Even with IDACORP’s energy marketing unit reeling from lower volatility and reduced pricing spreads out West, an executive with the company last Tuesday said the company is not ready to pull the plug on its trading operations, noting that the company has carved out a “unique position” in the Western power markets.

Citing stagnant wholesale energy markets and the continued pressure of drought, IDACORP on Tuesday lowered its 2002 earnings guidance to a range between $1.35 and $1.70 per share. Consistent with earlier guidance, this includes the potential dilutive effect of issuing equity securities during 2002.

IDACORP said that the results of its marketing arm, IDACORP Energy, continue to be negatively impacted by lower volatility and reduced pricing spreads in the Western wholesale energy market. Faced with increasing regulatory uncertainty and continued deterioration of credit-worthy counterparties, IDACORP Energy is limiting its origination activities to shorter-term transactions. The company expects IDACORP Energy to contribute between zero and a 25 cent loss per share for 2002.

Against this backdrop, an analyst on Wednesday asked IDACORP officials to explain why the company doesn’t simply shut down the company’s trading operation.

“Our view right now is that we have developed a unique position in the Western power markets,” said Richard Riazzi, CEO of IDACORP Energy, in a conference call with the financial community. “As I mentioned earlier, through the acquisition of 2,800 MW of transmission capacity, we believe at this point in time, we are positioned very well to compete in normal markets,” he said.

“We think we need to see some more defined rules and regulations that apply,” the executive went on to say. “As we see the supply and demand dynamics working in an unfettered fashion, from a regulatory perspective, we still see a lot of opportunity.”

At the same time, Riazzi said that “on an ongoing basis, as we evaluate this, if we do not see regulatory certainty and if we don’t see the sanctity of long-term contracts being upheld in this industry, then you’re right, we have a decision to make whether we want to stay in this business or not, as I think all other energy companies in this business will be faced with as well.”

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