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Fitch Rates Idaho Power's $100MM Secured MTNs 'A-'; Outlook Stable

Posted on: Tuesday, 16 October 2007, 15:00 CDT

Fitch Ratings has assigned an 'A-' rating to Idaho Power Company's (IPC) $100 million issuance of 6.25% Secured Medium Term Notes (MTN), Series G due Oct. 15, 2037. Proceeds from the offering are expected to be used to repay $80 million of long-term debt scheduled to mature in December 2007 and short-term debt and for general corporate purposes. The Rating Outlook is Stable. IPC is a wholly-owned subsidiary of IDACORP, Inc. (IDA; Issuer Default Rating (IDR) 'BBB'; Outlook Stable)

Idaho Power Company's (IPC) ratings and Stable Outlook consider the earnings and cash flow volatility associated with the company's largely hydro-based generating portfolio, the beneficial effects of the utility's power cost adjustment (PCA) mechanism and a reasonable regulatory environment in Idaho.

The PCA mechanism allows IPC to pass through 90% of net power supply costs/benefits to retail ratepayers in Idaho. The PCA has offset a significant portion of the negative effects of higher thermal production costs due to below normal water conditions in recent years and allowed IPC to maintain a relatively stable financial profile. Below normal winter 2006-2007 snow pack is likely to, once again, result in reduced hydro output and lower 2007 profitability and cash flow compared to the more favorable water conditions that prevailed in 2006.

The inability of IPC to recover its large projected capital investment program on a timely basis through rates is a primary source of concern for IPC investors, along with the potential continuation of drought conditions in the longer term. IPC filed a general rate case in June 2007 with the Idaho Public Utilities Commission requesting a $64 million rate increase based on an 11.5% return on common equity. A final order in the proceeding is expected in early 2008.

For further information, please refer to the Idaho Power Co. credit analysis dated June 28, 2007.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Source: Business Wire

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