REVENUES: (Notes)

12 Months Ended

Dec. 31, 2019

REVENUES

IDACORP and Idaho Power adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method on January 1, 2018. The adoption did not change the timing or amounts of revenue recognized by IDACORP or Idaho Power and, therefore, the companies recorded no cumulative-effect adjustment. The following table provides a summary of electric utility operating revenues for IDACORP and Idaho Power (in thousands):



	Year Ended December 31,
	2019		2018		2017
Electric utility operating revenues:
Revenue from contracts with customers	$	1,285,286	$	1,312,112	$	1,320,004
Alternative revenue programs and derivative revenues	57,654		54,470		24,889
Total electric utility operating revenues	$	1,342,940	$	1,366,582	$	1,344,893

Revenues from Contracts with Customers

Revenues from contracts with customers are primarily related to Idaho Power’s regulated tariff-based sales of energy or related services. Generally, tariff-based sales do not involve a written contract, but are classified as revenues from contracts with customers under ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Idaho Power assesses revenues on a contract-by-contract basis to determine the nature, amount, timing, and uncertainty, if any, of revenues being recognized. The following table presents revenues from contracts with customers disaggregated by revenue source (in thousands):



	Year Ended December 31,
	2019			2018			2017
Revenues from contracts with customers:
Retail revenues:
Residential (includes $35,587, $34,625 and $17,320, respectively, related to the FCA⁽¹⁾)	$	526,966		$	530,527		$	552,333
Commercial(includes $1,336, $1,299, and $876, respectively, related to the FCA⁽¹⁾)	295,203			310,299			319,195
Industrial	181,372			190,130			195,124
Irrigation	135,850			158,001			150,030
Provision for sharing	—			(5,025		)	—
Deferred revenue related to HCC relicensing AFUDC⁽²⁾	(8,780		)	(8,780		)	(10,706		)
Total retail revenues	1,130,611			1,175,152			1,205,976
Less: FCA mechanism revenues⁽¹⁾	(36,923		)	(35,924		)	(18,196		)
Wholesale energy sales	71,198			52,845			24,790
Transmission wheeling-related revenues	53,828			59,094			43,970
Energy efficiency program revenues	40,128			35,703			39,241
Other revenues from contracts with customers	26,444			25,242			24,223
Total revenues from contracts with customers	$	1,285,286		$	1,312,112		$	1,320,004

(1) The FCA mechanism is an alternative revenue program in the Idaho jurisdiction and does not represent revenue from contracts with customers.

(2) The IPUC allows Idaho Power to recover a portion of the AFUDC on construction work in progress related to the HCC relicensing process, even though the relicensing process is not yet complete and the costs have not been moved to electric plant in service. Idaho Power is collecting $8.8 million annually in the Idaho jurisdiction but is deferring revenue recognition of the amounts collected until the license is issued and the accumulated license costs approved for recovery are placed in service. Prior to the May 2018 Idaho Tax Reform Settlement Stipulation described in Note 3 - "Regulatory Matters," Idaho Power was collecting $10.7 million annually.

Retail Revenues: Idaho Power’s retail revenues primarily relate to the sale of electricity to customers based on regulated tariff-based prices. Idaho Power recognizes retail revenues in amounts for which it has the right to invoice the customer in the period when energy is delivered or services are provided to customers. The total energy price generally has a fixed component related to having service available and a usage-based component related to the demand, delivery, and consumption of energy. The revenues recognized reflect the consideration Idaho Power expects to be entitled to in exchange for energy and services. Retail customers are classified as residential, commercial, industrial, or irrigation. Approximately 95 percent of Idaho Power's retail revenue originates from customers located in Idaho, with the remainder originating from customers located in Oregon. Idaho Power’s retail customer rates are based on Idaho Power’s cost of service and are determined through general rate case proceedings, settlement stipulations, and other filings with the IPUC and OPUC. Changes in rates and changes in customer demand are typically the primary causes of fluctuations in retail revenue from period to period. The primary influences on changes in customer demand for electricity are weather, economic conditions (including growth in the number of Idaho Power customers), and energy efficiency. Idaho Power's utility revenues are not earned evenly during the year.

Retail revenues are billed monthly based on meter readings taken throughout the month. Payments for amounts billed are generally due from the customer within 15 days of billing. Idaho Power accrues estimated unbilled revenues for energy or related services delivered to customers but not yet billed at period-end based on actual meter readings at period-end and estimated rates.

Credit losses recorded on receivables arising from Idaho Power’s contracts with customers were $2.6 million, $3.6 million, and $4.7 million for 2019, 2018, and 2017, respectively.

Residential Customers: Idaho Power’s energy sales to residential customers typically peak during the winter heating season and summer cooling season. Extreme temperatures increase sales to residential customers who use electricity for cooling and heating, compared with normal temperatures. Idaho Power's rate structure provides for higher rates during the summer when overall system loads are at their highest, and includes tiers such that rates increase as a customer's consumption level increases. These seasonal and tiered rate structures contribute to the seasonal fluctuations in revenues and earnings. Economic and demographic conditions can also affect residential customer demand; strong job growth and population growth in Idaho Power’s service area have led to increasing customer growth rates in recent years. Residential demand is also impacted by energy efficiency initiatives. Idaho Power’s FCA mechanism mitigates some of the fluctuations caused by weather and energy efficiency initiatives.

Commercial Customers: Most businesses are included in Idaho Power's commercial customer class, as well as small industrial companies, and public street and highway lighting accounts. Idaho Power’s commercial customers are less influenced by weather conditions than residential customers, although weather does affect commercial customer energy use. Economic conditions, including manufacturing activity levels, and energy efficiency initiatives also affect energy use of commercial customers.

Industrial Customers: Industrial customers consist of large industrial companies, including special contract customers. Energy use of industrial customers is primarily driven by economic conditions, with weather having little impact on this customer class.

Irrigation Customers: Irrigation customers use electricity to operate irrigation pumps, primarily during the agricultural growing season. The amount and timing of precipitation as well as temperature levels can affect the timing and amounts of sales to irrigation customers, with increased precipitation generally resulting in decreased sales.

Provision for Sharing: Idaho Power's sharing mechanism is associated with the October 2014 Idaho Earnings Support and Sharing Settlement Stipulation that provides for the sharing with customers of a portion of Idaho-jurisdiction earnings exceeding a 10.0 percent Idaho ROE. Based on full-year 2019 Idaho ROE, Idaho Power recorded no provision against current revenues for sharing of earnings with customers for 2019. Idaho Power recorded $5.0 million of sharing of earnings with customers during 2018 and no provision was recorded during 2017. The October 2014 Idaho Earnings Support and Sharing Settlement Stipulation is described further in Note 3 - "Regulatory Matters."

Wholesale Energy Sales: As a public utility under the Federal Power Act (FPA), Idaho Power has the authority to charge market-based rates for wholesale energy sales under its FERC tariff. Idaho Power’s wholesale electricity sales are primarily to utilities and power marketers and are predominantly short-term and consist of a single performance obligation satisfied as energy is transferred to the counterparty. Idaho Power's wholesale energy sales depend largely on the availability of generation resources in excess of the amount necessary to serve customer loads as well as adequate market power prices at the time when those resources are available. A reduction in either factor may lead to lower wholesale energy sales.

Transmission Wheeling-Related Revenues: As a public utility under the FPA, Idaho Power has the authority to provide cost-based wholesale and retail access transmission services under its OATT. Services under the OATT are offered on a nondiscriminatory basis such that all potential customers have an equal opportunity to access the transmission system. Idaho Power’s transmission revenue is primarily related to third parties reserving capacity on Idaho Power’s transmission system to transmit electricity through Idaho Power’s service area. The reservations are predominantly short-term but may be part of a long-term capacity contract, short-term contract, or on-demand when available. Transmission wheeling-related revenues consist of a single performance obligation satisfied as capacity on Idaho Power’s transmission system is provided to the third party. Transmission wheeling-related revenues are affected by changes in Idaho Power’s OATT rate and customer demand. Demand for transmission services can be affected by regional market factors, such as loads and generation of utilities in Idaho Power’s region.

Energy Efficiency Program Revenues: Idaho Power collects most of its energy efficiency program costs through an energy efficiency rider on customer bills. The rider collections are deferred until expenditures are incurred. Energy efficiency program expenditures funded through the rider are reported as an operating expense with an equal amount recorded in revenues, resulting in no net impact on earnings. Energy efficiency program revenues are recognized in the period when the related costs of the energy efficiency program are incurred by Idaho Power. The cumulative variance between expenditures and amounts collected through the rider is recorded as a regulatory asset or liability. A liability balance indicates that Idaho Power has collected more than it has spent, and an asset balance indicates that Idaho Power has spent more than it has collected. At December 31, 2019, Idaho Power's energy efficiency rider balances were a $0.3 million regulatory asset in the Idaho jurisdiction and a $1.2 million regulatory asset in the Oregon jurisdiction.

Alternative Revenue Programs and Derivative Revenues

While revenues from contracts with customers make up most of Idaho Power’s revenues, the IPUC has authorized the use of the FCA mechanism, which may increase or decrease tariff-based rates billed to customers. The FCA mechanism is described in detail in Note 3 - "Regulatory Matters." The FCA mechanism revenues include only the initial recognition of FCA revenues when the regulator-specified conditions for recognition have been met. Revenue from contracts with customers excludes the portion of the tariff price representing FCA revenues that had been initially recorded in prior periods when regulator-specified conditions were met. When those amounts are included in the price of utility service and billed to customers, such amounts are recorded as recovery of the associated regulatory asset or liability and not as revenues.

The table below presents the FCA mechanism revenues and derivative revenues (in thousands):



	Year Ended December 31,
	2019		2018		2017
Alternative revenue programs and derivative revenues:
FCA mechanism revenues	$	36,923	$	35,924	$	18,196
Derivative revenues	20,731		18,546		6,693
Total alternative revenue programs and derivative revenues	$	57,654	$	54,470	$	24,889

IDACORP's Other Revenues

IDACORP's other revenues are primarily comprised of revenues from IDACORP’s subsidiary, Ida-West. Ida-West operates small hydropower generation projects that satisfy the requirements of PURPA.