Idacorp’s efforts to unwind the power marketing operations may be hindered after the company acknowledged last week that FERC is considering regulatory action for some marketing transactions between subsidiaries Idacorp Energy and Idaho Power. Apparently, they did not have regulatory approval for some power trading transactions, and also had not gotten formal approval to transfer power contracts. Idacorp said it did not know what sanctions it might face, nor what effect the actions might have on earnings.

“Some of these matters will require resolution with FERC, and others will be dealt with in the ongoing proceeding of the Idaho Public Utilities Commission (IPUC) that has been under way since May 2001,” Idacorp said in a written statement. “The primary purpose of the IPUC proceeding is to determine the appropriate compensation Idacorp Energy should provide to Idaho Power Co., another Idacorp subsidiary, as a result of transactions between the affiliates since February 2001.” Similar state regulatory issues relating to the period before February 2001 were resolved by the parties and approved by the IPUC, Idacorp added.

FERC is reviewing the following:

Idacorp CEO Jan B. Packwood said the “voluntary disclosure concerns past issues in a segment of our business that we are exiting, and we do not expect any material adverse effect on our ongoing operations. Nor will there be any adverse impact on our retail customers.” Packwood said that even though Idacorp is winding down its power marketing business, “we are putting in place an enhanced compliance and oversight program. This program will help ensure that we are in strict compliance with all relevant federal and state regulations in our operations. We will continue to cooperate fully with regulatory authorities — including the FERC and the Idaho and Oregon public utilities commissions — to resolve these issues.”

Idacorp still has to determine the appropriate amount of compensation to be provided to Idaho Power as a result of transactions between it and Idacorp Energy. “Similar issues that arose prior to February 2001 were resolved by the parties involved and approved by the IPUC,” it said in a statement. “In an order issued Aug. 28, 2002, the IPUC approved Idaho Power’s ongoing hedging and risk management strategies. This formalizes Idaho Power’s agreement to implement a number of changes to its existing practices for managing risk and initiating hedging purchases and sales.”

In the order, the IPUC also directed Idaho Power to present a resolution or a status report to the IPUC no later than Dec. 20, 2002, on additional compensation due to the utility for the use of its transmission system and other capital assets by Idacorp Energy and any remaining transfer pricing issues. Idaho Power expects to comply with the order “well before the due date,” it said.

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