XML 91 R22.htm IDEA: XBRL DOCUMENT

BENEFIT PLANS:

12 Months Ended

Dec. 31, 2019

Retirement Benefits, Description [Abstract]

BENEFIT PLANS

Idaho Power sponsors defined benefit and other postretirement benefit plans that cover the majority of its employees. Idaho Power also sponsors a defined contribution 401(k) employee savings plan and provides certain post-employment benefits.

Pension Plans

Idaho Power has two pension plans–a noncontributory defined benefit pension plan (pension plan) and two nonqualified defined benefit pension plans for certain senior management employees called the Security Plan for Senior Management Employees I and Security Plan for Senior Management Employees II (together, SMSP). Idaho Power also has a nonqualified defined benefit pension plan for directors that was frozen in 2002. Remaining vested benefits from that plan are included with the SMSP in the disclosures below. The benefits under these plans are based on years of service and the employee's final average earnings.

The following table summarizes the changes in benefit obligations and plan assets of these plans (in thousands of dollars):



	Pension Plan						SMSP
	2019			2018			2019			2018

Change in projected benefit obligation:
Benefit obligation at January 1	$	951,857		$	999,344		$	102,318		$	110,303
Service cost	34,061			37,836			(181		)	(316		)
Interest cost	42,312			38,833			4,575			4,248
Actuarial loss (gain)	147,784			(84,758		)	17,888			(7,050		)
Plan amendment	—			—			2,839			—
Benefits paid	(41,262		)	(39,398		)	(4,996		)	(4,867		)
Projected benefit obligation at December 31	1,134,752			951,857			122,443			102,318
Change in plan assets:
Fair value at January 1	650,604			697,683			—			—
Actual return (loss) on plan assets	113,777			(47,681		)	—			—
Employer contributions	40,000			40,000			—			—
Benefits paid	(41,262		)	(39,398		)	—			—
Fair value at December 31	763,119			650,604			—			—
Funded status at end of year	$	(371,633	)	$	(301,253	)	$	(122,443	)	$	(102,318	)
Amounts recognized in the statement of financial position consist of:
Other current liabilities	$	—		$	—		$	(5,911	)	$	(5,158	)
Noncurrent liabilities	(371,633		)	(301,253		)	(116,532		)	(97,160		)
Net amount recognized	$	(371,633	)	$	(301,253	)	$	(122,443	)	$	(102,318	)
Amounts recognized in accumulated other comprehensive income consist of:
Net loss	$	347,785		$	278,720		$	45,851		$	30,496
Prior service cost	56			62			3,143			399
Subtotal	347,841			278,782			48,994			30,895
Less amount recorded as regulatory asset⁽¹⁾	(347,841		)	(278,782		)	—			—
Net amount recognized in accumulated other comprehensive income	$	—		$	—		$	48,994		$	30,895
Accumulated benefit obligation	$	958,586		$	814,549		$	109,966		$	94,630

(1) Changes in the funded status of the pension plan that would be recorded in accumulated other comprehensive income for an unregulated entity are recorded as a regulatory asset for Idaho Power as Idaho Power believes it is probable that an amount equal to the regulatory asset will be collected through the setting of future rates.

The actuarial losses reflected in the benefit obligations for the pension and SMSP plans in 2019 are due primarily to decreases in the assumed discount rates of both plans from December 31, 2018, to December 31, 2019. The actuarial gains affecting the benefit obligations for the pension and SMSP plans in 2018 are due primarily to increases in the assumed discount rates from December 31, 2017, to December 31, 2018. For more information on discount rates, see “Plan Assumptions” below in this Note 12.

As a non-qualified plan, the SMSP has no plan assets. However, Idaho Power has a Rabbi trust designated to provide funding for SMSP obligations. The Rabbi trust holds investments in marketable securities and corporate-owned life insurance. The recorded value of these investments was approximately $97.6 million and $92.5 million at December 31, 2019 and 2018, respectively, and is reflected in Investments and in Company-owned life insurance on the consolidated balance sheets.

The following table shows the components of net periodic benefit cost for these plans (in thousands of dollars). For purposes of calculating the expected return on plan assets, the market-related value of assets is equal to the fair value of the assets.



	Pension Plan									SMSP
	2019			2018			2017			2019			2018			2017
Service cost	$	34,061		$	37,836		$	33,742		$	(181	)	$	(316	)	$	759
Interest cost	42,312			38,833			38,957			4,575			4,248			4,315
Expected return on assets	(48,623		)	(52,302		)	(45,138		)	—			—			—
Amortization of net loss	13,564			13,558			13,190			2,533			3,788			2,963
Amortization of prior service cost	6			6			28			96			98			127
Net periodic pension cost	41,320			37,931			40,779			7,023			7,818			8,164
Regulatory deferral of net periodic benefit cost⁽¹⁾	(39,379		)	(36,153		)	(38,699		)	—			—			—
Previously deferred pension cost recognized⁽¹⁾	17,154			17,154			17,154			—			—			—
Net periodic benefit cost recognized for financial reporting⁽¹⁾⁽²⁾	$	19,095		$	18,932		$	19,234		$	7,023		$	7,818		$	8,164

(1) Net periodic benefit costs for the pension plan are recognized for financial reporting based upon the authorization of each regulatory jurisdiction in which Idaho Power operates. Under IPUC order, the Idaho portion of net periodic benefit cost is recorded as a regulatory asset and is recognized in the income statement as those costs are recovered through rates.

(2) Of total net periodic benefit cost recognized for financial reporting $15.1 million, $15.2 million, and $16.2 million respectively, was recognized in "Other operations and maintenance" and $11.0 million, and $11.6 million, and $11.2 million respectively, was recognized in "Other expense, net" on the consolidated statements of income of the companies for the twelve months ended December 31, 2019, 2018, and 2017.

The following table shows the components of other comprehensive (loss) income for the plans (in thousands of dollars):



	Pension Plan									SMSP
	2019			2018			2017			2019			2018			2017
Actuarial (loss) gain during the year	$	(82,631	)	$	(15,226	)	$	(26,608	)	$	(17,888	)	$	7,049		$	(10,635	)
Plan amendment service cost	—			—			—			(2,839		)	—			—
Reclassification adjustments for:
Amortization of net loss	13,564			13,558			13,190			2,533			3,788			2,963
Amortization of prior service cost	6			6			28			96			98			127
Adjustment for deferred tax effects	17,776			428			1,744			4,658			(2,815		)	1,555
Adjustment due to the effects of regulation	51,285			1,234			11,646			—			—			—
Other comprehensive (loss) income recognized related to pension benefit plans	$	—		$	—		$	—		$	(13,440	)	$	8,120		$	(5,990	)

The following table summarizes the expected future benefit payments of these plans (in thousands of dollars):



	2020		2021		2022		2023		2024		2025-2029
Pension Plan	$	40,727	$	42,674	$	44,576	$	46,670	$	48,694	$	273,700
SMSP	6,010		6,186		6,281		6,700		6,724		33,304

Idaho Power’s funding policy for the pension plan is to contribute at least the minimum required under the Employee Retirement Income Security Act of 1974 (ERISA) but not more than the maximum amount deductible for income tax purposes. In 2019, 2018, and 2017, Idaho Power elected to contribute more than the minimum required amounts in order to bring the pension plan to a more funded position, to reduce future required contributions, and to reduce Pension Benefit Guaranty Corporation premiums. As of the date of this report, IDACORP's and Idaho Power's minimum required contribution to the pension plan is estimated to be $14 million during 2020. Depending on market conditions and cash flow considerations in 2020, Idaho Power could contribute up to $40 million to the pension plan during 2020 in order to help balance the regulatory collection of these expenditures with the amount and timing of contributions and to mitigate the cost of being in an underfunded position.

Postretirement Benefits

Idaho Power maintains a defined benefit postretirement benefit plan (consisting of health care and death benefits) that covers all employees who were enrolled in the active-employee group plan at the time of retirement as well as their spouses and qualifying dependents. Retirees hired on or after January 1, 1999, have access to the standard medical option at full cost, with no contribution by Idaho Power. Benefits for employees who retire after December 31, 2002, are limited to a fixed amount, which has limited the growth of Idaho Power’s future obligations under this plan.

The following table summarizes the changes in benefit obligation and plan assets (in thousands of dollars):



	2019			2018
Change in accumulated benefit obligation:
Benefit obligation at January 1	$	66,453		$	70,051
Service cost	853			1,051
Interest cost	2,989			2,643
Actuarial loss (gain)	5,298			(2,688		)
Benefits paid⁽¹⁾	(4,564		)	(4,604		)
Plan amendments				—
Benefit obligation at December 31	71,029			66,453
Change in plan assets:
Fair value of plan assets at January 1	33,391			38,294
Actual return (loss) on plan assets	7,269			(1,330		)
Employer contributions⁽¹⁾	3,529			1,031
Benefits paid⁽¹⁾	(4,564		)	(4,604		)
Fair value of plan assets at December 31	39,625			33,391
Funded status at end of year (included in noncurrent liabilities)	$	(31,404	)	$	(33,062	)

(1) Contributions and benefits paid are each net of $3.3 million and $3.1 million of plan participant contributions for 2019 and 2018, respectively.

Amounts recognized in accumulated other comprehensive income consist of the following (in thousands of dollars):



	2019			2018
Net loss	$	(81	)	$	(330	)
Prior service cost	174			222
Subtotal	93			(108		)
Less amount recognized in regulatory assets	(93		)	108
Net amount recognized in accumulated other comprehensive income	$	—		$	—

The net periodic postretirement benefit cost was as follows (in thousands of dollars):



	2019			2018			2017
Service cost	$	853		$	1,051		$	973
Interest cost	2,989			2,643			2,783
Expected return on plan assets	(2,220		)	(2,467		)	(2,307		)
Immediate recognition of loss from temporary deviation⁽¹⁾	—			4,216			—
Amortization of prior service cost	48			47			47
Net periodic postretirement benefit cost	$	1,670		$	5,490		$	1,496

(1) In 2018, a loss associated with a temporary deviation from the cost-sharing provisions of the substantive plan was recognized in "Other expense, net" on the consolidated statements of income of the companies.

The following table shows the components of other comprehensive income for the plan (in thousands of dollars):



	2019			2018			2017
Actuarial loss during the year	$	(249	)	$	(1,109	)	$	(2,964	)
Prior service cost arising during the year	—			—			(212		)
Reclassification adjustments for:
Immediate recognition of loss from temporary deviation⁽¹⁾	—			4,216			—
Reclassification adjustments for amortization of prior service cost	48			47			47
Adjustment for deferred tax effects	52			270			807
Adjustment due to the effects of regulation	149			(3,424		)	2,322
Other comprehensive income related to postretirement benefit plans	$	—		$	—		$	—

The following table summarizes the expected future benefit payments of the postretirement benefit plan (in thousands of dollars):



	2020		2021		2022		2023		2024		2025-2028
Expected benefit payments	$	5,552	$	4,932	$	4,750	$	4,532	$	4,289	$	19,133

Plan Assumptions

The following table sets forth the weighted-average assumptions used at the end of each year to determine benefit obligations for all Idaho Power-sponsored pension and postretirement benefits plans:



	Pension Plan				SMSP				Postretirement Benefits
	2019		2018		2019		2018		2019		2018
Discount rate	3.60	%	4.55	%	3.65	%	4.60	%	3.60	%	4.60	%
Rate of compensation increase⁽¹⁾	4.37	%	4.25	%	4.75	%	4.75	%	—		—
Medical trend rate	—		—		—		—		6.7	%	6.3	%
Dental trend rate	—		—		—		—		4.0	%	4.0	%
Measurement date	12/31/2019		12/31/2018		12/31/2019		12/31/2018		12/31/2019		12/31/2018

(1) The 2019 rate of compensation increase assumption for the pension plan includes an inflation component of 2.40% plus a 1.97% composite merit increase component that is based on employees' years of service. Merit salary increases are assumed to be 8.0% for employees in their first year of service and scale down to 0.6% for employees in their fortieth year of service and beyond.

The following table sets forth the weighted-average assumptions used to determine net periodic benefit cost for all Idaho Power-sponsored pension and postretirement benefit plans:



	Pension Plan						SMSP						Postretirement Benefits
	2019		2018		2017		2019		2018		2017		2019		2018		2017
Discount rate	4.55	%	3.95	%	4.45	%	4.60	%	3.95	%	4.45	%	4.60	%	3.95	%	4.45	%
Expected long-term rate of return on assets	7.50	%	7.50	%	7.50	%	—		—		—		6.75	%	6.75	%	6.75	%
Rate of compensation increase	4.37	%	4.25	%	4.17	%	4.75	%	4.75	%	4.75	%	—		—	%	—	%
Medical trend rate	—		—		—		—		—		—		6.7	%	6.3	%	6.8	%
Dental trend rate	—		—		—		—		—		—		4.0	%	4.0	%	4.0	%

The assumed health care cost trend rate used to measure the expected cost of health benefits covered by the postretirement plan was 6.7 percent in 2019 and is assumed to decrease to 5.9 percent in 2020, 5.2 percent in 2021, 5.1 percent in 2022 and to gradually decrease to 3.9 percent by 2091. The assumed dental cost trend rate used to measure the expected cost of dental benefits covered by the plan was 4.0 percent, or equal to the medical trend rate if lower, for all years.

Plan Assets

Pension Asset Allocation Policy: The target allocation and actual allocations at December 31, 2019, for the pension asset portfolio by asset class is set forth below:



Asset Class	Target Allocation		Actual Allocation December 31, 2019
Debt securities	24	%	23	%
Equity securities	56	%	59	%
Real estate	7	%	6	%
Other plan assets	13	%	12	%
Total	100	%	100	%

Assets are rebalanced as necessary to keep the portfolio close to target allocations.

The plan’s principal investment objective is to maximize total return (defined as the sum of realized interest and dividend income and realized and unrealized gain or loss in market price) consistent with prudent parameters of risk and the liability profile of the portfolio. Emphasis is placed on preservation and growth of capital along with adequacy of cash flow sufficient to fund current and future payments to plan participants.

The three major goals in Idaho Power’s asset allocation process are to:


•	determine if the investments have the potential to earn the rate of return assumed in the actuarial liability calculations;


•	match the cash flow needs of the plan. Idaho Power sets bond allocations sufficient to cover approximately five years of benefit payments. Idaho Power then utilizes growth instruments (equities, real estate, venture capital) to fund the longer-term liabilities of the plan; and


•	maintain a prudent risk profile consistent with ERISA fiduciary standards.

Allowable plan investments include stocks and stock funds, investment-grade bonds and bond funds, real estate funds, private equity funds, and cash and cash equivalents. With the exception of real estate holdings and private equity, investments must be readily marketable so that an entire holding can be disposed of quickly with only a minor effect upon market price.

Rate-of-return projections for plan assets are based on historical risk/return relationships among asset classes. The primary measure is the historical risk premium each asset class has delivered versus the yield on the Moody's AA Corporate Bond Index. This historical risk premium is then added to the current yield on the Moody's AA Corporate Bond Index. Additional analysis is performed to measure the expected range of returns, as well as worst-case and best-case scenarios. Based on the current low interest rate environment, current rate-of-return expectations are lower than the nominal returns generated over the past 30 years when interest rates were generally much higher.

Idaho Power’s asset modeling process also utilizes historical market returns to measure the portfolio’s exposure to a “worst-case” market scenario, to determine how much performance could vary from the expected “average” performance over various time periods. This “worst-case” modeling, in addition to cash flow matching and diversification by asset class and investment style, provides the basis for managing the risk associated with investing portfolio assets.

Fair Value of Plan Assets: Idaho Power classifies its pension plan and postretirement benefit plan investments using the three-level fair value hierarchy described in Note 17 - "Fair Value Measurements." The following table presents the fair value of the plans' investments by asset category (in thousands of dollars).



	Level 1		Level 2		Level 3		Total
Assets at December 31, 2019
Cash and cash equivalents	$	10,878	$	—	$	—	$	10,878
Short-term bonds	21,628		—		—		21,628
Intermediate bonds	22,369		134,931		—		157,300
Long-term bonds	—		—		—		—
Equity Securities: Large-Cap	92,852		—		—		92,852
Equity Securities: Mid-Cap	81,663		—		—		81,663
Equity Securities: Small-Cap	67,075		—		—		67,075
Equity Securities: Micro-Cap	31,469		—		—		31,469
Equity Securities: International	13,817		—		—		13,817
Equity Securities: Emerging Markets	8,245		—		—		8,245
Plan assets measured at NAV (not subject to hierarchy disclosure)
Commingled Fund: Equity Securities: Global and International							114,975
Commingled Fund: Equity Securities: Emerging Markets							40,059
Commingled Fund: Commodities fund							34,793
Real estate							47,570
Private market investments							40,795
Total	$	349,996	$	134,931	$	—	$	763,119
Postretirement plan assets⁽¹⁾	$	641	$	38,984	$	—	$	39,625



	Level 1		Level 2		Level 3		Total
Assets at December 31, 2018
Cash and cash equivalents	$	9,717	$	—	$	—	$	9,717
Short-term bonds	20,644		—		—		20,644
Intermediate bonds	20,595		87,646		—		108,241
Long-term bonds	—		40,857		—		40,857
Equity Securities: Large-Cap	71,176		—		—		71,176
Equity Securities: Mid-Cap	71,419		—		—		71,419
Equity Securities: Small-Cap	53,401		—		—		53,401
Equity Securities: Micro-Cap	30,387		—		—		30,387
Equity Securities: International	7,104		—		—		7,104
Equity Securities: Emerging Markets	6,519		—		—		6,519
Plan assets measured at NAV (not subject to hierarchy disclosure)
Commingled Fund: Equity Securities: International							95,653
Commingled Fund: Equity Securities: Emerging Markets							29,757
Commingled Fund: Commodities fund							30,842
Real estate							39,846
Private market investments							35,041
Total	$	290,962	$	128,503	$	—	$	650,604
Postretirement plan assets⁽¹⁾	$	758	$	32,633	$	—	$	33,391

(1) The postretirement benefits assets are primarily life insurance contracts.

For the years ended December 31, 2019 and 2018, there were no material transfers into or out of Levels 1, 2, or 3.

Fair Value Measurement of Level 2 Plan assets and Plan assets measured at NAV:

Level 2 Bonds: These investments represent U.S. government, agency bonds, and corporate bonds. The U.S. government and agency bonds, as well as the corporate bonds, are not traded on an exchange and are valued utilizing market prices for similar assets or liabilities in active markets.

Level 2 Postretirement Asset: This asset represents an investment in a life insurance contract and is recorded at fair value, which is the cash surrender value, less any unpaid expenses. The cash surrender value of this insurance contract is contractually equal to the insurance contract's proportionate share of the market value of an associated investment account held by the insurer. The investments held by the insurer's investment account are all instruments traded on exchanges with readily determinable market prices.

Commingled Funds: These funds, made up of the international and emerging markets equity securities and commodities fund measured at NAV, are not publicly traded, and therefore no publicly quoted market price is readily available. The values of the commingled funds are presented at estimated fair value, which is determined based on the unit value of the fund. The values of these investments are calculated by the custodian for the fund company on a monthly or more frequent basis, and are based on market prices of the assets held by each of the commingled funds divided by the number of fund shares outstanding for the respective fund. The investments in commingled funds have redemption limitations that permit monthly redemption following notice requirements of 5 to 7 days.

Real Estate: Real estate holdings represent investments in open-end and closed-end commingled real estate funds. As the property interests held in these real estate funds are not frequently traded, establishing the market value of the property interests held by the fund, and the resulting unit value of fund shareholders, is based on unobservable inputs including property appraisals by the fund companies, property appraisals by independent appraisal firms, analysis of the replacement cost of the property, discounted cash flows generated by property rents and changes in property values, and comparisons with sale prices of similar properties in similar markets. These real estate funds also furnish annual audited financial statements that are also used to further validate the information provided. Redemptions on the open-end funds are generally available on a quarterly basis, with 10 to 35 days written notice, depending on the individual fund. If the fund has sufficient liquidity, the redemption will be processed at the fund NAV or the fund’s estimate of fair value at the end of the quarter. If the fund does not have sufficient liquidity to honor the full redemption, the remainder will be set for redemption the following quarter on a pro-rata basis with other redemption requests. This same process will repeat until the redemption request has been completed. To protect other fund holders, real estate funds have no duty to liquidate or encumber funds to meet redemption requests. The closed-end funds are formed for a stated life of 7 to 9 years. The fund can be further extended with the approval of the limited partners. There are generally no redemption rights associated with these funds. The limited partner must hold the fund for the life of the fund or find a third-party buyer.

Private Market Investments: Private market investments represent two categories: fund of hedge funds and venture capital funds. These funds are valued by the fund companies based on the estimated fair values of the underlying fund holdings divided by the fund shares outstanding or multiplied by the ownership percentages of the holder. Some hedge fund strategies utilize securities with readily available market prices, while others utilize less liquid investment vehicles that are valued based on unobservable inputs including cost, operating results, recent funding activity, or comparisons with similar investment vehicles. Redemptions are available on a quarterly basis with 70 days written notice. Redemptions will be processed at the quarterly NAV or fair value within 60 days following quarter end. In the event of a full redemption, a reserve amount of 5% to 10% of the redemption amount may be held in reserve until the audited financial statements of the fund are published. This allows the fund to adjust the redemption so that other fund holders are not adversely impacted. Venture capital fund investments are valued by the fund companies based on estimated fair value of the underlying fund holdings divided by the fund shares outstanding. Some venture capital investments have progressed to the point that they have readily available exchange-based market valuations. Early stage venture investments are valued based on unobservable inputs including cost, operating results, discounted cash flows, the price of recent funding events, or pending offers from other viable entities. These private market investments furnish annual audited financial statements that are also used to further validate the information provided. These funds are formed for a stated life of 10 to 15 years. The general partner can extend the fund life for 2 or 3 one-year periods. The fund can be further extended with the approval of the limited partners. There are generally no redemption rights associated with these funds. The limited partner must hold the fund for the life of the fund or find a third-party buyer.

Employee Savings Plan

Idaho Power has a defined contribution plan designed to comply with Section 401(k) of the Internal Revenue Code and that covers substantially all employees. Idaho Power matches specified percentages of employee contributions to the plan. Matching annual contributions were approximately $7.7 million, $7.7 million, and $7.4 million in 2019, 2018, and 2017, respectively.

Post-employment Benefits

Idaho Power provides certain benefits to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement, in addition to the health care benefits required under the Consolidated Omnibus Budget Reconciliation Act. These benefits include salary continuation, health care and life insurance for those employees found to be disabled under Idaho Power’s disability plans, and health care for surviving spouses and dependents. Idaho Power accrues a liability for such benefits. The post-employment benefits included in other deferred credits on both IDACORP’s and Idaho Power’s consolidated balance sheets at December 31, 2019, and 2018, were approximately $2 million.