IDA Q2 2024: CapEx surge financed by ATM as rate cases loom
- Robust load pipeline and customer growth: Executives highlighted a strong and growing pipeline of large load inquiries with companies from various industries actively exploring expansion and new sites, underpinning future revenue growth.
- Operational resilience in extreme conditions: The Q&A noted that despite a challenging wildfire season and record heat, the company maintained system reliability and quickly restored outages through proactive maintenance, which bodes well for long‑term customer trust and operational stability.
- Flexible and disciplined financing approach: Management emphasized the use of an ATM program and a balanced mix of debt and equity to fund CapEx, ensuring financial flexibility and the ability to manage significant infrastructure investments without compromising credit metrics.
- Regulatory Timing Uncertainty: The company faces uncertainty around the timing and outcomes of its pending rate cases in both Oregon and Idaho, which could delay rate recovery and negatively impact future revenue recognition and cash flow.
- Rising CapEx and Lumpy Spending: There is potential for a substantial increase in capital spending, with uncertain timing and magnitude that could strain cash flows and complicate financing strategies, especially if large projects are consolidated into one period.
- Financing and Credit Rating Pressures: Increased debt levels arising from the current high CapEx cycle and potential dilution through equity financing (despite an ATM program) may pressure credit metrics, leading to concerns over maintaining or improving current ratings.
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CapEx & Financing
Q: How will rising CapEx affect financing plans?
A: Management explained that CapEx is expected to increase significantly, and they plan to finance growth through a blend of debt and equity – including the use of the ATM program – while watching cash flows and credit metrics closely. -
Future Rate Case
Q: What is the plan for the next rate case?
A: They anticipate initiating regulatory discussions for a new rate case, especially in Idaho, around September to October, to help recover increased CapEx costs while managing the sizable QIP balance. -
Credit Rating Outlook
Q: Can you maintain or improve credit metrics?
A: Management acknowledged current metrics around 14–15%, expecting these to improve over time as regulatory recoveries and cash flows catch up, despite near-term CapEx pressures. -
Regulatory Timing & Guidance
Q: When are the next regulatory guidance updates expected?
A: They expect the Oregon case to go into effect in October and to start Idaho settlement discussions by September-October, with updated capital planning guidance coming this quarter. -
ATM Program Usage
Q: Will you tap the ATM program soon?
A: The ATM remains a flexible tool for financing, but management sees no immediate equity need this year, preferring to match funding with future CapEx payment obligations. -
Regulatory Revenue Impact
Q: How will regulatory settlements affect revenue?
A: Recent settlements have increased revenues by around 4% to 7%, and management expects future rate requests to yield single-digit increases, balancing investment recovery and customer affordability. -
RFP Spending Cadence
Q: How is RFP spending scheduled over the next five years?
A: While contract timing remains fluid, they expect spending to be spread over the cycle – with some projects skewing toward the back end due to varied payment structures. -
Load Pipeline Trends
Q: What is the current load pipeline trend?
A: There is robust and steady activity in large load inquiries, with significant projects from companies like Meta and Micron underscoring continued growth in demand. -
System Reliability
Q: How did the system perform during extreme conditions?
A: Despite severe heat and active wildfire events, the system maintained high reliability with swift restoration efforts, ensuring customers stayed powered during 105° conditions.
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