Welcome to IDACORP's Second Quarter 2017 Conference Call. Today's call is being recorded and webcast live. A complete replay will be available from the end of the day for a period of 12 months on the Company's website at idacorpinc.com. [Operator Instructions] Now, I will turn the call over to Justin Forsberg, Director of Investor Relations.

Thanks, Kate. Before the markets opened today, we issued and posted to the IDACORP website our second quarter 2017 earnings release and our Form 10-Q. The slides we’ll be using to supplement today's call are also available for download on our website. We'll refer to those slides as we present today's update. As noted on Slide 2, our presentation today will include forward-looking statements which represent our current views on what the future holds. These forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today, some of which are listed on Slide 2 and are supplemented by information in our filings with the Securities and Exchange Commission which we encourage you to review. We caution you against placing undue reliance on any forward-looking statements. As shown on Slide 3, on today's call, we have Darrel Anderson, President and Chief Executive Officer and Steve Keen, Senior Vice President, Chief Financial Officer and Treasurer along with other individuals available to help answer your questions during the question-and-answer period. On Slide 4, we present our quarterly financial results. IDACORP's 2017 second quarter earnings per diluted share were $0.99, a decrease of $0.13 per share from last year's second quarter. For the first six months of 2017, earnings per diluted share were $1.65, $0.02 higher than the same period in 2016. I will now turn the presentation over to Steve who will discuss the results in greater detail and will review our updated 2017 earnings guidance and corresponding key operating metrics.

Thanks, Justin. We had a strong second quarter which exceeded our internal earnings expectations but was somewhat below the same quarter last year. On Slide 5, you'll see a reconciliation of income from the second quarter of 2016 to 2017. At Idaho Power, continued customer growth in our service area provided an increase of $2 million to operating income this quarter compared with the second quarter of 2016 as the number of Idaho Power customers grew by 1.8% over the past 12 months. Net of the changes I’ll describe in a moment, this growth helped drive a $1.6 million increase in Idaho Power's operating income relative to last year's second quarter. Lower sales volumes mostly from soft irrigation sales due to greater precipitation decreased operating income by $9.9 million. Fixed cost adjustment or FCA revenues which relate to residential and small commercial customers were flat over the comparative period. The weather related decrease in sales volumes was offset by positive net impacts of the North Valmy coal-fired power plant and depreciation settlement stipulations approved by the Idaho and Oregon public utilities commissions in the second quarter of 2017. You'll see the impacts of the Valmy plant rate and depreciation changes reflective in the $15.5 million and $9.4 million changes respectively on the reconciliation table on Slide 5. The settlement stipulations provided for cost recovery of approximately $5.2 million for the full year 2017 when compared with our estimate of ongoing net income without this settlement. This was comprised of an after tax increase in net income of $2.5 million for the first half of the year, all of which was recorded during the second quarter and an estimated $2.7 million to be recorded during the last six months of 2017. We estimate that Valmy settlement stipulations will provide gradually less…

Thanks, Steve, and good afternoon everyone and thanks for joining us today. Justin told me many you have had a number of calls today so we are glad that you're able to join us. To begin I have some economic and growth updates to share for our service area followed by some information related to operating activities and I will close with a weather outlook. You'll see on Slide 8 that economic activity remained strong at Idaho Power service area with new customers coming online and existing large load customers expanding facilities. We saw solid industrial customer load growth quarter-over-quarter with continued gains from food packaging and food processing customers. We continue to feel a number of requests from sites collectors and customer contacts related to potential future business locations in our service area. Overall, during the 12 months ended June 30, 2017 Idaho Power's customer count grew by 1.8%. Most of this customer count growth relates to residential customers, which resulted in a 2.6% increase in total residential customer usage over last year's second quarter. This continued customer growth combined with the confluence of warm weather and irrigation sales in July resulted in Idaho Power setting a new peak load on July 7 of 3,422 megawatts compared with a previous peak of 3,407 megawatts previously set in July of 2013. Unemployment levels also remained well below the 4.4% national average at 2.9%. Employment in Idaho Power’s service area grew by approximately 2.2% over the last 12 months continuing to achieve new records now approaching 0.5 million people employed. Also, Moody's analytics is forecasting housing starts in our service area to grow by nearly 30% above 2016 levels over the next two years after the region works its way through the existing inventory of new multi and single family construction…

Thank you. Ladies and gentlemen, we are ready to begin the question-and-answer session. [Operator Instructions] And the first question comes from Paul Ridzon of KeyBanc. Please go ahead.

Good afternoon.

Hi, Paul.

Hi, Paul.

Just a quick question. The $15.5 million, I know some of that has Valmy, but can you parse it out where else that came from? Suggesting like a pretty big number.

I would say the bulk of that is Valmy. Do you have any other? I’d say that's primarily the contributor to that change.

Paul, I think you have to look at it from the Valmy piece and the depreciation piece and look at them on a combined basis because there's different pieces, there's the revenue component and there's depreciation component.

Okay. I wasn't thinking about getting them against each other. Okay, that makes sense.

And it was looked at from the basis of a – as it set the new program for collection up, it was a full year and so it's actually two quarters recorded in the second quarter is how I would look at it. So that also magnifies it a bit.

So you doubled up the depreciation to revenue?

Yes. All the FX are recorded in Q2.

I know you touched on it briefly but how are you thinking, what are [indiscernible] the regulatory arena in 2018?

Paul, this is Darrel. I would – it’s something [indiscernible] going to have to continue to look at and it's going to be predicated on a number of things. One of those is, what impact is the positive impact of growth it has on us and we are experiencing some positive growth today. How successful we are in continuing to manage our expense line that will be another component of our consideration. And then obviously, where are we at with our ADITC mechanism, what is the level of credits that we are utilizing and likely other factors that we’ll have to look at but we will continue to take a hard look. Steve mentioned in his comments, one of the things that we are focused on is number one preserving credits and staying out and not raising prices for customers, and the best way we can do that is grow and that's why our initiative around customer growth is well in hand and we assigned a new leader to that effort and we believe based on things we are seeing, we're seeing positive results on the business development side. So that's where our effort is and that’s where we will have to look at come next year. But right now as you see us here today, obviously we're not doing anything. We don't plan to do anything this year but we will have to reassess that as we go into 2018, and Steve, I don’t know if you have any other thoughts.

No, I might just add that I do – that’s a place where the Valmy settlement is helpful and that it does help preserve credit this year as you saw. We were previously expecting to use credits and now we’re saying that we don't expect to use them this year. There is going to be amount, an amount next year that will also help with an improvement of our prior plan for 2018. As we mentioned in the script, we do expect it could decline modestly, it's going to - we're collecting all of this out through a period that in Idaho at least ends in 2028. So it’s going to decline over that period but it is a recurring amount unlike the item that helped last year which was a bond redemption and it was done. This one will provide ongoing benefits and that is an important part of preserving those tax credits, it’s going to help.

And that decline on the volley impacts, we just - from a first approximation standpoint, we just think about that is a straight-line dropped through 2028.

Yeah. I’ve looked at over with Ken Petersen. I think that's the best way to do it Paul. It’s truly more complex than that if you look at the order there, there are variations for a variety of reasons as cost drew up and adjust as we look at. It’s got own impacts and another things embedded but I think if you take that you're not going to be far off the mark if you take that sort of a decline.

Thanks. And then lastly it sounds as though you’re still working through some housing inventory. But at what point we’re going to have to separating new substations and issues like that for new development. And what's the risk of getting on our capital regulatory terminal?

I think that given what we - as we're looking at on the horizon right now, we think that in and around this $300 million that we've been spending, I think we would expect that for the next few years that number's probably going well. We have to fit those any of that new construction into that capital number. I think for the most part, we don’t see a significant ramp up for that type of activity. I think what you see on the horizon as I'd like to wrap up in construction likely is when we would begin actual construction on Boardman to Hemingway is what we’re going to see. I think the next big ramp up in construction dollars. Steven Keen?

Yes, I would agree with that.

Okay. We are adding a fair chunk Paul every year for those types of things right now. So it isn’t like we aren’t putting in substations today. In terms of the new customer growth related to the types of ads you’re talking about subdivisions and that sort of thing it may be upgrades to existing subdivisions but we're coping with that growth and have been for a number years. I think one of the signs that has been positive for our company is we didn't really stop, we slowed way down but we never really quit or went backwards and so we just kind of kept that in our plan. So we have an amount on an annual basis that’s ongoing but it is you're hitting a point that I know that those who are managing those costs are being more challenged than they were a few years ago. So we'll keep our eye on that.

Okay, thank you very much for your answers.

Thanks, Paul.

The next question is from Brian Russo of Ladenburg Thalmann. Please go ahead.

Hi, good afternoon.

Hi, Brian.

Hi, Brian.

I think you answered my first question and maybe I'll just repeat what you said, the no need [ph] for ADITC is that was due to the positive impact that the Valmy settlement provides from an earnings perspective?

That's certainly the primary contributor. There is a lot of moving parts in public utility and there were few other things as we look back. We maybe scoring a little different today than we were in first quarter but that’s the bulk of the move.

Okay. But I guess the original guidance assumed under 10 because you didn’t have approval of Valmy yet and you needed that to bake it into the guidance? Got it.

Yes, I would say that was - if you - the history there the Valmy case really is I think when we started we were envisioning it a little more like a depreciation case. And as we work through that process it became obvious that we could actually deal with the bigger problem of how we address all of Valmy and the parties came together and really it's a much better overall solution and certainly lays the plan out through the end of life. But we didn't start the year with that as a sure thing absolutely.

Okay. And what's driving the wheeling volumes growth just curious.

I visited with our Head of Power Supply this morning. I could take to Tess or I could actually – let her talk.

Tess Park who heads up our VP of Power Supply is going to respond.

So because of the large quantity of water conditions in the northwest and a rapid increase in temperatures in the southwest, the parties that move energy from the northwest to the southwest to supply load in that area use our transmission and that primarily the driver for that increases not as well as the fact that the rate is higher than last year during the same period.

Okay. You don't wheel volumes west like the northwest who bill volumes to the southwest.

This is done - that's typically two we will also and goes to the south, but it other parties using our transmission system that result in that transmission wheeling revenue increasing because of the increased water.

Got it, understood. And then should we be aware of anything on the irrigation sale side when we move into the third quarter since - it sounds like they got a slow start in the second quarter?

All what I’ve said is they feel…

I'm sorry, Brian. We certainly did have a slow start and I think as we sit here today I don't know that you're going to see the recovery of necessarily the things we didn't get early because some of that was actually it was precipitation that caused us as much as anything and so they got the water, they just don't have to – didn't have to pump to get it. But as we sit here today with the weather hot in July, it feels like it is more of a normal and maybe even some modest pressure up. I would say it seems more like we're back on track is probably the best way to categorize it. And certainly hot and dries pushes a little bit. I guess the last factor would be crops begin coming off during the month of July. So June is usually fairly strong for us, it’s kind of steady and July and from July out into the August, September they’re just kind of gradually different crops drop out. So there is somewhat of a decline that’s there every year to go back and look at volumes and third quarter you'll see they're typically lower than second quarter.

Okay, thank you.

Thanks, Brian.

The next question is from Chris Ellinghaus of Williams Capital. Please go ahead.

Hey, guys.

Hi, Chris.

Hi, Chris.

Did you say that despite July the guidance still is for or is including third quarter being normal?

I did say that Chris. That's just how we’ve typically approached our guidance and we wanted to make it clear that the fact that the weather was hot and that we didn't get a lot of precipitation so wanted to report that as well but truth is we're not closed for the month. We know somewhat of what there was volume wise but with our mechanisms and the interplay of our rates, we have some unique rates in our tariffs that you kind of need to know the whole billing cycle and know where the rate landed. We've opted to just not include it, but it is a positive sign that usage certainly would have been impacted by the higher temperatures.

Okay. So if - if Nova's [ph] slide that Darrel was talking about comes to fruition for the quarter, there would be a little more upside to your earnings even considering your unusual tariffs.

I think that's a fair statement. Another place just to show you how everybody knows we try to balance things we say that hot and dry can also bring unusual things that cost us money if we have a bad fire season or something like that you could see some costs that we don't have that. But barring those items, the hot and dry usually means we sell more energy and that’s helpful.

Right.

We will get moderation in residential and small commercial class with the FCA but even there we just participate less. We don't get the full amount, some of that goes back to help our customers.

Right. Okay. as far as the ADITC reversal, when you made the decision to do that in the second quarter which economists thinking was more of a third quarter issue, was that because the North Valmy decision was enough to do that or was that North Valmy plus sort of peeking into the third quarter weather. How did you come to that decision?

We wouldn't really use the weather portion going forward Chris but we do look at anything that we know about or that we have modified our plan or our expected result from here to the end of the year rolls into that because we have to actually update the year end calculation and see where we think earnings will land. And our accounting treatment actually mandates that. And so if we look at that and it shows that we don't think we’ll use credits then that causes us to reverse what we've got on the books and set back to zero, and that's why we are little ways past that line but we're not long ways past the line that's why we put in the caution. When you're there you could go either direction and being past the line positive items will have an earnings impact. If we get some negative, it could you swift us back into a modest amount of credit.

Okay. And as far as the potential to extend the ADITC mechanism, sometimes that has been at least pseudo attached to a rate case and sometimes it's just been an outside settlement. Should you decide to not pursue a rate case next year in Idaho? Are you thinking you would have some sort of discussion with parties about the extension outside of a rate case?

Chris, this is Darrel. I think all of the above. I think we will take a look at it and we wouldn't be out of orders and maybe take that on one-off but we might also look at it in conjunction with something else also. We would just look at all of the options that are on the table. The other thing here is if you look at our history when we went for renewals or re-upping the ADITC mechanism, those are - they were at different times as it relates to how close to expiration of the of the existing agreement. Some we got right up close to the expiration, some a little bit earlier so [indiscernible] where we are and how we're feeling about things and we will keep you guys in the loop on that as we do that in our calls given what we know at the time. But right now we will assess that next year.

Chris, I do think 2018 would be earlier than we may be done one before but it's certainly not impossible. So we will keep that on the list.

And Chris, I’ll just say - this is staying of the obvious somewhat but the mechanism at least my perspective on it is has been good for both customers and shareholders and I think that - most of the party to look at it that way. So as we get closer to 2019 I think it it's one of those things that would definitely have to be on the table to consider doing it. So it’s been a statement of the obvious but the same time we look at it as a valuable tool in the toolbox.

Okay. You didn't say much about business development this time Darrel. Sometimes you tell us about hotels and sometimes you tell us about Cliff Bars or whatever but what are you seeing in terms of business development that you didn't talk about?

So what I’d like to talk about is go through our whole pipeline chart. I really can't do that because it's a pretty exciting list of the things that we are monitoring right now. The one thing I will tell you about the hotels is they are all online now and they're getting people and they use the energy and we’re seeing a lot more activity in those hotels as we see that. And I would just tell you there's a lot of activity. We've got Adam Richins this here who is our Vice President over that area, He's been very active out there with his team that he's got out there talking despite selectors and meeting with economic development people. And so I - I would just tell you there is both existing, I think that we can't lose sight of this, the existing customers that we have are looking to expand in our service territory. And if you look at our industrial load from last year to this year, you see a pretty good increase in industrial and most of that is existing customer at growth in what they are doing in the technology sector, with processing sector, those guys are expanding. So that's why I didn't mention anything specific as a lot of it is are some of our existing customers who are expanding their footprint in Idaho. But there's a lot of activity going on.

Okay, great. Thanks guys, appreciate it.

Thanks, Chris.

Thanks, Chris.

And a final opportunity. [Operator Instructions] That concludes the question-and-answer session for today. Mr. Anderson, I will turn the conference back to you.

Okay, thank you and thank you to all that were participating on the call this afternoon. We actually appreciate your continued interest in IDACORP and that we hope you have a great rest of the day. Thanks much.

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