, 2004.
PAGE 1 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE II
As used in this Plan, the following terms shall be defined as stated in this Article, as interpreted by the Administrative Committee pursuant to its authority granted by Section 9.1 of this Plan.
2.1 Actuarial Equivalent . "Actuarial Equivalent" shall mean equivalence in value between two (2) or more forms and/or times of payment based on a determination by an actuary chosen by the Company using generally accepted actuarial assumptions, methods and factors as used in the Retirement Plan of Idaho Power Company which may be amended from time to time.
For purposes of Section 7.4, Actuarial Equivalent shall be calculated using the Pension Benefit Guaranty Immediate Rate as of the month preceding distribution plus 1% and the mortality table specified in the Retirement Plan of Idaho Power Company which may be amended from time to time.
2.2 Administrative Committee . "Administrative Committee" shall mean the Administrative Committee appointed by the Compensation Committee pursuant to Section 9.1 hereof to administer the Plan.
2.3 Affiliate . "Affiliate" shall mean a business entity that is affiliated in ownership with the Company or an Employer and is recognized as an Affiliate by the Company for the purposes of this Plan.
PAGE 2 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
2.4 Beneficiary . "Beneficiary" shall mean the person, persons or entity designated by the Participant pursuant to Article VIII to receive any benefits payable under the Plan. Each such designation shall be made in a written instrument filed with the Administrative Committee and shall become effective only when received, accepted and acknowledged in writing by the Administrative Committee or its designee.
2.5 Board . "Board" shall mean the Board of Directors of the Company.
2.6 Change in Control . "Change in Control" shall mean any of the following events:
(a) any person, or more than one person acting as a group, acquires ownership of stock of IDACORP, Inc. that, together with all other stock held by such person or persons, constitutes more than 50% of the total fair market value or total voting power of the stock of IDACORP, Inc.
(b) any person, or more than one person acting as a group, acquires (or has acquired during the 12 month period ending on the date of the most recent acquisition by such person or persons) ownership of thirty-five percent (35%) or more of the voting stock of IDACORP, Inc.
PAGE 3 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
(c) any person, or more than one person acting as a group, other than an Affiliate of IDACORP (as such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934), acquires (or has acquired during the 12 month period ending on the date of the most recent acquisition by such person or persons) assets from IDACORP, Inc. that have a total fair market value equal to or more than forty percent (40%) of the total gross fair market value of all the assets of the corporation immediately prior to such acquisition or acquisitions. (For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets).
(d) a majority of members of the Board of Directors of IDACORP, Inc. is replaced during any twelve (12) month period, such that, individuals who at the beginning of such period constitute the Board of IDACORP, Inc. cease for any reason to constitute a majority thereof, unless the appointment or election of each new director was endorsed by a majority of the directors in office prior to such appointment or election.
(e) any event described in (a) through (d) above occurs with respect to the Company, except that IDACORP, Inc. and its Affiliates shall not be considered persons for purposes of determining whether there has been a change in control.
2.7 Change in Control Period . "Change in Control Period" shall mean the period beginning with a Change in Control as defined in Section 2.6 and ending with the earlier of: (i) Termination Date of the Change in Control as determined by the Compensation Committee or (ii) 24 months following the consummation of a Change in Control.
2.8 Company . "Company" shall mean the Idaho Power Company, an Idaho corporation, its successors and assigns.
2.9 Compensation Committee . "Compensation Committee" shall mean the Board committee assigned responsibility for administering executive compensation.
PAGE 4 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
2.10 Compensation . "Compensation" shall mean the base salary and annual bonus (not to exceed one (1) times base salary for the year in which the bonus was paid) paid to a Participant and considered to be "wages" for purposes of federal income tax withholding. Compensation shall be calculated before reduction for any amounts deferred by the Participant pursuant to any plan sponsored by the Employer which permits deferral of current compensation. Compensation does not include long-term incentive compensation in any form, expense reimbursements, or any form of non-cash compensation or benefits.
2.11 Disability . "Disability" shall mean that a Participant is eligible to receive benefits under the Long-Term Disability Program maintained by the Employer.
2.12 Early Retirement Date . "Early Retirement Date" shall mean a Participant's Termination Date, if such termination occurs on or after such Participant's:
(i) attainment of age fifty-five (55); or
(ii) completion of thirty (30) years of Credited Service under the Retirement Plan
but prior to Participant's Normal Retirement Date.
2.13 Employer . "Employer" shall mean the Company and any business affiliated with the Company that employs persons who are approved by the Board or the Administrative Committee for participation in this Plan.
PAGE 5 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
2.14 Final Average Monthly Compensation . "Final Average Monthly Compensation" shall mean the Compensation received by the Participant during any sixty (60) consecutive months (during the last ten (10) years of employment) for which the Participant's compensation was the highest divided by sixty (60). In determining Final Average Monthly Compensation, annual bonuses shall be allocated equally to the months in which they were paid. Final Average Monthly Compensation shall not include any Compensation payable to a Participant pursuant to a written severance agreement with the Employer. Notwithstanding the foregoing, because the benefits payable under this Plan are frozen as of December 31, 2004, Compensation paid after that date shall not be taken into account.
2.15 Frozen Retirement Benefit . "Frozen Retirement Benefit" shall mean the benefit accrued as of November 30, 1994, under the Idaho Power Company Security Plan for Senior Management Employees as amended and restated May 1, 1990. The Frozen Retirement Benefit shall be calculated using compensation through November 30, 1994, and actual age at commencement of benefits. All Participants are 100% vested in their Frozen Retirement Benefit as of November 30, 1994. The Frozen Retirement Benefit shall be paid in the form and manner set forth in this Plan prior to the November 30, 1994 amendment including the early retirement reduction factors in effect under the May 1, 1990 restatement. The Frozen Retirement Benefit shall include the Participant's salary reduction with interest as provided in Section 5.5 of the Idaho Power Company Security Plan for Senior Management Employees as amended and restated May 1, 1990. In addition, the Frozen Retirement Benefit shall also include any benefit payable from the Idaho Power Company Supplemental Employee Retirement Plan (SERP) before August 1, 1996 Restatement. The Participant's age, service and compensation at August 1, 1996, shall be used in determining this additional Frozen Retirement Benefit from the SERP. Effective November 30, 1994, there shall be no additional employee contributions or salary reductions under this Plan. The Frozen Retirement Benefit accrued shall not be reduced due to the failure to complete salary reductions for the final benefit class if such failure resulted from removing the salary reduction requirement from the Plan effective November 30, 1994.
PAGE 6 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
2.16 Frozen Survivor Benefit . "Frozen Survivor Benefit" shall mean the survivor benefit accrued as of November 30, 1994, under Article IV of the Idaho Power Company Security Plan for Senior Management Employees as amended and restated May 1, 1990. The Frozen Survivor Benefit shall be calculated using compensation through November 30, 1994. All Participants are 100% vested in their Frozen Survivor Benefit as of November 30, 1994. The Frozen Survivor Benefit shall be paid in the form and manner set forth in this Plan prior to the November 30, 1994 amendment. The Frozen Survivor Benefit shall include the Participant's salary reduction with interest as provided in Section 5.5 of the Idaho Power Company Security Plan for Senior Management Employees as amended and restated May 1, 1990. Effective November 30, 1994, there shall be no additional employee contributions or salary reductions under this Plan. In addition, the Frozen Survivor Benefit shall also include any benefit payable from the Idaho Power Company Supplemental Employee Retirement Plan (SERP) before August 1, 1996 Restatement. The Participant's age, service and compensation at termination shall be used in determining this additional Frozen Survivor Benefit from the SERP. The Frozen Survivor Benefit accrued shall not be reduced due to the failure to complete salary reductions for the final benefit class if such failure resulted from removing the salary reduction requirement from the Plan effective November 30, 1994.
2.17 Normal Form of Benefit . "Normal Form of Benefit" shall mean the normal form of monthly retirement benefit provided under Section 3.01 of the Employer's Retirement Plan.
2.18 Normal Retirement Date . "Normal Retirement Date" shall mean a Participant's Termination Date if the termination occurs on or after the date the Participant attains age sixty-two (62).
PAGE 7 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
2.19 Participant . "Participant" shall mean any individual who is participating in or has participated in this Plan as provided in Article III.
2.20 Plan Year . "Plan Year" shall mean the calendar year effective November 30, 1994.
2.21 Retirement . "Retirement" shall mean termination of a Participant's employment with the Employer at the Participant's Early Retirement Date or Normal Retirement Date, as applicable.
2.22 Retirement Plan . "Retirement Plan" shall mean The Retirement Plan of Idaho Power Company as may be amended from time to time.
2.23 Security Plan Retirement Benefit . "Security Plan Retirement Benefit" shall mean the benefit determined under Article VI of this Plan.
2.24 Target Retirement Percentage . "Target Retirement Percentage" shall equal six percent (6%) for each of the first ten (10) Years of Participation plus an additional one percent (1%) for each Year of Participation, exceeding ten (10). The maximum Target Retirement Percentage shall be seventy-five percent (75%).
2.25 Termination Date . "Termination Date" shall mean the actual date a Participant's employment with the Employer terminates by resignation, discharge, death, Retirement or by any other method.
PAGE 8 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
2.26 Years of Participation . "Years of Participation" shall be twelve (12) month periods, and portions thereof, which shall begin on the earlier of the date an individual, who has been designated by the Employer, is approved by the Administrative Committee, pursuant to Section 3.1, or the date designated by the Administrative Committee, and shall end on the earliest of a Participant's Termination Date, the date the Participant experiences a change in status, as provided in Sections 3.3 and 3.4, or December 31, 2004. Partial Years of Participation, if any, shall be used in determining benefits under this Plan.
PAGE 9 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE III
3.1 Eligibility . Eligibility to participate in this Plan is limited to those key employees of the Employer who are designated, from time to time, by the Employer subject to approval of the Administrative Committee.
3.2 Vesting . A Participant shall be one hundred percent (100%) immediately vested.
3.3 Change in Employment Status . If the Employer determines that a Participant's employment performance or classification is no longer at a level which deserves participation in this Plan, but does not terminate the Participant's employment with the Employer, participation herein and eligibility to receive benefits hereunder shall be limited to the Participant's accrued benefit as of the date of the change in employment status. In such an event, the benefits payable to the Participant shall be based solely on the Participant's Years of Participation and Final Average Monthly Compensation as of such date. The benefit shall be calculated under the early retirement provisions pursuant to Sections 6.2 and 6.3(a), with commencement of benefit not earlier than the later of the Termination Date or the Participant's Early Retirement Date.
3.4 Non-Participating Affiliate . A Participant, who subsequently is transferred to an affiliated company that does not provide for participation in this Plan, may be allowed to continue participation under the Plan subject to the approval of the Administrative Committee. A Participant who is not allowed to continue participation in this Plan will not have benefits determined nor receive benefits under Article VI until his or her Termination Date.
PAGE 10 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE IV
4.1 Benefit Election . Participants in this Plan prior to December 1, 1994 or, if the Participant is deceased, the Beneficiary of such Participant, must elect to receive in the 30-day period immediately prior to receipt of any benefits under this Plan, (a) the Frozen Benefit (the Frozen Retirement Benefit or Frozen Survivor Benefit); or (b) the benefit accrued under this Plan as in effect after November 30, 1994.
A Participant may at any time prior to death or commencing benefits elect pursuant to Section 5.3(b) that upon their death before commencing benefits, the Frozen Survivor Benefit be paid to the designated Beneficiaries. This election may be revoked by the Participant at any time. This election requires spousal consent if the Participant is married.
4.2 Commencement of Benefits . A Participant or a Beneficiary shall determine the date when benefits shall commence within the time authorized by the Plan.
PAGE 11 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE V
5.1 Pre-retirement Survivor Benefits . If a Participant dies while employed by the Employer, the Employer shall pay a survivor benefit to such Participant's Beneficiary as follows:
(a) Amount . The pre-termination survivor benefit shall be equal to sixty-six and two-thirds percent (66 2/3%) of the retirement benefit calculated under Article VI assuming retirement occurred at the later of age sixty-two (62) or date of death. Final Average Monthly Compensation and the Retirement Plan benefit shall be determined as of the date of the Participant's death. For purposes of this section (a), the Retirement Plan benefit shall be the accrued benefit determined as of the date of death as defined in the Retirement Plan.
(b) Payment . If the Participant is married on the date of death, the benefits shall be paid to the spouse of the Participant for the life of the spouse beginning on the first day of the month coincident with or following the date of death. If the spouse's date of birth is more than ten (10) years after the Participant's date of birth, the monthly benefit shall be reduced using the Actuarial Equivalent factors to reflect the number of years over ten (10) the spouse is younger than the Participant. If the Participant is unmarried on the date of death, the benefit shall be paid to the Participant's Beneficiary in a lump sum that is the Actuarial Equivalent of the value of a death benefit payable to an assumed spouse the same age as the Participant.
PAGE 12 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
5.2 Post-termination Survivor Benefit .
(a) Death Prior to Commencement of Benefits . If a Participant dies prior to commencement of benefits but after reaching a Termination Date:
(i) Amount . The amount of the post-termination survivor benefit shall be equal to sixty-six and two thirds percent (66 2/3%) of the retirement benefit payable to the Participant.
(ii) Payment . If the Participant is married on the date of death, the benefits shall be paid to the spouse of the Participant for the life of the spouse beginning on the first day of the month coincident with or following the date of death. If the spouse's date of birth is more than ten (10) years after the Participant's date of birth, the monthly benefit shall be reduced using Actuarial Equivalent factors to reflect the number of years over ten (10) the spouse is younger than the Participant. If the Participant is unmarried on the date of death, the benefit shall be paid to the Participant's Beneficiary in a lump sum that is the Actuarial Equivalent of the value of a death benefit payable to an assumed spouse the same age as the Participant.
(b) Death After Commencement of Benefits . If a Participant dies after commencement of benefits, a survivor benefit will be paid only if, and to the extent provided for, under the form of benefit elected by the Participant pursuant to Sections 6.6.
5.3 Survivor Benefit Election for Participants Prior to December 1, 1994 .
PAGE 13 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
(a) Death Prior to Commencing Benefits and Making Frozen Survivor Benefit Election . As described in Section 4.1, if a Participant who participated in this Plan prior to December 1, 1994 dies prior to commencing benefits, the Beneficiary of the Participant must elect to receive (a) the Frozen Survivor Benefit; or (b) the benefit accrued under Section 5.1 of this plan as in effect after November 30, 1994. If the Participant was unmarried at the time of the Participant's death and more than one primary Beneficiary has been designated, the Beneficiaries shall be deemed to have elected the benefit of highest value based on the Actuarial Equivalent basis specified in Section 2.1 of this Plan.
(b) Election of Frozen Survivor Benefit Prior to Commencing Benefits . A Participant may at any time prior to commencing benefits elect that, upon their death before commencing benefits, the Frozen Survivor Benefit be paid to the designated Beneficiary(ies). This election, including the Beneficiary(ies) designation, requires spousal consent if married. This election may be revoked by the Participant at any time. If this election is made and the Participant dies before commencing benefits, the Frozen Survivor Benefit shall be paid to the Beneficiary(ies) in lieu of the survivor benefits described in Sections 5.1 and 5.2.
5.4 Suicide . In the event a Participant commits suicide within one (1) year of initially entering this Plan, no benefits shall be payable hereunder to the Participant's Beneficiaries.
PAGE 14 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE VI
SECURITY PLAN RETIREMENT BENEFITS
6.1 Normal Retirement Benefit . If a Participant's employment with the Employer terminates at a Normal Retirement Date, the Employer shall pay to the Participant a monthly Security Plan Retirement Benefit beginning the first day of the month following the Normal Retirement Date. Payment of this benefit cannot be deferred. The monthly Security Plan Retirement Benefit shall equal the Target Retirement Percentage multiplied by the Participant's Final Average Monthly Compensation, less the amount of the Participant's retirement benefit under the Retirement Plan Normal Form of Benefit regardless of the form actually selected by the Participant under the Retirement Plan.
6.2 Early Retirement Benefit . If a Participant's employment with the Employer terminates at an Early Retirement Date, the Employer shall pay to the Participant a monthly Security Plan Retirement Benefit beginning the first day of the month following the Early Retirement Date. Payment of this benefit cannot be deferred. The monthly Security Plan Retirement Benefit shall be equal to the Target Retirement Percentage, multiplied by the Early Retirement Factor and by the Participant's Final Average Monthly Compensation, less the amount of the Participant's retirement benefit under the Retirement Plan Normal Form of Benefit payable at the Participant's Early Retirement Date.
PAGE 15 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
6.3 Early Retirement Factor . If a Participant's employment with an Employer terminates before the Participant's Normal Retirement Date, the Target Retirement Percentage shall be multiplied by one (1) of the following Early Retirement Factors.
(a) If termination occurs with approval or if the Participant's employment with the Employer terminates within a Change in Control Period, the Early Retirement Factor shall be as described below:
Exact Age When Payments Begin |
Early Retirement Factor |
62 |
100% |
61 |
96% |
60 |
92% |
59 |
87% |
58 |
82% |
57 |
77% |
56 |
72% |
55 |
67% |
Early Retirement Factors will be prorated to reflect retirement based upon completed months rather than an exact age.
PAGE 16 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
(b) If termination occurs without approval and the Participant has not terminated within a Change in Control Period, the Early Retirement Factor shall be the factor described in (a) above, times a fraction equal to the Participant's Years of Participation at termination divided by the Years of Participation the Participant would have had at Participant's Normal Retirement Date if the Participant had continued to be employed by the Employer.
(c) Authorization to grant approval for early retirement is vested with the Compensation Committee for elected officers of the Employer and with the Chief Executive Officer of the Employer for non-officers.
6.4 Early Termination Benefits . If a Participant's employment with the Employer terminates prior to his or her death, prior to his or her Early Retirement Date, and not within a Change in Control Period, the Employer shall pay to the Participant, commencing on the first day of the month following the Participant's fifty-fifth (55th) birthday, the Security Plan Retirement Benefit as determined under this section.
(a) The Target Retirement Percentage shall be calculated based upon the Years of Participation and then multiplied by a fraction equal to the Participant's actual Years of Participation divided by the Years of Participation the Participant would have had at the Normal Retirement Date if the Participant had continued to be employed by the Employer to age sixty-two (62). The adjusted Target Retirement Percentage shall be multiplied by the factor described in Section 6.3(a) for each month between the Participant's benefits commencement date (age 55) and age sixty-two (62).
(b) The Early Termination Benefit shall be offset by the Retirement Plan Normal Form of Benefit payable on the date of benefit commencement (age 55) regardless of service.
PAGE 17 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
6.5 Termination After Change in Control . If a Participant's employment terminates within the Change in Control Period prior to his or her Normal Retirement Date, the Participant shall receive, beginning on the later of the attainment of age fifty-five (55) or the Participant's actual termination date, the Early Retirement Benefit calculated with the Early Retirement Factors set forth in 6.3(a).
6.6 Form of Payment . The Security Plan Retirement Benefit shall be paid as a single life annuity for the lifetime of the Participant.
(a) The Participant may also elect to receive Actuarial Equivalent payments in one of the forms of benefit listed below:
(i) A joint and survivor annuity with payments continued to the surviving spouse at an amount equal to two-thirds (2/3) of the Participant's benefit.
(ii) A joint and survivor annuity with payments continued to the surviving spouse at an amount equal to the Participant's benefit.
(iii) A single life annuity, if the Participant had previously elected one of the joint and survivor annuity options listed above.
PAGE 18 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE VII
7.1 Disability . During a period of Disability, a Participant will continue to accrue Years of Participation, and Compensation shall be credited to a Participant who is receiving Disability benefits at the full time equivalent rate of pay that was being earned immediately prior to becoming disabled.
7.2 Withholding Payroll Taxes . The Employer shall withhold from payments made hereunder any taxes required to be withheld from a Participant's wages under federal, state or local law.
7.3 Payment to Guardian . If a Plan benefit is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of property, the Administrative Committee may direct payment of such Plan benefit to the guardian, legal representative or person having the care and custody of the minor, incompetent or incapable person. The Administrative Committee may require proof of incompetency, minority, incapacity or guardianship, as it may deem appropriate, prior to distribution of the Plan benefit. The distribution shall completely discharge the Administrative Committee and the Employer from all liability with respect to such benefit.
PAGE 19 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
7.4 Accelerated Distribution . Notwithstanding any other provision of the Plan, a Participant shall be entitled to receive, upon written request to the Administrative Committee, a lump sum distribution equal to ninety percent (90%) of the Actuarial Equivalent accrued Security Plan Retirement Benefit, as of the date thirty (30) days after notice is given to the Administrative Committee. The remaining balance of ten percent (10%) shall be forfeited by the Participant. The amount payable under this section shall be paid in a lump sum with ten (10) days following the thirty (30) day period outlined above. If a Participant requests and obtains an accelerated distribution under this Section 7.4 and remains employed by the Employer, participation will cease and there will be no future benefit accruals under this Plan. Following the death of a Participant, the Beneficiary may, at any time, request an accelerated distribution under this section. If the deceased Participant named multiple Beneficiaries, then all named Beneficiaries must consent to and request an accelerated distribution. The benefit payable to the Beneficiary shall be equal to ninety percent (90%) of the Actuarial Equivalent of the Security Plan Retirement Benefit payable to the Beneficiary. Payment of an accelerated distribution pursuant to this Section 7.4 shall completely discharge the Employer's obligation to the Participant and any Beneficiaries under this Plan. Distribution of the Frozen Retirement Benefit and the Frozen Survivor Benefit may not be accelerated.
PAGE 20 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE VIII
8.1 Beneficiary Designation for Participant Not Eligible for Frozen Survivor Benefit . If the Participant is married, the Beneficiary shall be the Participant's spouse. Each unmarried Participant shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries (both primary as well as contingent) to whom payment under this Plan shall be made in the event of the Participant's death prior to the discharge of the Employer's obligation under this plan.
Any Beneficiary designation may be changed by a Participant by the filing of a written form prescribed by the Administrative Committee. The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized divorce or marriage (other than common law) of a Participant subsequent to the date of filing of a Beneficiary designation form shall automatically revoke the prior designation. If a Participant fails to designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage or divorce, without execution of a new designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then Participant's designated Beneficiary shall be deemed to be the person or persons surviving the Participant in the first of the following classes in which there is a survivor, share and share alike:
(a) the Participant's surviving spouse;
PAGE 21 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
(b) the Participant's children, except that if any of the children predecease the Participant but leave issue surviving, the issue shall take by right of representation;
(c) the Participant's personal representative (executor or administrator).
8.2 Beneficiary Designation for Participant Eligible for Frozen
(a) Frozen Survivor Benefit Elected . If the Participant elects the Frozen Survivor Benefit pursuant to Section 5.3(b), the Participant shall designate any person or persons as Beneficiary or Beneficiaries (both primary as well as contingent) to whom payment of the Frozen Survivor Benefit shall be made in the event of the Participant's death prior to commencement of benefits under this Plan. If the Participant is married, designation of a Beneficiary other than the spouse shall require spousal consent. Any future change in Beneficiary shall also require spousal consent.
(b) F rozen Survivor Benefit Not Elected by Married Participant . If the Participant does not elect the Frozen Survivor Benefit pursuant to Section 5.3(b) and the Participant is married, the Participant's spouse shall be the Beneficiary to whom payment of the Frozen Survivor Benefit shall be made in the event of the Participant's death prior to the commencement of benefits under the Plan.
PAGE 22 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
(c) Frozen Survivor Benefit Not Elected by Unmarried Participant . If the Participant does not elect the Frozen Survivor Benefit pursuant to Section 5.3(b) and the Participant is unmarried, the Participant shall designate any person or persons as Beneficiary(ies) (both primary as well as contingent) to whom payment of the Frozen Survivor Benefit shall be made in the event of the Participant's death prior to the commencement of benefits under this Plan.
Any Beneficiary designation may be changed by a Participant by filing a written form prescribed by the Administrative Committee. The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed.
Any finalized divorce or marriage (other than common law) of a Participant subsequent to the date of filing a Beneficiary designation form shall automatically revoke the prior designation unless the Frozen Survivor Benefit has been elected pursuant to Section 5.3(b) and a nonspouse beneficiary designated. If a Participant fails to designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage or divorce, without execution of a new designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then Participant's designated Beneficiary shall be deemed to be the person or persons surviving the Participant in the first of the following classes in which there is a survivor, share and share alike:
(a) the Participant's surviving spouse;
(b) the Participant's children, except that if any of the children predecease the Participant but leave issue surviving, the issue shall take by right of representation;
(c) the Participant's personal representative (executor or administrator).
PAGE 23 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
8.3 Beneficiary Designation at Commencement of Benefits . Notwithstanding any Beneficiary designation made pursuant to Sections 8.1. and 8.2, a Participant who commences retirement benefits under Article VI shall:
(a) If they elect the Frozen Retirement Benefit, designate a Beneficiary or Beneficiaries (primary as well as contingent) to whom any remainder of the payments shall be made in the event of their death prior to receiving 180 payments.
(b) If they elect the benefit accrued under Article VI as in effect after November 30, 1994, the Beneficiary shall be the spouse pursuant to an election under Section 6.6. If no election has been made under Section 6.6(b), no benefits are payable upon the Participant's death.
8.4 Effect of Payment . The payment to the Beneficiary shall completely discharge Employer's obligations under this Plan.
PAGE 24 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE IX
9.1 Administrative Committee Duties . This Plan shall be administered by an Administrative Committee, which shall be the Chief Executive Officer of the Company and the Fiduciary Committee approved by the Compensation Committee. The Administrative Committee shall have the authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan. A majority vote of the Administrative Committee members shall control any decision.
In the administration of this Plan, the Administrative Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit and may from time to time consult with counsel who may be counsel to the Employer.
Subject to Article X, the decision or action of the Administrative Committee in respect of any questions arising out of, or in connection with, the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.
PAGE 25 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
9.2 Indemnity of Administrative Committee . To the extent permitted by applicable law, the Employer shall indemnify, hold harmless and defend the Administrative Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan, provided that the Administrative Committee was acting in accordance with the applicable standard of care. The indemnity provisions set forth in this Article shall not be deemed to restrict or diminish in any way any other indemnity available to the Administrative Committee members in accordance with the Articles or By-laws of the Company.
PAGE 26 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE X
10.1 Claim . Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Administrative Committee who shall respond in writing as soon as practicable.
10.2 Denial of Claim . If the claim or request is denied, the written notice of denial shall state:
(a) the reason for denial, with specific reference to the Plan provisions where applicable on which the denial is based;
(b) a description of any additional material or information required and an explanation of why it is necessary; and
(c) an explanation of the Plan's claims review procedure.
10.3 Review of Claim . Any person whose claim or request is denied or who has not received a response within thirty (30) days may request a review by notice given in writing to the Administrative Committee. The claim or request shall be reviewed by the Administrative Committee who may, but shall not be required to, grant the claimant a hearing. On review, the claimant may have representation, examine pertinent documents, and submit issues and comments in writing.
PAGE 27 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
10.4 Final Decision . The decision on review shall normally be made within sixty (60) days. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be one hundred twenty (120) days. The decision shall be in writing and shall state the reason and any relevant Plan provisions. All decisions on review shall be final and bind all parties concerned.
PAGE 28 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE XI
TERMINATION, SUSPENSION OR AMENDMENT
11.1 Termination, Suspension or Amendment of Plan . The Board may, in its sole discretion, terminate or suspend this Plan at any time or from time to time, in whole or in part. The Compensation Committee may amend this Plan at any time or from time to time. Any amendment may provide different benefits or amounts of benefits from those herein set forth. However, no such termination, suspension or amendment or other action with respect to the Plan shall adversely affect the benefits of Participants which have accrued prior to such action, the benefits of any Participant who has previously retired, or the benefits of any Beneficiary of a Participant who has previously died. Furthermore, no termination, suspension or amendment shall alter the applicability of the vesting schedule in Section 3.2 with respect to a Participant's accrued benefit at the time of such termination, suspension or amendment.
11.2 Change in Control . Notwithstanding Section 11.1 above, during a Change in Control Period, neither the Board nor the Administrative Committee may terminate this Plan with regard to accrued benefits of current Participants. No amendment may be made to the Plan during a Change in Control Period which would adversely affect the accrued benefits of current Participants, the benefits of any Participant who has retired, or the Beneficiary of any Participant who has died. The Plan shall continue to operate and be effective with regard to all current or retired Participants and their Beneficiaries during any Change in Control Period.
PAGE 29 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
ARTICLE XII
12.1 Unfunded Plan . This Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of "management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and therefore to be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
12.2 Unsecured General Creditor . Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or asset of the Employer, nor shall they be Beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Employer. Except as may be provided in Section 12.3, such policies, annuity contracts or other assets of the Employer shall not be held under any trust for the benefit of Participants, their Beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the fulfilling of the obligation of the Employer under this Plan. Any and all of the Employer's assets and policies shall be, and remain, the general, unpledged, unrestricted assets of the Employer. The Employer's obligation under the Plan shall be that of an unfunded and unsecured promise to pay money in the future.
PAGE 30 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
12.3 Trust Fund . The Employer shall be responsible for the payment of all benefits provided under the Plan. At its discretion, the Employer may establish one or more trusts, with such trustees as the Board may approve, for the purpose of providing for the payment of such benefits. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Employer's creditors. To the extent any benefits provided under the Plan are actually paid from any such trust, the Employer shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Employer.
12.4 Nonassignability . Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amount payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of Participant's or any other person's bankruptcy or insolvency.
12.5 Not a Contract of Employment . The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Employer and the Participant, and the Participant (or Participant's Beneficiary) shall have no rights against the Employer except as may otherwise be specifically provided herein. Moreover, nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Employer or to interfere with the right of the Employer to discipline or discharge the Participant at any time.
PAGE 31 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
12.6 Governing Law . The provisions of this Plan shall be construed, interpreted and governed in all respects in accordance with the applicable federal law and, to the extent not preempted by such federal law, in accordance with the laws of the State of Idaho without regard to the principles of conflicts of laws.
12.7 Validity . If any provision of this Plan shall be held illegal or invalid for any reason, the remaining provisions shall nevertheless continue in full force and effect without being impaired or invalidated in any way.
12.8 Notice . Any notice or filing required or permitted to be given under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail or fax. The notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
12.9 Successors . Subject to Section 11.1, the provisions of this Plan shall bind and inure to the benefit of the Employer and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Employer, and successors of any such corporation or other business entity.
IDAHO POWER COMPANY
By: ________________________________
Chief Executive Officer
By: ________________________________
Secretary
PAGE 32 -SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES
Exhibit 10(h)(iii)
IDACORP, Inc.
RESTRICTED STOCK PLAN
ARTICLE I
PURPOSE AND ELIGIBILITY
1.1
Purpose
.
The purpose of the Plan is to award shares
of common stock to certain officers and executives ("key employees")
of IDACORP, Inc. (the "Company") and its subsidiaries to provide an
equity-based incentive program to key employees that encourages retention,
facilities alignment of business decisions with shareholder interests and
recognizes key employees for outstanding performance.
1.2
Eligibility
.
Subject to the determination of the
committee described in Section 2.2 herein, all officers and key executives
of the Company and its subsidiaries shall be eligible to receive awards under
the Plan. A person who receives an award under the Plan is referred to herein
as a "Participant."
ARTICLE II
AWARDS
2.1
Shares Available for Awards
.
The maximum number of
shares which may be awarded from time to time under the Plan is 370,000.
Shares of common stock awarded under the Plan ("Restricted Shares")
shall be authorized but unissued shares of common stock of the Company,
treasury shares or shares purchased on the open market. Restricted Shares
which are not earned or which are forfeited shall again be available for
subsequent awards under the Plan.
2.2
The Committee
.
All awards made hereunder shall be
made to such key employees as shall be determined solely by the Compensation
Committee of the Board of Directors of the Company (the "Committee").
The Committee shall have full discretion and exclusive power, subject to the provisions of the Plan, to select and determine the key employees to whom awards are made, the times when awards are made, the number of Restricted Shares granted, the length of the restricted period (the "Restricted Period"), the applicable restrictions, forfeiture provisions, performance criteria, if any, dividend rights, if any, voting rights, if any, and any other rights, terms and conditions it may choose to apply to such awards.
The Committee shall have full power and
authority to interpret and apply the provisions of the Plan, and to prescribe,
amend and rescind such rules and regulations relating to the Plan as it shall
deem desirable. Any interpretation, determination or other action taken by the
Committee shall be final, binding and conclusive. No member of the Committee
shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan or awards made hereunder.
2.3
Awards
.
(a)
The terms of each award, as determined solely by the Committee, shall be
set forth in a written agreement (a "Restricted Stock Agreement")
duly executed on behalf of the Company and the Participant in such form as the
Committee shall from time to time approve.
(b)
A stock certificate representing the number of Restricted Shares granted
to a Participant shall be registered in the Participant's name but shall be
held in custody by the Company for the Participant's account. The Participant
shall not have the right to vote such Restricted Shares or to receive dividends
thereon unless such rights are granted by the Committee. In addition, the
following restrictions shall apply: (i) the Participant shall not be
entitled to delivery of a certificate until the expiration or termination of
the Restricted Period and the satisfaction of performance criteria, if any; (ii) none
of the Restricted Shares may be sold, transferred, assigned, pledged, or
otherwise encumbered or disposed of during the Restricted Period, other than by
will or the laws of descent and distribution; and (iii) all of the
Restricted Shares shall be forfeited by the Participant without further
obligation on the part of the Company as of the date of the Participant's
termination of employment in accordance with the provisions of Section 3.1
hereof prior to the expiration or termination of the Restricted Period. Upon
the forfeiture of any Restricted Shares, such forfeited shares shall be
transferred to the Company without further action by the Participant.
(c)
Upon the expiration or termination of the Restricted Period and the
satisfaction of performance criteria, if any, the restrictions imposed on the
appropriate Restricted Shares shall lapse and a stock certificate for the
number of Restricted Shares with respect to which the restrictions have lapsed
shall be delivered to the Participant, free of all such restrictions, except
any that may be imposed by law or by the applicable Restricted Stock
Agreement. Except as provided under Section 5.3 hereof, no payment will be
required from the Participant upon the issuance or delivery of any Restricted
Shares.
2.4
Section 83(b) Election
.
A Participant who files an
election with the Internal Revenue Service to include the fair market value of
any Restricted Shares in gross income while they are still subject to
restrictions shall promptly furnish the Company with a copy of such election
together with the amount of any federal, state, local or other taxes required
to be withheld to enable the Company to claim an income tax deduction with
respect to such election.
2.5 Adjustment in Event of Changes in Capitalization . In the event of a recapitalization, stock split, stock dividend, stock combination, exchange of shares, merger, consolidation, acquisition or disposition of property or shares, reorganization, liquidation, or other similar changes or transactions, of or by the Company, the aggregate number of Restricted Shares shall be appropriately adjusted and all provisions of this Plan with respect to the number of Restricted Shares shall also be adjusted.
2
ARTICLE III
TERMINATION OF EMPLOYMENT; CHANGE IN CONTROL
3.1
Termination of Employment
.
Subject to the Committee's
right to determine otherwise at the time of grant, upon termination of the
Participant's employment with the Company by reason of death or disability, or
with approval of the Committee upon retiring from the Company prior to attaining
age 62, all unvested Restricted Stock shall immediately vest. Upon termination
of employment for any other reason, all unvested Restricted Stock shall be
forfeited.
3.2
Change in Control
.
All unvested Restricted
Shares shall vest immediately upon a "Change in Control." For
purposes of this Plan, "Change in Control" shall mean the earliest of
the following to occur:
(a)
any person (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the "1934 Act") and as used in Section 13(d) of
the 1934 Act, excluding (i) the Company or any Subsidiary, (ii) a corporation
or other entity owned, directly or indirectly, by the stockholders of the
Company immediately prior to the transaction in substantially the same
proportions as their ownership of stock of the Company, (iii) an employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Subsidiary or (iv) an underwriter temporarily holding securities pursuant to an
offering of such securities ("Person")) is the beneficial owner (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or
more of the combined voting power of the then outstanding voting securities
eligible to vote generally in the election of directors of the Company;
provided, however, that no Change in Control will be deemed to have occurred as
a result of a change in ownership percentage resulting solely from an
acquisition of securities by the Company;
(b)
consummation of a merger, consolidation, reorganization or share
exchange, or sale of all or substantially all of the assets, of the Company or
Idaho Power Company (a "Qualifying Transaction"), unless, immediately
following such Qualifying Transaction, all of the following have occurred: (i)
all or substantially all of the beneficial owners of the Company immediately
prior to such Qualifying Transaction beneficially own in substantially the same
proportions, directly or indirectly, more than 50% of the combined voting power
of the then outstanding voting securities entitled to vote generally in the
election of directors of the corporation or other entity resulting from such
Qualifying Transaction (including, without limitation, a corporation or other
entity which, as a result of such transaction, owns the Company or all or
substantially all of the Company's assets either directly or through one or
more subsidiaries) (as the case may be, the "Successor Entity"), (ii)
no Person is the beneficial owner (as defined in Rule 13d-3 under the 1934
Act), directly or indirectly, of 20% or more of the combined voting power of
the then outstanding voting securities eligible to vote generally in the
election of directors of the Successor Entity and (iii) at least a majority of
the members of the board of directors of the Successor Entity are Incumbent
Directors;
(c) a complete liquidation or dissolution of the Company or Idaho Power Company; or
3
(d) within a 24-month period, individuals who were directors of the Board of Directors of the Company (the "Board of Directors") immediately before such period ("Incumbent Directors") cease to constitute at least a majority of the directors of the Board of Directors; provided, however, that any director who was not a director of the Board of Directors at the beginning of such period shall be deemed to be an Incumbent Director if the election or nomination for election of such director was approved by the vote of at least two-thirds of the directors of the Board of Directors then still in office (i) who were in office at the beginning of the 24-month period or (ii) whose election or nomination for election was so approved, in each case, unless such individual was elected or nominated as a result of an actual or threatened election contest or as a result of an actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board of Directors.
For avoidance of doubt, transactions for the purpose of dividing Idaho Power Company's assets into separate distribution, transmission or generation entities or such other entities as the Company or Idaho Power Company may determine shall not constitute a Change in Control unless so determined by the Board of Directors. For purposes of this Plan, the term "Subsidiary" shall mean any corporation of which more than 50% of the outstanding stock having ordinary voting power to elect a majority of the board of directors of such corporation is now or hereafter owned, directly or indirectly, by the Company.
ARTICLE IV
AMENDMENTS AND TERMINATION
4.1
Amendments
.
The Board of Directors reserves the right
at any time and from time to time, and retroactively if deemed necessary or
appropriate by it, to amend in whole or in part, and in any manner, any or all
of the provisions of this Plan, provided that no amendment shall make it
possible for any part of a Participant's Restricted Shares to be used for or
diverted to purposes other than for the exclusive benefit of Participants or
their beneficiaries, except to the extent otherwise provided in this Plan.
4.2
Termination
.
The Board of Directors reserves the
right to terminate this Plan at any time. No Participant shall accrue any
additional benefits under this Plan after the effective date of such
termination.
ARTICLE V
MISCELLANEOUS
5.1
Governing Law
.
All questions pertaining to the
validity, construction and administration of the Plan shall be determined in
accordance with the laws of the State of Idaho, without regard to conflicts of
laws provisions.
5.2 Nonguarantee of Employment . Nothing contained in this Plan shall be construed as a contract of employment between the Company and any Participant, as a right of any Participant to be continued in the employment of the Company, or as a limitation on the right of the Company to discharge any of its employees, with or without cause.
4
5.3 Taxes . The Company shall make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state and local taxes required by law to be withheld with respect to awards of Restricted Shares, and the lapse of restrictions on Restricted Shares, including but not limited to (i) deducting the amount required to be withheld from any other amount then or thereafter payable to a Participant, former Participant, beneficiary or legal representative and (ii) requiring a Participant, former Participant, beneficiary or legal representative to pay to the Company the amount required to be withheld as a condition of the delivery of Restricted Shares. For all purposes of this Plan, the fair market value of common stock shall be determined by the Company in good faith, and such determination shall be binding upon the Participants and all other persons for federal, state and local tax purposes.
5.4
Notices
.
Each notice relating to this Plan shall be
in writing and delivered in person or by certified mail to the proper address.
All notices to the Company shall be addressed to it at 1221 West Idaho Street,
Boise, Idaho 83707, Attention: Manager of Compensation. All notices to
Participants, former Participants, beneficiaries or other persons acting for or
on behalf of such persons shall be addressed to such person at the last address
for such person maintained in the Company's records.
5.5
Headings
.
The headings and sub-headings in this Plan
are inserted for convenience of reference only and are to be ignored in any
construction of the provisions hereof.
5.6 Severability . In case any provision of this Plan shall be held illegal or void, such illegality or invalidity shall not affect the remaining provisions of this Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provision had never been inserted herein.
(1) Adopted by Idaho Power Company on December 20, 1994, effective July 1, 1994
(2) Assumed by IDACORP effective October 1, 1998
(3) Amended by IDACORP July 20, 2006 to change the name of the company to IDACORP, amend the change in control definition and make other non-substantive changes
5
Exhibit 10(h)(vi)
IDACORP, Inc.
RESTRICTED STOCK PLAN
[DATES] PERIOD OF RESTRICTION
RESTRICTED STOCK AGREEMENT
(time vesting)
[Date]
[Name]
[Address]
In accordance with the terms of the IDACORP, Inc. Restricted Stock Plan (the "Plan"), pursuant to action of the Compensation Committee (the "Committee") of the Board of Directors, IDACORP, Inc. (the "Company") hereby grants to you (the "Participant"), subject to the terms and conditions set forth in this Restricted Stock Agreement (including Annex A hereto and all documents incorporated herein by reference), an award of restricted shares of Company common stock (the "Restricted Stock"), as set forth below:
Date of Grant: |
__________, 200__ |
Number of Shares of Restricted Stock: |
|
Restricted Period: |
__________ through ________________ |
Performance Goal: |
N/A |
Vesting Schedule: |
All of the Shares of Restricted Stock subject to this Award shall vest on _________ if the Participant remains employed through the Restricted Period. |
THESE SHARES OF RESTRICTED STOCK ARE SUBJECT TO FORFEITURE AS PROVIDED IN ANNEX A AND THE PLAN.
[The Participant, in consideration of this grant of Restricted Stock, by affixing his signature hereto, specifically waives any rights he may have under Section 3.2, Change in Control, of the Plan, as it was in effect prior to July 20, 2006, and hereby consents to the use of the definition of Change in Control as amended on July 20, 2006, in connection with any prior grants made pursuant to the Plan and still outstanding on the date hereof.]
Further terms and conditions of the Award are set forth in Annex A hereto, which is an integral part of this Restricted Stock Agreement.
All terms, provisions and conditions applicable to the Award set forth in the Plan and not set forth herein are hereby incorporated by reference herein. To the extent any provision hereof is inconsistent with the Plan, the Plan will govern. The Participant hereby acknowledges receipt of a copy of this Restricted Stock Agreement including Annex A hereto and a copy of the Plan and agrees to be bound by all the terms and provisions hereof and thereof.
IDACORP, Inc.
By:______________________________
Agreed :
___________________________
Attachment: Annex A
2
ANNEX A
TO
IDACORP, INC. RESTRICTED STOCK PLAN
RESTRICTED STOCK AGREEMENT
It is understood and agreed that the Award of Restricted Stock evidenced by the Restricted Stock Agreement to which this is annexed is subject to the following additional terms and conditions:
1. Forfeiture and Transfer Restrictions .
A. Forfeiture Restrictions . Except as provided otherwise in Section 2 of this Annex A, if the Participant's employment is terminated during the Restricted Period, the Shares of Restricted Stock subject to this Award shall be forfeited as of the date of termination.
B. Transfer Restrictions. The Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated during the Restricted Period.
2. Termination of Employment . If the Participant's employment is terminated during the Restricted Period (i) due to the Participant's death or disability or (ii) with the approval of the Committee due to the Participant's retirement, the Restricted Stock shall vest on the date of such termination of employment with respect to a prorated number of Shares of Restricted Stock determined by multiplying the total number of Shares subject to this Award times a fraction, the numerator of which is the number of whole months having elapsed during the Restricted Period as of the date of such termination of employment and the denominator of which is the total number of whole months in the Restricted Period. For purposes of this Section 2, determination of whether a Participant's employment is terminated due to the Participant's retirement shall be made in the sole discretion of the Committee and the Committee's determination shall be final.
3. Vesting of Restricted Stock . Except as provided otherwise in Section 3.2 of the Plan and Sections 1 or 2 of this Annex A, the Restricted Stock shall vest in accordance with the Vesting Schedule set forth in the Restricted Stock Agreement. Any Shares that do not vest shall be forfeited.
A-1
4. Voting Rights, Dividends and Custody . The Participant shall be entitled to vote and receive regular cash dividends paid with respect to the Shares subject to this Award during the Restricted Period; provided, however, that in no event shall the Participant vote or receive dividends paid with respect to any forfeited Shares on or after the date of forfeiture. The Shares subject to this Award shall be registered in the name of the Participant and held in the Company's custody during the Restricted Period.
5. Tax Withholding . The Company may make such provisions as are necessary for the withholding of all applicable taxes on the Restricted Stock, in accordance with Section 5.3 of the Plan. With respect to the minimum statutory tax withholding required with respect to the Restricted Stock, the Participant may elect to satisfy such withholding requirement by having the Company withhold Shares from this Award.
6. Ratification of Actions . By accepting this Award or other benefit under the Plan, the Participant and each person claiming under or through him shall be conclusively deemed to have indicated the Participant's acceptance and ratification of, and consent to, any action taken under the Plan or the Award by IDACORP, Inc.
7. Notices . Any notice hereunder to IDACORP, Inc. shall be addressed to its office at 1221 West Idaho Street, Boise, Idaho 83702; Attention: Manager of Compensation, and any notice hereunder to the Participant shall be addressed to him or her at the address specified on the Restricted Stock Agreement, subject to the right of either party to designate at any time hereafter in writing some other address.
8. Definitions . Capitalized terms not otherwise defined herein shall have the meanings given them in the Plan.
9. Governing Law and Severability . To the extent not preempted by Federal law, the Restricted Stock Agreement will be governed by and construed in accordance with the laws of the State of Idaho, without regard to conflicts of law provisions. In the event any provision of the Restricted Stock Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Restricted Stock Agreement, and the Restricted Stock Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.
A-2
Exhibit 10(h)(vii)
IDACORP, Inc.
RESTRICTED STOCK PLAN
[DATES] PERIOD OF RESTRICTION
PERFORMANCE STOCK AGREEMENT
(performance vesting)
[Date]
[Name]
[Address]
In accordance with the terms of the IDACORP, Inc. Restricted Stock Plan (the "Plan"), pursuant to action of the Compensation Committee (the "Committee") of the Board of Directors, IDACORP, Inc. (the "Company") hereby grants to you (the "Participant"), subject to the terms and conditions set forth in this Performance Stock Agreement (including Annex A hereto and all documents incorporated herein by reference), an award of restricted shares of Company common stock (the "Restricted Stock"), as set forth below:
Date of Grant: |
__________, 200__ |
Number of Shares of Restricted Stock: |
|
Restricted Period: |
__________ through ________________ |
Performance Goal: |
Cumulative earnings per share
("CEPS") for the calendar years ________, ________ and ________ as
reported on the audited financial statements of the Company.
|
Vesting Schedule: |
If CEPS are less than $____, no Shares shall
vest;
If CEPS are at least $____, ______ Shares shall vest plus an additional _______ Shares for every one cent increase in CEPS over $____ up to but not including $____ in CEPS; If CEPS are $____, all Shares granted shall vest; and if CEPS are over $____, all Shares granted shall vest and an additional grant of ________ Shares for every one cent increase in CEPS up to and including $_____ in CEPS shall be made, without restrictions as to vesting. Vesting of Shares of Restricted Stock pursuant to the foregoing schedule shall occur on _________ (the "Vesting Date"). |
THESE SHARES OF RESTRICTED STOCK ARE SUBJECT TO FORFEITURE AS PROVIDED IN ANNEX A AND THE PLAN.
1
[The Participant, in consideration of this grant of Restricted Stock, by affixing his signature hereto, specifically waives any rights he may have under Section 3.2, Change in Control, of the Plan, as it was in effect prior to July 20, 2006, and hereby consents to use of the definition of Change in Control as amended on July 20, 2006, in connection with any prior grants made pursuant to the Plan and still outstanding on the date hereto.]
Further terms and conditions of the Award are set forth in Annex A hereto, which is an integral part of this Performance Stock Agreement.
All terms, provisions and conditions applicable to the Award set forth in the Plan and not set forth herein are hereby incorporated by reference herein. To the extent any provision hereof is inconsistent with the Plan, the Plan will govern. The Participant hereby acknowledges receipt of a copy of this Performance Stock Agreement including Annex A hereto and a copy of the Plan and agrees to be bound by all the terms and provisions hereof and thereof.
IDACORP, Inc.
By:______________________________
Agreed :
___________________________
Attachment: Annex A
3
ANNEX A
TO
IDACORP, INC. RESTRICTED STOCK PLAN
PERFORMANCE STOCK AGREEMENT
It is understood and agreed that the Award of Restricted Stock evidenced by the Performance Stock Agreement to which this is annexed is subject to the following additional terms and conditions:
1. Forfeiture and Transfer Restrictions.
A. Forfeiture Restrictions . Except as provided otherwise in Section 2 of this Annex A, if the Participant's employment is terminated during the Restricted Period, the Shares of Restricted Stock subject to this Award shall be forfeited as of the date of termination.
B. Transfer Restrictions . The Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated during the Restricted Period.
2. Termination of Employment . If the Participant's employment is terminated during the Restricted Period (i) due to the Participant's death or disability or (ii) with the approval of the Committee due to the Participant's retirement, the Restricted Stock shall vest, if at all, on _____ in accordance with the provisions set forth under "Vesting Schedule," but with respect to a prorated number of Shares of Restricted Stock determined by multiplying the total number of Shares subject to this Award that would vest times a fraction, the numerator of which is the number of whole months having elapsed during the Restricted Period as of the date of such termination of employment and the denominator of which is the total number of whole months in the Restricted Period. For purposes of this Section 2, determination of whether a Participant's employment is terminated due to the Participant's retirement shall be made in the sole discretion of the Committee and the Committee's determination shall be final.
3. Vesting of Restricted Stock . Except as provided otherwise in Section 3.2 of the Plan and Sections 1 or 2 of this Annex A, the Restricted Stock shall vest, if at all, in accordance with the Vesting Schedule set forth in the Performance Stock Agreement. Any Shares that do not vest shall be forfeited.
A-1
4. Voting Rights, Dividends and Custody . The Participant shall be entitled to vote and receive regular cash dividends paid with respect to the Shares subject to this Award during the Restricted Period; provided, however, that in no event shall the Participant vote or receive dividends paid with respect to any forfeited Shares on or after the date of forfeiture. The Shares subject to this Award shall be registered in the name of the Participant and held in the Company's custody during the Restricted Period.
5. Tax Withholding . The Company may make such provisions as are necessary for the withholding of all applicable taxes on the Restricted Stock, in accordance with Section 5.3 of the Plan. With respect to the minimum statutory tax withholding required with respect to the Restricted Stock, the Participant may elect to satisfy such withholding requirement by having the Company withhold Shares from this Award.
6. Ratification of Actions . By accepting this Award or other benefit under the Plan, the Participant and each person claiming under or through him shall be conclusively deemed to have indicated the Participant's acceptance and ratification of, and consent to, any action taken under the Plan or the Award by IDACORP, Inc.
7. Notices . Any notice hereunder to IDACORP, Inc. shall be addressed to its office at 1221 West Idaho Street, Boise, Idaho 83702; Attention: Manager of Compensation, and any notice hereunder to the Participant shall be addressed to him or her at the address specified on the Performance Stock Agreement, subject to the right of either party to designate at any time hereafter in writing some other address.
8. Definitions . Capitalized terms not otherwise defined herein shall have the meanings given them in the Plan.
9. Governing Law and Severability . To the extent not preempted by Federal law, the Performance Stock Agreement will be governed by and construed in accordance with the laws of the State of Idaho, without regard to conflicts of law provisions. In the event any provision of the Performance Stock Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Performance Stock Agreement, and the Performance Stock Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.
A-2
Exhibit 10(h)(viii)
IDAHO POWER COMPANY
SECURITY PLAN FOR BOARD OF DIRECTORS
Amended and Restated
Effective July 20, 2006
TABLE OF CONTENTS
ARTICLE I
PURPOSE; EFFECTIVE DATE............................................................................................... 1
1.1...... Purpose......................................................................................................................... 1
ARTICLE II
DEFINITION............................................................................................................................ 1
2.1...... Actuarial Equivalent........................................................................................................ 1
2.2...... Administrative Committee............................................................................................... 1
2.3...... Beneficiary..................................................................................................................... 1
2.4...... Board............................................................................................................................ 1
2.5...... Change in Control.......................................................................................................... 1
2.6...... Change in Control Period............................................................................................... 3
2.7...... Company....................................................................................................................... 3
2.8...... Compensation Committee............................................................................................... 3
2.9...... Contract of Participation................................................................................................. 3
2.10.... Employer....................................................................................................................... 3
2.11.... Participant...................................................................................................................... 3
2.12.... Plan Anniversary Date.................................................................................................... 3
2.13.... Plan Year....................................................................................................................... 3
2.14.... Supplemental Retirement Benefit..................................................................................... 3
2.15.... Year of Service.............................................................................................................. 3
ARTICLE III
PARTICIPATION AND VESTING......................................................................................... 3
3.1...... Participation................................................................................................................... 3
3.2...... Fee Reduction................................................................................................................ 4
3.3...... Vesting........................................................................................................................... 4
ARTICLE IV
SURVIVOR BENEFITS........................................................................................................... 4
4.1...... Death Benefit................................................................................................................. 4
4.2...... Suicide........................................................................................................................... 6
ARTICLE V
RETIREMENT BENEFITS....................................................................................................... 6
5.1...... Benefit........................................................................................................................... 6
5.2...... Form of Payment............................................................................................................ 6
5.3...... Commencement of Benefit Payment................................................................................ 7
5.4...... Grandfathered Form of Benefit....................................................................................... 7
ARTICLE VI
BENEFICIARY DESIGNATION............................................................................................. 7
6.1...... Beneficiary Designation................................................................................................... 7
6.2...... Amendments, Marital Status, No Participant Designation................................................. 7
6.3...... Effect of Payment........................................................................................................... 8
TABLE OF CONTENTS
(Continued)
ARTICLE VII
TERMINATION, SUSPENSION OR AMENDMENT OF PLAN.......................................... 8
7.1...... Termination, Suspension or Amendment of Plan.............................................................. 8
7.2...... Change in Control.......................................................................................................... 8
ARTICLE VIII
ADMINISTRATION................................................................................................................ 8
8.1...... Administrative Committee; Duties................................................................................... 8
8.2...... Indemnity of Administrative Committee........................................................................... 8
ARTICLE IX
CLAIMS PROCEDURE........................................................................................................... 9
9.1...... Claim............................................................................................................................. 9
9.2...... Denial of Claim............................................................................................................... 9
9.3...... Review of Claim............................................................................................................. 9
9.4...... Final Decision................................................................................................................. 9
ARTICLE X
MISCELLANEOUS................................................................................................................. 9
10.1.... Unfunded Plan................................................................................................................ 9
10.2.... Unsecured General Creditor......................................................................................... 10
10.3.... Trust Fund................................................................................................................... 10
10.4.... Nonassignability........................................................................................................... 10
10.5.... Governing Law............................................................................................................. 10
10.6.... Validity........................................................................................................................ 10
10.7.... Notice.......................................................................................................................... 10
10.8.... Successors................................................................................................................... 10
10.9.... Payment to Guardian.................................................................................................... 11
10.10.. Accelerated Distribution............................................................................................... 11
ii
IDAHO POWER COMPANY
SECURITY PLAN FOR BOARD OF DIRECTORS
Amended and Restated July 20, 2006
ARTICLE I
PURPOSE; EFFECTIVE DATE
1.1 Purpose. The purpose of this restated Security Plan for Board of Directors (the "Plan") is to define the terms of the Plan to advance the interests of Idaho Power Company, an Idaho corporation, and its stockholders by furnishing a variety of supplemental benefits designed to attract and retain outstanding individuals as directors of Idaho Power Company, its subsidiaries and affiliates, and to stimulate the efforts of such directors by giving suitable recognition to services which will contribute materially to the success of Idaho Power. The effective date of this restatement shall be July 20, 2006.
ARTICLE II
DEFINITION
For the purposes of this Plan, the following terms shall have the meaning indicated, unless the context clearly indicates otherwise.
2.1 Actuarial Equivalent. "Actuarial Equivalent" shall mean equivalence in value between two (2) or more forms and/or times of payment based on a determination by an actuary chosen by the Company using generally accepted actuarial assumptions, methods and factors as used in the Retirement Plan of Idaho Power Company which may be amended from time to time. For purposes of Section 10.10, Actuarial Equivalent shall be calculated using the Pension Benefit Guaranty Immediate Rate as of the month preceding distribution plus 1% and the mortality table specified in the Retirement Plan of Idaho Power Company which may be amended from time to time.
2.2 Administrative Committee. "Administrative Committee" shall mean the committee appointed by the Compensation Committee pursuant to Section 8.1 hereof to administer the Plan.
2.4 Board. "Board" shall mean the Board of Directors of the Company.
2.5 Change in Control. "Change in Control" shall mean the earlier of the following to occur:
(a) any person (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Section 13(d) of the Exchange Act, excluding (i) IDACORP, Inc. or any Subsidiary, (ii) a corporation or other entity owned, directly or indirectly, by the stockholders of IDACORP, Inc. immediately prior to the transaction in substantially the same proportions as their ownership of stock of IDACORP, Inc., (iii) an employee benefit plan (or related trust) sponsored or maintained by IDACORP, Inc. or any Subsidiary or (iv) an underwriter temporarily holding securities pursuant to an offering of such securities ("Exchange Act Person")) is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20 percent or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of IDACORP, Inc.; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by IDACORP, Inc.;
(b) consummation of a merger, consolidation, reorganization or share exchange, or sale of all or substantially all of the assets, of IDACORP, Inc. or the Company (a "Qualifying Transaction"), unless, immediately following such Qualifying Transaction, all of the following have occurred: (i) all or substantially all of the beneficial owners of IDACORP, Inc. immediately prior to such Qualifying Transaction beneficially own in substantially the same proportions, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Qualifying Transaction (including, without limitation, a corporation or other entity which, as a result of such transaction, owns IDACORP, Inc. or all or substantially all of IDACORP, Inc.'s assets either directly or through one or more subsidiaries) (as the case may be, the "Successor Entity"), (ii) no Exchange Act Person is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Successor Entity and (iii) at least a majority of the members of the board of directors of the Successor Entity are Incumbent Directors;
(c) a complete liquidation or dissolution of IDACORP, Inc. or the Company; or
2
(d) within a 24-month period, individuals who were directors of the Board of Directors of IDACORP, Inc. (the "IDACORP Board of Directors") immediately before such period ("Incumbent Directors") cease to constitute at least a majority of the directors of the IDACORP Board of Directors; provided, however, that any director who was not a director of the IDACORP Board of Directors at the beginning of such period shall be deemed to be an Incumbent Director if the election or nomination for election of such director was approved by the vote of at least two-thirds of the directors of the IDACORP Board of Directors then still in office (i) who were in office at the beginning of the 24-month period or (ii) whose election or nomination for election was so approved, in each case, unless such individual was elected or nominated as a result of an actual or threatened election contest or as a result of an actual or threatened solicitation of proxies or consents by or on behalf of any Exchange Act Person other than the IDACORP Board of Directors.
For avoidance of doubt, transactions for the purpose of dividing the Company's assets into separate distribution, transmission or generation entities or such other entities as IDACORP, Inc. or the Company may determine shall not constitute a Change in Control unless so determined by the IDACORP Board of Directors. For purposes of this definition, the term "Subsidiary" shall mean any corporation of which more than 50% of the outstanding stock having ordinary voting power to elect a majority of the board of directors of such corporation is now or hereafter owned, directly or indirectly, by IDACORP, Inc.
2.6 Change in Control Period. "Change in Control Period" shall mean the period beginning with a Change in Control, as defined in Section 2.5, and ending 24 months following the consummation of a Change in Control.
2.7 Company. "Company" shall mean the Idaho Power Company, an Idaho corporation, its successors and assigns.
2.8 Compensation Committee. "Compensation Committee" shall mean the Board committee assigned responsibility for administering Executive Compensation.
2.9 Contract of Participation. "Contract of Participation" shall mean an agreement of participation in the Idaho Power Security Plan for Board of Directors between the Participant and the Employer, in the form attached as Appendix A.
2.10 Employer. "Employer" shall mean the Company and any affiliated or subsidiary corporation designated by the Board, or any successors to the business thereof.
2.11 Participant. "Participant" shall mean any individual who is elected to the Board and who has executed a Contract of Participation.
2.12 Plan Anniversary Date. "Plan Anniversary Date" shall mean February 1 of any year.
2.13 Plan Year. "Plan Year" shall mean the calendar year effective November 30, 1994.
2.14 Supplemental Retirement Benefit. "Supplemental Retirement Benefit" shall mean a benefit determined under Article V of this Plan.
2.15 Year of Service. "Year of Service" shall mean each twelve (12) months of service on the Board.
ARTICLE III
PARTICIPATION AND VESTING
3.1 Participation. Effective November 30, 1994, participation in the Plan shall be limited to outside directors who elect to participate in this Plan by executing a Contract of Participation. Inside directors who were Participants on November 30, 1994, shall receive their vested accrued benefit as provided in Section 4.1(b) and Article V.
3.3 Vesting. Participants shall be one hundred percent (100%) immediately vested in their accrued benefit.
ARTICLE IV
SURVIVOR BENEFITS
(a) For all Participants who are first elected to the Board after November 30, 1994, the survivor benefit shall be as follows:
(i) If a Participant's death occurs prior to severance from service on the Board and commencement of the Supplemental Retirement Benefit, the Employer shall pay a survivor benefit to such Participant's Beneficiary as follows:
a) Amount. The pre-termination survivor benefit shall be equal to sixty-six and two-thirds percent (66 2/3%) of the Supplemental Retirement Benefit calculated under Article V. A Participant shall be considered to have a minimum of five (5) Years of Service for purposes of this calculation.
b) Payment. If the Participant is married on the date of death, the benefits shall be paid for the life of the spouse. If the spouse's date of birth is more than ten (10) years after the Participant's date of birth, the monthly benefit shall be reduced to the Actuarial Equivalent of the above benefit, assuming the above benefit is payable to a spouse ten (10) years younger than the Participant. If the Participant is unmarried on the date of death, the benefit shall be paid to the Participant's Beneficiary in a lump sum equal to the value of a death benefit payable to an assumed spouse the same age as the Participant.
(ii) If a Participant's death occurs after termination from service on the Board but prior to commencement of the Supplemental Retirement Benefit, the Employer shall pay a survivor benefit to said Participant's Beneficiary as follows:
a) Amount. The amount of the post termination survivor benefit shall be equal to sixty-six and two-thirds percent (66 2/3%) of the Supplemental Retirement Benefit payable to the Participant.
4
b) Payment. If the Participant is married on the date of death, the benefits shall be paid for the life of the spouse. If the spouse's date of birth is more than ten (10) years after the Participant's date of birth, the monthly benefit shall be reduced to the Actuarial Equivalent of the above benefit, assuming the above benefit is payable to a spouse ten (10) years younger than Participant. If the Participant is unmarried on the date of death, the benefit shall be paid to the Participant's Beneficiary in a lump sum equal to the value of a death benefit payable to an assumed spouse the same age as the Participant.
(iii) Death After Commencement of Benefits. If a Participant dies after commencement of benefits, a survivor benefit will be paid only if, and to the extent provided for, under the form of benefit elected by the Participant.
(b) For all Participants who are first elected to the Board on or prior to November 30, 1994, the survivor benefit shall be as follows:
(i) If a Participant's death occurs prior to commencement of the Supplemental Retirement Benefit, the Participant's Beneficiaries shall receive the death benefit described below unless the Participant's Beneficiary elects to receive the death benefits provided for in Section 4.1(a)(i) in lieu of this benefit. The death benefit will be determined by the Participant's Years of Service, including Years of Service after November 30, 1994, at death as set forth in the schedule below:
YEARS OF
|
MONTHLY
|
ANNUAL
|
1 |
$291.67 |
$3,500 |
2 |
$583.33 |
$7,000 |
3 |
$875.00 |
$10,500 |
4 |
$1,166.67 |
$14,000 |
5 and over |
$1,458.33 |
$17,500 |
The death benefits shall be paid to the Beneficiary in equal monthly installments for the period of one hundred eighty (180) months without interest. Payments shall commence on the tenth day of the month following receipt by the Administrative Committee of proof of Participant's death.
(ii) Death After Commencement of Benefits.
a) A Participant who did not elect to receive the Supplemental Retirement Benefit in the grandfathered form as provided for in Section 5.4, and dies at any time after severance from service on the Board and after the commencement of the Supplemental Retirement Benefit, the Participant's Beneficiary shall receive a survivor benefit to the extent provided for under the form of benefit elected by the Participant.
5
b) A Participant who elected to receive the Supplemental Retirement Benefit in the grandfathered form as provided for in Section 5.4 and dies at any time after severance from service on the Board and after the commencement of the Supplemental Retirement Benefit, the Participant's Beneficiaries shall receive the balance, if any, of the 180-month Supplemental Retirement Benefit. Receipt by the Participant's Beneficiaries of the benefit under this subparagraph shall be in lieu of all other survivor benefits under this Plan.
4.2 Suicide. In the event a Participant commits suicide within one (1) year of initially entering this Plan, no benefits shall be payable hereunder to the Participant's Beneficiaries.
ARTICLE V
RETIREMENT BENEFITS
5.1 Benefit. Upon severance of service on the Board, each Participant shall be entitled to receive, at the time specified in Section 5.3 below, a Supplemental Retirement Benefit, the amount of which will be determined by the Participant's Years of Service on the Plan Anniversary Date immediately preceding or coinciding with his severance date as set forth below:
YEARS OF
|
MONTHLY
|
ANNUAL
|
1 |
$291.67 |
$3,500 |
2 |
$583.33 |
$7,000 |
3 |
$875.00 |
$10,500 |
4 |
$1,166.67 |
$14,000 |
5 and over |
$1,458.33 |
$17,500 |
5.2 Form of Payment. The Supplemental Retirement Benefit shall be paid in the basic form provided below unless the Participant elects in the calendar year prior to retirement or termination an Actuarial Equivalent form of benefit provided in this section. Participants elected to the Board prior to November 30, 1994, may elect a grandfathered form of benefit as provided in Section 5.4 in lieu of any other form of benefit.
(a) Normal Form of Benefit Payment. The normal form of payment shall be a single-life annuity for the lifetime of the Participant.
(b) Actuarial Equivalent Forms of Benefit.
(i) A joint and survivor annuity with payments continued to the survivor at an amount equal to two-thirds (2/3) of the Participant's benefits.
6
(ii) A joint and survivor annuity with payments continued to the survivor at an amount equal to the Participant's benefits.
5.3 Commencement of Benefit Payment.
(a) Outside Directors. The Supplemental Retirement Benefit shall be paid to an outside director Participant commencing on the tenth (10th) day of the month immediately following the later of age sixty-five (65) or severance from service on the Board as an outside director.
(b) Inside Directors. The Supplemental Retirement Benefit shall be paid to an inside director Participant commencing on the tenth (10th) day of the month immediately following severance from service on the Board.
5.4 Grandfathered Form of Benefit. A Participant first elected to the Board prior to November 30, 1994, may elect a grandfathered form of benefit. This grandfathered form of benefit shall be paid in 180 equal monthly installments in an amount set forth in Section 5.1. The election shall be made prior to the Participant's termination.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 Beneficiary Designation. The Primary Beneficiary shall be the Participant's spouse. Each Participant, in the event the Participant's spouse predeceases the Participant or if the Participant is unmarried, shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries (both principal as well as contingent) to whom payment under this Plan shall be made in the event of death prior to complete distribution to Participant of the benefits due Participant under the Plan.
6.2 Amendments, Marital Status, No Participant Designation. Any Beneficiary designation form may be changed by a Participant by the filing of a written form prescribed by the Administrative Committee. The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized divorce or marriage (other than common law) of a Participant subsequent to the date of filing of a Beneficiary designation form shall automatically revoke the prior designation. If a Participant fails to designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage or divorce, without execution of a new designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then Participant's designated Beneficiary shall be deemed to be the person or persons surviving the Participant in the first of the following classes in which there is a survivor, share and share alike:
(a) the Participant's surviving spouse;
(b) the Participant's children, except that if any of the children predecease the Participant but leaves issue surviving, the issue shall take by right of representation;
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(c) the Participant's personal representative (executor or administrator).
ARTICLE VII
TERMINATION, SUSPENSION OR AMENDMENT OF PLAN
7.1 Termination, Suspension or Amendment of Plan. The Board may, in its sole discretion, terminate or suspend this Plan at any time or from time to time, in whole or in part. Either the Board or the Administrative Committee may amend this Plan at any time or from time to time. Any amendment may provide different benefits or amounts of benefits from those herein set forth. However, no such termination, suspension or amendment shall adversely affect the benefits of Participants vested therein prior to such action, the benefits of any Participant who has retired, or the Beneficiary of any Participant who has died.
7.2 Change in Control. Notwithstanding Section 7.1 above, during a Change in Control Period, neither the Board nor the Administrative Committee may terminate this Plan with regard to accrued benefits of current Participants. No amendment may be made to the Plan during a Change in Control Period which would adversely affect the accrued benefits of current Participants, the benefits of any Participant who has retired, or the Beneficiary of any Participant who has died. The Plan shall continue to operate and be effective with regard to all current or retired Participants and their Beneficiaries during any Change in Control Period.
ARTICLE VIII
ADMINISTRATION
8.1 Administrative Committee; Duties. This Plan shall be administered by an Administrative Committee which shall consist of not less than three (3) nor more than five (5) persons appointed by the Compensation Committee. Members of the Administrative Committee may be Participants under this Plan. The Administrative Committee shall have the authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan. A majority vote of the Administrative Committee members shall control any decision.
In the administration of this Plan, the Administrative Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit and may from time to time consult with counsel who may be counsel to the Employer. Subject to Article IX, the decision or action of the Administrative Committee in respect of any questions arising out of, or in connection with, the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.
8.2 Indemnity of Administrative Committee. To the extent permitted by applicable law, the Employer shall indemnify, hold harmless and defend the Administrative Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan, provided that the Administrative Committee was acting in accordance with the applicable standard of care. The indemnity provisions set forth in this Article shall not be deemed to restrict or diminish in any way any other indemnity available to the Administrative Committee members in accordance with the Article or By-laws of the Company.
ARTICLE IX
CLAIMS PROCEDURE
9.2 Denial of Claim. If the claim or request is denied, the written notice of denial shall state:
(a) the reason for denial, with specific reference to the Plan provisions on which the denial is based;
(b) a description of any additional material or information required and an explanation of why it is necessary; and
(c) an explanation of the Plan's claim review procedure.
9.3 Review of Claim. Any person whose claim or request is denied or who has not received a response within thirty (30) days may request review by notice given in writing to the Administrative Committee. The claim or request shall be reviewed by the Administrative Committee who may, but shall not be required to, grant the claimant a hearing. On review, the claimant may have representation, examine pertinent documents, and submit issues and comments in writing.
9.4 Final Decision. The decision on review shall normally be made within sixty (60) days. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified, and the time limit shall be one hundred twenty (120) days. The decision shall be in writing and shall state the reason and the relevant Plan provisions. All decisions on review shall be final and bind all parties concerned.
ARTICLE X
MISCELLANEOUS
10.1 Unfunded Plan. This Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of "management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and therefore to be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
10.2 Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or asset of the Employer, nor shall they be Beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Employer. Except as may be provided in Section 10.3, such policies, annuity contracts or other assets of the Employer shall not be held under any trust for the benefit of Participants, their Beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the fulfilling of the obligation of the Employer under this Plan. Any and all of the Employer's assets and policies shall be, and remain, the general, unpledged, unrestricted assets of the Employer. The Employer's obligation under the Plan shall be that of an unfunded and unsecured promise to pay money in the future.
10.3 Trust Fund. The Employer shall be responsible for the payment of all benefits provided under the Plan. At its discretion, the Employer may establish one or more trusts, with such trustees as the Board may approve, for the purpose of providing for the payment of such benefits. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Employer's creditors. To the extent any benefits provided under the Plan are actually paid from any such trust, the Employer shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Employer.
10.4 Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amount payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of Participant's or any other person's bankruptcy or insolvency.
10.5 Governing Law. The provisions of this Plan shall be construed, interpreted and governed in all respects in accordance with the applicable federal law and, to the extent not preempted by such federal law, in accordance with the laws of the State of Idaho without regard to the principles of conflicts of laws.
10.6 Validity. If any provision of this Plan shall be held illegal or invalid for any reason, the remaining provisions shall nevertheless continue in full force and effect without being impaired or invalidated in any way.
10.7 Notice. Any notice or filing required or permitted to be given under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail or fax. The notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
10.8 Successors. Subject to Section 7.1, the provisions of the Plan shall bind and inure to the benefit of the Employer and its successors and assigns. The term successors as used herein shall include any corporation or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Employer, and successors of any such corporation or other business entity.
10.9 Payment to Guardian. If a Plan benefit is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of property, the Administrative Committee may direct payment of such Plan benefit to the guardian, legal representative or person having the care and custody of the minor, incompetent or person. The Administrative Committee may require proof of incompetency, minority, incapacity or guardianship, as it may deem appropriate, prior to distribution of the Plan benefit. The distribution shall completely discharge the Administrative Committee and the Employer from all liability with respect to such benefit.
10.10 Accelerated Distribution. Notwithstanding any other provision of the Plan, a Participant shall be entitled to receive, upon written request to the Administrative Committee, a lump sum distribution equal to ninety percent (90%) of the Actuarial Equivalent vested accrued Security Plan Retirement Benefit, as of the date thirty (30) days after notice is given to the Administrative Committee. The remaining balance of ten percent (10%) shall be forfeited by the Participant. The amount payable under this section shall be paid in a lump sum with ten (10) days following the thirty (30) day period outlined above. If a Participant requests and obtains an accelerated distribution under this Section 10.10 and remains employed by the Company, participation will cease and there will be no future benefit accruals under this Plan. Following the death of a Participant, the Beneficiary may, at any time, request an accelerated distribution under this section. If the deceased Participant named multiple Beneficiaries, then all named Beneficiaries must consent to a request and accelerated distribution. The benefit payable to the Beneficiary shall be equal to ninety percent (90%) of the Actuarial Equivalent of the security Plan Retirement Benefit payable to the Beneficiary. Payment of an accelerated distribution pursuant to this Section 10.10 shall completely discharge the Employer's obligation to the Participant and any Beneficiaries under this Plan.
IDAHO POWER COMPANY
____________________________________ Chairman
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APPENDIX A
CONTRACT OF PARTICIPATION IN THE
IDAHO POWER COMPANY SECURITY PLAN
FOR BOARD OF DIRECTORS
NAME OF PARTICIPANT:
DATE OF BIRTH:
SECURITY PLAN ENTRY DATE:
BENEFICIARY:
This Agreement is made and entered into as of the date written below by and between Idaho Power Company and the Participant. This Agreement is subject to all of the terms of the Idaho Power Company Security Plan for Board of Directors, as amended and restated July 20, 2006 (The "Plan").
By signing this agreement, Participant acknowledges receipt of a copy of the Plan document.
PARTICIPANT IDAHO POWER COMPANY
BY: PARTICIPANT BY: CHAIRMAN
DATE: DATE:
Exhibit 10(h)(x)
CHANGE IN CONTROL AGREEMENT
BETWEEN IDACORP, INC.
AND
______________________
THIS AGREEMENT, is by and between IDACORP, Inc., an Idaho corporation (the "Corporation") and __________________ (the "Executive") and is effective on the date established pursuant to Section 15 of this Agreement (the "Effective Date").
W I T N E S S E T H:
WHEREAS, the Executive is a valuable employee of the Corporation or a Subsidiary of the Corporation, an integral part of its management, and a key participant in the decision-making process relative to short-term and long-term planning and policy for the Corporation; and
WHEREAS, the Corporation wishes to encourage the Executive to continue his career and services with the Corporation or a Subsidiary, as the case may be, following a Change in Control; and
WHEREAS, the Board has determined that it would be in the best interests of the Corporation and its shareholders to assure continuity in the management of the Corporation's, including Subsidiaries', administration and operations in the event of a Change in Control by entering into this Agreement with the Executive;
NOW THEREFORE, it is hereby agreed by and between the parties hereto as follows:
1. Definitions.
a. "Board" shall mean the Board of Directors of the Corporation.
b. "Cause" shall mean the Executive's fraud or dishonesty which has resulted or is likely to result in material economic damage to the Corporation or a Subsidiary of the Corporation, as determined in good faith by a vote of at least two-thirds of the non-employee directors of the Corporation at a meeting of the Board at which the Executive is provided an opportunity to be heard.
c. "Change in Control" shall mean:
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(i) any person (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "1934 Act") and as used in Section 13(d) of the 1934 Act), excluding (A) the Corporation or any Subsidiary, (B) a corporation or other entity owned, directly or indirectly, by the stockholders of the Corporation immediately prior to the transaction in substantially the same proportions as their ownership of stock of the Corporation, (C) an employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary or (D) an underwriter temporarily holding securities pursuant to an offering of such securities ("Person")) is the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Corporation;
(ii) any Person has commenced a tender or exchange offer to acquire any stock of the Corporation (or securities convertible into stock) for cash, securities or any other consideration provided that, after the closing of the offer with full shareholder subscription, such Person would be the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation (calculated as provided in Paragraph (d) of Rule 13d-3 under the 1934 Act in the case of rights to acquire stock);
(iii) all required shareholder approvals have been obtained for a merger, consolidation, reorganization or share exchange, or sale of all or substantially all of the assets, of the Corporation or Idaho Power Company (a "Qualifying Transaction"), unless, immediately following such Qualifying Transaction, all of the following have occurred: (A) all or substantially all of the beneficial owners of the Corporation immediately prior to such Qualifying Transaction will beneficially own in substantially the same proportions, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Qualifying Transaction (including, without limitation, a corporation or other entity which, as a result of such transaction, owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) (as the case may be, the "Successor Entity"), (B) no Person will be the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Successor Entity and (C) at least a majority of the members of the board of directors of the Successor Entity will be Incumbent Directors;
(iv) shareholder approval of a complete liquidation or dissolution of the Corporation or Idaho Power Company; or
(v) within a 24-month period, individuals who were directors of the Board immediately before such period ("Incumbent Directors") cease to constitute at least a majority of the directors of the Board; provided, however, that any director who was not a director of the Board at the beginning of such period shall be deemed to be an Incumbent Director if the election or nomination for election of such director was approved by the vote of at least two-thirds of the directors of the Board then still in office (A) who were in office at the beginning of the 24-month period or (B) whose election or nomination for election was so approved, in each case, unless such individual was elected or nominated as a result of an actual or threatened election contest or as a result of an actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board; or
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(vi) consummation of any transaction described in Section 1(c)(iii) or 1(c)(iv) if such transaction was not approved by shareholders.
For avoidance of doubt, transactions for the purpose of dividing Idaho Power Company's assets into separate distribution, transmission or generation entities or such other entities as the Corporation or Idaho Power Company may determine shall not constitute a Change in Control unless so determined by the Board.
Upon the Board's determination that (x) a tender offer that constituted a Change in Control under Section 1(c)(ii) will not result in a Person becoming the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation or (y) the Qualifying Transaction described in Section 1(c)(iii) will not be closed or (z) a complete liquidation or dissolution of the Corporation or Idaho Power Company that was approved by shareholders, as described in Section 1(c)(iv), will not occur, a Change in Control shall be deemed not to have occurred from such date of determination forward, and this Agreement shall continue in effect as if no Change in Control had occurred except to the extent termination requiring payments under this Agreement occurs prior to such Board determination.
d. "Compensation" shall mean the sum of (i) the Executive's annual base salary at the time of termination and (ii) the Executive's target annual bonus in the year of termination (or, if as of the date of termination no target annual bonus has yet been determined for the year of termination, the target annual bonus for the prior year).
e. "Constructive Discharge" shall mean any of the following:
(i) any material failure by the Corporation to comply with any of the provisions of this Agreement;
(ii) the Corporation or a Subsidiary of the Corporation requiring the Executive to be based at any office or location more than 50 miles from the location at which the Executive was based on the day prior to the Change in Control;
(iii) a reduction which is more than de minimis in (A) the Executive's annual rate of base salary or maximum annual bonus opportunity, (B) the long-term incentive compensation the Executive has the opportunity to earn, determined in the aggregate if multiple long-term incentive opportunities exist or (C) the combined annual benefit accrual rate under the Corporation's qualified defined benefit pension plan and/or the Idaho Power Company Security Plan for Senior Management Employees, as in effect immediately prior to the Change in Control (except if such reduction is a part of a reduction for all executive officers);
(iv) the Corporation's failure to require a successor entity to assume and agree to perform the Corporation's obligations pursuant to Section 9; or
(v) a reduction which is more than de minimis in the long term disability and life insurance coverage provided to the Executive under the Corporation's life insurance and long term disability plans as in effect immediately prior to the Change in Control.
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No such event described hereunder shall constitute Constructive Discharge unless the Executive has given written notice to the Corporation specifying the event relied upon for such termination within one year after the occurrence of such event (but in no event later than the Ending Date) and the Corporation has not remedied such within 30 days of receipt of such notice. The Corporation and Executive, upon mutual written agreement, may waive any of the foregoing provisions which would otherwise constitute a Constructive Discharge.
f. "Coverage Period" shall begin on the Starting Date and end on the Ending Date.
g. "Disability" shall mean an injury or illness which permanently prevents the Executive from performing services to the Corporation and which qualifies the Executive for payments under the Corporation's long term disability plan, which for purposes of this Agreement shall be the Idaho Power Company Long Term Disability Plan.
h. "Ending Date" shall be the date which is 36 full calendar months following the date on which a Change in Control occurs or if the Change in Control is shareholder approval pursuant to Section 1(c)(iii) or 1(c)(iv), the date which is 36 months following the consummation of the transaction subject to such shareholder approval.
i. "Starting Date" shall be the date on which a Change in Control occurs.
j. "Subsidiary" means any corporation of which more than 50% of the outstanding stock having ordinary voting power to elect a majority of the board of directors of such corporation is now or hereafter owned, directly or indirectly, by the Corporation.
2. Term.
This Agreement shall be effective as of the Starting Date and shall continue thereafter until the 36 month anniversary of the later of (i) such date or (ii) if the Change in Control causing the Agreement to be effective is shareholder approval pursuant to Section 1(c)(iii) or 1(c)(iv), the date of the consummation of the transaction subject to such shareholder approval; provided, however, the Corporation's obligations, if any, to provide payments and/or benefits pursuant to Section 3 of this Agreement and the obligations of the Corporation and the Executive under Section 5 of this Agreement shall survive the termination of this Agreement.
3. Severance Benefits.
a. If the Executive's employment with the Corporation and all Subsidiaries is terminated by the Corporation or a Subsidiary for any reason other than Cause, death, or Disability (for avoidance of doubt, transfer of employment between or among the Corporation and any of its Subsidiaries shall not constitute a termination of employment by the Corporation or a Subsidiary for purposes of this Agreement), or by the Executive in the event of a Constructive Discharge, in either case at any time during the Coverage Period, then,
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(i) within five business days after such termination, the Corporation shall pay or cause to be paid to the Executive (or if the Executive dies after termination of employment but before receiving all payments to which he has become entitled hereunder, to the estate of the Executive) the following amounts:
(A) accrued but unpaid salary and accrued but unused vacation and sick time in accordance with the Corporation's or a Subsidiary's, as the case may be, Flexible Time Off or similar program, as may be amended from time to time; and
(B) a lump sum cash amount equal to two and one-half times the Executive's Compensation; and
(ii) the Executive shall be entitled to the following additional severance benefits:
(A) notwithstanding anything in any other award notice or agreement providing otherwise, as applicable, (1) all of the Executive's outstanding stock options and stock appreciation rights shall become immediately vested and exercisable; (2) all of the Executive's outstanding shares of restricted stock and restricted stock units shall become immediately vested in full (at target levels for any performance-based restricted stock or restricted stock units); and (3) the target payout opportunity under all of the Executive's outstanding performance units or performance shares (or other similar awards with performance-based vesting) shall become immediately vested at target levels;
(B) outplacement services commencing within 12 months of the Starting Date and extending for a period of not more than 12 months, the scope and provider of which shall be selected by the Executive in his sole discretion (but at a total cost to the Corporation of not more than $12,000); and
(C) for a period commencing with the month in which termination of employment shall have occurred and ending 24 months thereafter, the Executive and, as applicable, the Executive's covered dependents shall be entitled to all benefits under the Corporation's welfare benefit plans (within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended), as if the Executive were still employed during such period, at the same level of benefits and at the same dollar cost to the Executive as is available to all of the Corporation's senior executives generally. If and to the extent that equivalent benefits shall not be payable or provided under any such plan, the Corporation shall pay or provide (or cause to be paid or provided) equivalent benefits on an individual basis. The benefits provided in accordance with this Section 3(a)(ii)(C) shall be secondary to any comparable benefits provided by another employer.
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b. Notwithstanding anything to the contrary contained in this Agreement, if the Executive voluntarily terminates employment for any reason (unless, prior to such termination, the Corporation has given notice to the Executive that it intends to terminate the Executive's employment for Cause) in the first full calendar month following the one year anniversary of the Change in Control (provided, that, (i) in the case of a Change in Control under Section 1(c)(ii), the one year anniversary shall be the first anniversary of the date the tender offer is completed, provided the tender offer has resulted in a Person becoming the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation and (ii) in the case of a Change in Control under Section 1(c)(iii) or 1(c)(iv), the one year anniversary shall be the first anniversary of the date of the consummation of the transaction or event constituting the Change in Control), the Corporation shall pay (or cause to be paid) to the Executive (or the Executive's estate upon death) the amounts and provide to the Executive the benefits provided under Section 3(a); provided, however, the lump sum amount calculated under Section 3(a)(i)(B) shall be multiplied by 2/3, and the welfare benefits provided pursuant to Section 3(a)(ii)(C) shall continue for 18 months rather than 24 months.
c. (i) If Independent Tax Counsel (as that term is defined below) determines that the aggregate payments and benefits provided or to be provided to the Executive pursuant to this Agreement, and any other payments and benefits provided or to be provided to the Executive from the Corporation or any of its Subsidiaries or other affiliates or any successors thereto constitute "parachute payments" as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") (or any successor provision thereto) ("Parachute Payments") that would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), and if the amount of the Parachute Payments in excess of 300% of the Executive's "base amount" (as defined in Section 280G of the Code, the "Base Amount") is greater than 15% of the total value of the Parachute Payments, then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount (determined by Independent Tax Counsel) such that after payment by the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment and any interest or penalties imposed with respect to such taxes (except to the extent such interest or penalty results from the Executive's failure to act in accordance with the Corporation's or a Subsidiary's reasonable directions or the Executive's failure to exercise due care), the Executive retains from the Gross-Up Payment an amount equal to the Excise Tax imposed upon the Parachute Payments. If it is later determined that the Independent Tax Counsel's estimates of the Excise Tax owed by the Executive are less than the amount actually owed by the Executive, then, subject to the Corporation's right to contest the payment of the Excise Tax pursuant to Section 3(c)(iii), the Independent Tax Counsel shall determine the amount of the additional gross-up payment required with respect to the additional Excise Tax ("Gross-Up Underpayment"), and any such Gross-Up Underpayment shall be promptly paid by the Corporation to or for the benefit of the Executive. For purposes of this Section 3(c), "Independent Tax Counsel" shall mean a lawyer, a certified public accountant with a nationally recognized accounting firm, or a compensation consultant with a nationally recognized actuarial and benefits consulting firm with expertise in the area of executive compensation tax law, who shall be selected by the Corporation and shall be acceptable to the Executive (the Executive's acceptance not to be unreasonably withheld), and whose fees and disbursements shall be paid by the Corporation.
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(ii) If Independent Tax Counsel determines that no Excise Tax is payable by the Executive, the Corporation shall so notify the Executive in writing. If, after such a determination, the Executive is subsequently required to make a payment of any Excise Tax with respect to the Parachute Payments , then the Independent Tax Counsel shall determine the amount of such Excise Tax and the required Gross-Up Payment attributable thereto, and any such Gross-Up Payment shall be promptly paid by the Corporation to or for the benefit of the Executive .
(iii) The Executive shall notify the Corporation in writing within 30 days of any claim by the Internal Revenue Service that, if successful, would require the payment by the Executive of an Excise Tax. Except as otherwise provided in Section 3(c)(v), upon receipt of such notice, the Corporation shall, in its sole discretion, either contest such claim or provide the Executive with a Gross-Up Payment intended to reimburse the Executive for any such Excise Tax and all taxes (including any Excise Tax) imposed upon the Gross-Up Payment and any interest or penalties imposed with respect to such taxes (except to the extent such interest or penalty results from the Executive's failure to act in accordance with the Corporation's or a Subsidiary's reasonable directions or the Executive's failure to exercise due care) . If the Corporation notifies the Executive in writing that it desires to contest such claim and that it will bear the costs and provide the indemnification as required by this sentence, the Executive shall:
(A) give the Corporation any information reasonably requested by the Corporation relating to such claim,
(B) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation,
(C) cooperate with the Corporation in good faith in order to effectively contest the claim, and
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(D) permit the Corporation to participate in any proceedings relating to the claim; provided, however, that the Corporation shall pay (or cause to be paid) directly all costs and expenses (including any interest and penalties, except to the extent such interest or penalty results from the Executive's failure to act in accordance with the Corporation's or a Subsidiary's reasonable directions or the Executive's failure to exercise due care) incurred in connection with the contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income or other tax, including interest and penalties with respect thereto (except to the extent such interest or penalty results from the Executive's failure to act in accordance with the Corporation's or a Subsidiary's reasonable directions or the Executive's failure to exercise due care), imposed as a result of such representation and payment of costs and expenses. The Corporation shall control all proceedings taken in connection with such contest; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall, unless prohibited by law, advance (or cause to be advanced) the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income or other tax, including interest or penalties with respect thereto (except to the extent such interest or penalty results from the Executive's failure to act in accordance with the Corporation's or a Subsidiary's reasonable directions or the Executive's failure to exercise due care), imposed with respect to such advance or with respect to any imputed income with respect to such advance. If the advancement described in the preceding sentence is prohibited by law, the Corporation and the Executive shall cooperate in an effort to determine an alternative approach to payment of the claim in a manner permitted by applicable law and consistent with original intent and economic benefit to the Executive of this provision.
(iv) If, after the receipt by the Executive of a Gross-Up Payment or a Gross-Up Underpayment pursuant to Section 3(c)(i) or 3(c)(ii), or after receipt by the Executive of an amount advanced by the Corporation pursuant to Section 3(c)(iii), it is determined that the amount of the Excise Tax owed by the Executive is less than the amount previously determined by the Independent Tax Counsel upon which the Gross-up Payment or the Gross-Up Underpayment was determined, or if the Executive becomes entitled to receive a refund with respect to a payment by the Corporation with respect to a claim by the Internal Revenue Service related to the Excise Tax, the Executive shall, within 10 days after such determination of overpayment or receipt of such refund, pay to the Corporation the amount of such overpayment or refund, together with any interest paid or credited thereon after taxes applicable thereto and any Gross-Up Payment or Gross-Up Underpayment based upon the overpayment.
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(v) If Independent Tax Counsel shall make a determination that Parachute Payments would be subject to the Excise Tax, but the amount of Parachute Payments in excess of 300% of the Executive's Base Amount is not greater than 15% of the total value of the Parachute Payments, then the Parachute Payments provided under this Agreement shall be reduced to the extent the Independent Tax Counsel shall determine is necessary (but not below zero) so that no portion thereof shall be subject to the Excise Tax. The determination of Independent Tax Counsel under this Section 3(c)(v) shall be final and binding on all parties hereto. The determination of which payments or benefits shall be reduced to avoid the Excise Tax shall be determined in the sole discretion of the Corporation; provided, however, that unless the Executive gives written notice specifying a different order to the Corporation to effectuate the limitations described above, the Corporation shall first reduce or eliminate, as the case may be, those payments or benefits that will cause a dollar-for-dollar reduction in total Parachute Payments, and then by reducing or eliminating other Parachute Payments, to the extent possible, in reverse order beginning with payments or benefits that are to be paid the farthest in time from the date the reduction or elimination is to be made. Any notice given by the Executive pursuant to the preceding sentence, unless prohibited by law, shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive's rights and entitlement to any benefits or compensation. If, after a reduction pursuant to this Section 3(c)(v), the Executive receives a claim by the Internal Revenue Service that, if successful, would require the payment by the Executive of an Excise Tax with respect to Parachute Payments, the Executive shall notify the Corporation in writing within 30 days of such claim and a further reduction of Parachute Payments shall be made pursuant to this Section 3(v) if (i) such reduction is possible and would prevent the Executive from incurring an Excise Tax and (ii) after such reduction, the aggregate amount of Parachute Payments reduced pursuant to this Section 3(c)(v) would not exceed 15% of the total value of the Parachute Payments. If such a reduction is not possible, would not prevent the Executive from incurring an Excise Tax or would cause the aggregate Parachute Payments reduced pursuant to this Section 3(c)(v) to exceed 15% of the total value of the Parachute Payments, then Section 3(c)(iii) shall be applicable and the Corporation shall, in its sole discretion, either contest such claim or provide the Executive with a Gross-Up Payment intended to reimburse the Executive for any such Excise Tax and all taxes (including any Excise Tax) imposed upon the Gross-Up Payment and any interest or penalties imposed with respect to such taxes (except to the extent such interest or penalty results from the Executive's failure to act in accordance with the Corporation's or a Subsidiary's reasonable directions or the Executive's failure to exercise due care). Except as contemplated by the preceding two sentences, no additional payments by the Corporation or return of payments by the Executive shall be required or made if a later determination based on case law, an IRS holding or otherwise would result in a recalculation of the Excise Tax implications.
(vi) Notwithstanding anything herein to the contrary, this Section 3(c) shall be interpreted (and, if determined by the Corporation to be necessary, reformed) to the extent necessary to fully comply with the Sarbanes-Oxley Act and Section 409A of the Code; provided that the Corporation agrees to maintain, to the maximum extent practicable, the original intent and economic benefit to the Executive of the applicable provision without violating the provisions of the Sarbanes-Oxley Act and Code Section 409A.
d. In the event of any termination of the Executive's employment described in Section 3(a) or Section 3(b), the Executive shall be under no obligation to seek other employment, and there shall be no offset against amounts due the Executive under this Agreement on account of any remuneration attributable to any subsequent employment; provided, however, to the extent the Executive receives medical and health benefits from a subsequent employer, medical and health benefits provided pursuant to Section 3(a)(ii)(C) shall be secondary to those received from the subsequent employer.
e. It is intended that the payments and benefits provided under this Agreement are in lieu of, and not in addition to, severance payments and benefits provided under any severance, change in control or similar plan or policy of the Corporation or a Subsidiary or under any other severance, change in control or similar agreements with the Corporation or any Subsidiary, whether written or oral ("Other Severance Benefits"). Unless waived by the Executive, Other Severance Benefits the Executive receives, or will receive in the future, shall reduce payments and benefits provided hereunder.
4. Nature of Obligation.
The Corporation shall not be required to establish a special or separate fund or other segregation of assets to assure payments under this Agreement, and, if the Corporation shall make any investments to aid it in meeting its obligations hereunder, the Executive shall have no right, title or interest in or to any such investments except as may otherwise be expressly provided in a separate written instrument relating to such investments. Nothing contained in this Agreement, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Corporation and the Executive or any other person. To the extent that any person acquires a right to receive payments under this Agreement such right shall be no greater than the right of an unsecured creditor.
5. Full Settlement; Litigation Expenses; Arbitration.
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a. Except as provided below, the Corporation's obligation to make or cause to be made the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Corporation or a Subsidiary may have against the Executive or others. The Corporation agrees to pay, upon written demand therefor by the Executive, all legal fees and expenses the Executive reasonably incurs as a result of any dispute or contest (regardless of the outcome thereof) by or with the Corporation or others regarding the validity or enforceability of, or liability under, any provision of this Agreement, plus in each case, interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code. Notwithstanding the foregoing, the Executive agrees to repay to the Corporation any such fees and expenses paid or advanced by the Corporation if and to the extent that the Corporation or such others obtains a judgment or determination that the Executive's claim was frivolous or was without merit from the arbitrator or a court of competent jurisdiction from which no appeal may be taken, whether because the time to do so has expired or otherwise. Notwithstanding any provision hereof or in any other agreement, the Corporation may offset any other obligation it has to the Executive by the amount of such repayment. In any such action brought by the Executive for damages or to enforce any provisions of this Agreement, he shall be entitled to seek both legal and equitable relief and remedies, including, without limitation, specific performance of the Corporation's obligations hereunder, in his sole discretion.
b. In the event of any dispute or difference between the Corporation and the Executive with respect to the subject matter of this Agreement and the enforcement of rights hereunder, either the Executive or the Corporation may, by written notice to the other, require such dispute or difference to be submitted to arbitration. The arbitrator or arbitrators shall be selected by agreement of the parties or, if they cannot agree on an arbitrator or arbitrators within 30 days after the Executive has notified the Corporation of his desire to have the question settled by arbitration, then the arbitrator or arbitrators shall be selected by the American Arbitration Association (the "AAA") upon the application of the Executive. The determination reached or award rendered in such arbitration shall be final and binding on both parties without any right of appeal or further dispute, subject to the applicable state or federal laws relating to arbitration determinations or awards. Enforcement of an arbitration award by such arbitrator may be sought in any court of competent jurisdiction. The arbitrators shall not be bound by judicial formalities and may abstain from following the strict rules of evidence and shall interpret this Agreement as an honorable engagement and not merely as a legal obligation. Unless otherwise agreed by the parties, any such arbitration shall take place in Boise, Idaho, and shall be conducted in accordance with the Rules of the AAA. The Executive's expenses for such proceeding shall be paid, or repaid to the Corporation as the case may be, as provided in subsection (a) of this Section 5.
6. Tax Withholding.
The Corporation may withhold from any payments made under this Agreement all federal, state or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
7. Entire Understanding.
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This Agreement contains the entire understanding between the Corporation and the Executive with respect to the subject matter hereof and supersedes any prior severance, change in control or similar agreement between the Corporation and the Executive (including, without limitation, the Change in Control Agreement by and between the Corporation and the Executive, which was executed by the Executive on ____________, _____); provided, however, that, except as otherwise provided in this Section 7 and in Sections 3(c) and 3(e), this Agreement shall not affect or operate to reduce any benefit or compensation inuring to the Executive of any kind elsewhere provided.
8. Severability.
If, for any reason, any one or more of the provisions or part of a provision contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement not held so invalid, illegal or unenforceable, and each other provision or part of a provision shall to the full extent consistent with law continue in full force and effect.
9. Consolidation, Merger, or Sale of Assets.
If the Corporation consolidates or merges into or with, or transfers all or substantially all of its assets to, another entity the term "Corporation" as used herein shall mean such other entity and this Agreement shall continue in full force and effect. In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Agreement, the Corporation shall require such successor expressly and unconditionally to assume and agree to perform the Corporation's obligations under this Agreement, in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.
10. Notices.
All notices, requests, demands and other communications required or permitted hereunder shall be given in writing and shall be deemed to have been duly given if delivered or mailed, postage prepaid, first class as follows:
to the Corporation:
IDACORP, Inc.
Attention: General Counsel
P.O. Box 70
Boise, Idaho 83707
to the Executive:
At the address (or to the facsimile number) last shown on the records of the Corporation.
or to such other address as either party shall have previously specified in writing to the other.
11. No Attachment.
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Except as required by law, no right by the Executive or his estate to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.
12. Binding Agreement.
This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and the Corporation and their respective permitted successors and assigns.
13. Modification and Waiver.
Prior to the date of a Change in Control or, if earlier, the date of a public announcement of a transaction or event which if consummated would be a Change in Control ("Pre-Change in Control Event"), this Agreement may be terminated, modified or amended by action of a majority of the members of the Board. After a Change in Control or Pre-Change in Control Event, this Agreement may not be terminated, modified or amended except by an instrument in writing signed by the parties hereto. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument signed by the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
14. Headings of No Effect.
The section headings contained in this Agreement are included solely for convenience of reference and shall not in any way affect the meaning or interpretation of any of the provisions of this Agreement.
15. Effective Date and Executive Acknowledgments.
This Agreement shall become effective on the Starting Date. The Executive acknowledges that he has read and understands the provisions of this Agreement. The Executive further acknowledges that he has been given an opportunity for his legal counsel to review this Agreement and that the provisions of this Agreement are reasonable and that he has received a copy of this Agreement.
16. Not Compensation for Other Plans.
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Except for amounts paid pursuant to Section 3(a)(i)(A) that are considered compensation, earnings or wages for purposes of any employee benefit plan of the Corporation or its Subsidiaries, it is understood by all parties hereto that amounts paid and benefits provided hereunder are not to be considered compensation, earnings or wages for purpose of any employee benefit plan of the Corporation or its Subsidiaries, including, but not limited to, the qualified retirement plan or the Idaho Power Company Security Plan.
17. Release.
Notwithstanding any provision herein to the contrary, the Corporation shall not have any obligation to pay (or cause to be paid) any amount or provide any benefit under this Agreement unless and until the Executive executes a release of the Corporation, its Subsidiaries and other affiliates and related parties, in such form as the Corporation may reasonably request, of all claims against the Corporation, its Subsidiaries and other affiliates and related parties relating to the Executive's employment and termination thereof and unless and until any revocation period applicable to such release has expired.
18. Governing Law.
This Agreement and its validity, interpretation, performance, and enforcement shall be governed by the laws of Idaho .
19. Code Section 409A.
a. If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, the Corporation shall, after consulting with the Executive, reform such provision to comply with Code Section 409A; provided that the Corporation agrees to make only such changes as are necessary to bring such provisions into compliance with Code Section 409A and to maintain, to the maximum extent practicable, the original intent and economic benefit to the Executive of the applicable provision without violating the provisions of Code Section 409A.
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b. Notwithstanding any provision to the contrary in this Agreement, if the Executive is deemed on the date of termination of employment to be a "specified employee" within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is required to be delayed in compliance with Section 409A(a)(2)(B) such payment or benefit shall not be made or provided (subject to the last sentence hereof) prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of the Executive's "separation from service" (as such term is defined in Treasury Regulations issued under Code Section 409A) or (ii) the date of his death (the "Deferral Period"). Upon the expiration of the Deferral Period, all payments and benefits deferred pursuant to this Section 19 (whether they would have otherwise been payable in a single sum or in installments in the absence of such deferral) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein . Notwithstanding the foregoing, to the extent that the foregoing applies to the provision of any ongoing welfare benefits to the Executive that would not be required to be delayed if the premiums therefor were paid by the Executive, the Executive shall pay the full cost of premiums for such welfare benefits during the Deferral Period and the Corporation shall pay (or cause to be paid) to the Executive an amount equal to the amount of such premiums paid by the Executive during the Deferral Period promptly after its conclusion.
IN WITNESS WHEREOF, the Corporation and the Executive both intending to be legally bound have duly executed and delivered this Agreement, to be effective as of the date set forth in Section 15.
IDACORP, INC.
By:__________________________
Its
Date: ________________________
EXECUTIVE
_____________________________
Date: _______________________
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Exhibit 10(h)(xi)
CHANGE IN CONTROL AGREEMENT
BETWEEN IDACORP, INC.
AND
______________________
THIS AGREEMENT, is by and between IDACORP, Inc., an Idaho corporation (the "Corporation") and __________________ (the "Executive") and is effective on the date established pursuant to Section 15 of this Agreement (the "Effective Date").
W I T N E S S E T H:
WHEREAS, the Executive is a valuable employee of the Corporation or a Subsidiary of the Corporation, an integral part of its management, and a key participant in the decision-making process relative to short-term and long-term planning and policy for the Corporation; and
WHEREAS, the Corporation wishes to encourage the Executive to continue his career and services with the Corporation or a Subsidiary, as the case may be, following a Change in Control; and
WHEREAS, the Board has determined that it would be in the best interests of the Corporation and its shareholders to assure continuity in the management of the Corporation's, including Subsidiaries', administration and operations in the event of a Change in Control by entering into this Agreement with the Executive;
NOW THEREFORE, it is hereby agreed by and between the parties hereto as follows:
1.
Definitions.
a.
"Board" shall mean the Board of Directors of the
Corporation.
b. "Cause" shall mean the Executive's fraud or dishonesty which has resulted or is likely to result in material economic damage to the Corporation or a Subsidiary of the Corporation, as determined in good faith by a vote of at least two-thirds of the non-employee directors of the Corporation at a meeting of the Board at which the Executive is provided an opportunity to be heard.
c. "Change in Control" shall mean:
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(i) any person (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "1934 Act") and as used in Section 13(d) of the 1934 Act), excluding (A) the Corporation or any Subsidiary, (B) a corporation or other entity owned, directly or indirectly, by the stockholders of the Corporation immediately prior to the transaction in substantially the same proportions as their ownership of stock of the Corporation, (C) an employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary or (D) an underwriter temporarily holding securities pursuant to an offering of such securities ("Person")) is the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Corporation;
(ii) any Person has commenced a tender or exchange offer to acquire any stock of the Corporation (or securities convertible into stock) for cash, securities or any other consideration provided that, after the closing of the offer with full shareholder subscription, such Person would be the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation (calculated as provided in Paragraph (d) of Rule 13d-3 under the 1934 Act in the case of rights to acquire stock);
( iii) all required shareholder approvals have been obtained for a merger, consolidation, reorganization or share exchange, or sale of all or substantially all of the assets, of the Corporation or Idaho Power Company (a "Qualifying Transaction"), unless, immediately following such Qualifying Transaction, all of the following have occurred: (A) all or substantially all of the beneficial owners of the Corporation immediately prior to such Qualifying Transaction will beneficially own in substantially the same proportions, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Qualifying Transaction (including, without limitation, a corporation or other entity which, as a result of such transaction, owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) (as the case may be, the "Successor Entity"), (B) no Person will be the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Successor Entity and (C) at least a majority of the members of the board of directors of the Successor Entity will be Incumbent Directors;
( iv) shareholder approval of a complete liquidation or dissolution of the Corporation or Idaho Power Company; or
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( v) within a 24-month period, individuals who were directors of the Board immediately before such period ("Incumbent Directors") cease to constitute at least a majority of the directors of the Board; provided, however, that any director who was not a director of the Board at the beginning of such period shall be deemed to be an Incumbent Director if the election or nomination for election of such director was approved by the vote of at least two-thirds of the directors of the Board then still in office (A) who were in office at the beginning of the 24-month period or (B) whose election or nomination for election was so approved, in each case, unless such individual was elected or nominated as a result of an actual or threatened election contest or as a result of an actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board; or
(vi) consummation of any transaction described in Section 1(c)(iii) or 1(c)(iv) if such transaction was not approved by shareholders.
For avoidance of doubt, transactions for the purpose of dividing Idaho Power Company's assets into separate distribution, transmission or generation entities or such other entities as the Corporation or Idaho Power Company may determine shall not constitute a Change in Control unless so determined by the Board.
Upon the Board's determination that (x) a tender offer that constituted a Change in Control under Section 1(c)(ii) will not result in a Person becoming the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation or (y) the Qualifying Transaction described in Section 1(c)(iii) will not be closed or (z) a complete liquidation or dissolution of the Corporation or Idaho Power Company that was approved by shareholders, as described in Section 1(c)(iv), will not occur, a Change in Control shall be deemed not to have occurred from such date of determination forward, and this Agreement shall continue in effect as if no Change in Control had occurred except to the extent termination requiring payments under this Agreement occurs prior to such Board determination.
d. "Compensation" shall mean the sum of (i) the Executive's annual base salary at the time of termination and (ii) the Executive's target annual bonus in the year of termination (or, if as of the date of termination no target annual bonus has yet been determined for the year of termination, the target annual bonus for the prior year).
e. "Constructive Discharge" shall mean any of the following:
(i) any material failure by the Corporation to comply with any of the provisions of this Agreement;
(ii) the Corporation or a Subsidiary of the Corporation requiring the Executive to be based at any office or location more than 50 miles from the location at which the Executive was based on the day prior to the Change in Control;
(iii) a red uction which is more than de minimis in (A) the Executive's annual rate of base salary or maximum annual bonus opportunity, (B) the long-term incentive compensation the Executive has the opportunity to earn, determined in the aggregate if multiple long-term incentive opportunities exist or (C) the combined annual benefit accrual rate under the Corporation's qualified defined benefit pension plan and/or the Idaho Power Company Security Plan for Senior Management Employees, as in effect immediately prior to the Change in Control (except if such reduction is a part of a reduction for all executive officers);
( iv) the Corporation's failure to require a successor entity to assume and agree to perform the Corporation's obligations pursuant to Section 9; or
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( v) a reduction which is more than de minimis in the long term disability and life insurance coverage provided to the Executive under the Corporation's life insurance and long term disability plans as in effect immediately prior to the Change in Control.
No such event described hereunder shall constitute Constructive Discharge unless the Executive has given written notice to the Corporation specifying the event relied upon for such termination within one year after the occurrence of such event (but in no event later than the Ending Date) and the Corporation has not remedied such within 30 days of receipt of such notice. The Corporation and Executive, upon mutual written agreement, may waive any of the foregoing provisions which would otherwise constitute a Constructive Discharge.
f. "Coverage Period" shall begin on the Starting Date and end on the Ending Date.
g. "Disability" shall mean an injury or illness which permanently prevents the Executive from performing services to the Corporation and which qualifies the Executive for payments under the Corporation's long term disability plan, which for purposes of this Agreement shall be the Idaho Power Company Long Term Disability Plan.
h. "Ending Date" shall be the date which is 36 full calendar months following the date on which a Change in Control occurs or if the Change in Control is shareholder approval pursuant to Section 1(c)(iii) or 1(c)(iv), the date which is 36 months following the consummation of the transaction subject to such shareholder approval.
i. "Starting Date" shall be the date on which a Change in Control occurs.
j. "Subsidiary" means any corporation of which more than 50% of the outstanding stock having ordinary voting power to elect a majority of the board of directors of such corporation is now or hereafter owned, directly or indirectly, by the Corporation.
2. Term.
This Agreement shall be effective as of the Starting Date and shall continue thereafter until the 36 month anniversary of the later of (i) such date or (ii) if the Change in Control causing the Agreement to be effective is shareholder approval pursuant to Section 1(c)(iii) or 1(c)(iv), the date of the consummation of the transaction subject to such shareholder approval; provided, however, the Corporation's obligations, if any, to provide payments and/or benefits pursuant to Section 3 of this Agreement and the obligations of the Corporation and the Executive under Section 5 of this Agreement shall survive the termination of this Agreement.
3. Severance Benefits.
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a. If the Executive's employment with the Corporation and all Subsidiaries is terminated by the Corporation or a Subsidiary for any reason other than Cause, death, or Disability (for avoidance of doubt, transfer of employment between or among the Corporation and any of its Subsidiaries shall not constitute a termination of employment by the Corporation or a Subsidiary for purposes of this Agreement), or by the Executive in the event of a Constructive Discharge, in either case at any time during the Coverage Period, then,
(i) within five business days after such termination, the Corporation shall pay or cause to be paid to the Executive (or if the Executive dies after termination of employment but before receiving all payments to which he has become entitled hereunder, to the estate of the Executive) the following amounts:
(A) accrued but unpaid salary and accrued but unused vacation and sick time in accordance with the Corporation's or a Subsidiary's, as the case may be, Flexible Time Off or similar program, as may be amended from time to time; and
(B) a lump sum cash amount equal to two and one-half times the Executive's Compensation; and
(ii) the Executive shall be entitled to the following additional severance benefits:
(A) notwithstanding anything in any other award notice or agreement providing otherwise, as applicable, (1) all of the Executive's outstanding stock options and stock appreciation rights shall become immediately vested and exercisable; (2) all of the Executive's outstanding shares of restricted stock and restricted stock units shall become immediately vested in full (at target levels for any performance-based restricted stock or restricted stock units); and (3) the target payout opportunity under all of the Executive's outstanding performance units or performance shares (or other similar awards with performance-based vesting) shall become immediately vested at target levels;
(B) outplacement services commencing within 12 months of the Starting Date and extending for a period of not more than 12 months, the scope and provider of which shall be selected by the Executive in his sole discretion (but at a total cost to the Corporation of not more than $12,000); and
(C) for a period commencing with the month in which termination of employment shall have occurred and ending 24 months thereafter, the Executive and, as applicable, the Executive's covered dependents shall be entitled to all benefits under the Corporation's welfare benefit plans (within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended), as if the Executive were still employed during such period, at the same level of benefits and at the same dollar cost to the Executive as is available to all of the Corporation's senior executives generally. If and to the extent that equivalent benefits shall not be payable or provided under any such plan, the Corporation shall pay or provide (or cause to be paid or provided) equivalent benefits on an individual basis. The benefits provided in accordance with this Section 3(a)(ii)(C) shall be secondary to any comparable benefits provided by another employer.
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b. Notwithstanding anything to the contrary contained in this Agreement, if the Executive voluntarily terminates employment for any reason (unless, prior to such termination, the Corporation has given notice to the Executive that it intends to terminate the Executive's employment for Cause) in the first full calendar month following the one year anniversary of the Change in Control (provided, that, (i) in the case of a Change in Control under Section 1(c)(ii), the one year anniversary shall be the first anniversary of the date the tender offer is completed, provided the tender offer has resulted in a Person becoming the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation and (ii) in the case of a Change in Control under Section 1(c)(iii) or 1(c)(iv), the one year anniversary shall be the first anniversary of the date of the consummation of the transaction or event constituting the Change in Control), the Corporation shall pay (or cause to be paid) to the Executive (or the Executive's estate upon death) the amounts and provide to the Executive the benefits provided under Section 3(a); provided, however, the lump sum amount calculated under Section 3(a)(i)(B) shall be multiplied by 2/3, and the welfare benefits provided pursuant to Section 3(a)(ii)(C) shall continue for 18 months rather than 24 months.
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c. (i) If Independent Tax Counsel (as that term is defined below) determines that the aggregate payments and benefits provided or to be provided to the Executive pursuant to this Agreement, and any other payments and benefits provided or to be provided to the Executive from the Corporation or any of its Subsidiaries or other affiliates or any successors thereto constitute "parachute payments" as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") (or any successor provision thereto) ("Parachute Payments") that would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then, except as otherwise provided in the next sentence, such Parachute Payments shall be reduced to the extent necessary so that no portion thereof shall be subject to the Excise Tax. If Independent Tax Counsel determines that the Executive would receive in the aggregate greater payments and benefits on an after tax basis if the Parachute Payments were not reduced pursuant to this Section 3(c), then no such reduction shall be made; provided, however, that in such case the provisions of Sections 3(c)(ii) and 3(c)(iii) shall not be operative. The determination of the Independent Tax Counsel under this subsection (i) shall be final and binding on all parties hereto. The determination of which payments or benefits shall be reduced to avoid the Excise Tax shall be determined in the sole discretion of the Corporation; provided, however, that unless the Executive gives written notice specifying a different order to the Corporation to effectuate the limitations described above, the Corporation shall first reduce or eliminate, as the case may be, those payments or benefits that will cause a dollar-for-dollar reduction in total Parachute Payments, and then by reducing or eliminating other Parachute Payments, to the extent possible, in reverse order beginning with payments or benefits that are to be paid the farthest in time from the date the reduction or elimination is to be made. Any notice given by the Executive pursuant to the preceding sentence, unless prohibited by law, shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive's rights and entitlement to any benefits or compensation. For purposes of this Section 3(c), "Independent Tax Counsel" shall mean a lawyer, a certified public accountant with a nationally recognized accounting firm, or a compensation consultant with a nationally recognized actuarial and benefits consulting firm with expertise in the area of executive compensation tax law, who shall be selected by the Corporation and shall be acceptable to the Executive (the Executive's acceptance not to be unreasonably withheld), and whose fees and disbursements shall be paid by the Corporation.
(ii) The Executive shall notify the Corporation in writing within 30 days of any claim by the Internal Revenue Service that, if successful, would require the payment by the Executive of an Excise Tax. Upon receipt of such notice, the Corporation may, in its sole discretion, either contest such claim, provide the Executive with an additional payment (a "Gross-Up Payment") intended to reimburse the Executive for any such Excise Tax and all taxes (including any Excise Tax) imposed upon the Gross-Up Payment and any interest or penalties with respect to such taxes (except to the extent such interest or penalty results from the Executive's failure to act in accordance with the Corporation's or a Subsidiary's reasonable directions or the Executive's failure to exercise due care), or do nothing. If the Corporation notifies the Executive in writing that it desires to contest such claim and that it will bear the costs and provide the indemnification as required by this sentence, the Executive shall:
(A) give the Corporation any information reasonably requested by the Corporation relating to such claim,
(B) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation,
(C) cooperate with the Corporation in good faith in order to effectively contest the claim, and
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(D) permit the Corporation to participate in any proceedings relating to the claim; provided, however, that the Corporation shall pay (or cause to be paid) directly all costs and expenses (including any interest and penalties, except to the extent such interest or penalty results from the Executive's failure to act in accordance with the Corporation's or a Subsidiary's reasonable directions or the Executive's failure to exercise due care) incurred in connection with the contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income or other tax, including interest and penalties with respect thereto (except to the extent such interest or penalty results from the Executive's failure to act in accordance with the Corporation's or a Subsidiary's reasonable directions or the Executive's failure to exercise due care), imposed as a result of such representation and payment of costs and expenses. The Corporation shall control all proceedings taken in connection with such contest; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall, unless prohibited by law, advance (or cause to be advanced) the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income or other tax, including interest or penalties with respect thereto (except to the extent such interest or penalty results from the Executive's failure to act in accordance with the Corporation's or a Subsidiary's reasonable directions or the Executive's failure to exercise due care), imposed with respect to such advance or with respect to any imputed income with respect to such advance. If the advancement described in the preceding sentence is prohibited by law, the Corporation and the Executive shall cooperate in an effort to determine an alternative approach to payment of the claim in a manner permitted by applicable law and consistent with original intent and economic benefit to the Executive of this provision.
(iii) If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 3(c)(ii), the Executive becomes entitled to receive a refund with respect to a payment by the Corporation with respect to such claim, the Executive shall, within 10 days after the receipt of such refund, pay to the Corporation the amount of such refund, together with any interest paid or credited thereon after taxes applicable thereto.
(iv) Notwithstanding anything herein to the contrary, this Section 3(c) shall be interpreted (and, if determined by the Corporation to be necessary, reformed) to the extent necessary to fully comply with the Sarbanes-Oxley Act and Section 409A of the Code; provided that the Corporation agrees to maintain, to the maximum extent practicable, the original intent and economic benefit to the Executive of the applicable provision without violating the provisions of the Sarbanes-Oxley Act and Code Section 409A.
d. In the event of any termination of the Executive's employment described in Section 3(a) or Section 3(b), the Executive shall be under no obligation to seek other employment, and there shall be no offset against amounts due the Executive under this Agreement on account of any remuneration attributable to any subsequent employment; provided, however, to the extent the Executive receives medical and health benefits from a subsequent employer, medical and health benefits provided pursuant to Section 3(a)(ii)(C) shall be secondary to those received from the subsequent employer.
e. It is intended that the payments and benefits provided under this Agreement are in lieu of, and not in addition to, severance payments and benefits provided under any severance, change in control or similar plan or policy of the Corporation or a Subsidiary or under any other severance, change in control or similar agreements with the Corporation or any Subsidiary, whether written or oral ("Other Severance Benefits"). Unless waived by the Executive, Other Severance Benefits the Executive receives, or will receive in the future, shall reduce payments and benefits provided hereunder.
4. Nature of Obligation.
The Corporation shall not be required to establish a special or separate fund or other segregation of assets to assure payments under this Agreement, and, if the Corporation shall make any investments to aid it in meeting its obligations hereunder, the Executive shall have no right, title or interest in or to any such investments except as may otherwise be expressly provided in a separate written instrument relating to such investments. Nothing contained in this Agreement, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Corporation and the Executive or any other person. To the extent that any person acquires a right to receive payments under this Agreement such right shall be no greater than the right of an unsecured creditor.
5. Full Settlement; Litigation Expenses; Arbitration.
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a. Except as provided below, the Corporation's obligation to make or cause to be made the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Corporation or a Subsidiary may have against the Executive or others. The Corporation agrees to pay, upon written demand therefor by the Executive, all legal fees and expenses the Executive reasonably incurs as a result of any dispute or contest (regardless of the outcome thereof) by or with the Corporation or others regarding the validity or enforceability of, or liability under, any provision of this Agreement, plus in each case, interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code. Notwithstanding the foregoing, the Executive agrees to repay to the Corporation any such fees and expenses paid or advanced by the Corporation if and to the extent that the Corporation or such others obtains a judgment or determination that the Executive's claim was frivolous or was without merit from the arbitrator or a court of competent jurisdiction from which no appeal may be taken, whether because the time to do so has expired or otherwise. Notwithstanding any provision hereof or in any other agreement, the Corporation may offset any other obligation it has to the Executive by the amount of such repayment. In any such action brought by the Executive for damages or to enforce any provisions of this Agreement, he shall be entitled to seek both legal and equitable relief and remedies, including, without limitation, specific performance of the Corporation's obligations hereunder, in his sole discretion.
b. In the event of any dispute or difference between the Corporation and the Executive with respect to the subject matter of this Agreement and the enforcement of rights hereunder, either the Executive or the Corporation may, by written notice to the other, require such dispute or difference to be submitted to arbitration. The arbitrator or arbitrators shall be selected by agreement of the parties or, if they cannot agree on an arbitrator or arbitrators within 30 days after the Executive has notified the Corporation of his desire to have the question settled by arbitration, then the arbitrator or arbitrators shall be selected by the American Arbitration Association (the "AAA") upon the application of the Executive. The determination reached or award rendered in such arbitration shall be final and binding on both parties without any right of appeal or further dispute, subject to the applicable state or federal laws relating to arbitration determinations or awards. Enforcement of an arbitration award by such arbitrator may be sought in any court of competent jurisdiction. The arbitrators shall not be bound by judicial formalities and may abstain from following the strict rules of evidence and shall interpret this Agreement as an honorable engagement and not merely as a legal obligation. Unless otherwise agreed by the parties, any such arbitration shall take place in Boise, Idaho, and shall be conducted in accordance with the Rules of the AAA. The Executive's expenses for such proceeding shall be paid, or repaid to the Corporation as the case may be, as provided in subsection (a) of this Section 5.
6. Tax Withholding.
The Corporation may withhold from any payments made under this Agreement all federal, state or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
7. Entire Understanding.
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This Agreement contains the entire understanding between the Corporation and the Executive with respect to the subject matter hereof and supersedes any prior severance, change in control or similar agreement between the Corporation and the Executive (including, without limitation, the Change in Control Agreement by and between the Corporation and the Executive, which was executed by the Executive on ____________, _____); provided, however, that, except as otherwise provided in this Section 7 and in Sections 3(c) and 3(e), this Agreement shall not affect or operate to reduce any benefit or compensation inuring to the Executive of any kind elsewhere provided.
8. Severability.
If, for any reason, any one or more of the provisions or part of a provision contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement not held so invalid, illegal or unenforceable, and each other provision or part of a provision shall to the full extent consistent with law continue in full force and effect.
9. Consolidation, Merger, or Sale of Assets.
If the Corporation consolidates or merges into or with, or transfers all or substantially all of its assets to, another entity the term "Corporation" as used herein shall mean such other entity and this Agreement shall continue in full force and effect. In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Agreement, the Corporation shall require such successor expressly and unconditionally to assume and agree to perform the Corporation's obligations under this Agreement, in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.
10. Notices.
All notices, requests, demands and other communications required or permitted hereunder shall be given in writing and shall be deemed to have been duly given if delivered or mailed, postage prepaid, first class as follows:
to the Corporation:
IDACORP, Inc.
Attention: General Counsel
P.O. Box 70
Boise, Idaho 83707
to the Executive:
At the address (or to the facsimile number) last shown on the records of the Corporation.
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or to such other address as either party shall have previously specified in writing to the other.
11. No Attachment.
Except as required by law, no right by the Executive or his estate to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.
12. Binding Agreement.
This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and the Corporation and their respective permitted successors and assigns.
13. Modification and Waiver.
Prior to the date of a Change in Control or, if earlier, the date of a public announcement of a transaction or event which if consummated would be a Change in Control ("Pre-Change in Control Event"), this Agreement may be terminated, modified or amended by action of a majority of the members of the Board. After a Change in Control or Pre-Change in Control Event, this Agreement may not be terminated, modified or amended except by an instrument in writing signed by the parties hereto. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument signed by the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
14. Headings of No Effect.
The section headings contained in this Agreement are included solely for convenience of reference and shall not in any way affect the meaning or interpretation of any of the provisions of this Agreement.
15. Effective Date and Executive Acknowledgments.
This Agreement shall become effective on the Starting Date. The Executive acknowledges that he has read and understands the provisions of this Agreement. The Executive further acknowledges that he has been given an opportunity for his legal counsel to review this Agreement and that the provisions of this Agreement are reasonable and that he has received a copy of this Agreement.
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16. Not Compensation for Other Plans.
Except for amounts paid pursuant to Section 3(a)(i)(A) that are considered compensation, earnings or wages for purposes of any employee benefit plan of the Corporation or its Subsidiaries, it is understood by all parties hereto that amounts paid and benefits provided hereunder are not to be considered compensation, earnings or wages for purpose of any employee benefit plan of the Corporation or its Subsidiaries, including, but not limited to, the qualified retirement plan or the Idaho Power Company Security Plan.
17. Release.
Notwithstanding any provision herein to the contrary, the Corporation shall not have any obligation to pay (or cause to be paid) any amount or provide any benefit under this Agreement unless and until the Executive executes a release of the Corporation, its Subsidiaries and other affiliates and related parties, in such form as the Corporation may reasonably request, of all claims against the Corporation, its Subsidiaries and other affiliates and related parties relating to the Executive's employment and termination thereof and unless and until any revocation period applicable to such release has expired.
18. Governing Law.
This Agreement and its validity, interpretation, performance, and enforcement shall be governed by the laws of Idaho .
19. Code Section 409A.
a. If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Code Section 409A or any regulations or Treasury guidance promulgated thereunder, the Corporation shall, after consulting with the Executive, reform such provision to comply with Code Section 409A; provided that the Corporation agrees to make only such changes as are necessary to bring such provisions into compliance with Code Section 409A and to maintain, to the maximum extent practicable, the original intent and economic benefit to the Executive of the applicable provision without violating the provisions of Code Section 409A.
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b. Notwithstanding any provision to the contrary in this Agreement, if the Executive is deemed on the date of termination of employment to be a "specified employee" within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is required to be delayed in compliance with Section 409A(a)(2)(B) such payment or benefit shall not be made or provided (subject to the last sentence hereof) prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of the Executive's "separation from service" (as such term is defined in Treasury Regulations issued under Code Section 409A) or (ii) the date of his death (the "Deferral Period"). Upon the expiration of the Deferral Period, all payments and benefits deferred pursuant to this Section 19 (whether they would have otherwise been payable in a single sum or in installments in the absence of such deferral) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein . Notwithstanding the foregoing, to the extent that the foregoing applies to the provision of any ongoing welfare benefits to the Executive that would not be required to be delayed if the premiums therefor were paid by the Executive, the Executive shall pay the full cost of premiums for such welfare benefits during the Deferral Period and the Corporation shall pay (or cause to be paid) to the Executive an amount equal to the amount of such premiums paid by the Executive during the Deferral Period promptly after its conclusion.
IN WITNESS WHEREOF, the Corporation and the Executive both intending to be legally bound have duly executed and delivered this Agreement, to be effective as of the date set forth in Section 15.
IDACORP, INC.
By:__________________________
Its
Date: ________________________
EXECUTIVE
__________________________________
Date: ________________________
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Exhibit 10(h)(xii)
IDACORP, INC.
2000 LONG-TERM INCENTIVE AND COMPENSATION PLAN
Article 1. Establishment, Purpose and Duration
1.1 Establishment of the Plan . IDACORP, Inc., an Idaho corporation (hereinafter referred to as the "Company"), hereby establishes an incentive and compensation plan for officers, key employees and directors, to be known as the "IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan" (hereinafter referred to as the "Plan"), as set forth in this document. The Plan permits the grant of nonqualified stock options (NQSO), incentive stock options (ISO), stock appreciation rights (SAR), restricted stock, restricted stock units, performance units, performance shares and other awards.
The Plan shall become effective when approved by the shareholders at the 2000 Annual Meeting of Shareholders (the "Effective Date") and shall remain in effect as provided in Section 1.3 herein.
1.2 Purpose of the Plan . The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal interests of Participants to those of Company shareholders and customers.
The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract and retain the services of Participants upon whose judgment, interest and special effort the successful conduct of its operations is largely dependent.
1.3 Duration of the Plan . The Plan shall commence on the Effective Date, as described in Section 1.1 herein, and shall remain in effect, subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Article 15 herein, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set forth below and, when such meaning is intended, the initial letter of the word is capitalized:
2.1 Award means, individually or collectively, a grant under the Plan of NQSOs, ISOs, SARs, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares or any other type of award permitted under Article 10 of the Plan.
2.2 Award Agreement means an agreement entered into by each Participant and the Company, setting forth the terms and provisions applicable to an Award granted to a Participant under the Plan.
2.3 Base Value of an SAR shall have the meaning set forth in Section 7.1 herein.
2.4 Board or Board of Directors means the Board of Directors of the Company.
2.5 Change in Control means the earliest of the following to occur:
(a) any Person, excluding (i) the Company or any Subsidiary, (ii) a corporation or other entity owned, directly or indirectly, by the stockholders of the Company immediately prior to the transaction in substantially the same proportions as their ownership of stock of the Company, (iii) an employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary or (iv) an underwriter temporarily holding securities pursuant to an offering of such securities ("Change in Control Person") is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Company; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Company;
(b) consummation of a merger, consolidation, reorganization or share exchange, or sale of all or substantially all of the assets, of the Company or Idaho Power Company (a "Qualifying Transaction"), unless, immediately following such Qualifying Transaction, all of the following have occurred: (i) all or substantially all of the beneficial owners of the Company immediately prior to such Qualifying Transaction beneficially own in substantially the same proportions, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Qualifying Transaction (including, without limitation, a corporation or other entity which, as a result of such transaction, owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) (as the case may be, the "Successor Entity"), (ii) no Change in Control Person is the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Successor Entity and (iii) at least a majority of the members of the board of directors of the Successor Entity are Incumbent Directors;
(c) a complete liquidation or dissolution of the Company or Idaho Power Company; or
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(d) within a 24-month period, individuals who were directors of the Board immediately before such period ("Incumbent Directors") cease to constitute at least a majority of the directors of the Board; provided, however, that any director who was not a director of the Board at the beginning of such period shall be deemed to be an Incumbent Director if the election or nomination for election of such director was approved by the vote of at least two-thirds of the directors of the Board then still in office (i) who were in office at the beginning of the 24-month period or (ii) whose election or nomination for election was so approved, in each case, unless such individual was elected or nominated as a result of an actual or threatened election contest or as a result of an actual or threatened solicitation of proxies or consents by or on behalf of any Change in Control Person other than the Board.
For avoidance of doubt, transactions for the purpose of dividing Idaho Power Company's assets into separate distribution, transmission or generation entities or such other entities as the Company or Idaho Power Company may determine shall not constitute a Change in Control unless so determined by the Board.
2.6 Code means the Internal Revenue Code of 1986, as amended from time to time.
2.7 Committee means the committee, as specified in Article 3, appointed by the Board to administer the Plan with respect to Awards.
2.8 Company means IDACORP, Inc., an Idaho corporation, or any successor thereto as provided in Article 17 herein.
2.9 Covered Employee means any Participant who would be considered a "covered employee" for purposes of Section 162(m) of the Code.
2.10 Director means any individual who is a member of the Board of Directors of the Company.
2.11 Disability means the continuous inability of an Employee because of illness or injury to engage in any occupation or employment for wage or profit with the Company or any other employer (including self-employment) for which he is reasonably qualified by education, training or experience. An Employee will not be considered disabled during any period unless he is under the regular care and attendance of a duly qualified physician.
2.12 Dividend Equivalent means, with respect to Shares subject to an Award, a right to be paid an amount equal to dividends declared on an equal number of outstanding Shares.
2.13 Eligible Person means an individual who is eligible to participate in the Plan, as set forth in Section 5.1 herein.
2.14 Employee means an individual who is paid on the payroll of the Company or of the Company's Subsidiaries, who is not covered by any collective bargaining agreement to which the Company or any of its Subsidiaries is a party, and is classified in the payroll system as a regular full-time, part-time or temporary employee. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Subsidiaries (or between Subsidiaries) shall not be deemed a termination of employment.
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2.15 Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
2.16 Exercise Period means the period during which an SAR or Option is exercisable, as set forth in the related Award Agreement.
2.17 Fair Market Value means the fair market value of a Share as determined in good faith by the Committee or pursuant to a procedure specified in good faith by the Committee; provided, however, that if the Committee has not specified otherwise, Fair Market Value shall mean the closing price of a Share as reported in the consolidated transaction reporting system, or, if there was no such sale on the relevant date, then on the last previous day on which a sale was reported.
2.18 Freestanding SAR means an SAR that is not a Tandem SAR.
2.19 Incentive Stock Option or ISO means an option to purchase Shares, granted under Article 6 herein, which is designated as an Incentive Stock Option and satisfies the requirements of Section 422 of the Code.
2.20 Nonqualified Stock Option or NQSO means an option to purchase Shares, granted under Article 6 herein, which is not intended to be an Incentive Stock Option under Section 422 of the Code.
2.21 Option means an Incentive Stock Option or a Nonqualified Stock Option.
2.22 Option Exercise Price means the price at which a Share may be purchased by a Participant pursuant to an Option, as determined by the Committee and set forth in the Option Award Agreement.
2.23 Participant means an Eligible Person who has outstanding an Award granted under the Plan.
2.24 Performance Goals means the performance goals established by the Committee, which shall be based on one or more of the following measures: sales or revenues, earnings per share, shareholder return and/or value, funds from operations, operating income, gross income, net income, cash flow, return on equity, return on capital, earnings before interest, operating ratios, stock price, customer satisfaction, accomplishment of mergers, acquisitions, dispositions or similar extraordinary business transactions, profit returns and margins, financial return ratios, budget achievement, performance against budget, and/or market performance. Performance goals may be measured solely on a corporate, subsidiary or business unit basis, or a combination thereof. Performance goals may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure.
2.25 Performance Period means the time period during which Performance Unit/Performance Share Performance Goals must be met.
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2.26 Performance Share means an Award described in Article 9 herein.
2.27 Performance Unit means an Award described in Article 9 herein.
2.28 Period of Restriction means the period during which the transfer of Restricted Stock is limited in some way, as provided in Article 8 herein.
2.29 Person shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act, as used in Sections 13(d) and 14(d) thereof, including usage in the definition of a "group" in Section 13(d) thereof.
2.30 Plan means the IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan, as amended from time to time.
2.31 Qualified Restricted Stock means an Award of Restricted Stock designated as Qualified Restricted Stock by the Committee at the time of grant and intended to qualify for the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C).
2.32 Qualified Restricted Stock Unit means an Award of Restricted Stock Units designated as Qualified Restricted Stock Units by the Committee at the time of grant and intended to qualify for the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C).
2.33 Restricted Stock means an Award described in Article 8 herein.
2.34 Restricted Stock Unit means an Award described in Article 8 herein.
2.35 Retirement means a Participant's termination from employment with the Company or a Subsidiary at the Participant's Early or Normal Retirement Date, as applicable.
(a) Early Retirement Date -- shall mean the date on which a Participant terminates employment, if such termination date occurs on or after Participant's attainment of age fifty-five (55) but prior to Participant's Normal Retirement Date.
(b) Normal Retirement Date -- shall mean the date on which the Participant terminates employment, if such termination date occurs on or after the Participant attains age sixty-two (62).
2.36 Securities Act means the Securities Act of 1933, as amended.
2.37 Shares means the shares of common stock, no par value, of the Company.
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2.38 Stock Appreciation Right or SAR means a right, granted alone or in connection with a related Option, designated as an SAR, to receive a payment on the day the right is exercised, pursuant to the terms of Article 7 herein. Each SAR shall be denominated in terms of one Share.
2.39 Subsidiary means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
2.40 Tandem SAR means an SAR that is granted in connection with a related Option, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall be similarly canceled).
Article 3. Administration
3.1 The Committee . The Plan shall be administered by the Compensation Committee or such other committee (the "Committee") as the Board of Directors shall select consisting solely of two or more members of the Board. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors.
3.2 Authority of the Committee . The Committee shall have full power except as limited by law, the Articles of Incorporation or the Bylaws of the Company, subject to such other restricting limitations or directions as may be imposed by the Board and subject to the provisions herein, to determine the Eligible Persons to receive Awards; to determine the size and types of Awards; to determine the terms and conditions of such Awards; to construe and interpret the Plan and any agreement or instrument entered into under the Plan; to establish, amend or waive rules and regulations for the Plan's administration; and (subject to the provisions of Article 15 herein) to amend the terms and conditions of any outstanding Award. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. As permitted by law, the Committee may delegate its authorities as identified hereunder.
3.3 Restrictions on Distribution of Shares and Share Transferability . Notwithstanding any other provision of the Plan, the Company shall have no liability to deliver any Shares or benefits under the Plan unless such delivery would comply with all applicable laws (including, without limitation, the Securities Act) and applicable requirements of any securities exchange or similar entity and unless the Participant's tax obligations have been satisfied as set forth in Article 16. The Committee may impose such restrictions on any Shares acquired pursuant to Awards under the Plan as it may deem advisable, including, without limitation, restrictions to comply with applicable Federal securities laws, with the requirements of any stock exchange or market upon which such Shares are then listed and/or traded and with any blue sky or state securities laws applicable to such Shares.
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3.4 Decisions Binding . All determinations and decisions (including, without limitation, all interpretations) made by the Committee pursuant to the provisions of the Plan and all related orders or resolutions of the Board shall be final, conclusive and binding on all persons, including the Company, its shareholders, Eligible Persons, Employees, Participants and their estates and beneficiaries.
3.5 Costs . The Company shall pay all costs of administration of the Plan.
Article 4. Shares Subject to the Plan
4.1 Number of Shares . Subject to Section 4.2 herein, the maximum number of Shares available for grant under the Plan shall be 3,100,000. Shares underlying lapsed or forfeited Awards, or Awards that are not paid in Shares, may be reused for other Awards. If the Option Exercise Price is satisfied by tendering Shares, only the number of Shares issued net of the Shares tendered shall be deemed issued under the Plan, provided, however, that, as long as the Shares are listed on the New York Stock Exchange, this sentence shall only be operative for ten years following the date the Plan is last approved by stockholders in a manner that constitutes stockholder approval for purposes of New York Stock Exchange listing standards. Shares granted pursuant to the Plan may be (i) authorized but unissued Shares of common stock, (ii) treasury shares or (iii) Shares purchased on the open market.
4.2 Adjustments in Authorized Shares and Awards . In the event of any merger, reorganization, consolidation, recapitalization, liquidation, stock dividend, split-up, spin-off, stock split, reverse stock split, share combination, share exchange or other change in the corporate structure of the Company affecting the Shares, such adjustment shall be made in the outstanding Awards, the number and kind of Shares which may be delivered under the Plan, and in the number and kind of and/or price of Shares subject to outstanding Awards granted under the Plan, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights. Notwithstanding the foregoing, unless otherwise determined by the Committee, (i) each such adjustment with respect to an Incentive Stock Option shall comply with the rules of Section 424(a) of the Code and (ii) in no event shall any adjustment be made which would render any Incentive Stock Option granted hereunder to be other than an incentive stock option for purposes of Section 422 of the Code. In no event shall the Committee have the right to amend an outstanding Option Award for the sole purpose of reducing the exercise price thereof.
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4.3 Individual Limitations . Subject to Section 4.2 above, (i) the total number of Shares with respect to which Options or SARs may be granted in any calendar year to any Covered Employee shall not exceed 250,000 Shares; (ii) the total number of Qualified Restricted Stock Shares or Qualified Restricted Stock Units that may be granted in any calendar year to any Covered Employee shall not exceed 250,000 Shares or Units, as the case may be; (iii) the total number of Performance Shares or Performance Units that may be granted in any calendar year to any Covered Employee shall not exceed 250,000 Shares or Units, as the case may be; (iv) the total number of Shares that are intended to qualify as performance-based compensation under Section 162(m) of the Code granted pursuant to Article 10 herein in any calendar year to any Covered Employee shall not exceed 250,000 Shares; (v) the total cash Award that is intended to qualify as performance-based compensation under Section 162(m) of the Code that may be paid pursuant to Article 10 herein in any calendar year to any Covered Employee shall not exceed $500,000; and (vi) the aggregate amount of Dividend Equivalents that are intended to qualify as performance-based compensation under Section 162(m) of the Code that a Covered Employee may receive in any calendar year shall not exceed $1,000,000.
Article 5. Eligibility and Participation
5.1 Eligibility . Persons eligible to participate in the Plan ("Eligible Persons") include all officers, key employees and directors of the Company and its Subsidiaries, as determined by the Committee.
5.2 Actual Participation . Subject to the provisions of the Plan, the Committee may, from time to time, select from all Eligible Persons those to whom Awards shall be granted.
Article 6. Stock Options
6.1 Grant of Options . Subject to the terms and conditions of the Plan, Options may be granted to an Eligible Person at any time and from time to time, as shall be determined by the Committee.
The Committee shall have complete discretion in determining the number of Shares subject to Options granted to each Eligible Person (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such Options. The Committee may grant ISOs, NQSOs or a combination thereof.
6.2 Option Award Agreement . Each Option grant shall be evidenced by an Option Award Agreement that shall specify the Option Exercise Price, the term of the Option, the number of Shares to which the Option pertains, the Exercise Period and such other provisions as the Committee shall determine. The Option Award Agreement shall also specify whether the Option is intended to be an ISO or a NQSO. Rights, if any, to Dividend Equivalents shall be determined by the Committee.
6.3 Option Exercise Price . Except for Options adjusted or granted pursuant to Article 4 herein, and replacement Options granted in connection with a merger, acquisition, reorganization or similar transaction, the Option Exercise Price of Options granted under the Plan shall be at least equal to the Fair Market Value of a Share on the date of grant of the Option.
6.4 Exercise of and Payment for Options . Options granted under the Plan shall be exercisable at such times and shall be subject to such restrictions and conditions as the Committee shall in each instance approve.
8
Options shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by provision for full payment for the Shares.
The Option Exercise Price shall be payable: (a) in cash or its equivalent, (b) by tendering (or attesting to the ownership of) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Exercise Price, (c) by broker-assisted cashless exercise, (d) by such other methods as the Committee may prescribe or (e) by a combination of (a), (b), (c) and/or (d).
6.5 Termination . Each Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant's employment with or service on the Board of the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee (subject to applicable law), need not be uniform among all Options granted pursuant to the Plan or among Participants and may reflect distinctions based on the reasons for termination.
6.6 Transferability of Options . Except as otherwise determined by the Committee, all Options granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant, and no Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. ISOs are not transferable other than by will or by the laws of descent and distribution.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs . Subject to the terms and conditions of the Plan, an SAR may be granted to an Eligible Person at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs or any combination of these forms of SARs.
The Committee shall have complete discretion in determining the number of SARs granted to each Eligible Person (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs. Rights, if any, to Dividend Equivalents shall be determined by the Committee.
Except for SARs adjusted or granted pursuant to Article 4 herein, and replacement SARs granted in connection with a merger, acquisition, reorganization or similar transaction, the Base Value of a Freestanding SAR shall equal the Fair Market Value of a Share on the date of grant of the SAR. The Base Value of Tandem SARs shall equal the Option Exercise Price of the related Option.
7.2 SAR Award Agreement . Each SAR grant shall be evidenced by an SAR Award Agreement that shall specify the number of SARs granted, the Base Value, the term of the SAR, the Exercise Period and such other provisions as the Committee shall determine.
9
7.3 Exercise and Payment of SARs . Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable.
Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR will expire no later than the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Exercise Price of the underlying ISO and the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Exercise Price of the ISO.
Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them.
A Participant may exercise an SAR at any time during the Exercise Period. SARs shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of SARs being exercised. Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount equal to the product of:
(a) the excess of (i) the Fair Market Value of a Share on the date of exercise over (ii) the Base Value multiplied by
(b) the number of Shares with respect to which the SAR is exercised.
At the sole discretion of the Committee, the payment to the Participant upon SAR exercise may be in cash, in Shares of equivalent value or in some combination thereof.
7.4 Termination . Each SAR Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant's employment with or service on the Board of the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all SARs granted pursuant to the Plan or among Participants and may reflect distinctions based on the reasons for termination.
7.5 Transferability of SARs . Except as otherwise determined by the Committee, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant or his or her legal representative, and no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
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Article 8. Restricted Stock and Restricted Stock Units
8.1 Grant of Restricted Stock and Restricted Stock Units . Subject to the terms and conditions of the Plan, Restricted Stock and/or Restricted Stock Units may be granted to an Eligible Person at any time and from time to time, as shall be determined by the Committee.
The Committee shall have complete discretion in determining the number of shares of Restricted Stock and/or Restricted Stock Units granted to each Eligible Person (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such Awards.
In addition, the Committee may, prior to or at the time of grant, designate an Award of Restricted Stock or Restricted Stock Units as Qualified Restricted Stock or Qualified Restricted Stock Units, as the case may be, in which event it will condition the grant or vesting, as applicable, of such Qualified Restricted Stock or Qualified Restricted Stock Units, as the case may be, upon the attainment of the Performance Goals selected by the Committee.
8.2 Restricted Stock/Restricted Stock Unit Award Agreement . Each grant of Restricted Stock and/or Restricted Stock Units shall be evidenced by a Restricted Stock and/or Restricted Stock Unit Award Agreement that shall specify the number of shares of Restricted Stock and/or Restricted Stock Units granted, the initial value (if applicable), the Period or Periods of Restriction, and such other provisions as the Committee shall determine.
8.3 Transferability . Restricted Stock and Restricted Stock Units granted hereunder may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee. During the applicable Period of Restriction, all rights with respect to the Restricted Stock and Restricted Stock Units granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant or his or her legal representative.
8.4 Certificates . No certificates representing Stock shall be issued until such time as all restrictions applicable to such Shares have been satisfied.
8.5 Removal of Restrictions . Restricted Stock shall become freely transferable by the Participant after the last day of the Period of Restriction applicable thereto. Once Restricted Stock is released from the restrictions, the Participant shall be entitled to receive a certificate. Payment of Restricted Stock Units shall be made after the last day of the Period of Restriction applicable thereto. The Committee, in its sole discretion, may pay Restricted Stock Units in cash or in Shares (or in a combination thereof), which have an aggregate Fair Market Value equal to the value of the Restricted Stock Units.
8.6 Voting Rights . During the Period of Restriction, Participants may exercise full voting rights with respect to the Restricted Stock.
11
8.7 Dividends and Other Distributions . Subject to the Committee's right to determine otherwise, during the Period of Restriction, Participants shall receive all regular cash dividends paid with respect to the Shares while they are so held, and all other distributions paid with respect to such Restricted Stock shall be credited to Participants subject to the same restrictions on transferability and forfeitability as the Restricted Stock with respect to which they were paid and shall vest or be paid, as the case may be, to the Participant promptly after the full vesting of the Restricted Stock with respect to which such distributions were made.
Rights, if any, to Dividend Equivalents on Restricted Stock Units shall be determined by the Committee.
8.8 Termination . Each Restricted Stock/Restricted Stock Unit Award Agreement shall set forth the extent to which the Participant shall have the right to receive Restricted Stock and/or a Restricted Stock Unit payment following termination of the Participant's employment with or service on the Board of the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all grants of Restricted Stock/Restricted Stock Units or among Participants and may reflect distinctions based on the reasons for termination.
Article 9. Performance Units and Performance Shares
9.1 Grant of Performance Units and Performance Shares . Subject to the terms and conditions of the Plan, Performance Units and/or Performance Shares may be granted to an Eligible Person at any time and from time to time, as shall be determined by the Committee.
The Committee shall have complete discretion in determining the number of Performance Units and/or Performance Shares granted to each Eligible Person (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such Awards.
9.2 Performance Unit/Performance Share Award Agreement . Each grant of Performance Units and/or Performance Shares shall be evidenced by a Performance Unit and/or Performance Share Award Agreement that shall specify the number of Performance Units and/or Performance Shares granted, the initial value (if applicable), the Performance Period, the Performance Goals and such other provisions as the Committee shall determine. Rights, if any, to Dividend Equivalents shall be determined by the Committee.
9.3 Value of Performance Units/Performance Shares . Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. In no event shall the value of a Performance Unit intended to qualify as performance-based compensation under Code Section 162(m) exceed the value of a Share. The value of a Performance Share shall be equal to the Fair Market Value of a Share. The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Units/Performance Shares that will be paid out to the Participants.
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9.4 Earning of Performance Units/Performance Shares . After the applicable Performance Period has ended, the Participant shall be entitled to receive a payout with respect to the Performance Units/Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved.
9.5 Form and Timing of Payment of Performance Units/Performance Shares . Payment of earned Performance Units/Performance Shares shall be made following the close of the applicable Performance Period. The Committee, in its sole discretion, may pay earned Performance Units/Shares in cash or in Shares (or in a combination thereof), which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee.
9.6 Termination . Each Performance Unit/Performance Share Award Agreement shall set forth the extent to which the Participant shall have the right to receive a Performance Unit/Performance Share payment following termination of the Participant's employment with or service on the Board of the Company and its Subsidiaries during a Performance Period. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all grants of Performance Units/Performance Shares or among Participants and may reflect distinctions based on reasons for termination.
9.7 Transferability . Except as otherwise determined by the Committee, a Participant's rights with respect to Performance Units/Performance Shares granted under the Plan shall be available during the Participant's lifetime only to such Participant or the Participant's legal representative and Performance Units/Performance Shares may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
Article 10. Other Awards
The Committee shall have the right to grant other Awards which may include, without limitation, the grant of Shares based on attainment of Performance Goals established by the Committee, the payment of Shares in lieu of cash or cash based on attainment of Performance Goals established by the Committee, and the payment of Shares in lieu of cash under other Company incentive or bonus programs. Payment under or settlement of any such Awards shall be made in such manner and at such times as the Committee may determine.
Article 11. Beneficiary Designation
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Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of the Participant's death before the Participant receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company and will be effective only when filed by the Participant in writing with the Company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate.
The spouse of a married Participant domiciled in a community property jurisdiction shall join in any designation of beneficiary or beneficiaries other than the spouse.
Article 12. Deferrals
The Committee may permit a Participant to defer the Participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under the Plan. If any such deferral election is permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals.
Article 13. Rights of Participants
13.1 Termination . Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant's employment or other relationship with the Company or any Subsidiary at any time, for any reason or no reason in the Company's or the Subsidiary's sole discretion, nor confer upon any Participant any right to continue in the employ of, or otherwise in any relationship with, the Company or any Subsidiary.
13.2 Participation . No Eligible Person shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to be selected to receive a future Award.
13.3 Limitation of Implied Rights . Neither a Participant nor any other Person shall, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including, without limitation, any specific funds, assets or other property which the Company or any Subsidiary, in their sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the Shares or amounts, if any, payable under the Plan, unsecured by any assets of the Company or any Subsidiary. Nothing contained in the Plan shall constitute a guarantee that the assets of such companies shall be sufficient to pay any benefits to any Person.
Except as otherwise provided in the Plan, no Award under the Plan shall confer upon the holder thereof any right as a shareholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.
Article 14. Change in Control
The terms of this Article 14 shall immediately become operative, without further action or consent by any Person, upon a Change in Control, and once operative shall supersede and take control over any other provisions of this Plan.
14
Upon a Change in Control
(a) Any and all Options and SARs granted hereunder shall become immediately vested and exercisable;
(b) Any restriction periods and restrictions imposed on Restricted Stock, Restricted Stock Units, Qualified Restricted Stock or Qualified Restricted Stock Units shall be deemed to have expired; any Performance Goals shall be deemed to have been met at the target level; such Restricted Stock and Qualified Restricted Stock shall become immediately vested in full, and such Restricted Stock Units and Qualified Restricted Stock Units shall be paid out in cash; and
(c) The target payout opportunity attainable under all outstanding Awards of Performance Units and Performance Shares and any Awards granted pursuant to Article 10 shall be deemed to have been fully earned for the entire Performance Period(s) as of the effective date of the Change in Control. All such Awards shall become immediately vested. All Performance Shares and other Awards granted pursuant to Article 10 denominated in Shares shall be paid out in Shares, and all Performance Units and other Awards granted pursuant to Article 10 shall be paid out in cash.
Notwithstanding anything contained herein or in any Award Agreement to the contrary, no payment or distribution under the Plan or pursuant to an Award that (1) is determined by the Company to be deferred compensation subject to Code Section 409A and (2) would be distributed because of a Change in Control shall be so distributed at the time of the Change in Control unless the distribution qualifies under Code Section 409A(a)(2)(A)(v) as a distribution upon a change in ownership or effective control or a change in the ownership of a substantial portion of assets or otherwise qualifies as a permissible distribution under Code Section 409A.
In the event of a Change in Control, the Board or the board of directors of any surviving entity or acquiring entity may provide or require that the surviving or acquiring entity shall: (1) assume or continue all or any part of the Options and SARs outstanding under the Plan or (2) substitute substantially equivalent Options and SARs (including an award to acquire substantially the same consideration paid to the shareholders in the transaction by which the Change in Control occurs) for those outstanding under the Plan. In the event any surviving entity or acquiring entity refuses to assume or continue such Awards or to substitute similar awards for those outstanding under the Plan, then with respect to Awards held by Participants whose continuous service has not terminated, the Board in its sole discretion and without liability to any person may: (1) provide for the payment of a cash amount in exchange for the cancellation of an Option or SAR equal to the product of (x) the excess, if any, of the Fair Market Value per Share at such time over the Option Exercise Price or Base Value, as the case may be, if any, times (y) the total number of Shares then subject to such Award; (2) continue the Awards; or (3) notify Participants holding an Option or SAR that they must exercise or redeem any portion of such Award (including, at the discretion of the Board, any unvested portion of such Award) at or prior to the closing of the transaction by which the Change in Control occurs and that the Awards shall terminate if not so exercised or redeemed at or prior to the closing of the transaction by which the Change in Control occurs. With respect to any other Awards outstanding under the Plan, such Awards shall terminate if not exercised or redeemed prior to the closing of the transaction by which the Change in Control occurs. The Board shall not be obligated to treat all Awards, even those that are of the same type, in the same manner.
Article 15. Amendment, Modification and Termination
15.1 Amendment, Modification and Termination . The Board may, at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part.
15.2 Awards Previously Granted . No termination, amendment or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan without the written consent of the Participant holding such Award, unless such termination, modification or amendment is required by applicable law and except as otherwise provided herein.
Article 16. Withholding
16.1 Tax Withholding . The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount (including any Shares withheld as provided below) sufficient to satisfy Federal, state and local taxes (including the Participant's FICA obligation) required by law to be withheld with respect to an Award made under the Plan.
16.2 Share Withholding . With respect to tax withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising out of or as a result of Awards granted hereunder, subject to such restrictions as the Committee may prescribe, Participants may elect to satisfy the withholding requirement, in whole or in part, by tendering Shares held by the Participant or by having the Company withhold Shares having a Fair Market Value equal to the minimum statutory tax withholding requirements. All elections shall be irrevocable, made in writing and signed by the Participant.
Article 17. Successors
All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise of all or substantially all of the business and/or assets of the Company.
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Article 18. Legal Construction
18.1 Gender and Number . Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular and the singular shall include the plural.
18.2 Severability . In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
18.3 Requirements of Law . The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
18.4 Governing Law . To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with, and governed by, the laws of the State of Idaho without regard to any conflicts of law or choice of law rule or principle that might otherwise reference construction or interpretation of the Plan or any agreements hereunder to the substantive law of another jurisdiction.
18.5 Section 409A . No amendment to the Plan made pursuant to the amendments approved by the Board on March 17, 2005 or July 20, 2006 shall be applicable to an Award to the extent such amendment would cause the Award to become subject to Code Section 409A.
Adopted by the Board on January 20, 2000
Approved by the Shareholders May 11, 2000
Amended by the Board January 18, 2001
Approved by the Shareholders May 17, 2001
Amended by the Board March 17, 2005
Approved by the Shareholders May 19, 2005
Amended by the Board July 20, 2006
17
Exhibit 10(h)(xvi)
DIRECTOR / OFFICER
IDACORP, Inc.
2000 LONG-TERM INCENTIVE AND COMPENSATION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
[Date]
[Name]
[Address]
In accordance with the terms of the IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan (the "Plan"), pursuant to action of the Compensation Committee of the Board of Directors, IDACORP, Inc. (the "Company") hereby grants to you (the "Participant"), subject to the terms and conditions set forth in this Option Award Agreement (including Annex A hereto and all documents incorporated herein by reference) the rights and options (the "Options") to purchase from the Company common stock, as set forth below:
Number of Nonqualified Stock Options: |
_________________ |
Number of Shares of Common Stock to which Options Pertain: |
_________________ |
Date of Grant: |
_________________ |
Option Exercise Price: |
$________________ per share |
Vesting: |
20% per year, commencing on the first anniversary of the Date of Grant |
Expiration Date |
Close of business on _________________ |
Exercise Period |
Date of Vesting through Expiration Date |
These optionS are subject to forfeiture as provided in annex a and the plan.
[The Participant, in consideration of this grant of Options, by affixing his signature hereto, specifically waives any rights he may have under the definition of Change in Control, contained in Section 2.5 of the Plan, as it was in effect prior to July 20, 2006, and hereby consents to the use of the definition of Change in Control as amended on July 20, 2006, and to the amendments made to Article 14 of the Plan on July 20, 2006, in connection with any awards made pursuant to the Plan and still outstanding on the date hereof.]
NYA 519943.1 37652 00308 10/31/2006 02:03pm
Further terms and conditions of the Award are set forth in Annex A hereto, which is an integral part of this Option Award Agreement
All terms, provisions and conditions applicable to the Awards set forth in the Plan and not set forth herein are hereby incorporated by reference herein. To the extent any provision hereof is inconsistent with a provision of the Plan, the provisions of the Plan will govern. The Participant hereby acknowledges receipt of a copy of this Option Award Agreement including Annex A hereto and a copy of the Plan and agrees to be bound by all the terms and provisions hereof and thereof.
IDACORP, Inc.
By: __________________________
Agreed :
_____________________________
Attachment: Annex A
2
ANNEX A
TO
IDACORP, Inc.
2000 LONG-TERM INCENTIVE AND COMPENSATION PLAN
NONQUALIFIED STOCK OPTION AWARD AGREEMENT
1. Further Terms and Conditions of Options . It is understood and agreed that the Award of Options evidenced by the Option Award Agreement to which this is annexed is subject to the following additional terms and conditions:
A. Exercise of Options . After vesting, the Options may be exercised in whole or in part from time to time by written notice of exercise delivered to IDACORP, Inc., at the address set forth below, such notice to be received and effective not later than the close of business on the Expiration Date, specifying the number of shares of common stock to be purchased. In the event that the Expiration Date shall fall on a day that is not a regular business day at IDACORP, Inc.'s executive offices in Boise, Idaho, such written notice must be delivered no later than the last regular business day prior to the Expiration Date.
The Option Exercise Price upon exercise of any Option shall be payable (a) in cash or its equivalent, (b) by tendering previously acquired shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Exercise Price, (c) by broker-assisted cashless exercise, (d) by such other methods as the Compensation Committee may prescribe or (e) by a combination of (a), (b), (c) and/or (d).
B. Termination of Employment [Service as a Director].
Unvested Options
Upon any termination of employment [of service as a Director], unvested Options shall be forfeited.
Vested Options
Death . If the Participant dies while still employed [a Director], any vested Options, to the extent that they are then exercisable, may be exercised at any time before the earlier of (x) the Expiration Date of the Option and (y) one (1) year after the date of the Participant's death, by the person designated in the Participant's last will and testament or by the personal representative of the Participant's estate.
A-1
Disability . If the Participant's employment terminates [resigns as a Director] because of Disability, any vested Options, to the extent that they are then exercisable, may be exercised at any time before the earlier of (x) the Expiration Date of the Option and (y) one (1) year after the date of termination of employment [resignation], by the Participant or by a person qualified or authorized to act on behalf of the Participant.
Cause . If a Participant's termination of employment is [is removed as a Director] for cause, the right to exercise any vested Options shall terminate with such termination of employment [removal]. For this purpose, the determination of the Compensation Committee as to whether employment was terminated [the Director was removed] for cause shall be final.
Retirement . If a Participant terminates employment because of Retirement, any vested Options, to the extent that they are then exercisable, may be exercised at any time before the earlier of (x) the Expiration Date of the Option and (y) three (3) years after the date of the Retirement, by the Participant or by a person qualified or authorized to act on behalf of the Participant.
Other Termination of Employment [Service]. If the Participant's termination of employment [service] is for any reason other than death, Disability, Retirement or cause, any vested Options, to the extent that they are then exercisable, may be exercised at any time before the earlier of (x) the Expiration Date of the Option and (y) three (3) months following the date of the termination of employment [service].
2. Provisions of the Plan . All terms, provisions and conditions applicable to the Award set forth in the Plan and not set forth herein are hereby incorporated by reference herein. To the extent any provision hereof is inconsistent with a provision of the Plan, the provisions of the Plan will govern. The Participant hereby acknowledges receipt of a copy of the Option Award Agreement including Annex A and a copy of the Plan and agrees to be bound by all the terms and provisions hereof and thereof.
3. Ratification of Actions . By accepting the Award or other benefit under the Plan, the Participant and each person claiming under or through him shall be conclusively deemed to have indicated the Participant's acceptance and ratification of, and consent to, any action taken under the Plan or the Award by IDACORP, Inc.
4. Notices . Any notice hereunder to IDACORP, Inc. shall be addressed to its office at 1221 West Idaho Street, Boise, Idaho 83702; Attention: Corporate Secretary and any notice hereunder to the Participant shall be addressed to him at the address specified on the Option Award Agreement, subject to the right of either party to designate at any time hereafter in writing some other address.
5. Definitions . Capitalized terms not otherwise defined herein shall have the meanings given them in the Plan.
6. Governing Law and Severability . To the extent not preempted by Federal law, the Option Award Agreement will be governed by and construed in accordance with the laws of the State of Idaho, without regard to conflicts of law provisions. In the event any provision of the Option Award Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Option Award Agreement, and the Option Award agreement shall be construed and enforced as if the illegal or invalid provision had not been included.A-2
Exhibit 10(h)(xvii)
DIRECTOR / OFFICER
IDACORP, Inc.
2000 LONG-TERM INCENTIVE AND COMPENSATION PLAN
[DATES] PERIOD OF RESTRICTION
RESTRICTED STOCK AWARD AGREEMENT
(time vesting)
[Date]
[Name]
[Address]
In accordance with the terms of the IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan (the "Plan"), pursuant to action of the Compensation Committee (the "Committee") of the Board of Directors, IDACORP, Inc. (the "Company") hereby grants to you (the "Participant"), subject to the terms and conditions set forth in this Restricted Stock Award Agreement (including Annex A hereto and all documents incorporated herein by reference), an award of restricted shares of Company common stock (the "Restricted Stock"), as set forth below:
Date of Grant: |
|
Number of Shares of Restricted Stock: |
|
Period of Restriction: |
___________ through ________________ |
Performance Goal: |
N/A |
Vesting Schedule: |
All of the Shares of Restricted Stock subject to this Award shall vest on ___________ if the Participant remains [employed][on the Board of Directors of the Company or a Subsidiary] through the Period of Restriction. |
THESE SHARES OF RESTRICTED STOCK ARE SUBJECT TO FORFEITURE AS PROVIDED IN ANNEX A AND THE PLAN.
Further terms and conditions of the Award are set forth in Annex A hereto, which is an integral part of this Restricted Stock Award Agreement.
All terms, provisions and conditions applicable to the Award set forth in the Plan and not set forth herein are hereby incorporated by reference herein. To the extent any provision hereof is inconsistent with the Plan, the Plan will govern. The Participant hereby acknowledges receipt of a copy of this Restricted Stock Award Agreement including Annex A hereto and a copy of the Plan and agrees to be bound by all the terms and provisions hereof and thereof.
IDACORP, Inc.
By:______________________________
Agreed :
___________________________
Attachment: Annex A2
2
ANNEX A
TO
IDACORP, Inc.
2000 LONG-TERM INCENTIVE AND COMPENSATION PLAN
RESTRICTED STOCK AWARD AGREEMENT
It is understood and agreed that the Award of Restricted Stock evidenced by the Restricted Stock Award Agreement to which this is annexed is subject to the following additional terms and conditions:
1. Forfeiture and Transfer Restrictions .
A. Forfeiture Restrictions . Except as provided otherwise in Section 2 of this Annex A, if the Participant's [employment][service] is terminated during the Period of Restriction, the Shares of Restricted Stock subject to this Award shall be forfeited as of the date of termination.
B. Transfer Restrictions . The Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated during the Period of Restriction.
2. Termination of [Employment][Service] . If the Participant's [employment][service] is terminated during the Period of Restriction (i) due to the Participant's death or Disability or (ii) due to the Participant's retirement with the approval of the Committee, the Restricted Stock shall vest on the date of such termination of [employment][service] with respect to a prorated number of Shares of Restricted Stock determined by multiplying the total number of Shares subject to this Award times a fraction, the numerator of which is the number of whole months having elapsed during the Period of Restriction as of the date of such termination of [employment][service] and the denominator of which is the total number of whole months in the Period of Restriction. For purposes of this Section 2, determination of whether a Participant's employment is terminated due to the Participant's retirement shall be made in the sole discretion of the Committee and the Committee's determination shall be final.
3. Vesting of Restricted Stock . Except as provided otherwise in Article 14 of the Plan and Sections 1 or 2 of this Annex A, the Restricted Stock shall vest in accordance with the Vesting Schedule set forth in the Restricted Stock Award Agreement. Any Shares that do not vest shall be forfeited.
4. Voting Rights, Dividends and Custody .
The Participant shall be entitled to vote and receive regular cash dividends paid with respect to the Shares subject to this Award during the Period of Restriction; provided, however, that in no event shall the Participant vote or receive dividends paid with respect to any forfeited A-1
Shares on or after the date of forfeiture. The Shares subject to this Award shall be registered in the name of the Participant and held in the Company's custody during the Period of Restriction.
5. Tax Withholding . The Company may make such provisions as are necessary for the withholding of all applicable taxes on the Restricted Stock, in accordance with Article 16 of the Plan. With respect to the minimum statutory tax withholding required with respect to the Restricted Stock, the Participant may elect to satisfy such withholding requirement by having the Company withhold Shares from this Award.
6. Ratification of Actions . By accepting this Award or other benefit under the Plan, the Participant and each person claiming under or through him shall be conclusively deemed to have indicated the Participant's acceptance and ratification of, and consent to, any action taken under the Plan or the Award by IDACORP, Inc.
7. Notices . Any notice hereunder to IDACORP, Inc. shall be addressed to its office at 1221 West Idaho Street, Boise, Idaho 83702; Attention: Corporate Secretary, and any notice hereunder to the Participant shall be addressed to him at the address specified on the Restricted Stock Award Agreement, subject to the right of either party to designate at any time hereafter in writing some other address.
8. Definitions . Capitalized terms not otherwise defined herein shall have the meanings given them in the Plan.
9. Governing Law and Severability . To the extent not preempted by Federal law, the Restricted Stock Award Agreement will be governed by and construed in accordance with the laws of the State of Idaho, without regard to conflicts of law provisions. In the event any provision of the Restricted Stock Award Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Restricted Stock Award Agreement, and the Restricted Stock Award Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.
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Exhibit 10(h)(xxxiii)
IDACORP, Inc.
2000
LONG-TERM INCENTIVE AND COMPENSATION PLAN
PERFORMANCE SHARE AWARD AGREEMENT
(Performance with two goals)
[Date]
[Name]
[Address]
In accordance with the terms of the IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan (the "Plan"), pursuant to action of the Compensation Committee (the "Committee") of the Board of Directors, IDACORP, Inc. (the "Company") hereby grants to you (the "Participant"), subject to the terms and conditions set forth in this Performance Share Award Agreement (including Annex A and Annex B hereto and all documents incorporated herein by reference), an award of shares of Company common stock that are subject to the attainment of performance target levels ("Performance Shares") and an opportunity to earn additional Performance Shares of Company common stock if performance exceeds target levels, as set forth below:
THESE PERFORMANCE SHARES ARE SUBJECT TO FORFEITURE AS PROVIDED IN ANNEX A AND THE PLAN.
[The Participant, in consideration of this grant of Performance Shares, by affixing his signature hereto, specifically (i) waives any rights he may have under the definition of Change in Control contained in Section 2.5 of the Plan, as it was in effect prior to July 20, 2006, and hereby consents to the use of the definition of Change in Control as amended July 20, 2006, and to the amendments made to Article 14 of the Plan on July 20, 2006, in connection with any grants made pursuant to the Plan and still outstanding on the date hereof; (ii) waives any rights he may have under the definition of Change in Control contained in Section 2.6 of the Idaho Power Company Security Plan for Senior Management Employees II, as it was in effect prior to July 20, 2006, and hereby consents to the use of the definition of Change in Control as amended on July 20, 2006; and (iii) waives any rights he may have under the definition of Change in Control contained in Section 3.2 of the Idaho Power 1994 (now IDACORP, Inc.) Restricted Stock Plan, as it was in effect prior to July 20, 2006, and hereby consents to the use of the definition of Change in Control as amended July 20, 2006 in connection with any grants made pursuant to the Plan and still outstanding on the date hereof.]
Further terms and conditions of the Award are set forth in Annex A and Annex B hereto, which are an integral part of this Performance Share Award Agreement.
2
All terms, provisions and conditions applicable to the Award set forth in the Plan and not set forth herein are hereby incorporated by reference herein. To the extent any provision hereof is inconsistent with the Plan, the Plan will govern. The Participant hereby acknowledges receipt of a copy of this Performance Share Award Agreement including Annex A and Annex B hereto and a copy of the Plan and agrees to be bound by all the terms and provisions hereof and thereof.
IDACORP, Inc.
By:______________________________
Agreed
:
_________________________________
Attachments: Annex A
Annex B
3
ANNEX A
TO
IDACORP, Inc.
2000 LONG-TERM INCENTIVE AND COMPENSATION PLAN
PERFORMANCE
SHARE AWARD AGREEMENT
(Performance with two goals)
It is understood and agreed that the Award of Performance Shares evidenced by the Performance Share Award Agreement to which this is annexed is subject to the following additional terms and conditions:
1. Nature of Award. The Award represents the opportunity to receive shares of Company common stock ("Shares") and cash dividends on those Shares. The Award consists of Shares registered in your name as of the Date of Grant, but subject to performance-based vesting conditions ("Performance Shares"). Furthermore, if the combined performance results exceed target levels, additional Performance Shares are earned and distributed in proportion to this excess as determined pursuant to Section 2 hereof. The amount of dividends paid on Performance Shares shall be determined pursuant to Section 4 hereof.
2. Performance Goals and Determination of Number of Performance Shares Earned .
The number of Performance Shares earned, if any, for the Performance Period
shall be determined in accordance with the following formula:
# of Shares = Combined Payout Percentage X Target Award
If the Combined Payout Percentage is not greater than 100%, the "# of Shares" earned relates to the number of Performance Shares subject to the Target Award that vest. To illustrate, with a Target Award of 100 Performance Shares, a 90% Combined Payout Percentage would result in 90% of the Target Award vesting (90 Performance Shares). If the Combined Payout Percentage is greater than 100%, all Performance Shares subject to the Target Award vest and additional Performance Shares equal to the "# of Shares" in excess of the Target Award are earned and distributed. To illustrate, with a Target Award of 100 Performance Shares, a 140% Combined Payout Percentage would result in 100% of the Performance Shares subject to the Target Award vesting and 40 additional Performance Shares earned and distributed. All Performance Shares that do not vest shall be forfeited.
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The "Combined Payout Percentage" is based on (i) the Company's cumulative earnings per share ("CEPS") for the Performance Period as set forth in the table below, weighted 50% and (ii) the Company's total shareholder return ("TSR") relative to that of the Peer Group listed on Annex B (the "Percentile Rank") for the Performance Period, determined in accordance with the table set forth below, weighted 50%:
CEPS Table and Method of Calculation:
CEPS for
|
Payout
Percentage
|
$___ ("maximum") or higher |
150% |
$___ ("target") |
100% |
$___ ("threshold") |
50% |
Less than $___ |
0% |
Performance results between threshold and target, and target and maximum, will be interpolated.
TSR Table and Method of Calculation:
Percentile Rank
|
Payout
Percentage
|
75 th ("maximum") or higher |
150% |
55 th ("target") |
100% |
40th |
50% |
Less than 40th |
0% |
Performance results between threshold and target, and target and maximum, will be interpolated.
The Percentile Rank of a given company's TSR is defined as the percentage of the Peer Group companies' returns falling at or below the given company's TSR. The formula for calculating the Percentile Rank follows:
Percentile Rank = (n - r + 1)/n x 100
Where:
n = total number of companies in the Peer Group, excluding the Company
r = the numeric rank of the Company's TSR relative to the Peer Group, where the highest return in the group is ranked number 1.
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To illustrate, if the Company's TSR is the third highest in the Peer Group comprised of 29 companies, its Percentile Rank would be 93, which would result in a TSR Payout Percentage (weighted 50%) of 150%. The calculation is: (29 - 3 + 1)/29 x 100 = 93.
The Percentile Rank shall be rounded to the nearest whole percentage, with (.5) rounded up.
If the common stock of a company in the Peer Group ceases to be traded during the Performance Period, the company will be deleted from the Peer Group. Percentile Rank shall be calculated without regard to the return of the deleted company.
Total shareholder return is the percentage change in the value of an investment in the common stock of a company from the initial investment made on the last trading day in the calendar year preceding the beginning of the Performance Period through the last trading day in the final year of the Performance Period. It is assumed that dividends are reinvested in additional shares of common stock at the frequency paid.
The Combined Payout Percentage is determined by dividing the sum of the CEPS and TSR Payout Percentages by 2. The total number of Shares earned shall be rounded to the nearest whole number of Shares, with (.5) rounded up.
3. Vesting of Performance Shares and Issuance of Performance Shares . Subject to Section 2 and Section 8 hereof and Article 14 of the Plan, vesting of Performance Shares subject to the Target Award shall occur (if at all) as soon as administratively practicable in the calendar year following the Performance Period to the extent the Performance Goals are met. Subject to any restrictions on issuance of Performance Shares under the Plan, and subject to Section 8 hereof and Article 14 of the Plan, the issuance of additional Performance Shares earned (if any) pursuant to Section 2 hereof shall occur as soon as administratively practicable in the calendar year following the Performance Period.
4. Dividends . The Participant shall be entitled to cash dividends accrued during the Performance Period with respect to Performance Shares subject to the Target Award that vest and any additional Performance Shares that are earned and distributed pursuant to Section 2 hereof. Any such dividends shall be paid in cash to the Participant as soon as administratively practicable following the Performance Period.
5. Forfeiture and Transfer Restrictions .
A. Forfeiture Restrictions . Except as provided otherwise in Section 6 hereof, if the Participant's employment is terminated during the Performance Period, Performance Shares shall be forfeited as of the date of termination.
B. Transfer Restrictions . Performance Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated during the Performance Period.
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6. Termination of Employment . If the Participant's employment is terminated during the Performance Period (i) due to the Participant's death or Disability or (ii) due to the Participant's Retirement, the number of Performance Shares subject to the Target Award that vest (if any) and the number of additional Performance Shares earned (if any) shall be determined in accordance with the provisions of Section 2 hereof as if the Participant had remained employed through the Performance Period, but shall be reduced by multiplying the number of Performance Shares subject to the Target Award that would otherwise be vested and the total number of Performance Shares that would otherwise be earned times a fraction, the numerator of which is the total number of months (with any partial month treated as a whole month) remaining in the Performance Period as of the date of such termination of employment and the denominator of which is the total number of whole months in the Performance Period. Any such vesting of Performance Shares subject to the Target Award and any issuance of Performance Shares earned shall occur in accordance with Section 3 hereof.
7. Voting Rights and Custody . The Participant shall be entitled to vote Performance Shares subject to the Target Award during the Performance Period; provided, however, that in no event shall the Participant vote any such Performance Shares on or after the date of forfeiture. Performance Shares subject to the Target Award shall be registered in the name of the Participant and held in the Company's custody during the Performance Period. The Participant shall not be entitled to vote the Performance Shares in excess of the Target Award unless and until such Performance Shares are earned and distributed.
8. Tax Withholding . The Company may make such provisions as are necessary for the withholding of all applicable taxes on all Performance Shares vested and earned under this Award, in accordance with Article 16 of the Plan. With respect to the minimum statutory tax withholding required with respect to such Performance Shares, the Participant may elect to satisfy such withholding requirement by having the Company withhold Performance Shares from this Award.
9. Ratification of Actions . By accepting this Award or other benefit under the Plan, the Participant and each person claiming under or through him shall be conclusively deemed to have indicated the Participant's acceptance and ratification of, and consent to, any action taken under the Plan or the Award by IDACORP, Inc.
10. Notices . Any notice hereunder to IDACORP, Inc. shall be addressed to its office at 1221 West Idaho Street, Boise, Idaho 83702; Attention: Corporate Secretary, and any notice hereunder to the Participant shall be addressed to him at the address specified on the Performance Share Award Agreement, subject to the right of either party to designate at any time hereafter in writing some other address.
11. Definitions . Capitalized terms not otherwise defined herein shall have the meanings given them in the Plan.
12. Governing Law and Severability . To the extent not preempted by Federal law, the Performance Share Award Agreement will be governed by and construed in accordance with the laws of the State of Idaho, without regard to conflicts of law provisions. In the event any provision of the Performance Share Award Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Performance Share Award Agreement, and the Performance Share Award Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.
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ANNEX B
TO
IDACORP, INC.
2000 LONG-TERM INCENTIVE AND COMPENSATION PLAN
PERFORMANCE SHARE
AWARD AGREEMENT
(Performance with two goals)
PEER GROUP COMPANIES
AGL Resources
Allete
Alliant Energy
Aquila
Black Hills Corp.
CLECO Corp
DPL, Inc.
DQE Inc.
Energy East
Equitable Resources, Inc.
Great Plains Energy
Hawaiian Electric Industries Inc
MDU Resources
National Fuel Gas Company
Northeast Utilities
NSTAR
OGE Energy
Oneok Inc
Pepco Holdings, Inc.
PNM Resources
Puget Energy
Questar Corp.
SCANA Corp
Sierra Pacific Resources
Vectren Corp
Westar Energy Inc
Washington Gas Light
Wisconsin Energy Corp.
WPS Resources
Exhibit 10(h)(xviii)
IDACORP, Inc.
2000 LONG-TERM INCENTIVE AND COMPENSATION PLAN
[DATES] PERIOD OF RESTRICTION
RESTRICTED STOCK AWARD AGREEMENT (Performance)
[Date]
[Name]
[Address]
In accordance with the terms of the IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan (the "Plan"), pursuant to action of the Compensation Committee (the "Committee") of the Board of Directors, IDACORP, Inc. (the "Company") hereby grants to you (the "Participant"), subject to the terms and conditions set forth in this Restricted Stock Award Agreement (including Annex A hereto and all documents incorporated herein by reference), an award of restricted shares of Company common stock (the "Restricted Stock"), as set forth below:
Date of Grant: |
|
Number of Shares of Restricted Stock: |
|
Period of Restriction: |
___________ through ________________ |
Performance Goal: |
Cumulative earnings per share ("CEPS") for the calendar years ____, ____ and ____, as reported on the Company's audited financial statements |
Vesting Schedule: |
If CEPS are less than $____, no Shares shall
vest;
If CEPS are at least $____, ____ Shares shall vest, plus an additional __ Share(s) for every one cent increase in CEPS over $____ up to but not including $____ in CEPS; and If CEPS are at least $____, ____ Shares shall vest (the "Target Award"), plus an additional __ Share(s) for every one cent increase in CEPS over $____ up to and including $____ in CEPS Vesting of Shares of Restricted Stock pursuant to the foregoing schedule shall occur on ____________ (the "Vesting Date") |
THESE SHARES OF RESTRICTED STOCK ARE SUBJECT TO FORFEITURE AS PROVIDED IN ANNEX A AND THE PLAN.
2
[The Participant, in consideration of this grant of Restricted Stock, by affixing his signature hereto, specifically waives any rights he may have under the definition of Change in Control, contained in Section 2.5 of the Plan, as it was in effect prior to July 20, 2006, and hereby consents to the use of the definition of Change in Control as amended on July 20, 2006, and to the amendments made to Article 14 of the Plan on July 20, 2006, in connection with any prior grants made pursuant to the Plan and still outstanding on the date hereof.]
Further terms and conditions of the Award are set forth in Annex A hereto, which is an integral part of this Restricted Stock Award Agreement.
All terms, provisions and conditions applicable to the Award set forth in the Plan and not set forth herein are hereby incorporated by reference herein. To the extent any provision hereof is inconsistent with the Plan, the Plan will govern. The Participant hereby acknowledges receipt of a copy of this Restricted Stock Award Agreement including Annex A hereto and a copy of the Plan and agrees to be bound by all the terms and provisions hereof and thereof.
IDACORP, Inc.
By:______________________________
Agreed :
___________________________
Attachment: Annex A
3
ANNEX A
TO
IDACORP, Inc.
2000 LONG-TERM INCENTIVE AND COMPENSATION PLAN
RESTRICTED STOCK AWARD AGREEMENT (performance)
It is understood and agreed that the Award of Restricted Stock evidenced by the Restricted Stock Award Agreement to which this is annexed is subject to the following additional terms and conditions:
1. Forfeiture and Transfer Restrictions .
A. Forfeiture Restrictions . Except as provided otherwise in Section 2 of this Annex A, if the Participant's [employment][service] is terminated during the Period of Restriction, the Shares of Restricted Stock subject to this Award shall be forfeited as of the date of termination.
B. Transfer Restrictions . The Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated during the Period of Restriction.
2. Termination of [Employment][Service] . If the Participant's [employment][service] is terminated during the Period of Restriction (i) due to the Participant's death or Disability or (ii) due to the Participant's retirement with the approval of the Committee, the Restricted Stock shall vest, if at all, on the Vesting Date in accordance with the Vesting Schedule set forth in the Restricted Stock Award Agreement, but the number of Shares that vests shall be reduced by multiplying the total number of Shares of Restricted Stock that vested times a fraction, the numerator of which is the total number of months (with any partial month treated as a whole month) remaining in the Period of Restriction as of the date of such termination of [employment][service] and the denominator of which is the total number of whole months in the Period of Restriction. For purposes of this Section 2, determination of whether a Participant's employment is terminated due to the Participant's retirement shall be made in the sole discretion of the Committee and the Committee's determination shall be final.
3. Vesting of Restricted Stock . Except as provided otherwise in Article 14 of the Plan and Sections 1 or 2 of this Annex A, the Restricted Stock shall vest in accordance with the Vesting Schedule set forth in the Restricted Stock Award Agreement. Any Shares that do not vest shall be forfeited.
4. Voting Rights, Dividends and Custody . The Participant shall be entitled to vote and receive regular cash dividends paid with respect to the Shares subject to this Award during the Period of Restriction; provided, however, that in no event shall the Participant vote or receive dividends paid with respect to any forfeited Shares on or after the date of forfeiture. The Shares
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subject to this Award shall be registered in the name of the Participant and held in the Company's custody during the Period of Restriction.
5. Tax Withholding . The Company may make such provisions as are necessary for the withholding of all applicable taxes on the Restricted Stock, in accordance with Article 16 of the Plan. With respect to the minimum statutory tax withholding required with respect to the Restricted Stock, the Participant may elect to satisfy such withholding requirement by having the Company withhold Shares from this Award.
6. Ratification of Actions . By accepting this Award or other benefit under the Plan, the Participant and each person claiming under or through him shall be conclusively deemed to have indicated the Participant's acceptance and ratification of, and consent to, any action taken under the Plan or the Award by IDACORP, Inc.
7. Notices . Any notice hereunder to IDACORP, Inc. shall be addressed to its office at 1221 West Idaho Street, Boise, Idaho 83702; Attention: Corporate Secretary, and any notice hereunder to the Participant shall be addressed to him at the address specified on the Restricted Stock Award Agreement, subject to the right of either party to designate at any time hereafter in writing some other address.
8. Definitions . Capitalized terms not otherwise defined herein shall have the meanings given them in the Plan.
9. Governing Law and Severability . To the extent not preempted by Federal law, the Restricted Stock Award Agreement will be governed by and construed in accordance with the laws of the State of Idaho, without regard to conflicts of law provisions. In the event any provision of the Restricted Stock Award Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Restricted Stock Award Agreement, and the Restricted Stock Award Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.
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Exhibit 10(h)(xix)
OFFICER INDEMNIFICATION AGREEMENT
IDACORP, INC.
This Agreement is made and entered into as of the ____ day of _________, 200_ by and between IDACORP, Inc. , an Idaho corporation (the "Corporation"), and _________________ (the "Indemnitee").
Recitals
Whereas , it is essential to the Corporation that it attract and retain as Officers of the Corporation and the Subsidiaries the most capable persons available; and
Whereas , Indemnitee is an Officer of the Corporation and/or one or more of the Subsidiaries and is serving as such at the request of the Corporation; and
Whereas , both the Corporation and Indemnitee recognize the increased risk of litigation and other claims being asserted against officers of public companies in the current environment; and
Whereas , in addition to the indemnification to which Indemnitee is entitled pursuant to the Idaho Business Corporation Act, the general corporation law of each other jurisdiction in which a Subsidiary for whom Indemnitee serves as an Officer is organized, the Articles of Incorporation of the Corporation, as amended, and the Articles of Incorporation or similar document of each Subsidiary for whom Indemnitee serves as an Officer (collectively, the "Charters"), the Corporation has purchased, at its expense, officers' liability insurance protecting Indemnitee in connection with such service; and
Whereas , the Corporation and Indemnitee have concluded that the indemnities available under the Charters and the insurance currently in effect need to be supplemented to more fully protect Indemnitee against the risks associated with Indemnitee's service as an Officer of the Corporation and/or any Subsidiary; and
Whereas , in recognition of Indemnitee's need for additional protection against personal liability in order to enhance Indemnitee's service to the Corporation and/or any Subsidiary in an effective manner, and in order to induce Indemnitee to provide services to the Corporation and/or any Subsidiary as an Officer thereof, the Corporation wishes to provide in this Agreement for the indemnification of Indemnitee to the fullest extent permitted by law and as set forth in this Agreement; [ and ]
[ADD THE FOLLOWING IF THIS AGREEMENT REPLACES AN EXISTING AGREEMENT-- Whereas , the Corporation and Indemnitee previously entered into an Officer Indemnification Agreement dated as of ____________, ______ (the "Prior Agreement") and the Corporation and Indemnitee desire that this Agreement supersede the Prior Agreement in its entirety; ]
Now, therefore , in consideration of the foregoing, the covenants contained herein and Indemnitee's service to the Corporation and/or any Subsidiary, the Corporation and Indemnitee, intending to be legally bound, hereby agree as follows:
Section 1. Agreement to Serve
Indemnitee will serve or continue to serve as an Officer faithfully and to the best of Indemnitee's ability at will of the Corporation and/or any Subsidiary, or until such earlier time as Indemnitee tenders his resignation in writing.
Section 2. Definitions
The following terms, as used herein, shall have the following respective meanings:
2.1. " Affiliate " of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings relative to the foregoing.
2.2. " Beneficial Owner " shall have the meaning set forth in Exchange Act Rule 13d‑3.
2.3. " Board " means the Board of Directors of the Corporation.
2.4. " Change in Control " means:
(a) any person (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Section 13(d) of the Exchange Act, excluding (i) the Corporation or any Subsidiary, (ii) a corporation or other entity owned, directly or indirectly, by the stockholders of the Corporation immediately prior to the transaction in substantially the same proportions as their ownership of stock of the Corporation, (iii) an employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary or (iv) an underwriter temporarily holding securities pursuant to an offering of such securities ("Exchange Act Person")) is the Beneficial Owner, directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Corporation;
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(b) any Exchange Act Person has commenced a tender or exchange offer to acquire any stock of the Corporation (or securities convertible into stock) for cash, securities or any other consideration provided that, after the closing of the offer with full shareholder subscription, such Exchange Act Person would be the Beneficial Owner, directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation (calculated as provided in Paragraph (d) of Rule 13d-3 under the Exchange Act in the case of rights to acquire stock);
(c) all required shareholder approvals have been obtained for a merger, consolidation, reorganization or share exchange, or sale of all or substantially all of the assets, of the Corporation or Idaho Power Company (a "Qualifying Transaction"), unless, immediately following such Qualifying Transaction, all of the following will have occurred: (i) all or substantially all of the Beneficial Owners of the Corporation immediately prior to such Qualifying Transaction will be the Beneficial Owners in substantially the same proportions, directly or indirectly, of more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Qualifying Transaction (including, without limitation, a corporation or other entity which, as a result of such transaction, owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more Subsidiaries) (as the case may be, the "Successor Entity"), (ii) no Exchange Act Person will be the Beneficial Owner, directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Successor Entity and (iii) at least a majority of the members of the board of directors of the Successor Entity will be Incumbent Directors;
(d) shareholder approval of a complete liquidation or dissolution of the Corporation or Idaho Power Company;
(e) within a 24-month period, individuals who were directors of the Board immediately before such period ("Incumbent Directors") cease to constitute at least a majority of the directors of the Board; provided, however, that any director who was not a director of the Board at the beginning of such period shall be deemed to be an Incumbent Director if the election or nomination for election of such director was approved by the vote of at least two-thirds of the directors of the Board then still in office (i) who were in office at the beginning of the 24-month period or (ii) whose election or nomination for election was so approved, in each case, unless such individual was elected or nominated as a result of an actual or threatened election contest or as a result of an actual or threatened solicitation of proxies or consents by or on behalf of any Exchange Act Person other than the Board; or
(f) consummation of any transaction described in Section 2.4(c) or 2.4(d) if such transaction was not approved by shareholders.
For avoidance of doubt, transactions for the purpose of dividing Idaho Power Company's assets into separate distribution, transmission or generation entities or such other entities as the Corporation or Idaho Power Company may determine shall not constitute a Change in Control unless so determined by the Board.
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Upon the Board's determination that (x) a tender offer that constituted a Change in Control under Section 2.4(b) will not result in an Exchange Act Person becoming the Beneficial Owner, directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation or (y) the Qualifying Transaction described in Section 2.4(c) will not be closed or (z) a complete liquidation or dissolution of the Corporation or Idaho Power Company that was approved by shareholders, as described in Section 2.4(d), will not occur, a Change in Control shall be deemed not to have occurred from such date of determination forward, and this Agreement shall continue in effect as if no Change in Control had occurred.
2.5. " Claim " means any threatened, pending or completed action, suit, proceeding, arbitration or other alternative dispute resolution mechanism, inquiry, hearing or investigation, whether conducted by the Corporation, a Subsidiary or any other Person, whether civil, criminal, administrative, legislative, investigative, or other, and in each case whether or not commenced prior to the date of this Agreement, that relates to a Covered Event, and includes, without limitation, those brought by or in the name of the Corporation, a Subsidiary or any Director or Officer of the Corporation or of any Subsidiary.
2.6. " Covered Event " means any event or occurrence that takes place either prior to, on or after the date of this Agreement arising out of, or related to, the fact that Indemnitee is or was an Officer, or while an Officer, is or was serving at the request of the Corporation or a Subsidiary as a director, officer, employee, trustee, agent, partner, member or fiduciary of another corporation, partnership, limited liability company, association, joint venture, employee benefit plan, trust, or other enterprise or organization, or related to anything done or not done by Indemnitee in any such capacity, whether or not the basis of the Claim is alleged action or failure to act in an Official Capacity or in any other capacity while serving as described above. An Officer is considered to be serving an employee benefit plan at the request of the Corporation or a Subsidiary if the Officer's duties to the Corporation or such Subsidiary also impose duties on, or otherwise involve services by, the Officer to the plan or to participants in or beneficiaries of the plan.
2.7. " D & O Insurance " means the directors' and officers' liability insurance issued by the insurers, and having the policy numbers, amounts and deductibles set forth in Section 5.1 hereof and any replacement or substitute policy or policies issued by one or more reputable insurers, providing , in the aggregate, at all times and in all respects, coverage at least comparable and in the same amount as that provided under the policies identified in Section 5.1 hereof.
2.8. " Director " means an individual who is or was a director of the Corporation. "Director" includes, unless the context requires otherwise, the estate or personal representative of a Director.
2.9. " Disinterested Director " means a Director, who at the time of any vote referred to in Section 7.2.2 hereof, is not:
(a) A party to the Claim giving rise to the subject matter of the decision being made; or
(b) An individual having a familial, financial, professional or employment relationship with Indemnitee whose indemnification or advance for Expenses is the subject of the decision being made, which relationship would, in the circumstances, reasonably be expected to exert an influence on such Director's judgment when voting on the decision being made.
2.10. " Exchange Act " means the Securities Exchange Act of 1934, as amended.
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2.11. " Expenses " includes attorneys' fees, retainers, court costs, travel expenses, fees and expenses of experts, including accountants and other advisors, transcript costs, filing fees, telephone charges, postage, copying costs, delivery service fees and other costs, disbursements, expenses and obligations of the type typically paid or incurred in connection with (i) investigating, prosecuting or defending, being a witness in or participating in (including on appeal), or preparing for any of the foregoing in any Claims relating to a Covered Event or (ii) establishing a right to indemnification under Section 7.2.5 hereof.
2.12. " Loss " means any amount which Indemnitee incurs as a result of any Claim, including, without limitation (a) all judgments, penalties and fines, and amounts paid or to be paid in settlement, (b) all interest, assessments and other charges paid or payable in connection therewith and (c) any federal, state, local or foreign taxes imposed (net of the value to Indemnitee of any tax benefits resulting from tax deductions or otherwise as a result of the actual or deemed receipt of any payments under this Agreement).
2.13. " Officer " means an individual who is or was an officer of the Corporation and/or any Subsidiary. "Officer" includes, unless the context requires otherwise, the estate or personal representative of an officer.
2.14. " Official Capacity " means the position in the Corporation and/or any Subsidiary held by Indemnitee.
2.15. " Other Enterprise " means any corporation (other than the Corporation or any Subsidiary), partnership, limited liability company, joint venture, association, employee benefit plan, trust or other enterprise or organization to which Indemnitee renders service at the request of the Corporation or any Subsidiary.
2.16. " Person " means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock corporation, trust, unincorporated organization or government (or any subdivision, department, commission or agency thereof).
2.17. " Special Legal Counsel " means a law firm or an attorney that (a) neither is nor in the past five years has been retained to represent in any material matter the Corporation, any Subsidiary, any Other Enterprise, Indemnitee or any other party to the Claim, (b) under applicable standards of professional conduct then prevailing would not have a conflict of interest in representing either the Corporation or Indemnitee in an action to determine Indemnitee's rights to indemnification under this Agreement and (c) is reasonably acceptable to the Corporation and Indemnitee.
2.18. " Subsidiary " of a Person means (i) any corporation more than fifty percent (50%) of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than fifty percent (50%) of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Corporation.
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2.19. " Trust " shall have the meaning set forth in Section 10 hereof.
2.20. " Voting Securities " means any securities of the Corporation that vote generally in the election of Directors.
Section 3. Indemnification
3.1. General Indemnity Obligation.
3.1.1. Subject to the remaining provisions of this Agreement, the Corporation hereby indemnifies and holds Indemnitee harmless for all Losses and Expenses, until no Claims relating to any Covered Event may be asserted against Indemnitee and until any Claims commenced prior thereto are finally terminated and resolved, regardless of whether Indemnitee continues to serve as an Officer.
3.1.2. The obligations of the Corporation under this Agreement shall apply to the fullest extent authorized or permitted by the provisions of applicable law, as presently in effect or as changed after the date of this Agreement, whether by statute or judicial decision.
3.1.3. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Corporation for a portion of the Losses and/or Expenses paid with respect to a Claim but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify and hold Indemnitee harmless against the portion thereof to which Indemnitee is entitled. The Reviewing Party (as such term is defined in Section 7.2.2 hereof) shall determine the portion (if less than all) of such Losses and/or Expenses for which Indemnitee is entitled to indemnification under this Agreement.
3.1.4. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been wholly successful on the merits or otherwise in defense of any or all Claims relating to (or arising in whole or in part out of) a Covered Event or in defense of any issue or matter therein, including dismissal without prejudice, the Corporation shall indemnify and hold Indemnitee harmless against all Expenses incurred in connection therewith.
3.2. Indemnification for Serving as Witness . Subject to the exclusions set forth in Section 4 hereof, the Corporation hereby indemnifies and holds Indemnitee harmless for all Losses and Expenses in connection with the preparation to serve or service as a witness for any Claim in which Indemnitee is not a party, if such actual or proposed service as a witness arose by reason of Indemnitee having served as an Officer.
3.3. Events Covered. Indemnification under Section 3.1 and/or 3.2 of this Agreement shall be available to Indemnitee regardless of whether the Covered Event that gives rise to the Claim for which Indemnitee seeks indemnification arose prior to, on or after the date of this Agreement.
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Section 4. Limitations on Indemnification
4.1. Coverage Limitations. No indemnification is available pursuant to the provisions of this Agreement:
4.1.1. If such indemnification is prohibited by applicable law;
4.1.2. In respect of any Claim initiated by Indemnitee against the Corporation, any Subsidiary or any Director or Officer of the Corporation or any Subsidiary, unless (i) the Corporation has joined in or consented to the initiation of such Claim or (ii) the Claim is one to enforce indemnification rights under Section 7.2.5 hereof;
4.1.3. In respect of any Losses, Expenses or payment of profits arising from the purchase and sale by Indemnitee of securities in accordance with the provisions of Section 16(b) of the Exchange Act or any similar provisions of any federal, state or local statutory law;
4.1.4. In respect of any fine or penalty arising out of a violation of Section 16(a) of the Exchange Act or similar provisions of any federal, state or local statutory law;
4.1.5. In respect of any civil penalty arising out of a violation of the federal securities laws under Section 21A of the Exchange Act or similar provisions of any federal, state or local statutory law;
4.1.6. In connection with a Claim by or in the right of the Corporation or any Subsidiary, except for reasonable Expenses incurred in connection with such Claim if it is determined that Indemnitee has conducted himself in good faith and (a) that he reasonably believed (1) in the case of conduct in his Official Capacity with the Corporation or any Subsidiary, that his conduct was in the Corporation's or such Subsidiary's best interests; and (2) in all other cases, that his conduct was at least not opposed to the Corporation's or such Subsidiary's best interests; and (3) in the case of any criminal proceeding, that he had no reasonable cause to believe his conduct was unlawful; or (b) that the Claim involved conduct for which indemnification has been made permissible or obligatory under a provision of the applicable Charter;
4.1.7. In connection with any Claim with respect to conduct for which Indemnitee was adjudged liable on the basis that he received a financial benefit to which Indemnitee was not entitled, whether or not involving action in his Official Capacity;
4.1.8. If a final decision by a court having jurisdiction in the matter determines that such indemnification is unlawful;
4.1.9. If Indemnitee's conduct giving rise to the Claim with respect to which indemnification is requested is finally adjudged to have been known by Indemnitee to be fraudulent, deliberately dishonest or willful misconduct; and
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4.1.10. In connection with a loss arising out of Indemnitee's conduct that constitutes an intentional infliction of harm on the Corporation, the shareholders or any Subsidiary, or an intentional violation of criminal law.
4.2. No Duplication of Payments. The Corporation shall not be liable under this Agreement to make any payment otherwise due and payable to the extent Indemnitee has otherwise actually received payment (whether under the Charter or the bylaws of the Corporation or of any Subsidiary, the D & O Insurance or otherwise) of any amounts otherwise due and payable under this Agreement, except to the extent the aggregate of Losses and Expenses to be indemnified exceeds the Losses and Expenses for which Indemnitee has been indemnified.
Section 5. D & O Insurance
5.1. Current Policies. The Corporation presently has in force and effect policies of D & O Insurance with such insurance companies, and having the policy numbers, amounts and deductibles as follows:
Insurer |
Policy No. |
Amount |
Deductible |
AEGIS |
DO167A1A04 |
$35,000,000 |
None |
EIM |
90083804DO |
$50,000,000 |
None |
Copies of such policies are available for inspection by Indemnitee at the Corporation's principal executive offices.
5.2. Continued Coverage. The Corporation hereby covenants and agrees that, subject only to the provisions of Section 5.3 hereof, the Corporation shall maintain the D & O Insurance providing, in all respects, coverage at least comparable and in the same amount as the D & O Insurance specified in Section 5.1 hereof, for so long as Indemnitee shall continue to serve as an Officer, and thereafter so long as Indemnitee shall be subject to any possible Claim relating to a Covered Event.
5.3. Limitations on D & O Insurance. The Corporation shall have no obligation to maintain D & O Insurance if the Board determines in good faith, as a matter of reasonable business judgment, that such insurance is not reasonably available, the premium cost for such insurance is substantially disproportionate to the amount of coverage provided, or the coverage provided by such insurance is so limited by exclusions as to provide an insufficient benefit. The Corporation shall promptly inform Indemnitee in writing of such determination.
5.4. Indemnification. The Corporation's indemnification obligation to Indemnitee under this Agreement shall not be affected by any reduction in, or cancellation of, the D&O Insurance (whether voluntary or involuntary on behalf of the Corporation).
Section 6. Notifications and Defense of Claims
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6.1. Notice by Indemnitee. Indemnitee shall give notice in writing to the Corporation as soon as practicable after Indemnitee becomes aware of any Claim with respect to which indemnification will or could be sought under this Agreement; provided that the failure of Indemnitee to give such notice shall not relieve the Corporation of any obligations it may have to Indemnitee otherwise than under this Agreement.
6.2. Defense.
6.2.1. In the event any Claim relating to Covered Events is by or in the right of the Corporation or any Subsidiary, Indemnitee may, at the option of Indemnitee, either control the defense thereof or accept the defense provided under the D & O Insurance; provided, however, that Indemnitee may not control the defense if such decision would affect the coverage provided by the D & O Insurance, if any, to Indemnitee, the Corporation, any Subsidiary or the other Directors and Officers covered thereby. The Corporation shall not be entitled to assume the defense of any Claim relating to Covered Events brought by or in the right of the Corporation or any Subsidiary.
6.2.2. In the event any Claim relating to Covered Events is other than by or in the right of the Corporation or any Subsidiary, the Corporation shall be entitled to participate therein at its own expense. Except as otherwise provided below, at the option of the Corporation, the Corporation, alone or jointly with any other notified indemnifying party, shall be entitled to assume the defense of any such Claim relating to Covered Events of which Indemnitee notifies the Corporation, with counsel reasonably satisfactory to Indemnitee. After notice from the Corporation to Indemnitee of the Corporation's decision to assume the defense of the Claim, the Corporation shall not be liable to Indemnitee under this Agreement for any Expenses subsequently incurred by Indemnitee in connection with the defense of the Claim other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ counsel in such Claim but the Expenses in connection with employment of such counsel shall be borne by Indemnitee unless (i) the employment of such counsel by Indemnitee has been authorized by the Corporation, (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Corporation and Indemnitee in the conduct of the defense of such Claim, or (iii) the Corporation shall not within sixty (60) days in fact have employed counsel to assume the defense of such Claim, in each of which cases the Expenses in connection with employment of Indemnitee's counsel shall be borne by the Corporation. The Corporation shall not be entitled to assume the defense of any Claim relating to Covered Events as to which Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Corporation and Indemnitee in the course of defense of such Claim.
6.2.3. The Corporation shall have no obligation under this Agreement with respect to any amounts paid, or to be paid, in settlement of any Claim relating to any Covered Event without the express prior written consent of the Corporation to any related settlement. In no event shall the Corporation authorize any settlement imposing any liability or other obligations on Indemnitee without the express prior written consent of Indemnitee. Neither the Corporation nor Indemnitee shall unreasonably withhold consent to any proposed settlement.
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Section 7. Advancements; Determinations; and Payments
7.1. Advancement of Expenses.
7.1.1. To obtain advancement of Expenses under this Agreement, Indemnitee shall submit to the Corporation a written request for such advancement, together with such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to such advancement. Indemnitee must also furnish to the Corporation a written affirmation of his good faith belief that (a) he has conducted himself in good faith and (1) that he reasonably believed (A) in the case of conduct in his Official Capacity with the Corporation or any Subsidiary, that his conduct was in the Corporation's or such Subsidiary's best interests; and (B) in all other cases, that his conduct was at least not opposed to the Corporation's or such Subsidiary's best interests; and (C) in the case of any criminal proceeding, that he had no reasonable cause to believe his conduct was unlawful, or (2) that the Claim involved conduct for which indemnification has been made permissible or obligatory under a provision of the applicable Charter, or that (b) the Claim involves conduct for which liability has been eliminated under a provision of the applicable Charter, as authorized by applicable law. In addition, Indemnitee must furnish to the Corporation a written undertaking to repay the advance if it is ultimately determined that he is not entitled to indemnification. Advances shall be made without regard to Indemnitee's ability to repay the advance and without regard to Indemnitee's ultimate entitlement to indemnification under the provisions of this Agreement. Indemnitee's obligation to repay the Corporation for advances shall be unsecured and no interest shall be charged thereon. Advances shall include any and all reasonable Expenses incurred by Indemnitee in pursuing an action to enforce this right of advancement.
7.1.2. If requested by Indemnitee, in accordance with Section 7.1.1 hereof, the Corporation shall advance to Indemnitee, no later than thirty (30) days following any such request, any and all Expenses for which advancement has been requested in accordance with Section 7.1.1 hereof.
7.2. Determination of Indemnification; Appeal.
7.2.1. To obtain indemnification under this Agreement, Indemnitee shall submit to the Corporation a written request, together with such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.
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7.2.2. Prior to any Change in Control, the Person or Persons who shall determine whether and to what extent Indemnitee is entitled to indemnification (the "Reviewing Party") shall be (i) if there are two (2) or more Disinterested Directors, the Board acting by a majority vote of all the Disinterested Directors, a majority of whom shall for such purposes constitute a quorum, or by a majority of the members of a committee of two (2) or more Disinterested Directors appointed by such a vote; (ii) Special Legal Counsel selected: (A) if there are fewer than two (2) Disinterested Directors, by the Board, in which selection Directors who do not qualify as Disinterested Directors may participate; or (B) by a majority vote of Disinterested Directors, a majority of whom shall for such purposes constitute a quorum; or (iii) the shareholders of the Corporation (if submitted by the Board) but shares of stock owned by or voted under the control of any Indemnitee who is at the time party to the Claim may not be voted. The Corporation shall notify Indemnitee in writing of such determination no later than two (2) business days thereafter.
7.2.3. After a Change in Control, the Reviewing Party shall be Special Legal Counsel selected in the manner set forth in clause (ii) of the first sentence in Section 7.2.2 hereof and approved by Indemnitee (which approval shall not be unreasonably withheld). With respect to all matters arising after a Change in Control concerning the rights of Indemnitee to indemnification under this Agreement (including the determinations required in the context of Section 10 of this Agreement) or any other agreement or under applicable law, the Charter or the by-laws of the Corporation or any applicable Subsidiary now or hereafter in effect relating to indemnification for Claims arising out of Covered Events, the Corporation shall seek legal advice only from such Special Legal Counsel. Such Special Legal Counsel, among other things, shall render its written opinion to the Corporation and Indemnitee as to whether and to what extent Indemnitee should be permitted to be indemnified under applicable law. The Corporation agrees to pay the reasonable fees of such Special Legal Counsel and indemnify fully such Special Legal Counsel against any and all expenses (including attorneys' fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the engagement of such Special Legal Counsel pursuant hereto.
7.2.4. If a determination is made, in accordance with Section 7.2.2 or 7.2.3 hereof, that Indemnitee is entitled to all or a portion of the requested indemnification, payment to Indemnitee shall be made within thirty (30) days after such determination.
7.2.5. If (i) no determination of entitlement to indemnification shall have been made within thirty (30) days after Indemnitee has made a request in accordance with Section 7.2.1 hereof, (ii) payment of indemnification pursuant to Section 7.2.4 hereof is not made within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification, (iii) it is determined pursuant to Section 7.2.2 or 7.2.3 hereof that Indemnitee is not entitled to indemnification under this Agreement or is only entitled to a portion of such indemnification, or (iv) Indemnitee has not received advancement of Expenses within thirty (30) days after making such a request in accordance with Section 7.1 hereof, Indemnitee shall have the right to enforce the indemnification rights under this Agreement by commencing litigation in any court of competent jurisdiction in the State of Idaho seeking an initial determination by the court or challenging any determination made in accordance with Section 7.2.2 or 7.2.3 hereof or any aspect thereof. Any determination made in accordance with Section 7.2.2 or 7.2.3 hereof not challenged by Indemnitee on or before the first anniversary of the date of the determination shall be binding on the Corporation and Indemnitee. The remedy provided for in this Section 7.2.5 shall be in addition to any other remedies available to Indemnitee in law or equity.
Section 8. Indemnification for Expenses Incurred in Enforcing Rights
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8.1. The Corporation shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall advance such Expenses to Indemnitee, that are incurred by Indemnitee in connection with any Claim asserted against or action brought by Indemnitee for (i) enforcement of this Agreement, (ii) indemnification of Expenses or Expense advances by the Corporation under this Agreement or any other agreement or under applicable law, the Charter or the bylaws of the Corporation or any applicable Subsidiary now or hereafter in effect relating to indemnification for Claims arising out of Covered Events, and/or (iii) recovery under the D & O Insurance. The advancement of Expenses under this Section 8.1 shall be governed by Section 7.1 hereof.
Section 9. Burden of Proof and Presumptions
9.1. Burden of Proof. To the maximum extent permitted by applicable law in making a determination with respect to entitlement to indemnification or advancement of Expenses hereunder, it shall be presumed that Indemnitee is entitled to indemnification or advancement of Expenses under this Agreement if Indemnitee has submitted a request for indemnification or a request for advancement of Expenses in accordance with Section 7.2.1 or 8.1 hereof, and the Corporation shall have the burden of proof to overcome that presumption in connection with the making of any determination in accordance with Section 7.1.1, 7.2.2, 7.2.3 or 8.1 of this Agreement contrary to that presumption.
9.2. Plea of Nolo Contendere. The termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not affect adversely either the right of Indemnitee to indemnification under this Agreement or the presumptions to which Indemnitee is otherwise entitled pursuant to the provisions of this Agreement nor create a presumption that Indemnitee did not meet any particular standard of conduct or have a particular belief or that a court has determined that indemnification is not permitted by applicable law.
9.3. Employee Plans. If Indemnitee is serving an employee benefit plan at the request of the Corporation or a Subsidiary, Indemnitee's conduct with respect to the plan for a purpose he reasonably believed to be in the best interests of the participants in, and the beneficiaries of, the plan shall be deemed to be not opposed to the best interests of the Corporation or the Subsidiary.
Section 10. Establishment of Trust
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In the event of a Change in Control, the Corporation shall, upon written request by Indemnitee, create a trust (the "Trust") for the benefit of Indemnitee and from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, participating in, and/or defending any Claim relating to a Covered Event. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Reviewing Party. The terms of the Trust shall provide that (i) the Trust shall not be revoked or the principal thereof invaded, without the written consent of the Indemnitee, (ii) the trustee shall advance, within thirty (30) days of a request by Indemnitee, any and all Expenses to Indemnitee (and Indemnitee hereby agrees to repay the Trust under the same circumstances for which Indemnitee would be required to repay the Corporation under Section 7.1.1 hereof), (iii) the Trust shall continue to be funded by the Corporation in accordance with the funding obligation set forth above, (iv) the trustee shall promptly pay to Indemnitee all amounts for which Indemnitee shall be entitled to indemnification pursuant to this Agreement, and (v) all unexpended funds in the Trust shall revert to the Corporation upon a final determination by the Reviewing Party or a court of competent jurisdiction, as the case may be, that Indemnitee has been fully indemnified under the terms of this Agreement. The trustee shall be a bank or trust company chosen by the Corporation and reasonably satisfactory to Indemnitee. Nothing in this Section 10 shall relieve the Corporation of any of its obligations under this Agreement. All income earned on the assets in the Trust shall be reported as income by the Corporation for federal, state, local, and foreign tax purposes. The Corporation shall pay all costs of establishing and maintaining the Trust and shall indemnify the trustee against any and all expenses (including attorneys' fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the establishment and maintenance of the Trust. If a Trust is created pursuant to this Section 10 and, thereafter, pursuant to the last paragraph of Section 2.4 hereof, the Change in Control is deemed not to have occurred, as soon as practicable after the Change in Control is deemed not to have occurred the Trust shall be revoked and any Trust funds shall revert to the Corporation (this Agreement constituting the Indemnitee's written consent to such revocation and reversion). Indemnitee agrees to cooperate and to take any actions as may reasonably be requested by the Corporation or the trustee of the Trust in connection with the revocation of the Trust and/or reversion of Trust funds pursuant to the preceding sentence.
Section 11. Subrogation
In the event of any payment under this Agreement to or on behalf of Indemnitee, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery in Indemnitee against any Person other than the Corporation or Indemnitee in respect of the Claim giving rise to such payment. Indemnitee shall execute all papers reasonably required and shall do everything reasonably necessary to secure such rights, including the execution of such documents reasonably necessary to enable the Corporation effectively to bring suit to enforce such rights.
Section 12. Miscellaneous Provisions
12.1. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of (a) the Corporation, its successors and assigns (including any direct or indirect successor by merger, consolidation, share exchange or operation of law or by transfer of all or substantially all of its assets) and (b) Indemnitee and the heirs, personal and legal representatives, executors, administrators or assigns of Indemnitee.
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12.2. Severability. The provisions of this Agreement are severable. If any provision of this Agreement shall be held by any court of competent jurisdiction to be invalid, void or unenforceable, such provision shall be deemed to be modified to the minimum extent necessary to avoid a violation of law and, as so modified, such provision and the remaining provisions shall remain valid and enforceable in accordance with their terms to the fullest extent permitted by law.
12.3. Rights Not Exclusive; Continuation of Right of Indemnification. Nothing in this Agreement shall be deemed to diminish or otherwise restrict Indemnitee's right to indemnification pursuant to any provision of the Charter or bylaws of the Corporation or any Subsidiary, any agreement, vote of shareholders or Disinterested Directors, applicable law or otherwise [ADD THE FOLLOWING IF THIS AGREEMENT REPLACES AN EXISTING AGREEMENT-- ; provided, however, that this Agreement shall supersede the Prior Agreement in its entirety and as of the date of this Agreement Indemnitee shall have no further rights under the Prior Agreement ] . This Agreement shall be effective as of the date first above written and continue in effect until no Claims relating to any Covered Event may be asserted against Indemnitee and until any Claims commenced prior thereto are finally terminated and resolved, regardless of whether Indemnitee continues to serve as an Officer.
12.4. Subsequent Amendments. No amendment, termination or repeal of any provision of the Charter or bylaws of the Corporation or any Subsidiary, or any respective successors thereto, shall affect or diminish in any way the rights of Indemnitee to indemnification, or the obligations of the Corporation, arising under this Agreement, whether the alleged actions or conduct of Indemnitee giving rise to the necessity of such indemnification arose before or after any such amendment, termination or repeal.
12.5. Notices. Notices required under this Agreement shall be given in writing and shall be deemed given when delivered in person or sent by certified or registered mail, return receipt requested, postage prepaid. Notices shall be directed to the Corporation at its principal executive offices currently located at 1221 West Idaho Street, Boise, Idaho 83702, Attention: Corporate Secretary, and to Indemnitee at its address set forth below (or such other address as either party may designate in writing to the other party).
12.6. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Idaho applicable to contracts made and performed in such state without giving effect to the principles of conflict of laws.
12.7. Headings. The headings of the Sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
12.8. Counterparts. This Agreement may be executed in any number of counterparts all of which taken together shall constitute one instrument.
12.9. Modifications and Waivers. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall constitute, or be deemed to constitute, a waiver of any other provisions hereof (whether or not similar) nor shall any such waiver constitute a continuing waiver.
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12.10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Corporation or any Affiliate of the Corporation against Indemnitee, Indemnitee's spouse, heirs, executors, or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action. Any claim or cause of action of the Corporation or any Affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such period; provided , however , that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.
The parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
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Exhibit 10(h)(xx)
Director Indemnification Agreement
IDACORP, Inc.
This Agreement is made and entered into as of the ____ day of _________, 200_ by and between IDACORP, Inc. , an Idaho corporation (the "Corporation"), and __________________ (the "Indemnitee").
Recitals
Whereas , it is essential to the Corporation that it attract and retain as Directors of the Corporation and the Subsidiaries the most capable persons available; and
Whereas , Indemnitee is a Director of the Corporation and/or one or more of the Subsidiaries and is serving as such at the request of the Corporation; and
Whereas , both the Corporation and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors of public companies in the current environment; and
Whereas , in addition to the indemnification to which Indemnitee is entitled pursuant to the Idaho Business Corporation Act, the general corporation law of each other jurisdiction in which a Subsidiary for whom Indemnitee serves as a Director is organized, the Articles of Incorporation of the Corporation, as amended, and the Articles of Incorporation or similar document of each Subsidiary for whom Indemnitee serves as a Director (collectively, the "Charters"), the Corporation has purchased, at its expense, directors' liability insurance protecting Indemnitee in connection with such service; and
Whereas , the Corporation and Indemnitee have concluded that the indemnities available under the Charters and the insurance currently in effect need to be supplemented to more fully protect Indemnitee against the risks associated with Indemnitee's service as a Director of the Corporation and/or any Subsidiary; and
Whereas , in recognition of Indemnitee's need for additional protection against personal liability in order to enhance Indemnitee's service to the Corporation and/or any Subsidiary in an effective manner, and in order to induce Indemnitee to provide services to the Corporation and/or any Subsidiary as a Director thereof, the Corporation wishes to provide in this Agreement for the indemnification of Indemnitee to the fullest extent permitted by law and as set forth in this Agreement; [ and ]
[ADD THE FOLLOWING IF THIS AGREEMENT REPLACES AN EXISTING AGREEMENT-- Whereas , the Corporation and Indemnitee previously entered into a Director Indemnification Agreement dated as of ____________, ______ (the "Prior Agreement") and the Corporation and Indemnitee desire that this Agreement supersede the Prior Agreement in its entirety; ]
Now, therefore , in consideration of the foregoing, the covenants contained herein and Indemnitee's service to the Corporation and/or any Subsidiary, the Corporation and Indemnitee, intending to be legally bound, hereby agree as follows:
Section 1. Agreement to Serve
Indemnitee will serve or continue to serve, at will of the Corporation and/or any Subsidiary, as a Director faithfully and to the best of Indemnitee's ability so long as Indemnitee is duly elected and qualified in accordance with the applicable provisions of the applicable Charter or bylaws of the Corporation and/or any Subsidiary or until such earlier time as Indemnitee tenders his resignation in writing.
Section 2. Definitions
The following terms, as used herein, shall have the following respective meanings:
2.1. " Affiliate " of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings relative to the foregoing.
2.2. " Beneficia l O wner " shall have the meaning set forth in Exchange Act Rule 13d‑3.
2.3. " Board " means the Board of Directors of the Corporation.
2.4. " Change in Contro l" means:
(a) any person (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Section 13(d) of the Exchange Act, excluding (i) the Corporation or any Subsidiary, (ii) a corporation or other entity owned, directly or indirectly, by the stockholders of the Corporation immediately prior to the transaction in substantially the same proportions as their ownership of stock of the Corporation, (iii) an employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary or (iv) an underwriter temporarily holding securities pursuant to an offering of such securities ("Exchange Act Person")) is the Beneficial Owner, directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Corporation;
(b) any Exchange Act Person has commenced a tender or exchange offer to acquire any stock of the Corporation (or securities convertible into stock) for cash, securities or any other consideration provided that, after the closing of the offer with full shareholder subscription, such Exchange Act Person would be the Beneficial Owner, directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation (calculated as provided in Paragraph (d) of Rule 13d-3 under the Exchange Act in the case of rights to acquire stock);
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(c) all required shareholder approvals have been obtained for a merger, consolidation, reorganization or share exchange, or sale of all or substantially all of the assets, of the Corporation or Idaho Power Company (a "Qualifying Transaction"), unless, immediately following such Qualifying Transaction, all of the following will have occurred: (i) all or substantially all of the Beneficial Owners of the Corporation immediately prior to such Qualifying Transaction will be the Beneficial Owners in substantially the same proportions, directly or indirectly, of more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Qualifying Transaction (including, without limitation, a corporation or other entity which, as a result of such transaction, owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more Subsidiaries) (as the case may be, the "Successor Entity"), (ii) no Exchange Act Person will be the Beneficial Owner, directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Successor Entity and (iii) at least a majority of the members of the board of directors of the Successor Entity will be Incumbent Directors;
(d) shareholder approval of a complete liquidation or dissolution of the Corporation or Idaho Power Company;
(e) within a 24-month period, individuals who were directors of the Board immediately before such period ("Incumbent Directors") cease to constitute at least a majority of the directors of the Board; provided, however, that any director who was not a director of the Board at the beginning of such period shall be deemed to be an Incumbent Director if the election or nomination for election of such director was approved by the vote of at least two-thirds of the directors of the Board then still in office (i) who were in office at the beginning of the 24-month period or (ii) whose election or nomination for election was so approved, in each case, unless such individual was elected or nominated as a result of an actual or threatened election contest or as a result of an actual or threatened solicitation of proxies or consents by or on behalf of any Exchange Act Person other than the Board; or
(f) consummation of any transaction described in Section 2.4(c) or 2.4(d) if such transaction was not approved by shareholders.
For avoidance of doubt, transactions for the purpose of dividing Idaho Power Company's assets into separate distribution, transmission or generation entities or such other entities as the Corporation or Idaho Power Company may determine shall not constitute a Change in Control unless so determined by the Board.
Upon the Board's determination that (x) a tender offer that constituted a Change in Control under Section 2.4(b) will not result in an Exchange Act Person becoming the Beneficial Owner, directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Corporation or (y) the Qualifying Transaction described in Section 2.4(c) will not be closed or (z) a complete liquidation or dissolution of the Corporation or Idaho Power Company that was approved by shareholders, as described in Section 2.4(d), will not occur, a Change in Control shall be deemed not to have occurred from such date of determination forward, and this Agreement shall continue in effect as if no Change in Control had occurred.
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2.5. " Claim " means any threatened, pending or completed action, suit, proceeding, arbitration or other alternative dispute resolution mechanism, inquiry, hearing or investigation, whether conducted by the Corporation, a Subsidiary or any other Person, whether civil, criminal, administrative, legislative, investigative, or other, and in each case whether or not commenced prior to the date of this Agreement, that relates to a Covered Event, and includes, without limitation, those brought by or in the name of the Corporation, a Subsidiary or any Director or officer of the Corporation or of any Subsidiary.
2.6. " Covered Event " means any event or occurrence that takes place either prior to, on or after the date of this Agreement arising out of, or related to, the fact that Indemnitee is or was a Director, or while a Director, is or was serving at the request of the Corporation or a Subsidiary as a director, officer, employee, trustee, agent, partner, member or fiduciary of another corporation, partnership, limited liability company, association, joint venture, employee benefit plan, trust, or other enterprise or organization, or related to anything done or not done by Indemnitee in any such capacity, whether or not the basis of the Claim is alleged action or failure to act in an Official Capacity or in any other capacity while serving as described above. A Director is considered to be serving an employee benefit plan at the request of the Corporation or a Subsidiary if the Director's duties to the Corporation or such Subsidiary also impose duties on, or otherwise involve services by, the Director to the plan or to participants in or beneficiaries of the plan.
2.7. " D & O Insurance " means the directors' and officers' liability insurance issued by the insurers, and having the policy numbers, amounts and deductibles set forth in Section 5.1 hereof and any replacement or substitute policy or policies issued by one or more reputable insurers, providing, in the aggregate, at all times and in all respects, coverage at least comparable and in the same amount as that provided under the policies identified in Section 5.1 hereof.
2.8. " Director " means an individual who is or was a director of the Corporation and/or one or more Subsidiaries, unless the context indicates otherwise. "Director" includes, unless the context requires otherwise, the estate or personal representative of a Director.
2.9. " Disinterested Director " means a Director of the Corporation, who at the time of any vote referred to in Section 7.2.2 hereof, is not:
(a) A party to the Claim giving rise to the subject matter of the decision being made; or
(b) An individual having a familial, financial, professional or employment relationship with Indemnitee whose indemnification or advance for Expenses is the subject of the decision being made, which relationship would, in the circumstances, reasonably be expected to exert an influence on such Director's judgment when voting on the decision being made.
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2.10. " Exchange Act " means the Securities Exchange Act of 1934, as amended.
2.11. " Expenses " includes attorneys' fees, retainers, court costs, travel expenses, fees and expenses of experts, including accountants and other advisors, transcript costs, filing fees, telephone charges, postage, copying costs, delivery service fees and other costs, disbursements, expenses and obligations of the type typically paid or incurred in connection with (i) investigating, prosecuting or defending, being a witness in or participating in (including on appeal), or preparing for any of the foregoing in any Claims relating to a Covered Event or (ii) establishing a right to indemnification under Section 7.2.5 hereof.
2.12. " Loss " means any amount which Indemnitee incurs as a result of any Claim, including, without limitation (a) all judgments, penalties and fines, and amounts paid or to be paid in settlement, (b) all interest, assessments and other charges paid or payable in connection therewith and (c) any federal, state, local or foreign taxes imposed (net of the value to Indemnitee of any tax benefits resulting from tax deductions or otherwise as a result of the actual or deemed receipt of any payments under this Agreement).
2.13. " Official Capacity " means the position of Indemnitee in the Corporation and/or any Subsidiary.
2.14. " Other Enterprise " means any corporation (other than the Corporation or any Subsidiary), partnership, limited liability company, joint venture, association, employee benefit plan, trust or other enterprise or organization to which Indemnitee renders service at the request of the Corporation or any Subsidiary.
2.15. " Person " means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock corporation, trust, unincorporated organization or government (or any subdivision, department, commission or agency thereof).
2.16. " Special Legal Counsel " means a law firm or an attorney that (a) neither is nor in the past five years has been retained to represent in any material matter the Corporation, any Subsidiary, any Other Enterprise, Indemnitee or any other party to the Claim, (b) under applicable standards of professional conduct then prevailing would not have a conflict of interest in representing either the Corporation or Indemnitee in an action to determine Indemnitee's rights to indemnification under this Agreement and (c) is reasonably acceptable to the Corporation and Indemnitee.
2.17. " Subsidiary " of a Person means (i) any corporation more than fifty percent (50%) of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than fifty percent (50%) of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Corporation.
2.18. " Trust " shall have the meaning set forth in Section 10 hereof.
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2.19. " Voting Securities " means any securities of the Corporation that vote generally in the election of Directors of the Corporation.
Section 3. Indemnification
3.1. General Indemnity Obligation.
3.1.1. Subject to the remaining provisions of this Agreement, the Corporation hereby indemnifies and holds Indemnitee harmless for all Losses and Expenses, until no Claims relating to any Covered Event may be asserted against Indemnitee and until any Claims commenced prior thereto are finally terminated and resolved, regardless of whether Indemnitee continues to serve as a Director.
3.1.2. The obligations of the Corporation under this Agreement shall apply to the fullest extent authorized or permitted by the provisions of applicable law, as presently in effect or as changed after the date of this Agreement, whether by statute or judicial decision.
3.1.3. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Corporation for a portion of the Losses and/or Expenses paid with respect to a Claim but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify and hold Indemnitee harmless against the portion thereof to which Indemnitee is entitled. The Reviewing Party (as such term is defined in Section 7.2.2 hereof) shall determine the portion (if less than all) of such Losses and/or Expenses for which Indemnitee is entitled to indemnification under this Agreement.
3.1.4. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been wholly successful on the merits or otherwise in defense of any or all Claims relating to (or arising in whole or in part out of) a Covered Event or in defense of any issue or matter therein, including dismissal without prejudice, the Corporation shall indemnify and hold Indemnitee harmless against all Expenses incurred in connection therewith.
3.2. Indemnification for Serving as Witness . Subject to the exclusions set forth in Section 4 hereof, the Corporation hereby indemnifies and holds Indemnitee harmless for all Losses and Expenses in connection with the preparation to serve or service as a witness for any Claim in which Indemnitee is not a party, if such actual or proposed service as a witness arose by reason of Indemnitee having served as a Director.
3.3. Events Covered . Indemnification under Section 3.1 and/or 3.2 of this Agreement shall be available to Indemnitee regardless of whether the Covered Event that gives rise to the Claim for which Indemnitee seeks indemnification arose prior to, on or after the date of this Agreement.
Section 4. Limitations on Indemnification
4.1. Coverage Limitations . No indemnification is available pursuant to the provisions of this Agreement:
4.1.1. If such indemnification is prohibited by applicable law;
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4.1.2. In respect of any Claim initiated by Indemnitee against the Corporation, any Subsidiary or any Director or officer of the Corporation or any Subsidiary, unless (i) the Corporation has joined in or consented to the initiation of such Claim or (ii) the Claim is one to enforce indemnification rights under Section 7.2.5 hereof;
4.1.3. In respect of any Losses, Expenses or payment of profits arising from the purchase and sale by Indemnitee of securities in accordance with the provisions of Section 16(b) of the Exchange Act or any similar provisions of any federal, state or local statutory law;
4.1.4. In respect of any fine or penalty arising out of a violation of Section 16(a) of the Exchange Act or similar provisions of any federal, state or local statutory law;
4.1.5. In respect of any civil penalty arising out of a violation of the federal securities laws under Section 21A of the Exchange Act or similar provisions of any federal, state or local statutory law;
4.1.6. In connection with a Claim by or in the right of the Corporation or any Subsidiary, except for reasonable Expenses incurred in connection with such Claim if it is determined that Indemnitee has conducted himself in good faith and (a) that he reasonably believed (1) in the case of conduct in his Official Capacity with the Corporation or any Subsidiary, that his conduct was in the Corporation's or such Subsidiary's best interests; and (2) in all other cases, that his conduct was at least not opposed to the Corporation's or such Subsidiary's best interests; and (3) in the case of any criminal proceeding, that he had no reasonable cause to believe his conduct was unlawful; or (b) that the Claim involved conduct for which indemnification has been made permissible or obligatory under a provision of the applicable Charter;
4.1.7. In connection with any Claim with respect to conduct for which Indemnitee was adjudged liable on the basis that he received a financial benefit to which Indemnitee was not entitled, whether or not involving action in his Official Capacity;
4.1.8. If a final decision by a court having jurisdiction in the matter determines that such indemnification is unlawful; and
4.1.9. If Indemnitee's conduct giving rise to the Claim with respect to which indemnification is requested is finally adjudged to have been known by Indemnitee to be fraudulent, deliberately dishonest or willful misconduct.
4.2. No Duplication of Payments . The Corporation shall not be liable under this Agreement to make any payment otherwise due and payable to the extent Indemnitee has otherwise actually received payment (whether under the Charter or the bylaws of the Corporation or of any Subsidiary, the D & O Insurance or otherwise) of any amounts otherwise due and payable under this Agreement, except to the extent the aggregate of Losses and Expenses to be indemnified exceeds the Losses and Expenses for which Indemnitee has been indemnified.
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Section 5. D & O Insurance
5.1. Current Policies . The Corporation presently has in force and effect policies of D & O Insurance with such insurance companies, and having the policy numbers, amounts and deductibles as follows:
Insurer |
Policy No. |
Amount |
Deductible |
AEGIS |
DO167A1A04 |
$35,000,000 |
None |
EIM |
90083804DO |
$50,000,000 |
None |
Copies of such policies are available for inspection by Indemnitee at the Corporation's principal executive offices.
5.2. Continued Coverage . The Corporation hereby covenants and agrees that, subject only to the provisions of Section 5.3 hereof, the Corporation shall maintain the D & O Insurance providing, in all respects, coverage at least comparable and in the same amount as the D & O Insurance specified in Section 5.1 hereof, for so long as Indemnitee shall continue to serve as a Director, and thereafter so long as Indemnitee shall be subject to any possible Claim relating to a Covered Event.
5.3. Limitations on D & O Insurance . The Corporation shall have no obligation to maintain D & O Insurance if the Board determines in good faith, as a matter of reasonable business judgment, that such insurance is not reasonably available, the premium cost for such insurance is substantially disproportionate to the amount of coverage provided, or the coverage provided by such insurance is so limited by exclusions as to provide an insufficient benefit. The Corporation shall promptly inform Indemnitee in writing of such determination.
5.4. Indemnification . The Corporation's indemnification obligation to Indemnitee under this Agreement shall not be affected by any reduction in, or cancellation of, the D&O Insurance (whether voluntary or involuntary on behalf of the Corporation).
Section 6. Notifications and Defense of Claims
6.1. Notice by Indemnitee . Indemnitee shall give notice in writing to the Corporation as soon as practicable after Indemnitee becomes aware of any Claim with respect to which indemnification will or could be sought under this Agreement; provided that the failure of Indemnitee to give such notice shall not relieve the Corporation of any obligations it may have to Indemnitee otherwise than under this Agreement.
6.2. Defense .
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6.2.1. In the event any Claim relating to Covered Events is by or in the right of the Corporation or any Subsidiary, Indemnitee may, at the option of Indemnitee, either control the defense thereof or accept the defense provided under the D & O Insurance; provided , however , that Indemnitee may not control the defense if such decision would affect the coverage provided by the D & O Insurance, if any, to Indemnitee, the Corporation, any Subsidiary or the other Directors and officers covered thereby. The Corporation shall not be entitled to assume the defense of any Claim relating to Covered Events brought by or in the right of the Corporation or any Subsidiary.
6.2.2. In the event any Claim relating to Covered Events is other than by or in the right of the Corporation or any Subsidiary, the Corporation shall be entitled to participate therein at its own expense. Except as otherwise provided below, at the option of the Corporation, the Corporation, alone or jointly with any other notified indemnifying party, shall be entitled to assume the defense of any such Claim relating to Covered Events of which Indemnitee notifies the Corporation, with counsel reasonably satisfactory to Indemnitee. After notice from the Corporation to Indemnitee of the Corporation's decision to assume the defense of the Claim, the Corporation shall not be liable to Indemnitee under this Agreement for any Expenses subsequently incurred by Indemnitee in connection with the defense of the Claim other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ counsel in such Claim but the Expenses in connection with employment of such counsel shall be borne by Indemnitee unless (i) the employment of such counsel by Indemnitee has been authorized by the Corporation, (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Corporation and Indemnitee in the conduct of the defense of such Claim, or (iii) the Corporation shall not within sixty (60) days in fact have employed counsel to assume the defense of such Claim, in each of which cases the Expenses in connection with employment of Indemnitee's counsel shall be borne by the Corporation. The Corporation shall not be entitled to assume the defense of any Claim relating to Covered Events as to which Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Corporation and Indemnitee in the course of defense of such Claim.
6.2.3. The Corporation shall have no obligation under this Agreement with respect to any amounts paid, or to be paid, in settlement of any Claim relating to any Covered Event without the express prior written consent of the Corporation to any related settlement. In no event shall the Corporation authorize any settlement imposing any liability or other obligations on Indemnitee without the express prior written consent of Indemnitee. Neither the Corporation nor Indemnitee shall unreasonably withhold consent to any proposed settlement.
Section 7. Advancements; Determinations; and Payments
7.1. Advancement of Expenses .
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7 .1.1. To obtain advancement of Expenses under this Agreement, Indemnitee shall submit to the Corporation a written request for such advancement, together with such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to such advancement. Indemnitee must also furnish to the Corporation a written affirmation of his good faith belief that (a) he has conducted himself in good faith and (1) that he reasonably believed (A) in the case of conduct in his Official Capacity with the Corporation or any Subsidiary, that his conduct was in the Corporation's or such Subsidiary's best interests; and (B) in all other cases, that his conduct was at least not opposed to the Corporation's or such Subsidiary's best interests; and (C) in the case of any criminal proceeding, that he had no reasonable cause to believe his conduct was unlawful, or (2) that the Claim involved conduct for which indemnification has been made permissible or obligatory under a provision of the applicable Charter, or that (b) the Claim involves conduct for which liability has been eliminated under a provision of the applicable Charter, as authorized by applicable law. In addition, Indemnitee must furnish to the Corporation a written undertaking to repay the advance if it is ultimately determined that he is not entitled to indemnification. Advances shall be made without regard to Indemnitee's ability to repay the advance and without regard to Indemnitee's ultimate entitlement to indemnification under the provisions of this Agreement. Indemnitee's obligation to repay the Corporation for advances shall be unsecured and no interest shall be charged thereon. Advances shall include any and all reasonable Expenses incurred by Indemnitee in pursuing an action to enforce this right of advancement.
7.1.2. If requested by Indemnitee, in accordance with Section 7.1.1 hereof, the Corporation shall advance to Indemnitee, no later than thirty (30) days following any such request, any and all Expenses for which advancement has been requested in accordance with Section 7.1.1 hereof.
7.2. Determination of Indemnification; Appeal .
7.2.1. To obtain indemnification under this Agreement, Indemnitee shall submit to the Corporation a written request, together with such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.
7.2.2. Prior to any Change in Control, the Person or Persons who shall determine whether and to what extent Indemnitee is entitled to indemnification (the "Reviewing Party") shall be (i) if there are two (2) or more Disinterested Directors, the Board acting by a majority vote of all the Disinterested Directors, a majority of whom shall for such purposes constitute a quorum, or by a majority of the members of a committee of two (2) or more Disinterested Directors appointed by such a vote; (ii) Special Legal Counsel selected: (A) if there are fewer than two (2) Disinterested Directors, by the Board, in which selection Directors of the Corporation who do not qualify as Disinterested Directors may participate; or (B) by a majority vote of Disinterested Directors, a majority of whom shall for such purposes constitute a quorum; or (iii) the shareholders of the Corporation (if submitted by the Board) but shares of stock owned by or voted under the control of any Indemnitee who is at the time party to the Claim may not be voted. The Corporation shall notify Indemnitee in writing of such determination no later than two (2) business days thereafter.
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7.2.3. After a Change in Control, the Reviewing Party shall be Special Legal Counsel selected in the manner set forth in clause (ii) of the first sentence in Section 7.2.2 hereof and approved by Indemnitee (which approval shall not be unreasonably withheld). With respect to all matters arising after a Change in Control concerning the rights of Indemnitee to indemnification under this Agreement (including the determinations required in the context of Section 10 of this Agreement) or any other agreement or under applicable law, the Charter or the by-laws of the Corporation or any applicable Subsidiary now or hereafter in effect relating to indemnification for Claims arising out of Covered Events, the Corporation shall seek legal advice only from such Special Legal Counsel. Such Special Legal Counsel, among other things, shall render its written opinion to the Corporation and Indemnitee as to whether and to what extent Indemnitee should be permitted to be indemnified under applicable law. The Corporation agrees to pay the reasonable fees of such Special Legal Counsel and indemnify fully such Special Legal Counsel against any and all expenses (including attorneys' fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the engagement of such Special Legal Counsel pursuant hereto.
7.2.4. If a determination is made, in accordance with Section 7.2.2 or 7.2.3 hereof, that Indemnitee is entitled to all or a portion of the requested indemnification, payment to Indemnitee shall be made within thirty (30) days after such determination.
7.2.5. If (i) no determination of entitlement to indemnification shall have been made within thirty (30) days after Indemnitee has made a request in accordance with Section 7.2.1 hereof, (ii) payment of indemnification pursuant to Section 7.2.4 hereof is not made within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification, (iii) it is determined pursuant to Section 7.2.2 or 7.2.3 hereof that Indemnitee is not entitled to indemnification under this Agreement or is only entitled to a portion of such indemnification, or (iv) Indemnitee has not received advancement of Expenses within thirty (30) days after making such a request in accordance with Section 7.1 hereof, Indemnitee shall have the right to enforce the indemnification rights under this Agreement by commencing litigation in any court of competent jurisdiction in the State of Idaho seeking an initial determination by the court or challenging any determination made in accordance with Section 7.2.2 or 7.2.3 hereof or any aspect thereof. Any determination made in accordance with Section 7.2.2 or 7.2.3 hereof not challenged by Indemnitee on or before the first anniversary of the date of the determination shall be binding on the Corporation and Indemnitee. The remedy provided for in this Section 7.2.5 shall be in addition to any other remedies available to Indemnitee in law or equity.
Section 8. Indemnification for Expenses Incurred in Enforcing Rights
8.1. The Corporation shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall advance such Expenses to Indemnitee, that are incurred by Indemnitee in connection with any Claim asserted against or action brought by Indemnitee for (i) enforcement of this Agreement, (ii) indemnification of Expenses or Expense advances by the Corporation under this Agreement or any other agreement or under applicable law or the Charter or the bylaws of the Corporation or any applicable Subsidiary now or hereafter in effect relating to indemnification for Claims arising out of Covered Events, and/or (iii) recovery under the D & O Insurance. The advancement of Expenses under this Section 8.1 shall be governed by Section 7.1 hereof.
Section 9. Burden of Proof and Presumptions
9.1. Burden of Proof . To the maximum extent permitted by applicable law in making a determination with respect to entitlement to indemnification or advancement of Expenses hereunder, it shall be presumed that Indemnitee is entitled to indemnification or advancement of Expenses under this Agreement if Indemnitee has submitted a request for indemnification or a request for advancement of Expenses in accordance with Section 7.2.1 or 8.1 hereof, and the Corporation shall have the burden of proof to overcome that presumption in connection with the making of any determination in accordance with Section 7.1.1, 7.2.2, 7.2.3 or 8.1 of this Agreement contrary to that presumption.
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9.2. Plea of Nolo Contendere . The termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not affect adversely either the right of Indemnitee to indemnification under this Agreement or the presumptions to which Indemnitee is otherwise entitled pursuant to the provisions of this Agreement nor create a presumption that Indemnitee did not meet any particular standard of conduct or have a particular belief or that a court has determined that indemnification is not permitted by applicable law.
9.3. Employee Plans . If Indemnitee is serving an employee benefit plan at the request of the Corporation or a Subsidiary, Indemnitee's conduct with respect to the plan for a purpose he reasonably believed to be in the best interests of the participants in, and the beneficiaries of, the plan shall be deemed to be not opposed to the best interests of the Corporation or the Subsidiary.
Section 10. Establishment of Trust
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In the event of a Change in Control, the Corporation shall, upon written request by Indemnitee, create a trust (the "Trust " ) for the benefit of Indemnitee and from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, participating in, and/or defending any Claim relating to a Covered Event. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Reviewing Party. The terms of the Trust shall provide that (i) the Trust shall not be revoked or the principal thereof invaded, without the written consent of the Indemnitee, (ii) the trustee shall advance, within thirty (30) days of a request by Indemnitee, any and all Expenses to Indemnitee (and Indemnitee hereby agrees to repay the Trust under the same circumstances for which Indemnitee would be required to repay the Corporation under Section 7.1.1 hereof), (iii) the Trust shall continue to be funded by the Corporation in accordance with the funding obligation set forth above, (iv) the trustee shall promptly pay to Indemnitee all amounts for which Indemnitee shall be entitled to indemnification pursuant to this Agreement, and (v) all unexpended funds in the Trust shall revert to the Corporation upon a final determination by the Reviewing Party or a court of competent jurisdiction, as the case may be, that Indemnitee has been fully indemnified under the terms of this Agreement. The trustee shall be a bank or trust company chosen by the Corporation and reasonably satisfactory to Indemnitee. Nothing in this Section 10 shall relieve the Corporation of any of its obligations under this Agreement. All income earned on the assets in the Trust shall be reported as income by the Corporation for federal, state, local, and foreign tax purposes. The Corporation shall pay all costs of establishing and maintaining the Trust and shall indemnify the trustee against any and all expenses (including attorneys' fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the establishment and maintenance of the Trust. If a Trust is created pursuant to this Section 10 and, thereafter, pursuant to the last paragraph of Section 2.4 hereof, the Change in Control is deemed not to have occurred, as soon as practicable after the Change in Control is deemed not to have occurred the Trust shall be revoked and any Trust funds shall revert to the Corporation (this Agreement constituting the Indemnitee's written consent to such revocation and reversion). Indemnitee agrees to cooperate and to take any actions as may reasonably be requested by the Corporation or the trustee of the Trust in connection with the revocation of the Trust and/or reversion of Trust funds pursuant to the preceding sentence.
Section 11. Subrogation
In the event of any payment under this Agreement to or on behalf of Indemnitee, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery in Indemnitee against any Person other than the Corporation or Indemnitee in respect of the Claim giving rise to such payment. Indemnitee shall execute all papers reasonably required and shall do everything reasonably necessary to secure such rights, including the execution of such documents reasonably necessary to enable the Corporation effectively to bring suit to enforce such rights.
Section 12. Miscellaneous Provisions
12.1. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of (a) the Corporation, its successors and assigns (including any direct or indirect successor by merger, consolidation, share exchange or operation of law or by transfer of all or substantially all of its assets) and (b) Indemnitee and the heirs, personal and legal representatives, executors, administrators or assigns of Indemnitee.
12.2. Severability . The provisions of this Agreement are severable. If any provision of this Agreement shall be held by any court of competent jurisdiction to be invalid, void or unenforceable, such provision shall be deemed to be modified to the minimum extent necessary to avoid a violation of law and, as so modified, such provision and the remaining provisions shall remain valid and enforceable in accordance with their terms to the fullest extent permitted by law.
12.3. Rights Not Exclusive; Continuation of Right of Indemnification . Nothing in this Agreement shall be deemed to diminish or otherwise restrict Indemnitee's right to indemnification pursuant to any provision of the Charter or bylaws of the Corporation or any Subsidiary, any agreement, vote of shareholders or Disinterested Directors, applicable law or otherwise [ADD THE FOLLOWING IF THIS AGREEMENT REPLACES AN EXISTING AGREEMENT-- ; provided, however, that this Agreement shall supersede the Prior Agreement in its entirety and as of the date of this Agreement Indemnitee shall have no further rights under the Prior Agreement ] . This Agreement shall be effective as of the date first above written and continue in effect until no Claims relating to any Covered Event may be asserted against Indemnitee and until any Claims commenced prior thereto are finally terminated and resolved, regardless of whether Indemnitee continues to serve as a Director.
12.4. Subsequent Amendments . No amendment, termination or repeal of any provision of the Charter or bylaws of the Corporation or any Subsidiary, or any respective successors thereto, shall affect or diminish in any way the rights of Indemnitee to indemnification, or the obligations of the Corporation, arising under this Agreement, whether the alleged actions or conduct of Indemnitee giving rise to the necessity of such indemnification arose before or after any such amendment, termination or repeal.
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12.5. Notices . Notices required under this Agreement shall be given in writing and shall be deemed given when delivered in person or sent by certified or registered mail, return receipt requested, postage prepaid. Notices shall be directed to the Corporation at its principal executive offices currently located at 1221 West Idaho Street, Boise, Idaho 83702, Attention: Corporate Secretary, and to Indemnitee at its address set forth below (or such other address as either party may designate in writing to the other party).
12.6. Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Idaho applicable to contracts made and performed in such state without giving effect to the principles of conflict of laws.
12.7. Headings . The headings of the Sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
12.8. Counterparts . This Agreement may be executed in any number of counterparts all of which taken together shall constitute one instrument.
12.9. Modifications and Waivers. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall constitute, or be deemed to constitute, a waiver of any other provisions hereof (whether or not similar) nor shall any such waiver constitute a continuing waiver.
12.10. Period of Limitations . No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Corporation or any Affiliate of the Corporation against Indemnitee, Indemnitee's spouse, heirs, executors, or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action. Any claim or cause of action of the Corporation or any Affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such period; provided , however , that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.
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The parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
-15-
Exhibit 10(h)(xxxv)
IDAHO POWER COMPANY
SECURITY PLAN FOR
SENIOR MANAGEMENT EMPLOYEES II
Effective January 1, 2005
(Amended July 20, 2006)
TABLE OF CONTENTS
Page
ARTICLE I........... PURPOSE; EFFECTIVE DATE....................................................................... 1
ARTICLE II.......... DEFINITIONS................................................................................................. 1
2.1...... Actuarial Equivalent.................................................................................................. 1
2.2...... Administrative Committee......................................................................................... 1
2.3...... Affiliate.................................................................................................................... 1
2.4...... Beneficiary............................................................................................................... 1
2.5...... Board...................................................................................................................... 2
2.6...... Change in Control.................................................................................................... 2
2.7...... Change in Control Period......................................................................................... 3
2.8...... Company................................................................................................................. 3
2.9...... Compensation Committee......................................................................................... 3
2.10.... Compensation.......................................................................................................... 3
2.11.... Disability.................................................................................................................. 3
2.12.... Early Retirement Date............................................................................................... 3
2.13.... Employer................................................................................................................. 3
2.14.... Final Average Monthly Compensation....................................................................... 4
2.15.... Key Employee......................................................................................................... 4
2.16.... Normal Form of Benefit............................................................................................ 4
2.17.... Normal Retirement Date........................................................................................... 4
2.18.... Participant................................................................................................................ 4
2.19.... Plan Year................................................................................................................. 4
2.20.... Retirement................................................................................................................ 4
2.21.... Retirement Plan........................................................................................................ 4
2.22.... Security Plan Retirement Benefit............................................................................... 4
2.23.... Target Retirement Percentage................................................................................... 4
2.24.... Termination Date...................................................................................................... 4
2.25.... Years of Participation............................................................................................... 4
ARTICLE III........ PARTICIPATION AND VESTING................................................................. 5
3.1...... Eligibility................................................................................................................... 5
3.2...... Vesting..................................................................................................................... 5
3.3...... Change in Employment Status................................................................................... 5
i
TABLE OF CONTENTS
(Continued)
Page
3.4...... Non-Participating Affiliate......................................................................................... 5
ARTICLE IV........ BENEFIT ELECTION...................................................................................... 5
ARTICLE V......... SURVIVOR BENEFITS................................................................................... 6
5.1...... Pre-retirement Survivor Benefits............................................................................... 6
5.2...... Post-termination Survivor Benefit.............................................................................. 6
ARTICLE VI........ SECURITY PLAN RETIREMENT BENEFITS................................................ 7
6.1...... Normal Retirement Benefit........................................................................................ 7
6.2...... Early Retirement Benefit........................................................................................... 7
6.3...... Early Retirement Factor............................................................................................ 7
6.4...... Early Termination Benefits........................................................................................ 8
6.5...... Termination After Change in Control......................................................................... 8
6.6...... Form of Payment...................................................................................................... 8
6.7...... Code §162(m) Delay............................................................................................... 9
6.8...... Payment to Key Employee....................................................................................... 9
ARTICLE VII....... OTHER RETIREMENT PROVISIONS............................................................ 9
7.1...... Disability.................................................................................................................. 9
7.2...... Withholding Payroll Taxes........................................................................................ 9
7.3...... Payment to Guardian................................................................................................ 9
ARTICLE VIII...... BENEFICIARY DESIGNATION................................................................... 10
8.1...... Beneficiary Designation........................................................................................... 10
8.2...... Effect of Payment................................................................................................... 10
ARTICLE IX........ ADMINISTRATION...................................................................................... 10
9.1...... Administrative Committee Duties............................................................................ 10
9.2...... Indemnity of Administrative Committee................................................................... 11
ARTICLE X......... CLAIMS PROCEDURE................................................................................. 11
10.1.... Claim..................................................................................................................... 11
10.2.... Denial of Claim....................................................................................................... 11
10.3.... Review of Claim..................................................................................................... 11
10.4.... Final Decision......................................................................................................... 11
ARTICLE XI........ TERMINATION, SUSPENSION OR AMENDMENT.................................. 12
11.1.... Termination, Suspension or Amendment of Plan...................................................... 12
ii
TABLE OF CONTENTS
(Continued)
Page
11.2.... Change in Control.................................................................................................. 12
ARTICLE XII....... MISCELLANEOUS....................................................................................... 12
12.1.... Unfunded Plan........................................................................................................ 12
12.2.... Unsecured General Creditor................................................................................... 12
12.3.... Trust Fund............................................................................................................. 12
12.4.... Nonassignability..................................................................................................... 13
12.5.... Not a Contract of Employment............................................................................... 13
12.6.... Governing Law....................................................................................................... 13
12.7.... Validity.................................................................................................................. 13
12.8.... Notice.................................................................................................................... 13
12.9.... Successors............................................................................................................. 14
iii
IDAHO POWER COMPANY
SECURITY PLAN FOR SENIOR MANAGEMENT EMPLOYEES II
EFFECTIVE JANUARY 1, 2005
(Amended July 20, 2006)
ARTICLE I
PURPOSE; EFFECTIVE DATE
The purpose of this Security Plan for Senior Management Employees II (the "Plan") is to provide supplemental retirement benefits for certain key employees of Idaho Power Company, its subsidiaries and affiliates. It is intended that the Plan will aid in attracting individuals of exceptional ability and retain those critical to the operation of the Company, by providing them with these benefits. The effective date of this Plan is January 1, 2005. It is intended to be compliant with Section 409A of the Internal Revenue Code, which was added by the American Jobs Creation Act of 2004, effective January 1, 2005. It continues the program of supplemental retirement benefits provided under the Security Plan for Senior Management Employees I, which was amended and restated effective December 31, 2004 to freeze that plan as of December 31, 2004.
ARTICLE II
DEFINITIONS
As used in this Plan, the following terms shall be defined as stated in this Article, as interpreted by the Administrative Committee pursuant to its authority granted by Section 9.1 of this Plan.
2.1 Actuarial Equivalent . "Actuarial Equivalent" shall mean equivalence in value between two (2) or more forms and/or times of payment based on a determination by an actuary chosen by the Company using generally accepted actuarial assumptions, methods and factors as used in the Retirement Plan of Idaho Power Company which may be amended from time to time.
2.2 Administrative Committee . "Administrative Committee" shall mean the Fiduciary Committee appointed by the Compensation Committee pursuant to Section 9.1 hereof and the Chief Executive Officer of the Company.
2.3 Affiliate . "Affiliate" shall mean a business entity that is affiliated in ownership with the Company or an Employer and is recognized as an Affiliate by the Company for the purposes of this Plan.
2.4 Beneficiary . "Beneficiary" shall mean the person, persons or entity designated by the Participant pursuant to Article VIII to receive any benefits payable under the Plan. Each such designation shall be made in a written instrument filed with the Administrative Committee and shall become effective only when received, accepted and acknowledged in writing by the Administrative Committee or its designee.
1
2.5 Board . "Board" shall mean the Board of Directors of the Company.
2.6 Change in Control . "Change in Control" shall mean any of the following events:
2.6.1 any person (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Section 13(d) of the Exchange Act, excluding (a) IDACORP, Inc. or any Subsidiary, (b) a corporation or other entity owned, directly or indirectly, by the stockholders of IDACORP, Inc. immediately prior to the transaction in substantially the same proportions as their ownership of stock of IDACORP, Inc., (c) an employee benefit plan (or related trust) sponsored or maintained by IDACORP, Inc. or any Subsidiary or (d) an underwriter temporarily holding securities pursuant to an offering of such securities ("Exchange Act Person")) is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of IDACORP, Inc.; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by IDACORP, Inc.;
2.6.2 consummation of a merger, consolidation, reorganization or share exchange, or sale of all or substantially all of the assets, of IDACORP, Inc. or the Company (a "Qualifying Transaction"), unless, immediately following such Qualifying Transaction, all of the following have occurred: (a) all or substantially all of the beneficial owners of IDACORP, Inc. immediately prior to such Qualifying Transaction beneficially own in substantially the same proportions, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Qualifying Transaction (including, without limitation, a corporation or other entity which, as a result of such transaction, owns IDACORP, Inc. or all or substantially all of IDACORP, Inc.'s assets either directly or through one or more subsidiaries) (as the case may be, the "Successor Entity"), (b) no Exchange Act Person is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Successor Entity and (c) at least a majority of the members of the board of directors of the Successor Entity are Incumbent Directors;
2.6.3 a complete liquidation or dissolution of IDACORP, Inc. or the Company; or
2
2.6.4 within a 24-month period, individuals who were directors of the Board of Directors of IDACORP, Inc. (the "IDACORP Board of Directors") immediately before such period ("Incumbent Directors") cease to constitute at least a majority of the directors of the IDACORP Board of Directors; provided, however, that any director who was not a director of the IDACORP Board of Directors at the beginning of such period shall be deemed to be an Incumbent Director if the election or nomination for election of such director was approved by the vote of at least two-thirds of the directors of the IDACORP Board of Directors then still in office (a) who were in office at the beginning of the 24-month period or (b) whose election or nomination for election was so approved, in each case, unless such individual was elected or nominated as a result of an actual or threatened election contest or as a result of an actual or threatened solicitation of proxies or consents by or on behalf of any Exchange Act Person other than the IDACORP Board of Directors.
For avoidance of doubt, transactions for the purpose of dividing the Company's assets into separate distribution, transmission or generation entities or such other entities as IDACORP, Inc. or the Company may determine shall not constitute a Change in Control unless so determined by the IDACORP Board of Directors. For purposes of this definition, the term "Subsidiary" shall mean any corporation of which more than 50% of the outstanding stock having ordinary voting power to elect a majority of the board of directors of such corporation is now or hereafter owned, directly or indirectly, by IDACORP, Inc.
2.7 Change in Control Period . "Change in Control Period" shall mean the period beginning with a Change in Control, as defined in Section 2.6, and ending 24 months following the consummation of a Change in Control.
2.8 Company . "Company" shall mean the Idaho Power Company, an Idaho corporation, its successors and assigns.
2.10 Compensation . "Compensation" shall mean the base salary and annual bonus (not to exceed one (1) times base salary for the year in which the bonus was paid) paid to a Participant and considered to be "wages" for purposes of federal income tax withholding. Compensation shall be calculated before reduction for any amounts deferred by the Participant pursuant to any plan sponsored by the Employer which permits deferral of current compensation. Compensation does not include long-term incentive compensation in any form, expense reimbursements, or any form of non-cash compensation or benefits. A Participant who elects an accelerated distribution under the Security Plan for Senior Management Employees I (which was frozen as of December 31, 2004), shall not be credited with any additional Compensation under this Plan beginning on the effective date of the accelerated distribution.
2.12.1 attainment of age fifty-five (55); or
2.12.2 completion of thirty (30) years of Credited Service under the Retirement Plan but prior to Participant's Normal Retirement Date.
2.14 Final Average Monthly Compensation . "Final Average Monthly Compensation" shall mean the Compensation received by the Participant during any sixty (60) consecutive months (during the last ten (10) years of employment) for which the Participant's compensation was the highest divided by sixty (60). In determining Final Average Monthly Compensation, annual bonuses shall be allocated equally to the months in which they were paid. Final Average Monthly Compensation shall not include any Compensation payable to a Participant pursuant to a written severance agreement with the Employer.
2.19 Plan Year . "Plan Year" shall mean the calendar year.
2.25 Years of Participation . "Years of Participation" shall be twelve (12) month periods, and portions thereof, which shall begin on the earlier of the date an individual, who has been designated by the Employer, is approved by Administrative Committee pursuant to Section 3.1, or the date designated by the Administrative Committee, and shall end on the earlier of a Participant's Termination Date, or the date the Participant experiences a change in status, as provided in Sections 3.3 and 3.4. Partial Years of Participation, if any, shall be used in determining benefits under this Plan. Years of Participation under the Security Plan for Senior Management Employees I (which was frozen as of December 31, 2004), if any, shall be included in determining the total Years of Participation. A Participant who elects an accelerated distribution under the Security Plan for Senior Management Employees I (which was frozen as of December 31, 2004), shall cease to earn Years of Participation under this Plan on the effective date of the accelerated distribution.
3.2 Vesting . A Participant shall be one hundred percent (100%) immediately vested.
In the event a Participant who was a participant prior to December 1, 1994, in the Security Plan for Senior Management Employees I, or, if the Participant is deceased, the Beneficiary of such Participant, elects to receive the Frozen Benefit (the Frozen Retirement Benefit or Frozen Survivor Benefit, as defined in the Security Plan for Senior Management Employees I) under the Security Plan for Senior Management Employees I, no benefits shall be payable under this Plan.
ARTICLE
V
SURVIVOR BENEFITS
5.1.1 Amount. The pre-termination survivor benefit shall be equal to sixty-six and two-thirds percent (66 2/3%) of the retirement benefit calculated under Section 6.1 assuming retirement occurred at the later of age sixty-two (62) or date of death. Final Average Monthly Compensation and the Retirement Plan benefit shall be determined as of the date of the Participant's death. For purposes of this section (a), the Retirement Plan benefit shall be the accrued benefit determined as of the date of death as defined in the Retirement Plan.
5.1.2 Payment. If the Participant is married on the date of death, the benefits shall be paid to the spouse of the Participant for the life of the spouse beginning on the first day of the month coincident with or following the date of death. If the spouse's date of birth is more than ten (10) years after the Participant's date of birth, the monthly benefit shall be reduced using the Actuarial Equivalent factors to reflect the number of years over ten (10) the spouse is younger than the Participant. If the Participant is unmarried on the date of death, the benefit shall be paid to the Participant's Beneficiary in a lump sum that is the Actuarial Equivalent of the value of a death benefit payable to an assumed spouse the same age as the Participant.
5.2 Post-termination Survivor Benefit .
5.2.1 Death Prior to Commencement of Benefits. If a Participant dies prior to commencement of benefits but after reaching a Termination Date:
(a) Amount. The amount of the post-termination survivor benefit shall be equal to sixty-six and two thirds percent (66 2/3%) of the retirement benefit payable to the Participant.
(b) Payment. If the Participant is married on the date of death, the benefits shall be paid to the spouse of the Participant for the life of the spouse beginning on the first day of the month coincident with or following the date of death. If the spouse's date of birth is more than ten (10) years after the Participant's date of birth, the monthly benefit shall be reduced using Actuarial Equivalent factors to reflect the number of years over ten (10) the spouse is younger than the Participant. If the Participant is unmarried on the date of death, the benefit shall be paid to the Participant's Beneficiary in a lump sum that is the Actuarial Equivalent of the value of a death benefit payable to an assumed spouse the same age as the Participant.
5.2.2 Death After Commencement of Benefits. If a Participant dies after commencement of benefits, a survivor benefit will be paid only if, and to the extent provided for, under the form of benefit elected by the Participant pursuant to Section 6.6.
ARTICLE
VI
SECURITY PLAN RETIREMENT BENEFITS
7
Exact Age When Payments Begin |
Early Retirement Factor |
62 |
100% |
61 |
96% |
60 |
92% |
59 |
87% |
58 |
82% |
57 |
77% |
56 |
72% |
55 |
67% |
54 |
62% |
53 |
57% |
52 |
52% |
51 |
47% |
50 |
42% |
49 |
38% |
48 |
34% |
Early Retirement Factors will be prorated to reflect retirement based on completed months rather than exact age.
6.4.1 The Target Retirement Percentage shall be calculated based upon the Years of Participation and then multiplied by a fraction equal to the Participant's actual Years of Participation divided by the Years of Participation the Participant would have had at the Normal Retirement Date if the Participant had continued to be employed by the Employer to age sixty-two (62). The adjusted Target Retirement Percentage shall be multiplied by the factor described in Section 6.3 for each month between the Participant's benefits commencement date (age 55) and age sixty-two (62).
6.4.2 The Early Termination Benefit shall be offset by the Retirement Plan Normal Form of Benefit which would be payable on the date of benefit commencement (age 55) regardless of service, and by the Participant's retirement benefit (before any adjustment due to an accelerated distribution), if any, under the Security Plan for Senior Management Employees I (which was frozen as of December 31, 2004) payable as a single life annuity.
6.6.1 The Participant may also elect to receive Actuarial Equivalent payments in one of the forms of benefit listed below:
(a) A joint and survivor annuity with payments continued to the surviving spouse at an amount equal to two-thirds (2/3) of the Participant's benefit.
(b) A joint and survivor annuity with payments continued to the surviving spouse at an amount equal to the Participant's benefit.
8
(c) A single life annuity, if the Participant had previously elected one of the joint and survivor annuity options listed above.
6.6.2 If the Actuarial Equivalent of the Security Plan Retirement Benefit is less than $10,000, the Administrative Committee may direct that the Participant's benefit be paid as a lump sum; provided that such lump sum payment shall be made on or before the later of (i) December 31 of the calendar year in which occurs the Participant's Termination Date or (ii) the date 2½ months after the Participant's Termination Date.
6.6.3 The election to receive benefits in a different form of payment may be made at any time prior to commencement of payment.
6.8 Payment to Key Employee . Notwithstanding the provisions in Sections 6.1, 6.2, 6.4 and 6.5 with respect to the commencement of payment of benefits, payment to a Key Employee shall be delayed for six months from the Key Employee's Termination Date, and the first payment shall include payments accumulated during the delay.
ARTICLE VII
OTHER RETIREMENT PROVISIONS
ARTICLE
VIII
BENEFICIARY DESIGNATION
Any Beneficiary designation may be changed by a Participant by the filing of a written form prescribed by the Administrative Committee. The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized divorce or marriage (other than common law) of a Participant subsequent to the date of filing of a Beneficiary designation form shall automatically revoke the prior designation. If a Participant fails to designate a Beneficiary as provided above, or if the Beneficiary designation is revoked by marriage or divorce, without execution of a new designation, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then Participant's designated Beneficiary shall be deemed to be the person or persons surviving the Participant in the first of the following classes in which there is a survivor, share and share alike:
8.1.1 the Participant's surviving spouse;
8.1.2 the Participant's children, except that if any of the children predecease the Participant but leave issue surviving, the issue shall take by right of representation;
8.1.3 the Participant's personal representative (executor or administrator).
In the administration of this Plan, the Administrative Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit and may from time to time consult with counsel who may be counsel to the Employer.
10
Subject to Article X, the decision or action of the Administrative Committee in respect of any questions arising out of, or in connection with, the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.
10.2 Denial of Claim . If the claim or request is denied, the written notice of denial shall state:
10.2.1 the reason for denial, with specific reference to the Plan provisions where applicable on which the denial is based;
10.2.2 a description of any additional material or information required and an explanation of why it is necessary; and
10.2.3 an explanation of the Plan's claims review procedure.
ARTICLE
XI
TERMINATION, SUSPENSION OR AMENDMENT
12.3 Trust Fund . The Employer shall be responsible for the payment of all benefits provided under the Plan. At its discretion, the Employer may establish one or more trusts, with such trustees as the Board may approve, for the purpose of providing for the payment of such benefits. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Employer's creditors. To the extent any benefits provided under the Plan are actually paid from any such trust, the Employer shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Employer.
12.9 Successors . Subject to Section 11.1, the provisions of this Plan shall bind and inure to the benefit of the Employer and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Employer, and successors of any such corporation or other business entity.
IDAHO POWER COMPANY
By:
Chief Executive Officer
By:
Secretary
Dated:
Adopted effective as of January 1, 2005
Amended by the Board July 20, 2006 14
Exhibit 10(h)(xxxvi)
IDAHO POWER COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective November 15, 2000
TABLE OF CONTENTS
Page
1.8 "Deferrable Compensation". 4
SECTION 3 ELIGIBILITY; DEFERRAL ELECTION.. 7
3.3.1 Initial Deferral Election. 7
3.3.2 Deferral Elections for Subsequent Years. 8
3.4 Part-Year Participation. 9
i
SECTION 4 DEFERRED COMPENSATION ACCOUNT; TRUST.. 9
4.1 Pre-2005 Account and Post-2004 Accounts. 9
4.2 Deemed Investment Options. 9
SECTION 5 PAYMENT AMOUNT, TIME AND MANNER OF PAYMENT.. 11
5.3 Time and Form of Payments. 11
5.3.1 Participant's Pre-2005 Account. 11
5.3.2 Participant's Post-2004 Account. 11
5.3.3 New Designation of Form of Payment of a Participant's Pre-2005 Account. 12
5.3.4 New Designation of Form of Payment of a Participant's Post-2004 Account. 12
SECTION 6 DEATH OR DISABILITY.. 13
6.4 Beneficiary Designation. 13
6.5 Disclaimers by Beneficiaries. 14
SECTION 8 AMENDMENT; TERMINATION.. 17
8.1 Amendment and Termination Generally. 17
8.2 Before a Change-in-Control. 17
ii
8.3 After a Change-in-Control. 17
SECTION 9 CLAIMS PROCEDURE. 18
SECTION 10 GENERAL PROVISIONS. 19
10.3 Nontransferability; Spendthrift Provisions. 19
10.4 Not an Employment Contract. 19
10.9 Unsecured General Creditor. 20
iii
IDAHO POWER COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
IDAHO POWER COMPANY ("Company") hereby establishes a nonqualified, unfunded supplemental deferred compensation plan for a select group of highly compensated employees known as the Idaho Power Company Executive Deferred Compensation Plan ("Plan"). The purposes of this Plan are to provide a means whereby certain amounts payable by the Company or affiliates of the Company to a select group of management or highly compensated employees may be deferred to some future period and to attract and retain certain executive employees of outstanding competence.
SECTION 1
DEFINITIONS
The following words and phrases shall have the following meanings, unless a different meaning is plainly required by the context. Any masculine terminology used in the Plan shall also include the feminine gender and the definition of any terms in the singular shall also include the plural.
1.1 "Account" means a Company internal bookkeeping account in the name of a Participant, representing the separate unfunded and unsecured general obligation of the Employer, to which shall be allocated amounts deferred by or otherwise allocated to the Participant under this Plan, together with investment earnings, gains and losses. A "Pre-2005 Account" means a subaccount to which amounts were deferred for Plan Years through 2004. A "Post-2004 Account" means a subaccount to which amounts are deferred for Plan Years beginning in 2005, and following.
1.2 "Affiliate" shall mean a business entity that is affiliated in ownership with the Company or an Employer and is recognized as an Affiliate by the Company for the purposes of this Plan.
1.3 "Beneficiary" shall mean the person or persons designated as such by the Participant. Each such designation shall be filed with the Company in a form acceptable to the Company and shall become effective only when received by the Company. Designated persons or entities shall not be considered Beneficiaries until the death of the Participant.
1.4 "Board" shall mean the Board of Directors of the Company.
1.5 "Change-in-Control" shall mean, with respect to a Pre-2005 Account, any of the following events:
(a) the public announcement by IDACORP, Inc. or by any person (which shall not include the Company, any Subsidiary of the Company or any employee benefit plan of the Company or of any Subsidiary of the Company) ("Person") that such Person, who or which, together with all Affiliates and Associates (within the meanings ascribed to such terms in Rule 12b-2 of the Securities Exchange Act of 1934, the "Exchange Act") of such person, shall be the beneficial owner of twenty percent (20%) or more of the voting stock of IDACORP, Inc.;
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(b) the commencement of, or after the first public announcement of any Person to commence, a tender or exchange offer the consummation of which would result in any Person becoming the beneficial owner of voting stock aggregating thirty percent (30%) or more of the then outstanding voting stock of IDACORP, Inc.;
(c) the announcement of any transaction relating to IDACORP, Inc. required to be described pursuant to the requirements of Item 6(e) of Schedule 14A of Regulation 14A of the Securities and Exchange Commission under the Exchange Act;
(d) a proposed change in the constituency of the Board of IDACORP, Inc., such that, during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board of IDACORP, Inc. cease for any reason to constitute at least a majority thereof, unless the election or nomination for election by the shareholders of IDACORP, Inc. of each new director was approved by a vote of at least two-thirds (2/3) of the directors then still in office who were members of the Board of IDACORP, Inc. at the beginning of the period.
(e) IDACORP, Inc. enters into an agreement of merger, consolidation, share exchange or similar transaction with any other corporation other than a transaction which would result in IDACORP, Inc.'s voting stock outstanding immediately prior to the consummation of such transaction continuing to represent (either by remaining outstanding or by being converted into voting stock of the surviving entity) at least two-thirds (2/3) of the combined voting power of IDACORP, Inc.'s or such surviving entity's outstanding voting stock immediately after such transaction.
(f) the Board of IDACORP, Inc. approves a plan of liquidation or dissolution of the Company or IDACORP, Inc. or an agreement for the sale or disposition by the Company or IDACORP, Inc. (in one transaction or a series of transactions) of all or substantially all of the Company's or IDACORP, Inc.'s assets to a person or entity which is not an affiliate of the Company or IDACORP, Inc. other than a transaction(s) for the purpose of dividing the assets of the Company or IDACORP, Inc. into separate distribution, transmission or generation entities or such other entities as the Company or IDACORP, Inc. may determine.
(g) Any other event which shall be deemed by a majority of the Executive Committee of the Board of IDACORP, Inc. to constitute a "Change in Control."
(h) The acquisition of securities of Idaho Power Company representing more than fifty percent (50%) of the combined voting power of Idaho Power Company's then outstanding securities by any unrelated entity, person or group of persons acting in concert.
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"Change-in-Control" shall mean, with respect to a Post-2004 Account, any of the following events:
(a) any person (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Section 13(d) of the Exchange Act, excluding (i) IDACORP, Inc. or any Subsidiary of IDACORP, Inc., (ii) a corporation or other entity owned, directly or indirectly, by the stockholders of IDACORP, Inc. immediately prior to the transaction in substantially the same proportions as their ownership of stock of IDACORP, Inc., (iii) an employee benefit plan (or related trust) sponsored or maintained by IDACORP, Inc. or any Subsidiary of IDACORP, Inc. or (iv) an underwriter temporarily holding securities pursuant to an offering of such securities ("Exchange Act Person")) is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of IDACORP, Inc.; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by IDACORP, Inc.;
(b) consummation of a merger, consolidation, reorganization or share exchange, or sale of all or substantially all of the assets, of IDACORP, Inc. or the Company (a "Qualifying Transaction"), unless, immediately following such Qualifying Transaction, all of the following have occurred: (i) all or substantially all of the beneficial owners of IDACORP, Inc. immediately prior to such Qualifying Transaction beneficially own in substantially the same proportions, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Qualifying Transaction (including, without limitation, a corporation or other entity which, as a result of such transaction, owns IDACORP, Inc. or all or substantially all of IDACORP, Inc.'s assets either directly or through one or more subsidiaries) (as the case may be, the "Successor Entity"), (ii) no Exchange Act Person is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding voting securities eligible to vote generally in the election of directors of the Successor Entity and (iii) at least a majority of the members of the board of directors of the Successor Entity are Incumbent Directors;
(c) a complete liquidation or dissolution of IDACORP, Inc. or the Company; or
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(d) within a 24-month period, individuals who were directors of the Board of Directors of IDACORP, Inc. (the "IDACORP Board of Directors") immediately before such period ("Incumbent Directors") cease to constitute at least a majority of the directors of the IDACORP Board of Directors; provided, however, that any director who was not a director of the IDACORP Board of Directors at the beginning of such period shall be deemed to be an Incumbent Director if the election or nomination for election of such director was approved by the vote of at least two-thirds of the directors of the IDACORP Board of Directors then still in office (i) who were in office at the beginning of the 24-month period or (ii) whose election or nomination for election was so approved, in each case, unless such individual was elected or nominated as a result of an actual or threatened election contest or as a result of an actual or threatened solicitation of proxies or consents by or on behalf of any Exchange Act Person other than the IDACORP Board of Directors.
For avoidance of doubt, transactions for the purpose of dividing the Company's assets into separate distribution, transmission or generation entities or such other entities as IDACORP, Inc. or the Company may determine shall not constitute a Change in Control unless so determined by the IDACORP Board of Directors.
1.6 "Committee" shall mean a Committee appointed by, or pursuant to authority of, the Board.
1.7 "Company" shall mean IDAHO POWER COMPANY, an Idaho corporation, or any successor corporation.
1.8 "Deferrable Compensation" for a Plan Year shall mean a Participant's base salary (prior to 401(k) and flexible benefit plan deductions) which would otherwise be payable to the Participant in the Plan Year and/or any bonus that would otherwise be payable to the Participant in the Plan Year. Deferrable Compensation shall not include fringe benefits, accrued but unused leave or vacation pay, severance pay, or other similar amounts not included in a Participant's base salary or bonus.
1.9 "Deferral Election" shall mean the agreement executed by an eligible employee whereby an eligible employee elects to defer a portion of the applicable year's salary and/or bonus and contains such other information as is required by the Committee.
1.10 "Employer" shall mean the Company and any business affiliated with the Company that employs persons who are designated by the Board or the Committee for participation in this Plan.
1.11 "Event of Maturity" shall mean any of the occurrences described in Section 5.2 by reason of which a Participant or Beneficiary may become entitled to a payment from this Plan.
1.12 "Key Employee" shall mean a person as defined in Section 416(i) of the Internal Revenue Code (the "Code") without regard to paragraph (5) thereof.
1.13 "Participant" shall mean any employee of an Employer who has been designated by the Board or the Committee as eligible to participate in the Plan and who has executed a Deferral Election and returned it to the Committee.
1.14 "Plan" shall mean the Idaho Power Company Executive Deferred Compensation Plan set forth herein and as may be amended from time to time.
1.15 "Plan Year" shall mean the calendar year, beginning on each January 1 and ending on the following December 31.
1.16 "Subsidiary" shall mean any corporation of which more than 50% of the outstanding stock having ordinary voting power to elect a majority of the board of directors of such corporation is now or hereafter owned, directly or indirectly, by the respective entity.
1.17 "Termination of Employment" shall mean a complete severance of an employee's employment relationship with the Employers and all Affiliates, if any, for any reason other than the employee's death. Retirement constitutes a Termination of Employment. A transfer from employment with an Employer to employment with an Affiliate of an Employer shall not constitute a Termination of Employment. A decision by the Committee not to select a Participant for participation for a subsequent Plan year shall not constitute a Termination of Employment. If an Employer who is an Affiliate ceases to be an Affiliate because of a sale of substantially all of the stock or assets of the Employer, then Participants who are employed by that Employer and who cease to be employed by the Company or an Employer on account of the sale of substantially all the stock or assets of the Employer shall be deemed to have thereby had a Termination of Employment for the purpose of commencing payments from this Plan.
1.18 "Trust" shall mean the trust described in Section 4.3. The Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan. Participants and their beneficiaries shall have no beneficial ownership interest in any assets of any such Trust.
SECTION 2
ADMINISTRATION
2.1 Administration . This Plan shall be administered by the Committee. The Committee shall have full discretionary power and authority to administer and interpret the Plan, determine all factual and legal questions under the Plan, including but not limited to eligibility and the amount of benefits, maintain records, determine deemed investment sources and generally be responsible for seeing that the purposes of the Plan are accomplished. Determinations by the Committee shall be final and binding on all parties with respect to all matters relating to the Plan unless overridden by action of the Board. The Committee may from time to time adopt such rules and procedures as it deems appropriate to assist in the administration of the Plan. The Committee may delegate all or part of its administrative duties to one or more persons, whether or not such persons are members of the Committee or employees of the Company.
2.2 Rules and Regulations. The following general rules will apply to the administration of the Plan:
(a) No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the claims procedure. The Committee may require that any claim for benefits and any request for a review of a denied claim be filed on forms to be furnished by the Committee upon request.
(b) All decisions on claims and on requests for a review of denied claims shall be made by the Committee.
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(c) The Plan Committee may, in its discretion, hold one or more hearings on a claim or a request for a review of a denied claim.
(d) A claimant may be represented by a lawyer or other representative (at the claimant's own expense), but the Plan Committee reserves the right to require the claimant to furnish written authorization. A claimant's representative shall be entitled, upon request, to copies of all notices given to the claimant.
(e) The decision of the Committee on a claim and on a request for a review of a denied claim shall be provided to the claimant in writing. If a decision or notice is not received by a claimant within the time specified, the claim or request for a review of a denied claim shall be deemed to have been denied.
(f) Prior to filing a claim or a request for a review of a denied claim, the claimant or his or her representative shall have a reasonable opportunity to review a copy of the Plan and all other pertinent documents in the possession of the Company.
(g) The Committee may permanently or temporarily delegate its responsibilities under this claims procedure to an individual or a committee of individuals.
2.3 Books and Records. The Committee shall maintain records of each Participant's Pre-2005 Account balance and Post-2004 Account balance. A Participant shall not be entitled to examine, audit or otherwise have access to any financial statements, bookkeeping records or other records of account pertaining to the Employer or the Plan under any circumstances whatsoever.
2.4 Liability. No member of the Committee and no director, officer or member of the Board of the Company or its affiliates shall be liable to any persons for any actions taken under the Plan, or for any failure to effect any of the objectives or purposes of the Plan, by reason of insolvency or otherwise. Neither the officers nor any member of the Committee or the Board of Directors of the Company or any of its affiliates in any way secures or guarantees the payment of any benefit or amount which may become due and payable hereunder to or with respect to any Participant. Each Participant and other person entitled at any time to payments hereunder shall look solely to the assets of the Company and its affiliates for such payments as an unsecured, general creditor. Nothing herein shall be construed to give a Participant, Beneficiary or any other person or persons any right, title, interest or claim in or to any specific asset, fund, reserve, account or property of any kind whatsoever owned by the Company or in which it may have any right, title or interest now or in the future. After benefits shall have been paid to or with respect to a Participant and such payment purports to cover in full the benefit hereunder, such former Participant or other person or persons, as the case may be, shall have no further right or interest in the other assets of the Company and its affiliates in connection with this Plan.
2.5 Conflict of Interest. If any individual to whom authority has been delegated or redelegated hereunder shall also be a Participant in this Plan, such Participant shall have no authority with respect to any matter specially affecting such Participant's individual interest hereunder or the interest of a person superior to him or her in the organization (as distinguished from the interests of all Participants and Beneficiaries or a broad class of Participants and Beneficiaries), all such authority being reserved exclusively to other individuals as the case may be, to the exclusion of such Participant, and such Participant shall act only in such Participant's individual capacity in connection with any such matter.
2.6 Committee. The Committee shall be the Administrator for purposes of section 3(16)(A) of the Employee Retirement Income Security Act of 1974.
SECTION 3
ELIGIBILITY; DEFERRAL ELECTION
3.1 Eligibility. The Committee will designate from time to time certain key employees of an Employer to be eligible to participate in the Plan. In selecting eligible employees, the Committee shall consider the position and responsibilities of such individuals, the value of their services to the Employer, and such other factors as the Committee deems pertinent. The Committee may rescind its designation of an eligible employee and discontinue an employee's active participation in the Plan at any time.
3.2 Overriding Exclusion. This Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of "management or highly‑compensated employees" (a "top‑hat group") within the meaning of sections 201, 301 and 401 of the Employee Retirement Income Security Act of 1974 ("ERISA"), and therefore to be exempt from the provisions of Parts 2, 3 and 4 of Title 1 of ERISA. Notwithstanding anything apparently to the contrary in this Plan or in any written communication, summary, resolution or document or oral communication, no individual shall be a Participant in this Plan, develop benefits under this Plan or be entitled to receive benefits under this Plan (either for the employee or survivors) unless such individual is a member of a select group of management or highly compensated employees (as that expression is used in ERISA). If a court of competent jurisdiction, any representative of the U.S. Department of Labor or any other governmental, regulatory or similar body makes any direct or indirect, formal or informal, determination that an individual is not a member of a select group of management or highly compensated employees (as that expression is used in ERISA), such individual shall not be (and shall not have ever been) a Participant in this Plan at any time. If any person not so defined has been erroneously treated as a Participant in this Plan, upon discovery of such error such person's erroneous participation shall immediately terminate ab initio .
3.3 Deferral Elections. An eligible employee may elect to participate for each Plan Year by completing a Deferral Election in a form prescribed by the Committee, signing it and returning it to the Committee.
3.3.1 Initial Deferral Election. As a condition of participation in this Plan, an eligible employee must complete such forms and make such elections as the Committee may require for the effective administration of the Plan. At a minimum, the Initial Deferral Election:
(a) shall be irrevocable for the Plan Year with respect to which it is made once it has been accepted by the Committee.
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(b) shall authorize the Employer to withhold from the Participant's Deferrable Compensation for the Plan Year a designated percentage and/or whole dollar amount to be deferred (but not less than $1,000 per Plan Year).
(c) shall designate the form of payment (lump sum or annual installments payable over fives years) subject to the provisions of Section 5.3 hereof.
(d) shall inform the Participant of the proper procedures, as adopted by the Committee, to designate initial deemed investments from among the deemed investment options authorized by the Committee in accordance with Section 4.2 hereof.
Only one form of payment is permitted each for a Participant's Pre-2005 Account and a Participant's Post-2004 Account. Therefore the Participant's election as to form of payment contained in the initial Deferral Election will apply to the Participant's entire Pre-2005 Account, and to the Participant's entire Post-2004 Account, including amounts deferred in subsequent years and allocated to such Post-2004 Account, unless a new designation of form of payment is made in accordance with Section 5.3 hereof. Participants may change their deemed investment elections on a prospective basis in accordance with Section 4.2.
3.3.2 Deferral Elections for Subsequent Years. An employee who is eligible to continue participation in subsequent Plan Years may elect to defer compensation for a Plan Year by completing a Deferral Election in the form and manner prescribed by the Committee. At a minimum such Deferral Election:
(a) shall be irrevocable for the Plan Year with respect to which it is made once it has been accepted by the Committee.
(b) shall authorize the Employer to withhold from the Participant's Deferrable Compensation for the Plan Year a designated percentage or whole dollar amount to be deferred (but not less than $1,000 per Plan Year).
3.3.3 Timing of Deferral Elections. With the exception of part-year participation as provided in Section 3.4, a Deferral Election must be returned before December 1 of the year prior to the Plan Year for which it is effective; provided, however, a Deferral Election for performance-based bonuses must be returned before June 30 of the Plan Year in which such bonus is earned.
3.3.4 Payroll Deductions. Each Deferral Election will authorize the Employer to withhold a percentage (in whole numbers) of, or a whole dollar amount from, a Participant's Deferrable Compensation for a Plan Year.
3.3.5 FICA Taxes. Amounts due for FICA taxes on the amounts deferred will be withheld from the Participant's remaining Deferrable Compensation.
3.3.6 No Spousal Rights. No spouse, former spouse, Beneficiary, or other person shall have any right to participate in the Participant's designation of the amount to be deferred, the deemed investments, the form of payment, or the time of payment.
3.4 Part-Year Participation. Beginning January 1, 2001, in the event an employee first becomes eligible to participate during a Plan Year and wishes to defer a portion of Deferrable Compensation for such calendar year, a Deferral Election must be submitted to the Committee no later than thirty (30) days following notification to the employee of eligibility to participate. Such Deferral Election will be effective only with respect to salary which would otherwise be payable to the Participant following the submission of the Deferral Election to the Committee and it will not be effective as to any bonus paid in the Plan Year but attributable to services provided in the prior year.
3.5 Termination of Participation. A person shall cease to be a Participant as soon as all amounts credited to the Participant's Account have been paid in full.
3.6 Cancellation of 2005 Deferral Election. Notwithstanding the provisions of Subsections 3.3.1(a) and 3.3.2(a), a Participant who has made an election to defer for the 2005 calendar year may, at any time prior to December 31, 2005, cancel such election.
SECTION 4
DEFERRED COMPENSATION ACCOUNT; TRUST
4.1 Pre-2005 Account and Post-2004 Accounts. Each Participant shall have a Pre-2005 Account, if such Participant participated in this Plan prior to January 1, 2005, and a Post-2004 Account with respect to amounts deferred after December 31, 2004. Amounts withheld by the Employer after January 1, 2005 shall be credited to the Participant's Post-2004 Account as of a date determined by the Committee, and an amount equal to the amount withheld will be contributed in cash by the Employer to the Trust referenced in Subsection 4.3.2 hereof. A Participant's Pre-2005 Account balance, if any, and Post-2004 Account balance, shall be subject to adjustments made under Section 4.2.
4.2 Deemed Investment Options. From time to time, the Committee will designate the deemed investment options available under the Plan, and the procedures for Participants to make or change deemed investment elections. Initially the deemed investment options will be all of the investments permitted under the Idaho Power Company Employee Savings Plan ("Employee Savings Plan"). The Committee may change the deemed investment options on a prospective basis at any time. A Participant's Account balance will be adjusted each business day the New York Stock Exchange is open for business for earnings, gains and losses as if it were invested in the deemed investments elected by the Participant.
4.2.1 Valuation of Assets. The market value of the assets that would have been held in each of the deemed investments shall be determined by the Committee in accordance with generally accepted valuation principles, consistently applied. In making adjustments to a Participant's Account and determining the value of assets for purposes of such adjustments, the Committee shall use methods that are comparable to those used in adjusting accounts and the valuation of assets under the Employee Savings Plan, including the extent to which expenses and other charges are taken into account in making such valuations. The amount payable to a Participant or his Beneficiary pursuant to Sections 6.3, 6.4, or 6.5 shall be equal to the Participant's Account balance on the date of the Event of Maturity giving rise to a distribution of the Participant's Account.
4.2.2 Deemed Investment Elections. A Participant may elect deemed investments, and allocate how his or her Account shall be allocated among such deemed investments in accordance with procedures adopted by the Committee for making or changing the selection of deemed investments. Such procedures may include election via an interactive voice response ("IVR") system or elections transmitted electronically. If the Participant has not made a deemed investment election, a Participant's Account balance will be adjusted as determined by the Committee in its sole discretion.
4.3.1 Unfunded Obligation. The obligation of the Employers to make payments under this Plan constitutes only the unsecured (but legally enforceable) promise of the Employers to make such payments. The Participants shall have no lien, prior claim or other security interest in any property of the Employers. The Employers are not required to establish or maintain any fund, trust or account (other than a bookkeeping account or reserve) for the purpose of funding or paying the benefits promised under this Plan. If such a fund is established, the property therein shall remain the sole and exclusive property of the Employers. The Employers will pay the cost of this Plan out of their general assets. All references to accounts, accruals, gains, losses, income, expenses, payments, custodial funds and the like are included merely for the purpose of measuring the Employers' obligation to Participants in this Plan and shall not be construed to impose on the Employers the obligation to create any separate fund for purposes of this Plan.
4.3.2 Establishment of Trust. In order to provide assets from which to fulfill its obligations to the Participants and their beneficiaries under the Plan, the Company shall establish a Trust by a trust agreement with a third party (the "Trustee") to which the Employers may, in their discretion, contribute cash or other property to provide for the benefit payments under the Plan. The Trust shall be a grantor trust for tax purposes. The Trustee will have the duty to invest the Trust assets and funds in accordance with the terms of the Trust. The Employers shall be entitled at any time, and from time to time, in their sole discretion, to substitute assets of at least equal fair market value for any assets held in the Trust. All rights associated with the assets of the Trust will be exercised by the Trustee or the person designated by the Trustee, and will in no event be exercisable by or rest with Participants or their beneficiaries. The Trust shall provide that any assets shall be used for the payment of benefits under the Plan and, to the extent the assets of the Trust exceed the amounts otherwise necessary for the payment of benefits (as a result of forfeitures under Section 7.2), the payment of administrative expenses of the Plan, provided, however, that in the event of the insolvency of the Company, the Trustee shall hold the assets for the benefit of the general creditors of the Company and its affiliated companies.
4.4 Assumption of Risk. The Participant, by electing to make deferrals under this Plan, assumes all risk in connection with any decrease in value of the Participant's Account.
SECTION 5
PAYMENT AMOUNT, TIME AND MANNER OF PAYMENT
5.1 Payment Amount. The "Payment Amount" shall be the Participant's Account balance as determined under Sections 4.1 and 4.2 as of the date of the Event of Maturity that gave rise to a distribution of a Participant's Account.
5.2 Maturity . A Participant's Pre-2005 Account shall mature and shall become payable in accordance with this Section 5 upon the earliest occurrence of any of the following events while in the employment of an Employer or an Affiliate:
(a) the Participant's death, or
(b) the Participant's Termination of Employment (including retirement), or
(c) the Participant's Disability, or
(d) termination of this Plan.
A Participant's Post-2004 Account shall mature and shall become payable in accordance with this Section 5 upon the earliest occurrence of any of the following events while in the employment of Employer or an Affiliate:
(a) the Participant's death, or
(b) the Participant's disability, or
(c) the Participant's Termination of Employment (including retirement).
5.3 Time and Form of Payments. Distribution of amounts withheld pursuant to a Deferral Election will be made either in one lump sum or in five annual installments, as selected by the Participant in the Deferral Election.
5.3.1 Participant's Pre-2005 Account. Upon the occurrence of an Event of Maturity effective as to a Participant, the Committee shall cause the Employer to commence payment of such Participant's Pre-2005 Account (reduced by the amount of any applicable payroll, withholding or other taxes) in the form designated by the Participant in his or her Deferral Election. If a lump sum payment has been elected, payment of the Participant's Pre-2005 Account will be made within sixty (60) days after the Event of Maturity giving rise to the distribution. If a Participant has elected annual installments, payments will commence in January of the year following the year in which the Event of Maturity occurred, or if such event occurred in December, within sixty (60) days after such event.
5.3.2 Participant's Post-2004 Account. Upon the occurrence of an Event of Maturity effective as to a Participant, the Committee shall cause the Employer to commence payment of such Participant's Post-2004 Account (reduced by the amount of any applicable payroll, withholding or other taxes) in the form designated by the Participant in his or her Deferral Election. If a lump sum payment has been elected, payment of the Participant's Post-2004 Account will be made within sixty (60) days after the Event of Maturity giving rise to the distribution, except if the Event of Maturity for a Key Employee is Termination of Employment, payment will be made or commenced six (6) months after the Termination of Employment. If a Participant has elected annual installments, payments will commence in January of the year following the year in which the Event of Maturity occurred or six (6) months after the Termination of Employment, whichever is later.
5.3.3 New Designation of Form of Payment of a Participant's Pre-2005 Account. At any time, and from time to time, a Participant may file with the Committee a new designation of form of payment. Each such subsequent designation shall supersede all prior designations and shall be effective as to the Participant's entire Account (including the portions of the Account attributable to periods before the new designation is filed) as if the new designation had been made in writing at the time of his or her initial Deferral Election. Notwithstanding the foregoing, however, any new designation shall be disregarded as if it had never been filed (and the prior effective designation will be given effect) unless the designation:
(a) was filed with the Committee at least one year before the Event of Maturity, and
(b) was filed at least one year after any other prior designation (including the designation made on the Initial Deferral Election).
5.3.4 New Designation of Form of Payment of a Participant's Post-2004 Account. Subject to the limitations described below, at any time and from time to time, a Participant may file with the Committee a new designation of form of payment. Each such subsequent designation shall supersede all prior designations and shall be effective as to the Participant's entire Post-2004 Account (including the portions of the Post-2004 Account attributable to periods before the new designation is filed) as if the new designation had been made in writing at the time of his or her initial Deferral Election. Notwithstanding the foregoing, however, any designation shall be disregarded as if it has never been filed (and the prior effective designation will be given effect) unless the designation: (a) was filed with the Committee at least one year before the Event of Maturity and at least one year after any other prior designation (including the designation made on the Initial Deferral Election); (b) a designation of payment in the form of installments may not be changed to a lump sum payment; and (c) a designation of payment in the form of a lump sum may be changed to installments, provided the installments shall not commence until five (5) years after the Event of Maturity.
5.3.5 Code §162(m) Delay. If the Committee reasonably anticipates that the Company's deduction with respect to such payment otherwise would be limited or eliminated by application of §162(m), the Committee may unilaterally delay the time of the making or commencement of payment, provided such payment will be made either at the earliest date the Committee reasonably anticipates that deduction of the payment will not be limited or eliminated by application of §162(m) or the calendar year in which the Participant terminates employment; provided, further, that such delay shall not exceed twenty-four (24) months.
5.4 Determination of Annual Installment Amounts. If distributions are made in annual installments over a period of years, the amount of each annual installment will be determined by the Committee by dividing the portion of the Participant's Pre-2005 Account balance which is payable in installments, measured immediately before an installment payment, by the number of installments remaining to be paid, and/or by dividing the portion of the Participant's Post-2004 Account which is payable in installments, measured immediately before an installment payment, by the number of installments remaining to be paid.
5.5 Default. If the form of payment is not clearly designated in the Deferral Election, a designation of a single lump sum payment will be deemed to have been made.
5.6 Withholding. The Company may withhold from any payments any deductions required by law.
SECTION 6
DEATH OR DISABILITY
6.1 Payment. A Participant's Payment Amount shall be payable under Sections 6.2 through 6.6 on the Participant's death or disability regardless of the provisions of Section 5, subject to the following provisions.
6.2 Death. On death, the Payment Amount shall be paid as follows:
(a) If the Beneficiary is the surviving spouse and the Participant had elected an installment payout, by installments, in accordance with the election, beginning in January of the year following the year of death, provided that if the death occurred in December, the first installment will be paid within 60 days of the Participant's death and the remaining annual installments will be paid in January thereafter.
(b) In all other cases, by a lump sum, payable within 60 days after the Participant's death.
6.3 Beneficiaries. An amount payable on death of a Participant shall be paid to the Participant's Beneficiary in the following order of priority:
(a) To the surviving Beneficiaries designated by the Participant in writing to the Committee.
(b) To the Participant's spouse, if living.
(c) To the Participant's estate.
6.4 Beneficiary Designation. A Participant shall submit to the Company upon initial designation as an eligible employee in the Plan, and at such other times as the Participant desires, on a form provided by the Committee, a written designation of the beneficiary or beneficiaries to whom payment of the Participant's Account under the Plan shall be made in the event of the Participant's death. Beneficiary designations shall become effective only when received by the Company. Beneficiary designations first received by the Company after the Participant's death, and any designations in effect at the time a valid subsequent designation is received by the Company, shall be invalid and have no effect.
6.5 Disclaimers by Beneficiaries. A Beneficiary entitled to a payment of all or a portion of a deceased Participant's Account may disclaim any interest therein subject to the following requirements. To be eligible to disclaim, a Beneficiary must not have received a payment of all or any portion of the Account at the time such disclaimer is executed and delivered, and, if a natural person, must have attained legal age as of the date of the disclaimer. Any disclaimer must be in writing and must be executed personally by the Beneficiary before a notary public. A disclaimer shall state that the Beneficiary's entire interest in the unpaid Account is disclaimed or shall specify what portion thereof is disclaimed. To be effective, an original executed copy of the disclaimer must be both executed and actually delivered to the Committee after the date of the Participant's death but not later than nine (9) months after the date of the Participant's death. A disclaimer shall be irrevocable when delivered to the Committee. A disclaimer shall be considered to be delivered to the Committee only when actually received by an officer of the Company or a member of the Committee who is familiar with the affairs of the Plan. The Committee shall be the sole judge of the content, interpretation and validity of a purported disclaimer. Upon the filing of a valid disclaimer, the Beneficiary shall be considered not to have survived the Participant as to the interest disclaimed. A disclaimer by a Beneficiary shall not be considered to be a transfer of an interest in violation of the provisions of Section 10.3. No other form of attempted disclaimer shall be recognized by the Committee. The foregoing requirements are solely for the purpose of disclaiming benefits under the Plan and compliance with these requirements does not assure that the disclaimer will be valid for tax purposes or any other purposes. It is the responsibility of the person disclaiming to assure compliance with any and all requirements to assure proper tax treatment of the disclaimer if that is intended
6.6 Special Rules. Unless the Participant has otherwise specified in the Participant's Beneficiary designation, the following rules shall apply:
(a) If there is not sufficient evidence that a Beneficiary was living at the time of the death of the Participant, it shall be deemed that the Beneficiary was not living at the time of the death of the Participant.
(b) The automatic Beneficiaries specified in Section 6.3 and the Beneficiaries designated by the Participant shall become fixed at the time of the Participant's death so that, if a Beneficiary survives the Participant but dies before the receipt of all payments due such Beneficiary hereunder, such remaining payments shall be payable to the representative of such Beneficiary's estate.
14
(c) If the Participant designates as a Beneficiary the person who is the Participant's spouse on the date of the designation, either by name or by relationship, or both, the dissolution, annulment or other legal termination of the marriage between the Participant and such person shall automatically revoke such designation. (The foregoing shall not prevent the Participant from designating a former spouse as a Beneficiary on a form executed by the Participant and received by the Committee after the date of the legal termination of the marriage between the Participant and such former spouse, and during the Participant's lifetime.)
(d) Any designation of a nonspouse Beneficiary by name that is accompanied by a description of relationship to the Participant shall be given effect without regard to whether the relationship to the Participant exists either then or at the Participant's death.
(e) Any designation of a Beneficiary only by statement of relationship to the Participant shall be effective only to designate the person or persons standing in such relationship to the Participant at the Participant's death.
(f) A Beneficiary designation is permanently void if it either is executed or is filed by a Participant who, at the time of such execution or filing, is then a minor under the law of the state of the Participant's legal residence. The Committee shall be the sole judge of the content, interpretation and validity of a purported Beneficiary designation.
6.7 Surviving Spouse and Installment Payments. If a surviving spouse is receiving installments and dies when a balance remains, the balance shall be paid in a lump sum to the spouse's estate.
6.8 Disability. Notwithstanding any provisions herein to the contrary, while a Participant is receiving long-term disability benefits under a plan sponsored by an Employer, no payments will be made under this Plan. If disability benefits stop and disability continues, the Payment Amount shall be paid in the manner selected under Section 5.3. If the Participant dies, the provisions applicable to death shall be followed. If the Participant ceases to be disabled and does not resume active employment, the Payment Amount shall be paid in accordance with Section 5.
6.9 Determination of Disability. A Participant is disabled if the Committee determines that either of the following apply:
(a) The Participant is eligible to receive long-term disability benefits under a plan maintained by the Employer or an affiliate or would have been eligible if covered by such plan.
(b) In the absence of a plan under (a), the Participant is permanently and totally disabled due to a medically determinable physical or mental impairment which (i) renders the individual incapable of performing any substantial gainful employment, (ii) can be expected to be of long-continued and indefinite duration or result in death, and (iii) is evidenced by a certification to this effect by a doctor of medicine approved by the Committee. In lieu of such a certification, the Committee may accept the official written determination that the individual will be eligible for disability benefits under the federal Social Security Act as now enacted or hereinafter amended (when any waiting period expires).
15
SECTION 7
WITHDRAWALS
7.1 Hardship Withdrawals. A Participant may withdraw amounts from the Participant's Pre-2005 Account and from the Participant's Post-2004 Account before those amounts would otherwise have been paid, if the Participant is employed by the Employer at the time of the request, and if the Participant demonstrates to the satisfaction of the Committee that the withdrawal is necessary because of an unforeseeable emergency. The withdrawal shall be limited to the amount reasonably necessary to meet the financial hardship, including any amounts necessary to pay federal, state or local income taxes reasonably anticipated to result from the payment.
7.1.1 Financial hardship. An unforeseeable emergency is a severe financial hardship of a Participant resulting from one or more of the following causes:
(a) An illness or accident of the Participant, Participant's spouse, or dependent (as defined in Section 152(a) of the Code);
(b) Loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance); or
(c) Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary.
A distribution on account of unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under this Plan.
7.1.2 Withdrawal Applications. The Committee shall establish guidelines and procedures for implementing withdrawals. An application shall be written, be signed by the Participant and include a statement of facts causing the financial hardship and any other facts required by the Committee.
7.1.3 Limitations The withdrawal date shall be fixed by the Committee. The Committee may require a minimum advance notice and may limit the amount, time and frequency of withdrawals.
7.2 Early Distribution. Notwithstanding any other provision of the Plan, any Participant or Beneficiary may, at any time, elect to receive an early payment of the Participant's Account balance, reduced by a penalty equal to ten percent (10%) of the Account balance as of the date of such election. The ten percent (10%) penalty shall be permanently forfeited and shall not be paid to, or in respect of, the Participant or Beneficiary. Any early payment under this Section 7.2 will be made as soon as administratively feasible after the Participant's or Beneficiary's election. Whenever a Participant receives an early payment under this Section 7.2, the Participant's participation under the Plan will terminate effective as of the date of such early payment and the Participant shall not be eligible to participate in the Plan until the third Plan Year beginning after the date of such early payment. An early distribution of a Participant's Post-2004 Account balance is not permitted.
SECTION 8
AMENDMENT; TERMINATION
8.1 Amendment and Termination Generally. Subject to the limitations of Sections 8.2 and 8.3, the Plan may be amended or terminated at any time through action by the Board, or by the Committee. Upon termination, each Participant or Beneficiary, as the case may be, will receive an amount equal to such Participant's Account balance, less any withholding obligations, as soon as practicable following the date the Plan is terminated. Distribution of each Participant's Account balance shall be made in the manner determined by the Company in its sole and absolute discretion.
8.2 Before a Change-in-Control. Prior to the occurrence of a Change-in-Control, the Board or Committee may unilaterally amend the Plan prospectively, retroactively or both, at any time and for any reason deemed sufficient by it without notice to any person affected by this Plan and may likewise terminate this Plan both with regard to persons expecting to receive benefits in the future, subject to the following.
8.2.1 Terminated Participants. The benefit, if any, payable to or with respect to a Participant who has had a termination of employment as of the effective date of such amendment, or the effective date of such termination, shall not be, without the knowing and voluntary written consent of the Participant, diminished or delayed by such amendment or termination (but the Committee may amend the Plan to otherwise modify the payment of any such benefit including, but not limited to, accelerating the payment of all remaining payments into a single lump sum payment).
8.2.2 Other Participants. The benefit, if any, payable to or with respect to each other Participant determined as if such Participant had a termination of employment on the effective date of such amendment or the effective date of such termination, shall not be, without the knowing and voluntary written consent of the Participant, diminished or delayed by such amendment or termination (but the Committee may amend the Plan to otherwise modify the payment of any such benefit including, but not limited to, accelerating the payment of all remaining payments into a single lump sum payment).
8.2.3 No Acceleration. Notwithstanding the provisions of Subsections 8.2.1 and 8.2.2, no amendment may accelerate the payment of benefits to a Participant from the Participant's Post-2004 Account.
8.3 After a Change-in-Control. After the occurrence of a Change-in-Control, the Committee may amend or terminate the Plan as provided in Section 8.2 but subject to the following limitations.
8.3.1 Existing Participants. After the occurrence of a Change-in-Control, the Board or Committee may only amend or terminate the Plan as applied to Participants who are Participants on the date of the Change-in-Control if:
(a) all benefits payable to or with respect to persons who were Participants as of the Change-in-Control (including benefits earned before and benefits earned after the Change-in-Control) have been paid in full prior to the adoption of the amendment or the termination, or
(b) eighty percent (80%) of all the Participants determined as of the date of the Change-in-Control give knowing and voluntary written consent to such amendment or termination.
8.3.2 New Participants. After the occurrence of a Change-in-Control, as applied to Participants who are not Participants on the date of the Change-in-Control, the Board or Committee may unilaterally amend the Plan prospectively, retroactively or both, at any time and for any reason deemed sufficient by it without notice to any person affected by this Plan and may likewise terminate this Plan.
8.4 No Oral Amendments . No modification of the terms of the Plan or termination of this Plan shall be effective unless it is in writing and signed on behalf of the Board or Committee by a person authorized to execute such writing. No oral representation concerning the interpretation or effect of the Plan shall be effective to amend the Plan nor binding on any person charged with the interpretation or application of the Plan.
8.5 Plan Binding on Successors. The Principal Sponsor shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Employers), by agreement, to expressly assume and agree to perform this Plan in the same manner and to the same extent that the Employers would be required to perform it if no such succession had taken place.
8.6 Payment. If the Internal Revenue Service issues a final ruling that any amounts deferred under this Plan will be subject to current income tax, all amounts to which the ruling is applicable shall be paid to the Participants within 30 days.
SECTION 9
CLAIMS PROCEDURE
9.1 Initial Claim. Any person claiming a benefit or requesting an interpretation, ruling or information under the Plan shall present the request in writing to the Committee, which shall respond in writing as soon as practicable.
9.2 Denial. If the claim or request is denied, the written notice of denial shall state:
18
(a) The reasons for denial, with specific reference to the Plan provisions on which the denial is based.
(b) A description of any additional materials or information required and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
9.3 Time. The initial notice of denial shall normally be given within 90 days of receipt of the claim. If special circumstances require an extension of time, the claimant shall be so notified and the time limit shall be 180 days.
9.4 Appeal. Any person whose claim or request is denied or who has not received a response within 30 days may request a review by notice in writing to the Committee. The original decision shall be reviewed by the Committee, which may, but shall not be required to, grant the claimant a hearing. On review, whether or not there is a hearing, the claimant may have representation, examine pertinent documents and submit issues and comments in writing.
9.5 Final Decision. The decision on review shall ordinarily be made within 60 days. If an extension of time is required for a hearing or other special circumstances, the claimant shall be so notified and the time limit shall be 120 days. The decision shall be in writing and shall state the reasons and the relevant plan provisions. All decisions on review shall be final and bind all parties concerned.
SECTION 10
GENERAL PROVISIONS
10.1 Attorneys' Fees. If suit or action is instituted to enforce any rights under this Plan, the prevailing party may recover from the other party reasonable attorneys' fees at trial and on any appeal.
10.2 Notices. Any notice under this Plan shall be in writing and shall be effective when actually delivered or, if mailed, when deposited as first class mail postage prepaid. Mail shall be directed to the Company at the address stated in this Plan, to the Participant's last known home address shown in the Company's records, or to such other address as a party may specify by notice to the other parties. Notices to an Employer or the Committee shall be sent to the Company's address.
10.3 Nontransferability; Spendthrift Provisions. The rights of a Participant under this Plan are personal. Except for the limited provisions of Section 6, no interest of a Participant or one claiming through a Participant may be directly or indirectly assigned, alienated, pledged, transferred or encumbered and no such interest shall be subject to seizure by legal process, attachment, garnishment, execution following judgment or in any other way subjected to the claims of any creditor.
10.4 Not an Employment Contract. This Plan is not and shall not be deemed to constitute a contract of employment between the Employer and any employee or other person, nor shall anything herein contained be deemed to give any employee or other person any right to be retained in an Employer's employ or in any way limit or restrict the Employer's right or power to discharge any employee or other person at any time and to treat him without regard to the effect which such treatment might have upon the employee as a Participant in the Plan.
10.5 Successors. Amounts payable under this Plan shall be an obligation of the Company and the Trust. If an Employer merges, consolidates, or otherwise reorganizes or if its business or assets are acquired by another company, this Plan shall continue with respect to those eligible individuals who continue in the employ of the successor company. The transition of Employers shall not be considered a termination of employment for purposes of this Plan.
10.6 Incompetence. The Committee may decide that because of the mental or physical condition of a person entitled to payments, or because of other relevant factors, it is in the person's best interest to make payments to others for the benefit of the person entitled to payment. In that event, the Committee may in its discretion direct those payments to be made as follows:
(a) To a parent or spouse or a child of legal age;
(b) To a legal guardian; or
(c) To one furnishing maintenance, support, or hospitalization.
10.7 Expenses. All expenses and costs in connection with the adoption and administration of the Plan and Trust will be borne by the Employers.
10.8 Governing Law. Except to the extent that federal law is controlling the Plan shall be construed and entered in accordance with and governed by the laws of the State of Idaho. Invalidation of any one of the provisions of the Plan for any reason shall in no way affect the other provisions hereof, and all such other provisions shall remain in full force and effect.
10.9 Unsecured General Creditor. Any amount allocated to a Participant's Account balance under this Plan shall be an unfunded, unsecured promise of the Employer to make payments in the future. Participants and their beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of the Employer. Any and all of the Employer's assets shall be, and remain, the general, unpledged, unrestricted assets of the Employer. The Employer may, but shall not be required to, establish a reserve of assets to provide funds for payments under this Plan. Such reserve may be through a trust fund, which it is intended will be established on such terms and conditions as shall prevent taxation and Participants and Beneficiaries of any amounts held in the reserve or credited to Account balances prior to the time payments are made. Establishing a reserve shall have no effect on the operation of this Plan or upon the status of Participants as unsecured general creditors of the Employer. Rights to payments will not be limited to assets held in any reserve.
10.10.1ERISA Status. This Plan is adopted with the understanding that it is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees as provided in section 201(2), section 301(3) and section 401(a)(1) of ERISA. Each provision shall be interpreted and administered accordingly.
10.10.2IRC Status. This Plan is intended to be a nonqualified deferred compensation arrangement. The rules of Section 409A of the Code and the regulations issued thereunder apply to all amounts deferred after December 31, 2004 under this Plan. The rules of Section 3121(v)(2) and Section 3306(r)(2) of the Code shall apply to this Plan.
10.10.3Rules of Document Construction:
(a) Age. An individual shall be considered to have attained a given age on such individual's birthday for that age (and not on the day before). Individuals born on February 29 in a leap year shall be considered to have their birthdays on February 28 in each year that is not a leap year.
(b) Compounds. The words "hereof," "herein" or "hereunder" or other similar compounds of the word "here" shall mean and refer to the entire Plan and not to any particular paragraph or Section of the Plan unless the context clearly indicates to the contrary.
(c) Titles. The titles given to the various Sections of the Plan are inserted for convenience of reference only and are not part of the Plan, and they shall not be considered in determining the purpose, meaning or intent of any provision hereof.
(d) References to Laws. A reference in the Plan a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation.
10.11 Effect on Other Plans. This Plan shall not alter, enlarge or diminish any person's employment rights or obligations or rights or obligations under any other retirement plan sponsored by an Employer.
10.12 Effective Date. This Plan shall be effective November 15, 2000
IDAHO POWER COMPANY.
Date: ___________________________ By: _____________________________
21
(1) Amended by Idaho Power Company effective October 1, 2003 to change deadline of making deferral elections and to revise hardship withdrawal provision.
(2) Amended by Idaho Power Company effective January 1, 2005 to permit cancellations of 2005 deferral elections.
(3) Amended by Idaho Power Company effective January 1, 2005 to establish grandfathered and non-grandfathered accounts and to make other Section 409A-related changes.
(4) Amended by Idaho Power Company effective July 20, 2006 to revise the change in control definition for non-grandfathered accounts. 22
Exhibit 12
IDACORP, INC.
Consolidated Financial Information
Ratio of Earnings to Fixed Charges
|
|
|
Twelve Months Ended |
||||||||||||||||
|
Nine months |
|
December 31, |
||||||||||||||||
|
ended |
|
(Thousands of Dollars) |
||||||||||||||||
|
September 30, |
|
|
|
|
|
|
|
|
|
|||||||||
|
2006 |
|
2005 |
|
2004 |
|
2003 |
|
2002 |
2001 |
|||||||||
|
|
|
|
||||||||||||||||
Earnings, as defined: |
|||||||||||||||||||
Income from continuing operations |
|||||||||||||||||||
before income taxes |
$ |
108,139 |
$ |
103,327 |
$ |
60,830 |
$ |
31,063 |
$ |
22,036 |
$ |
206,972 |
|||||||
Adjust for distributed income of equity |
|||||||||||||||||||
investees |
(5,995) |
(10,370) |
1,990 |
(2,136) |
(2,544) |
(1,620) |
|||||||||||||
Equity in loss of equity method |
|||||||||||||||||||
investments |
- |
- |
- |
- |
- |
296 |
|||||||||||||
Minority interest in losses of majority |
|||||||||||||||||||
owned subsidiaries |
- |
- |
(48) |
(435) |
(211) |
(612) |
|||||||||||||
Fixed charges, as below |
49,027 |
64,379 |
66,137 |
68,134 |
62,658 |
85,034 |
|||||||||||||
Total earnings, as defined |
$ |
151,171 |
$ |
157,336 |
$ |
128,909 |
$ |
96,626 |
$ |
81,939 |
$ |
290,070 |
|||||||
Fixed charges, as defined: |
|||||||||||||||||||
Interest charges |
$ |
48,260 |
$ |
62,962 |
$ |
61,269 |
$ |
64,813 |
$ |
60,031 |
$ |
75,305 |
|||||||
Preferred stock dividends of |
|||||||||||||||||||
subsidiaries - gross up - |
|||||||||||||||||||
IDACORP rate |
- |
- |
3,216 |
1,915 |
857 |
8,142 |
|||||||||||||
Rental interest factor |
767 |
1,417 |
1,652 |
1,406 |
1,770 |
1,587 |
|||||||||||||
Total fixed charges, as defined |
$ |
49,027 |
$ |
64,379 |
$ |
66,137 |
$ |
68,134 |
$ |
62,658 |
$ |
85,034 |
|||||||
Ratio of earnings to fixed charges |
3.08x |
2.44x |
1.95x |
1.42x |
1.31x |
3.41x |
|||||||||||||
Exhibit 12(a)
IDACORP, INC.
Consolidated Financial Information
Supplemental Ratio of Earnings to Fixed Charges
|
|
|||||||||||||||||||
Twelve Months Ended |
||||||||||||||||||||
Nine months |
December 31, |
|||||||||||||||||||
ended |
|
(Thousands of Dollars) |
||||||||||||||||||
September 30, |
|
|
||||||||||||||||||
2006 |
|
2005 |
|
2004 |
|
2003 |
|
2002 |
|
2001 |
||||||||||
Earnings, as defined: |
||||||||||||||||||||
Income from continuing operations |
||||||||||||||||||||
before income taxes |
$ |
108,139 |
$ |
103,327 |
$ |
60,830 |
$ |
31,063 |
$ |
22,036 |
$ |
206,972 |
||||||||
Adjust for distributed income of equity |
||||||||||||||||||||
investees |
(5,995) |
(10,370) |
1,990 |
(2,136) |
(2,544) |
(1,620) |
||||||||||||||
Equity in loss of equity method |
||||||||||||||||||||
investments |
- |
- |
- |
- |
- |
296 |
||||||||||||||
Minority interest in losses of majority |
||||||||||||||||||||
owned subsidiaries |
- |
- |
(48) |
(435) |
(211) |
(612) |
||||||||||||||
Supplemental fixed charges, as below |
50,349 |
65,991 |
67,654 |
69,679 |
64,257 |
86,818 |
||||||||||||||
Total earnings, as defined |
$ |
152,493 |
$ |
158,948 |
$ |
130,426 |
$ |
98,171 |
$ |
83,538 |
$ |
291,854 |
||||||||
Fixed charges, as defined: |
||||||||||||||||||||
Interest charges |
$ |
48,260 |
$ |
62,962 |
$ |
61,269 |
$ |
64,813 |
$ |
60,031 |
$ |
75,305 |
||||||||
Preferred stock dividends of |
||||||||||||||||||||
subsidiaries - gross up - |
||||||||||||||||||||
IDACORP rate |
- |
- |
3,216 |
1,915 |
857 |
8,142 |
||||||||||||||
Rental interest factor |
767 |
1,417 |
1,652 |
1,406 |
1,770 |
1,587 |
||||||||||||||
Total fixed charges |
$ |
49,027 |
$ |
64,379 |
$ |
66,137 |
$ |
68,134 |
$ |
62,658 |
$ |
85,034 |
||||||||
Supplemental increment to fixed |
||||||||||||||||||||
charges * |
1,322 |
1,612 |
1,517 |
1,545 |
1,599 |
1,784 |
||||||||||||||
Total supplemental fixed charges |
$ |
50,349 |
$ |
65,991 |
$ |
67,654 |
$ |
69,679 |
$ |
64,257 |
$ |
86,818 |
||||||||
Supplemental ratio of earnings to fixed |
||||||||||||||||||||
Charges |
3.03x |
2.41x |
1.93x |
1.41x |
1.30x |
3.36x |
||||||||||||||
* Explanation of increment - Interest on the guaranty of American Falls
Reservoir District bonds and Milner Dam, Inc. notes which are already included
in operation expenses.
Exhibit 12(b)
IDACORP, INC.
Consolidated Financial Information
Ratio of Earnings to Combined Fixed Charges and Preferred Dividends
Requirements
|
Twelve Months Ended |
||||||||||||||||||||
Nine months |
December 31, |
||||||||||||||||||||
ended |
|
(Thousands of Dollars) |
|||||||||||||||||||
September 30, |
|
|
|||||||||||||||||||
2006 |
|
2005 |
|
2004 |
|
2003 |
|
2002 |
2001 |
||||||||||||
Earnings, as defined: |
|||||||||||||||||||||
Income from continuing operations |
|||||||||||||||||||||
before income taxes |
$ |
108,139 |
$ |
103,327 |
$ |
60,830 |
31,063 |
22,036 |
206,972 |
||||||||||||
Adjust for distributed income of equity |
|||||||||||||||||||||
investees |
(5,995) |
(10,370) |
1,990 |
(2,136) |
(2,544) |
(1,620) |
|||||||||||||||
Equity in loss of equity method |
|||||||||||||||||||||
investments |
- |
- |
- |
- |
- |
296 |
|||||||||||||||
Minority interest in losses of majority |
|||||||||||||||||||||
owned subsidiaries |
- |
- |
(48) |
(435) |
(211) |
(612) |
|||||||||||||||
Fixed charges, as below |
49,027 |
64,379 |
66,137 |
68,134 |
62,658 |
85,034 |
|||||||||||||||
Total earnings, as defined |
$ |
151,171 |
$ |
157,336 |
$ |
128,909 |
96,626 |
81,939 |
290,070 |
||||||||||||
Fixed charges, as defined: |
|||||||||||||||||||||
Interest charges |
$ |
48,260 |
$ |
62,962 |
$ |
61,269 |
64,813 |
60,031 |
75,305 |
||||||||||||
Preferred stock dividends of |
|||||||||||||||||||||
subsidiaries - gross up - |
|||||||||||||||||||||
IDACORP rate |
- |
- |
3,216 |
1,915 |
857 |
8,142 |
|||||||||||||||
Rental interest factor |
767 |
1,417 |
1,652 |
1,406 |
1,770 |
1,587 |
|||||||||||||||
Total fixed charges |
$ |
49,027 |
$ |
64,379 |
66,137 |
68,134 |
62,658 |
85,034 |
|||||||||||||
Preferred dividends requirements |
- |
- |
- |
- |
- |
- |
|||||||||||||||
Total combined fixed charges |
$ |
49,027 |
$ |
64,379 |
$ |
66,137 |
68,134 |
62,658 |
85,034 |
||||||||||||
Ratio of earnings to combined fixed |
|||||||||||||||||||||
charges and preferred dividends |
3.08x |
2.44x |
1.95x |
1.42x |
1.31x |
3.41x |
|||||||||||||||
Exhibit 12(c)
IDACORP, INC.
Consolidated Financial Information
Supplemental Ratio of Earnings to Combined Fixed Charges and Preferred
Dividends Requirements
|
|||||||||||||||||||
Twelve Months Ended |
|||||||||||||||||||
Nine months |
December 31, |
||||||||||||||||||
ended |
(Thousands of Dollars) |
||||||||||||||||||
September 30, |
|
||||||||||||||||||
2006 |
2005 |
|
2004 |
|
2003 |
|
2002 |
2001 |
|||||||||||
Earnings, as defined: |
|||||||||||||||||||
Income from continuing operations |
|||||||||||||||||||
before income taxes |
$ |
108,139 |
$ |
103,327 |
$ |
60,830 |
$ |
31,063 |
$ |
22,036 |
$ |
206,972 |
|||||||
Adjust for distributed income of equity |
|||||||||||||||||||
investees |
(5,995) |
(10,370) |
1,990 |
(2,136) |
(2,544) |
(1,620) |
|||||||||||||
Equity in loss of equity method |
|||||||||||||||||||
investments |
- |
- |
- |
- |
- |
296 |
|||||||||||||
Minority interest in losses of majority |
|||||||||||||||||||
owned subsidiaries |
- |
- |
(48) |
(435) |
(211) |
(612) |
|||||||||||||
Supplemental fixed charges and |
|||||||||||||||||||
Preferred dividends, as below |
50,349 |
65,991 |
67,654 |
69,679 |
64,257 |
86,818 |
|||||||||||||
Total earnings, as defined |
$ |
152,493 |
$ |
158,948 |
$ |
130,426 |
$ |
98,171 |
$ |
83,538 |
$ |
291,854 |
|||||||
Fixed charges, as defined: |
|||||||||||||||||||
Interest charges |
$ |
48,260 |
$ |
62,962 |
$ |
61,269 |
$ |
64,813 |
$ |
60,031 |
$ |
75,305 |
|||||||
Preferred stock dividends of |
|||||||||||||||||||
subsidiaries - gross up - |
|||||||||||||||||||
IDACORP rate |
- |
- |
3,216 |
1,915 |
857 |
8,142 |
|||||||||||||
Rental interest factor |
767 |
1,417 |
1,652 |
1,406 |
1,770 |
1,587 |
|||||||||||||
Total fixed charges |
$ |
49,027 |
$ |
64,379 |
$ |
66,137 |
$ |
68,134 |
$ |
62,658 |
$ |
85,034 |
|||||||
Supplemental increment to fixed charges * |
1,322 |
1,612 |
1,517 |
1,545 |
1,599 |
1,784 |
|||||||||||||
Supplemental fixed charges |
50,349 |
65,991 |
67,654 |
69,679 |
64,257 |
86,818 |
|||||||||||||
Preferred dividends requirements |
- |
- |
- |
- |
- |
- |
|||||||||||||
Total combined supplemental |
$ |
50,349 |
$ |
65,991 |
$ |
67,654 |
$ |
69,679 |
$ |
64,257 |
$ |
86,818 |
|||||||
Supplemental ratio of earnings to |
|||||||||||||||||||
combined fixed charges and preferred |
|||||||||||||||||||
Dividends |
3.03x |
2.41x |
1.93x |
1.41x |
1.30x |
3.36x |
|||||||||||||
*Explanation of increment - Interest on the guaranty of American Falls Reservoir District bonds and Milner Dam, Inc. notes which are already included in operation expenses.
Exhibit 12(d)
Idaho Power Company
Consolidated Financial Information
Ratio of Earnings to Fixed Charges
|
|||||||||||||||||||
Twelve Months Ended |
|||||||||||||||||||
Nine months |
December 31, |
||||||||||||||||||
ended |
(Thousands of Dollars) |
||||||||||||||||||
September 30, |
|||||||||||||||||||
2006 |
2005 |
|
2004 |
|
2003 |
|
2002 |
2001 |
|||||||||||
|
|
|
|
|
|
|
|||||||||||||
Earnings, as defined: |
|||||||||||||||||||
Income from continuing operations |
|||||||||||||||||||
before income taxes |
$ |
125,191 |
$ |
115,764 |
$ |
76,936 |
$ |
80,319 |
$ |
86,326 |
$ |
48,250 |
|||||||
Adjust for distributed income of equity |
|||||||||||||||||||
investees |
(5,995) |
(10,370) |
1,990 |
(2.136) |
(2,544) |
(1,620) |
|||||||||||||
Equity in loss of equity method |
|||||||||||||||||||
investments |
- |
- |
- |
- |
- |
- |
|||||||||||||
Minority interest in losses of majority |
|||||||||||||||||||
owned subsidiaries |
- |
- |
- |
- |
- |
- |
|||||||||||||
Fixed charges, as below |
44,753 |
57,739 |
55,530 |
60,304 |
61,403 |
64,964 |
|||||||||||||
Total earnings, as defined |
$ |
163,949 |
$ |
163.133 |
$ |
134.456 |
$ |
138,487 |
$ |
145,185 |
$ |
111,594 |
|||||||
Fixed charges, as defined: |
|||||||||||||||||||
Interest charges |
$ |
44,206 |
$ |
56,866 |
$ |
54,297 |
$ |
59,363 |
$ |
60,317 |
$ |
64,002 |
|||||||
Rental interest factor |
547 |
873 |
1,233 |
941 |
1,086 |
962 |
|||||||||||||
Total fixed charges, as defined |
$ |
44,753 |
$ |
57,739 |
$ |
55,530 |
$ |
60,304 |
$ |
61,403 |
$ |
64,964 |
|||||||
Ratio of earnings to fixed charges |
3.66x |
2.83x |
2.42x |
2.30x |
2.36x |
1.72x |
|||||||||||||
Exhibit 12(e)
Idaho Power Company
Consolidated Financial Information
Supplemental Ratio of Earnings to Fixed Charges
|
|||||||||||||||||||
Twelve Months Ended |
|||||||||||||||||||
Nine months |
December 31, |
||||||||||||||||||
ended |
(Thousands of Dollars) |
||||||||||||||||||
September 30, |
|
||||||||||||||||||
2006 |
2005 |
|
2004 |
|
2003 |
|
2002 |
2001 |
|||||||||||
Earnings, as defined: |
|||||||||||||||||||
Income from continuing operations |
|||||||||||||||||||
before income taxes |
$ |
125,191 |
$ |
115,764 |
$ |
76,936 |
$ |
80,319 |
$ |
86,326 |
$ |
48,250 |
|||||||
Adjust for distributed income of equity |
|||||||||||||||||||
investees |
(5,995) |
(10,370) |
1,990 |
(2,136) |
(2,544) |
(1,620) |
|||||||||||||
Equity in loss of equity method |
|||||||||||||||||||
investments |
- |
- |
- |
- |
- |
- |
|||||||||||||
Minority interest in losses of majority |
|||||||||||||||||||
owned subsidiaries |
- |
- |
- |
- |
- |
- |
|||||||||||||
Supplemental fixed charges, as below |
46,075 |
59,351 |
57,047 |
61,849 |
63,002 |
66,748 |
|||||||||||||
Total earnings, as defined |
$ |
165,271 |
$ |
164,745 |
$ |
135,973 |
$ |
140,032 |
$ |
146,784 |
$ |
113,378 |
|||||||
Fixed charges, as defined: |
|||||||||||||||||||
Interest charges |
$ |
44,206 |
$ |
56,866 |
$ |
54,297 |
$ |
59,363 |
$ |
60,317 |
$ |
64,002 |
|||||||
Rental interest factor |
547 |
873 |
1,233 |
941 |
1,086 |
962 |
|||||||||||||
Total fixed charges |
$ |
44,753 |
$ |
57,739 |
$ |
55,530 |
60,304 |
$ |
61,403 |
$ |
64,964 |
||||||||
Supplemental increment to fixed charges* |
1,322 |
1,612 |
1,517 |
1,545 |
1,599 |
1,784 |
|||||||||||||
Total supplemental fixed charges |
$ |
46,075 |
$ |
59,351 |
$ |
57,047 |
$ |
61,849 |
$ |
63,002 |
$ |
66,748 |
|||||||
Supplemental ratio of earnings to fixed |
|||||||||||||||||||
charges |
3.59x |
2.78x |
2.38x |
2.26x |
2.33x |
1.70x |
|||||||||||||
*Explanation of increment - Interest on the
guaranty of American Falls Reservoir District bonds and Milner Dam, Inc. notes
which are already included in operation expenses.
Exhibit 15
November 1, 2006
IDACORP, Inc.
Idaho Power Company
Boise, Idaho
We have reviewed, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the unaudited
interim financial information of IDACORP, Inc. and subsidiaries and Idaho Power
Company and subsidiary for the periods ended September 30, 2006 and 2005, as
indicated in our reports dated November 1, 2006; because we did not perform
audits, we expressed no opinion on that information.
We are aware that our reports
referred to above, which are included in your Quarterly Report on Form 10-Q for
the quarter ended September 30, 2006, are incorporated by reference in
Registration Statements No. 333-64737, 333-83434, and 333-103917 on Form S-3
and Registration Statements No. 333-65157, 333-65406, 333-104254, and
333-125259 on Form S-8 of IDACORP, Inc. and Registration Statement No.
333-122153 on Form S-3 and Registration Statement No. 333-66496 on Form S-8 of
Idaho Power Company.
We also are aware that the aforementioned reports, pursuant
to Rule 436(c) under the Securities Act of 1933, are not considered a part of
the Registration Statements prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and 11
of that Act.
DELOITTE & TOUCHE LLP
Boise, Idaho
Exhibit 31(a)
CERTIFICATION
I, J. LaMont Keen, certify
that:
1. I have reviewed this
Quarterly Report on Form 10-Q of IDACORP, Inc.;
2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and we have:
a)
Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
report is being prepared;
b)
Designed such internal control
over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles;
c)
Evaluated the effectiveness of the
registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation;
and
d)
Disclosed in this report any
change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officer and I
have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
a)
All significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report financial
information; and
b)
Any fraud, whether or not
material, that involves management or other employees who have a significant
role in the registrant's internal control over financial reporting.
Date: |
November 2, 2006 |
By: |
/s /J. LaMont Keen |
J. LaMont Keen |
|||
President and Chief Executive Officer |
Exhibit 31(b)
CERTIFICATION
I, Darrel T. Anderson,
certify that:
1. I have reviewed this
Quarterly Report on Form 10-Q of IDACORP, Inc.;
2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and we have:
a)
Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
report is being prepared;
b)
Designed such internal control
over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
c)
Evaluated the effectiveness of the
registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation;
and
d)
Disclosed in this report any
change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officer and I
have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
a)
All significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: |
November 2, 2006 |
By: |
/s/Darrel T. Anderson |
Darrel T. Anderson |
|||
Senior Vice President - Administrative Services |
|||
and Chief Financial Officer |
Exhibit 31(c)
CERTIFICATION
I, J. LaMont Keen, certify
that:
1. I have reviewed this
Quarterly Report on Form 10-Q of Idaho Power Company;
2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and we have:
a)
Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
report is being prepared;
b)
Designed such internal control
over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
c)
Evaluated the effectiveness of the
registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such
evaluation; and
d)
Disclosed in this report any
change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officer and I
have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
a)
All significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: |
November 2, 2006 |
By: |
/s/ J. LaMont Keen |
|
J. LaMont Keen |
||||
President and Chief Executive Officer |
Exhibit 31(d)
CERTIFICATION
I, Darrel T. Anderson,
certify that:
1. I have reviewed this
Quarterly Report on Form 10-Q of Idaho Power Company;
2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and we have:
a)
Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
report is being prepared;
b)
Designed such internal control
over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles;
c)
Evaluated the effectiveness of the
registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such
evaluation; and
d)
Disclosed in this report any
change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officer and I
have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
a)
All significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: |
November 2, 2006 |
By: |
/s/Darrel T. Anderson |
Darrel T. Anderson |
|||
Senior Vice President - Administrative Services |
|||
and Chief Financial Officer |
Exhibit 32(a)
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of IDACORP, Inc.
(the "Company") on Form 10-Q for the quarter ended September 30, 2006
as filed with the Securities and Exchange Commission on or about the date
hereof (the "Report"), we, J. LaMont Keen, President and Chief
Executive Officer of the Company, and Darrel T. Anderson, Senior Vice President
- Administrative Services and Chief Financial Officer of the Company, certify
that:
(1)
The Report fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/J. LaMont Keen |
|
/s/Darrel T. Anderson |
J. LaMont Keen |
Darrel T. Anderson |
|
President and Chief Executive Officer |
Senior Vice President - Administrative Services |
|
November 2, 2006 |
and Chief Financial Officer |
|
November 2, 2006 |
Exhibit 32(b)
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Idaho Power Company (the "Company") on Form 10-Q for the quarter ended September 30, 2006 as filed with the Securities and Exchange Commission on or about the date hereof (the "Report"), we, J. LaMont Keen, President and Chief Executive Officer of the Company, and Darrel T. Anderson, Senior Vice President - Administrative Services and Chief Financial Officer of the Company, certify that:
(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/J. LaMont Keen |
|
/s/Darrel T. Anderson |
J. LaMont Keen |
Darrel T. Anderson |
|
President and Chief Executive Officer |
Senior Vice President - Administrative Services |
|
November 2, 2006 |
and Chief Financial Officer |
|
November 2, 2006 |
Exhibit 99
Lawrence F. Spencer, Director of Investor Relations
Phone: (208) 388-2664
lspencer@idacorpinc.com
IDACORP Announces Third Quarter 2006 Results
Third Quarter 2006 Highlights
Third quarter diluted earnings per share of $1.03 versus $0.56 in 2005
$0.27 per diluted share after-tax gain on sale of IDACORP Technologies
Idaho Power records $9 million improvement in operating income -- diluted earnings per share up $0.21
BOISE--IDACORP, Inc. (NYSE:IDA) today reported third quarter net income of $44.0 million versus $23.6 million in 2005 and year-to-date earnings of $89.3 million compared with $56.1 million in 2005. Diluted earnings per share increased by $0.47 per share for the quarter to $1.03 per share and by $0.76 per share for the first nine months to $2.09 per share.
"Our third quarter performance demonstrates progress in implementing our back-to-basics strategy," said IDACORP President and Chief Executive Officer J. LaMont Keen. "We continue to divest ourselves of non-core businesses and are focusing efforts and resources on the challenges and long-term opportunities provided by Idaho Power's growing customer base."
Third Quarter Performance Summary
The following are key components of the increase in third quarter IDACORP net income from 2005 to 2006:
IDACORP recorded
a net of tax gain of $11.8 million, or $0.27 per diluted share, from the sale
of IDACORP Technologies.
Idaho Power earnings increased from $21.0 million to $30.4 million.
o Increased sales attributable to continued customer growth and higher usage due to warmer weather raised revenues $7.9 million. Customer numbers grew by approximately 15,700, or 3.5 percent, and cooling degree days increased 9.9 percent quarter over quarter. General business revenues decreased $35.7 million due to changes in rates, effective June 1*.
Page 1 of 8
o
Other revenues
increased $7.5 million due to the expiration in the second quarter 2006 of certain
regulatory amortizations.
o
Net power supply
expenses** increased $18.9 million as a result of higher fuel and fuel
transportation costs, and the need to make power purchases during a period of
high prices prompted by warmer than normal weather, especially in July.
o
The Power Cost
Adjustment (PCA) mechanism resulted in a $55 million credit for the quarter. Net
power supply costs in excess of the amounts in the annual PCA forecast account
for $51 million of the $55 million credit with the remainder representing the
amortization of prior year authorized balances.
o Also, during the third quarter, other operations and maintenance expenses decreased in part due to a $3 million court judgment in Sept. reversing accrued Federal Energy Regulatory Commission fees. Taxes other than income taxes were lower due to property tax relief enacted by the Idaho Legislature in August 2006.
* A 3.2 percent increase in Idaho base rates offset by a 19.3 percent reduction attributable to the annual Power Cost Adjustment.
** Fuel and purchased power expense less off-system sales.
Analysis of Earnings per Diluted Share
The following table summarizes diluted earnings (loss) per share from each
business:
Three Months Ended |
Nine Months Ended |
|||||||
9/30/06 |
9/30/05 |
9/30/06 |
9/30/05 |
|||||
Income from Continuing Operations: |
||||||||
Idaho Power Company |
$ 0.71 |
$ 0.50 |
$ 1.81 |
$ 1.31 |
||||
IDACORP Energy |
0.00 |
0.00 |
0.00 |
(0.01) |
||||
IDACORP Financial Services |
0.05 |
0.06 |
0.15 |
0.18 |
||||
Ida-West Energy |
0.03 |
0.02 |
0.06 |
0.04 |
||||
Holding Company |
(0.03 ) |
0.03 |
(0.10 ) |
0.00 |
||||
0.76 |
0.61 |
1.92 |
1.52 |
|||||
Earnings (Losses) From Discontinued Operations |
0.27 |
(0.05 ) |
0.17 |
(0.19 ) |
||||
Earnings Per Diluted Share |
$ 1.03 |
$ 0.56 |
$ 2.09 |
$ 1.33 |
||||
2006 Outlook
The outlook for key operating and financial metrics for 2006 are:
Page 2 of 8
Metric |
Current Estimate (1) |
Previous Estimate |
Idaho Power Company Operation & Maintenance Expense (Millions) |
No Change |
$250 - $260 |
Idaho Power Company Capital Expenditures (Millions) (2) |
$210 - $215 |
$190 - $200 |
Idaho Power Company Hydroelectric Generation (Million MWh) (3) |
9.0 - 9.2 |
8.8 - 9.3 |
Non-regulated Subsidiary Earnings Per Share from Continuing Operations (4) |
$0.15 - $0.17 |
$0.09 - $0.13 |
Effective Tax Rates: Idaho Power Company Consolidated - IDACORP (5) |
No Change No Change |
38% - 42% 20% - 25% |
(1) Key operating and financial metrics will be updated quarterly.
(2) Increase in estimated capital expenditures due to expenditures related to gas peaking facilities, land purchases associated with relicensing efforts, and increased customer connection costs.
(3) Assumes normal operating conditions and normal precipitation for the balance of the year.
(4) Estimates include contributions from Ida-West Energy and IDACORP Financial netted against holding company expenses. Increase in estimate due to better than expected contributions from Ida-West Energy as a result of improved water and operating conditions.
(5) For continuing operations.
Web Cast / Conference Call
The company will hold an analyst conference call today at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time). All parties interested in listening may do so through a live Web cast. Details of the conference call logistics are posted on the company's Web site (http://www.idacorpinc.com). A replay of the conference call will be available on the company's Web site for a period of 12 months.
Background Information / Safe Harbor Statement
Boise, Idaho-based IDACORP, formed in 1998, is a holding company comprised of Idaho Power Company, a regulated electric utility; IDACORP Financial, a holder of affordable housing projects and other real estate investments; IDACOMM, a provider of telecommunication services and commercial Internet services; and Ida-West Energy, an operator of small hydroelectric generation projects that satisfy the requirements of the Public Utility Regulatory Policies Act of 1978.
Page 3 of 8
earnings, ongoing operations, and financial conditions, are "forward-looking statements" within the meaning of federal securities laws. Although IDACORP and Idaho Power believe that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. Factors that could cause actual results to differ materially from the forward-looking statements include: changes in governmental policies, including new interpretations of existing policies, and regulatory actions and regulatory audits, including those of the Federal Energy Regulatory Commission, the Idaho Public Utilities Commission, the Oregon Public Utility Commission and the Internal Revenue Service with respect to allowed rates of return, industry and rate structure, day-to-day business operations, acquisition and disposal of assets and facilities, operation and construction of plant facilities, relicensing of hydroelectric projects, recovery of purchased power expenses, recovery of other capital investments, present or prospective wholesale and retail competition (including but not limited to retail wheeling and transmission costs) and other refund proceedings; changes arising from the Energy Policy Act of 2005; litigation and regulatory proceedings, including those resulting from the energy situation in the western United States, and settlements that influence business and profitability; changes in and compliance with environmental, endangered species and safety laws and policies; weather variations affecting hydroelectric generating conditions and customer energy usage; over-appropriation of surface and groundwater in the Snake River Basin resulting in reduced generation at hydroelectric facilities; construction of power generating, transmission and distribution facilities including inability to obtain required governmental permits and approvals, and risks related to contracting, construction and start-up; operation of power generating facilities including breakdown or failure of equipment, performance below expected levels, competition, fuel supply, including availability, transportation and prices, and transmission; impacts from the potential formation of a regional transmission organization and the dissolution of Grid West; population growth rates and demographic patterns; market demand and prices for energy, including structural market changes; changes in operating expenses and capital expenditures and fluctuations in sources and uses of cash; results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by factors such as credit ratings and general economic conditions; actions by credit rating agencies, including changes in rating criteria and new interpretations of existing criteria; homeland security, natural disasters, acts of war or terrorism; market conditions and technological developments that could affect the operations and prospects of IDACORP's subsidiaries or their competitors; increasing health care costs and the resulting effect on medical benefits paid for employees; performance of the stock market and the changing interest rate environment, which affect the amount of required contributions to pension plans, as well as the reported costs of providing pension and other postretirement benefits; increasing costs of insurance, changes in coverage terms and the ability to obtain insurance; changes in tax rates or policies, interest rates or rates of inflation; adoption of or changes in critical accounting policies or estimates; and new accounting or Securities and Exchange Commission requirements, or new interpretation or application of existing requirements. Any forward-looking statement speaks only as of the date on which such statement is made. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
Page 4 of 8
IDACORP, Inc.
Condensed Consolidated Statements of Income
For Periods Ended September 30, 2006 and 2005
(unaudited)
(Thousands of Dollars, except per share amounts)
Three Months Ended |
Year-To-Date |
||||||||||
9/30/2006 |
9/30/2005 |
9/30/2006 |
9/30/2005 |
||||||||
Operating Revenues: |
|||||||||||
Electric utility: |
|||||||||||
General business |
$ |
179,411 |
$ |
207,237 |
$ |
500,803 |
$ |
504,189 |
|||
Off-system sales |
39,692 |
34,105 |
219,531 |
105,189 |
|||||||
Other revenues |
9,696 |
2,890 |
16,587 |
25,429 |
|||||||
Total electric utility revenues |
228,799 |
244,232 |
736,921 |
634,807 |
|||||||
Other |
1,733 |
1,675 |
4,586 |
3,915 |
|||||||
Total Operating Revenues |
230,532 |
245,907 |
741,507 |
638,722 |
|||||||
Operating Expenses: |
|||||||||||
Electric utility: |
|||||||||||
Purchased power |
98,926 |
81,396 |
229,659 |
162,403 |
|||||||
Fuel expense |
34,933 |
28,018 |
83,856 |
77,483 |
|||||||
Power cost adjustment |
(54,995) |
(9,670) |
(6,928) |
(1,673) |
|||||||
Other operations & maintenance |
62,395 |
64,292 |
193,909 |
185,108 |
|||||||
Gain on sale of emission allowances |
(22) |
- |
(8,258) |
- |
|||||||
Depreciation |
25,289 |
25,726 |
74,471 |
75,838 |
|||||||
Taxes other than income taxes |
4,057 |
5,115 |
15,957 |
15,644 |
|||||||
Total electric utility operations |
170,583 |
194,877 |
582,666 |
514,803 |
|||||||
Other |
3,293 |
3,125 |
10,157 |
9,380 |
|||||||
Total Operating Expenses |
173,876 |
198,002 |
592,823 |
524,183 |
|||||||
Operating Income (Loss): |
|||||||||||
Electric utility |
58,216 |
49,355 |
154,255 |
120,004 |
|||||||
Other |
(1,560) |
(1,450) |
(5,571) |
(5,465) |
|||||||
Total Operating Income |
56,656 |
47,905 |
148,684 |
114,539 |
|||||||
Other Income |
4,431 |
3,610 |
14,181 |
10,978 |
|||||||
Income (Losses) of Unconsolidated |
|||||||||||
Equity-Method Investments |
(444) |
872 |
(2,703) |
584 |
|||||||
Other Expenses |
2,669 |
1,759 |
6,745 |
4,055 |
|||||||
Interest Expense: |
|||||||||||
Interest on long-term debt |
14,241 |
14,317 |
42,525 |
42,683 |
|||||||
Other interest expense |
549 |
598 |
2,753 |
1,879 |
|||||||
Total interest expense |
14,790 |
14,915 |
45,278 |
44,562 |
|||||||
Income Before Income Taxes |
43,184 |
35,713 |
108,139 |
77,484 |
|||||||
Income Tax Expense |
10,692 |
9,752 |
26,019 |
13,287 |
|||||||
Income from Continuing Operations |
32,492 |
25,961 |
82,120 |
64,197 |
|||||||
Income (Losses) from Discontinued |
|||||||||||
Operations (net of tax) |
11,497 |
(2,344) |
7,201 |
(8,062) |
|||||||
Net Income |
$ |
43,989 |
$ |
23,617 |
$ |
89,321 |
$ |
56,135 |
|||
Weighted Average Common Shares |
|||||||||||
Outstanding - Basic (000's) |
42,678 |
42,287 |
42,569 |
42,245 |
|||||||
Basic Earnings (Loss) per Share: |
|||||||||||
Income from Continuing Operations |
$ |
0.76 |
$ |
0.61 |
$ |
1.93 |
$ |
1.52 |
|||
Earnings
(Losses) - Discontinued
|
0.27 |
(0.05) |
0.17 |
(0.19) |
|||||||
Basic Earnings per Share |
$ |
1.03 |
$ |
0.56 |
$ |
2.10 |
$ |
1.33 |
|||
Weighted Average Common Shares |
|||||||||||
Outstanding - Diluted (000's) |
42,863 |
42,380 |
42,710 |
42,318 |
|||||||
Diluted Earnings (Loss) per Share: |
|||||||||||
Income from Continuing Operations |
$ |
0.76 |
$ |
0.61 |
$ |
1.92 |
$ |
1.52 |
|||
Earnings
(Losses) - Discontinued
|
0.27 |
(0.05) |
0.17 |
(0.19) |
|||||||
Diluted Earnings per Share |
$ |
1.03 |
$ |
0.56 |
$ |
2.09 |
$ |
1.33 |
|||
Dividends Paid per Share
of Common
|
$ |
0.30 |
$ |
0.30 |
$ |
0.90 |
$ |
0.90 |
Page 5 of 8
IDACORP, Inc.
Condensed Consolidated Statements of Cash Flows
For Nine Months Ended September 30, 2006 and 2005
(unaudited)
(Thousands of Dollars)
Nine Months Ended |
|||||
9/30/06 |
9/30/05 |
||||
Operating Activities: |
|||||
Net income |
$ |
89,321 |
$ |
56,135 |
|
Adjustments to reconcile net income to net |
|||||
cash provided by operating activities: |
|||||
Unrealized (gains) losses from energy |
|||||
marketing activities |
(234) |
71 |
|||
Depreciation and amortization |
90,928 |
93,069 |
|||
Deferred income taxes and investment tax credits |
(16,467) |
(8,030) |
|||
Changes in regulatory assets and liabilities |
6,111 |
2,974 |
|||
Undistributed earnings of subsidiaries |
(7,944) |
(12,027) |
|||
Provision for uncollectible accounts |
42 |
(167) |
|||
Gain on sales of assets |
(25,242) |
(1,490) |
|||
Other non-cash adjustments to net income |
(2,400) |
- |
|||
Change in: |
|||||
Accounts receivables and prepayments |
23,569 |
(8,875) |
|||
Accounts payable and other accrued liabilities |
(14,252) |
(31,518) |
|||
Taxes accrued |
2,720 |
19,774 |
|||
Other |
23,696 |
11,267 |
|||
Net cash provided by operating activities |
169,848 |
121,183 |
|||
Investing Activities: |
|||||
Additions to property, plant and equipment |
(168,185) |
(132,974) |
|||
Sale of ITI |
21,469 |
- |
|||
Sale of emission allowances |
11,323 |
- |
|||
Investments in unconsolidated affiliates |
(15,370) |
- |
|||
Other |
4,580 |
32,449 |
|||
Net cash used in investing activities |
(146,183) |
(100,525) |
|||
Financing Activities |
|||||
Issuance of common stock |
9,174 |
3,661 |
|||
Issuance of long-term debt |
- |
64,992 |
|||
Retirement of long-term debt |
(10,993) |
(76,166) |
|||
Dividends on common stock |
(38,449) |
(38,001) |
|||
Change in short term borrowings |
(27,410) |
19,330 |
|||
Other |
23 |
(4,564) |
|||
Net cash used in financing activities |
(67,655) |
(30,748) |
|||
Net decrease in cash and cash equivalents |
(43,990) |
(10,090) |
|||
Cash and cash equivalents at beginning of period |
52,356 |
23,403 |
|||
Cash and cash equivalents at end of period |
$ |
8,366 |
$ |
13,313 |
|
Page 6 of 8
IDACORP, Inc.
Condensed Consolidated Balance Sheets
As of September 30, 2006 and December 31, 2005
(unaudited)
(Thousands of Dollars)
|
9/30/06 |
12/31/05 |
|||
Assets |
|
||||
Cash and cash equivalents |
$ |
8,366 |
$ |
52,356 |
|
Receivables, net of allowance |
69,163 |
82,768 |
|||
Employee notes |
2,668 |
2,951 |
|||
Energy marketing assets |
11,590 |
23,859 |
|||
Other current assets |
123,889 |
128,913 |
|||
Assets held for sale |
3,556 |
6,673 |
|||
Total current assets |
219,232 |
297,520 |
|||
Investments |
199,916 |
191,593 |
|||
Property, Plant and Equipment - net |
2,383,975 |
2,294,441 |
|||
Energy marketing assets - long-term |
2,768 |
22,189 |
|||
Regulatory assets |
371,026 |
415,177 |
|||
Employee notes -long-term |
2,454 |
2,862 |
|||
Other assets |
112,202 |
114,378 |
|||
Assets held for sale |
19,852 |
25,966 |
|||
Total other assets |
508,302 |
580,572 |
|||
Total Assets |
$ |
3,311,425 |
$ |
3,364,126 |
|
Liabilities and Shareholders' Equity |
|
||||
Current maturities of long-term debt |
$ |
15,364 |
$ |
16,307 |
|
Notes payable |
32,690 |
60,100 |
|||
Accounts payable |
66,448 |
80,324 |
|||
Energy marketing liabilities |
11,945 |
24,093 |
|||
Other current liabilities |
125,231 |
106,845 |
|||
Liabilities held for sale |
1,536 |
5,916 |
|||
Total current liabilities |
253,214 |
293,585 |
|||
Deferred income taxes |
497,661 |
519,563 |
|||
Energy marketing liabilities - long-term |
2,829 |
22,189 |
|||
Regulatory liabilities |
316,807 |
345,109 |
|||
Other liabilities |
132,998 |
124,833 |
|||
Liabilities held for sale |
7,666 |
10,051 |
|||
Total other liabilities |
957,961 |
1,021,745 |
|||
|
|||||
Long-Term Debt |
1,013,692 |
1,023,545 |
|||
Shareholders' equity |
1,086,558 |
1,025,251 |
|||
Total
Liabilities & Shareholders'
|
$ |
3,311,425 |
$ |
3,364,126 |
|
Page 7 of 8
Idaho Power Company Supplemental Operating Statistics
Three Months Ended |
Year-To-Date |
||||||||||||
9/30/06 |
9/30/05 |
9/30/06 |
9/30/05 |
||||||||||
Energy Use - MWh |
|||||||||||||
Residential |
1,249,496 |
1,141,236 |
3,688,983 |
3,424,215 |
|||||||||
Commercial |
1,008,865 |
964,801 |
2,794,180 |
2,718,994 |
|||||||||
Industrial |
875,275 |
879,766 |
2,596,481 |
2,547,816 |
|||||||||
Irrigation |
986,535 |
1,012,470 |
1,593,064 |
1,385,517 |
|||||||||
Total
|
4,120,171 |
3,998,273 |
10,672,708 |
10,076,542 |
|||||||||
Off-System
|
|
790,435 |
|
|
586,776 |
|
|
5,076,917 |
|
|
2,269,049 |
||
Total |
4,910,606 |
4,585,049 |
15,749,625 |
12,345,591 |
|||||||||
Revenue ($000's) |
|||||||||||||
Residential |
$ |
72,550 |
$ |
76,131 |
$ |
224,992 |
$ |
215,506 |
|||||
Commercial |
41,700 |
48,115 |
125,241 |
129,547 |
|||||||||
Industrial |
24,055 |
31,780 |
80,947 |
86,893 |
|||||||||
Irrigation |
41,106 |
51,211 |
69,623 |
72,243 |
|||||||||
Total
|
|
179,411 |
|
|
207,237 |
|
|
500,803 |
|
|
504,189 |
||
Off-System Sales |
39,692 |
34,105 |
219,531 |
105,189 |
|||||||||
Total |
$ |
219,103 |
$ |
241,342 |
$ |
720,334 |
$ |
609,378 |
|||||
Customers - Period End |
|||||||||||||
Residential |
390,380 |
376,784 |
|||||||||||
Commercial |
59,389 |
57,501 |
|||||||||||
Industrial |
130 |
131 |
|||||||||||
Irrigation |
18,230 |
18,015 |
|||||||||||
Total |
468,129 |
452,431 |
|||||||||||
Page 8 of 8