After chopping its power marketing staff in half this summer, Boise-based IDACORP Inc. last week decided to throw in the towel on natural gas marketing. It had plenty of company last week in that regard with El Paso and CMS also indicating they were calling it quits in trading (see related stories). IDACORP will exit natural gas trading operations by the end of the first quarter of 2003, affecting a small Houston staff.

The company also canceled its plans to enter the midstream gas business through a series of proposed purchases. IDACORP said this summer it planned to buy some midstream gas assets, primarily gathering and processing, but the turmoil in the business and continuing credit pressures forced it to reconsider the plan.

“Although it has been only a few months since we announced that we would explore this business opportunity, the continuing turbulence in the economic climate surrounding our industry requires regular re-assessment of strategies,” said IDACORP CEO Jan B. Packwood. “Our desire to improve our credit quality led us to conclude that now is not the time to undertake a new strategic initiative of this nature.”

IDACORP’s Denver office, which was established to explore midstream opportunities, will be closed by year-end and will affect five employees. Additionally, the company will wind down its natural gas trading operations based in Houston, impacting six employees. Also, as the company continues to wind down its electricity trading operations, additional workforce reductions will be implemented at IDACORP Energy’s operations in Boise by mid-2003, affecting about 60 employees.

IDACORP, formed in 1998, is a holding company for utility Idaho Power, independent power producer Ida-West Energy, marketing unit IDACORP Energy and financial and telecommunications businesses.

On Friday, the company reported third quarter earnings of 98 cents per share, a 7-cent/share increase over 3Q2001 earnings of 91 cents per share. The increase was mainly attributed to a one-time $34 million tax benefit that contributed 90 cents/share during the quarter. In September 2002, Idaho Power filed its 2001 federal income tax return changing its tax accounting method for capitalized overhead costs.

Third quarter operating income was down 74% to $17 million. While utility operating income was up 69% to $22 million, operating income from marketing was down 98% to $1 million from $57 million in 3Q2001. The company reported a net loss before income taxes of $2 million. Net income after taxes was $37 million. Net income for the first nine months of the year was down 38% to $65 million.

“Our financial results after consideration of these [tax] items are consistent with our expectations and prior guidance,” said Packwood. “As we indicated in July, our earnings this quarter were expected to get a lift from our tax method change, but the actual amounts came in higher than our original estimates.”

The company expects earnings per share for 2002 should still be $1.45-1.75/share. Idaho Power is expected to contribute between $2.15 and $2.25 per share; IDACORP Energy projects a loss of between $0.50 and $0.60 per share, including the impacts of restructuring; and all other entities expect to register between a break even performance and a $0.10 per share loss.

IDACORP shares were down 4% by mid day Friday to $23.99, which is near the bottom of a 52-week range of $20.87-$41.14.

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