IDACORP INC - 10-Q Quarterly Report

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
IDACORP, Inc.
Consolidated Statements of Operations
(unaudited)

				Three Months Ended June 30,
				2004		2003
				(thousands of dollars except for per
				share amounts)
OPERATING REVENUES:
	Electric utility:
		General business		$	158,305	$	166,613
		Off-system sales			36,809		19,839
		Other revenues			11,795		11,176
			Total electric utility revenues		206,909		197,628
	Energy marketing				(9)		(1,053)
	Other				4,972		3,701
		Total operating revenues			211,872		200,276

OPERATING EXPENSES:
	Electric utility:
		Purchased power			64,766		32,019
		Fuel expense			21,569		23,908
		Power cost adjustment			(1,746)		25,383
		Other operations and maintenance			63,193		59,537
		Depreciation			25,271		24,279
		Taxes other than income taxes			5,378		5,251
		Impairment of assets			9,756		-
			Total electric utility expenses		188,187		170,377
	Energy marketing:
		Cost of revenues			-		(15)
		Selling, general and administrative			543		6,481
		Net gain on legal disputes			(1,648)		-
	Other				9,383		9,433
			Total operating expenses		196,465		186,276

OPERATING INCOME (LOSS):
	Electric utility				18,722		27,251
	Energy marketing				1,096		(7,519)
	Other				(4,411)		(5,732)
		Total operating income			15,407		14,000

OTHER INCOME					17,491		5,448

OTHER EXPENSES					7,632		4,075

INTEREST EXPENSE AND PREFERRED DIVIDENDS:
	Interest on long-term debt				13,215		14,449
	Other interest				1,585		937
	Preferred dividends of Idaho Power Company				853		866
		Total interest expense and preferred dividends			15,653		16,252

INCOME (LOSS) BEFORE INCOME TAXES					9,613		(879)

INCOME TAX BENEFIT					(3,379)		-

NET INCOME (LOSS)				$	12,992	$	(879)

AVERAGE COMMON SHARES OUTSTANDING (000's)					38,189		38,247
EARNINGS (LOSS) PER SHARE OF COMMON
	STOCK (basic and diluted)			$	0.34	$	(0.02)

The accompanying notes are an integral part of these statements.

IDACORP, Inc.
Consolidated Statements of Operations
(unaudited)

				Six Months Ended June 30,
				2004		2003
				(thousands of dollars except for per
				share amounts)
OPERATING REVENUES:
	Electric utility:
		General business		$	304,462	$	341,675
		Off-system sales			64,930		38,447
		Other revenues			21,120		20,928
			Total electric utility revenues		390,512		401,050
	Energy marketing				77		2,540
	Other				9,472		8,614
		Total operating revenues			400,061		412,204

OPERATING EXPENSES:
	Electric utility:
		Purchased power			83,270		45,625
		Fuel expense			49,073		49,446
		Power cost adjustment			10,818		77,230
		Other operations and maintenance			117,340		110,122
		Depreciation			50,161		48,413
		Taxes other than income taxes			10,943		10,408
		Impairment of assets			9,756		-
			Total electric utility expenses		331,361		341,244
	Energy marketing:
		Cost of revenues			(79)		3,705
		Selling, general and administrative			1,064		13,184
		Net (gain) loss on legal disputes			(1,649)		10,938
	Other				17,763		17,699
			Total operating expenses		348,460		386,770

OPERATING INCOME (LOSS):
	Electric utility				59,151		59,806
	Energy marketing				741		(25,287)
	Other				(8,291)		(9,085)
		Total operating income			51,601		25,434

OTHER INCOME					23,847		11,600

OTHER EXPENSES					11,179		7,598

INTEREST EXPENSE AND PREFERRED DIVIDENDS:
	Interest on long-term debt				26,568		29,642
	Other interest				2,037		2,012
	Preferred dividends of Idaho Power Company				1,707		1,734
		Total interest expense and preferred dividends			30,312		33,388

INCOME (LOSS) BEFORE INCOME TAXES					33,957		(3,952)

INCOME TAX EXPENSE					1,306		-

NET INCOME (LOSS)				$	32,651	$	(3,952)

AVERAGE COMMON SHARES OUTSTANDING (000's)					38,194		38,220
EARNINGS (LOSS) PER SHARE OF COMMON
	STOCK (basic and diluted)			$	0.85	$	(0.10)

The accompanying notes are an integral part of these statements.

IDACORP, Inc.
Consolidated Balance Sheets
(unaudited)

			June 30,		December 31,
			2004		2003
ASSETS			(thousands of dollars)

CURRENT ASSETS:
	Cash and cash equivalents		$	17,234	$	75,159
	Receivables:
		Customer		93,579		93,599
		Allowance for uncollectible accounts		(43,406)		(43,210)
		Employee notes		3,637		3,347
		Other		7,145		8,209
	Energy marketing assets			8,739		4,176
	Accrued unbilled revenues			40,492		30,869
	Materials and supplies (at average cost)			27,861		21,351
	Fuel stock (at average cost)			7,876		6,228
	Prepayments			30,945		27,779
	Regulatory assets			4,226		6,269
		Total current assets		198,328		233,776

INVESTMENTS				196,622		204,474

PROPERTY, PLANT AND EQUIPMENT:
	Utility plant in service			3,259,287		3,220,228
	Accumulated provision for depreciation			(1,289,868)		(1,239,604)
		Utility plant in service - net		1,969,419		1,980,624
	Construction work in progress			130,941		96,091
	Utility plant held for future use			2,468		2,438
	Other property, net of accumulated depreciation			43,829		9,166
		Property, plant and equipment - net		2,146,657		2,088,319

OTHER ASSETS:
	American Falls and Milner water rights			31,585		31,585
	Company-owned life insurance			35,676		35,624
	Energy marketing assets - long-term			17,907		14,358
	Regulatory assets			414,717		427,760
	Long-term receivables			3,106		3,106
	Employee notes			4,370		4,775
	Other			57,719		57,949
		Total other assets		565,080		575,157

		TOTAL	$	3,106,687	$	3,101,726

The accompanying notes are an integral part of these statements.

IDACORP, Inc.
Consolidated Balance Sheets
(unaudited)

				June 30,		December 31,
				2004		2003
LIABILITIES AND SHAREHOLDERS' EQUITY				(thousands of dollars)

CURRENT LIABILITIES:
	Current maturities of long-term debt			$	17,443	$	67,923
	Notes payable				77,895		93,650
	Accounts payable				51,297		60,916
	Energy marketing liabilities				8,411		4,317
	Taxes accrued				49,290		35,580
	Interest accrued				13,273		13,741
	Deferred income taxes				3,059		5,639
	Other				32,917		25,557
		Total current liabilities			253,585		307,323

OTHER LIABILITIES:
	Deferred income taxes				534,989		554,715
	Energy marketing liabilities - long-term				17,976		14,393
	Regulatory liabilities				261,788		258,524
	Other				117,869		104,290
		Total other liabilities			932,622		931,922

LONG-TERM DEBT					995,210		945,834

COMMITMENTS AND CONTINGENT LIABILITIES

PREFERRED STOCK OF IDAHO POWER COMPANY					52,299		52,366

SHAREHOLDERS' EQUITY:
	Common stock, no par value (shares authorized 120,000,000; 38,345,358
		and 38,341,358 shares issued, respectively)			474,424		472,902
	Retained earnings				406,894		397,167
	Accumulated other comprehensive loss				(2,753)		(2,630)
	Treasury stock (156,736 and 110,748 shares at cost, respectively)				(4,578)		(3,158)
	Unearned compensation				(1,016)		-
		Total shareholders' equity			872,971		864,281

			TOTAL	$	3,106,687	$	3,101,726

The accompanying notes are an integral part of these statements.

IDACORP, Inc.
Consolidated Statements of Cash Flows
(unaudited)

				Six Months Ended
				June 30,
				2004		2003
				(thousands of dollars)
OPERATING ACTIVITIES:
	Net income (loss)			$	32,651	$	(3,952)
	Adjustments to reconcile net income (loss) to net cash provided by
		operating activities:
		Net non-cash loss on legal disputes			-		10,938
		Allowance for uncollectible accounts			180		(263)
		Impairment of assets			9,756		-
		Unrealized losses from energy marketing activities			-		11,691
		Depreciation and amortization			61,861		65,744
		Deferred taxes and investment tax credits			(21,111)		(54,465)
		Accrued power cost adjustment costs			9,946		75,314
		Gain on sale of non-utility assets			(4,780)		-
		Gain on extinguishment of debt			(7,188)		-
		Change in:
			Receivables and prepayments		(2,208)		69,052
			Accrued unbilled revenues		(9,623)		309
			Materials and supplies and fuel stock		(2,882)		(1,990)
			Accounts payable and other accrued liabilities		(10,758)		(76,246)
			Taxes receivable/accrued		13,710		38,928
			Other current liabilities		5,391		(2,053)
		Other assets			(947)		3,264
		Other liabilities			16,257		1,332
			Net cash provided by operating activities		90,255		137,603

INVESTING ACTIVITIES:
	Additions to property, plant and equipment				(89,921)		(57,599)
	Sale of non-utility assets				5,387		-
	Other assets				(1,180)		(7,017)
	Other liabilities				(1,907)		190
		Net cash used in investing activities			(87,621)		(64,426)

FINANCING ACTIVITIES:
	Issuance of first mortgage bonds				50,000		140,000
	Issuance of other long-term debt				-		25,475
	Retirement of first mortgage bonds				(50,000)		(160,000)
	Retirement of other long-term debt				(19,591)		(7,329)
	Retirement of preferred stock of Idaho Power Company				(77)		(831)
	Dividends on common stock				(22,923)		(35,487)
	Decrease in short-term borrowings				(16,650)		(57,150)
	Common stock issued				128		4,123
	Acquisition of treasury shares				(1,419)		(798)
	Other assets				-		(3,168)
	Other liabilities				(27)		(623)
		Net cash used in financing activities			(60,559)		(95,788)

Net decrease in cash and cash equivalents					(57,925)		(22,611)
Cash and cash equivalents beginning of period					75,159		42,736
Cash and cash equivalents end of period				$	17,234	$	20,125

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid during the period for:
		Income taxes		$	9,476	$	16,216
		Interest (net of amount capitalized)		$	27,838	$	29,949

The accompanying notes are an integral part of these statements.

IDACORP, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)

				Three Months Ended
				June 30,
				2004		2003
				(thousands of dollars)

NET INCOME (LOSS)				$	12,992	$	(879)

OTHER COMPREHENSIVE INCOME (LOSS):
	Unrealized gains (losses) on securities:
		Unrealized holding gains (losses) arising during the period,
			net of tax of ($65) and $1,788		(145)		3,001
		Reclassification adjustment for (gains) losses included
			in net income, net of tax of ($218) and $19		(339)		30
			Net unrealized gains (losses)		(484)		3,031

TOTAL COMPREHENSIVE INCOME				$	12,508	$	2,152

				Six Months Ended
				June 30,
				2004		2003
				(thousands of dollars)

NET INCOME (LOSS)				$	32,651	$	(3,952)

OTHER COMPREHENSIVE INCOME (LOSS):
	Unrealized gains (losses) on securities:
		Unrealized holding gains arising during the period,
			net of tax of $284 and $996		471		1,667
		Reclassification adjustment for (gains) losses included
			in net income, net of tax of ($381) and $230		(594)		359
			Net unrealized gains (losses)		(123)		2,026

TOTAL COMPREHENSIVE INCOME (LOSS)				$	32,528	$	(1,926)

The accompanying notes are an integral part of these statements.

IDACORP, Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Business
IDACORP, Inc. (IDACORP) is a holding company whose principal operating subsidiary is Idaho Power Company (IPC). IDACORP is exempt from registration as a public utility holding company pursuant to Section 3(a)(1) of the Public Utility Holding Company Act of 1935 (1935 Act). In addition, pursuant to Rule 2 of the General Rules and Regulations under the 1935 Act, IDACORP is exempt from all the provisions of the 1935 Act and rules thereunder, except for Section 9(a)(2) of the 1935 Act, which requires IDACORP to seek prior Securities and Exchange Commission approval to acquire securities of another public utility company.

IPC is an electric utility engaged in the generation, transmission, distribution, sale and purchase of electric energy. IPC is regulated by the Federal Energy Regulatory Commission (FERC) and the state regulatory commissions of Idaho and Oregon. IPC is the parent of Idaho Energy Resources Co., a joint venturer in Bridger Coal Company, which supplies coal to the Jim Bridger generating plant owned in part by IPC.

IDACORP's other operating subsidiaries include:

IdaTech - developer of integrated fuel cell systems;

IDACORP Financial Services, Inc. (IFS) - affordable housing and other real estate investments;

Velocitus - commercial and residential Internet service provider;

IDACOMM - provider of telecommunications services;

Ida-West Energy (Ida-West) - operator of independent power projects; and

IDACORP Energy (IE) - marketer of electricity and natural gas.

IE wound down its operations during 2003. Also in 2003, Ida-West discontinued its project development operations and is managing its independent power projects with a reduced workforce.

Principles of Consolidation
The consolidated financial statements of IDACORP and IPC include the accounts of each company and those variable interest entities (VIEs) for which the companies are the primary beneficiaries. All significant intercompany balances have been eliminated in consolidation. Investments in business entities in which IDACORP and IPC are not the primary beneficiaries, but have the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method.

The entities that IDACORP and IPC consolidate consist primarily of wholly-owned or controlled subsidiaries. In addition, IDACORP consolidates the following VIEs:

Ida-West participates in Marysville Hydro Partners, a joint venture that owns a small hydroelectric project. Marysville has approximately $22 million of assets, primarily the hydroelectric plant, and approximately $18 million of intercompany long-term debt, which is eliminated in consolidation.

IFS is a limited partner in Empire Development Company, LLC (Empire), an entity that earns historic tax credits through the rehabilitation of the Empire Building in Boise, Idaho. Empire has approximately $9 million of assets, primarily real property, and $8 million of long-term debt. This debt is non-recourse to IDACORP, personally guaranteed by the general partner and collateralized by the property.

Through IFS, IDACORP also holds significant variable interests in VIEs for which it is not the primary beneficiary. These VIEs are historic rehabilitation and affordable housing developments in which IFS holds limited partnership interests ranging from five to 99 percent. These investments were acquired between 1996 and 2002. IFS's maximum exposure to loss in these developments totaled $109 million at June 30, 2004.

Financial Statements
In the opinion of IDACORP and IPC, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly their consolidated financial positions as of June 30, 2004, and consolidated results of operations for the three and six months ended June 30, 2004 and 2003 and consolidated cash flows for the six months ended June 30, 2004 and 2003. These financial statements do not contain the complete detail or footnote disclosure concerning accounting policies and other matters that would be included in full-year financial statements and therefore they should be read in conjunction with the audited consolidated financial statements included in IDACORP's and IPC's Annual Report on Form 10-K for the year ended December 31, 2003. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

Earnings Per Share
The computation of diluted earnings per share (EPS) differs from basic EPS only due to including immaterial amounts of potentially dilutive shares related to stock-based compensation awards. The diluted EPS computation excluded 840,500 common stock options for the three and six months ended June 30, 2004, because the options' exercise prices were greater than the average market price of the common stock during the period. For the same periods in 2003, 1,280,000 options were excluded from the diluted EPS calculation for the same reason. In total, 1,243,500 options were outstanding at June 30, 2004, with expiration dates between 2010 and 2014.

Stock-Based Compensation
Stock-based employee compensation is accounted for under the recognition and measurement principles of Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees," and related interpretations. Grants of restricted stock are reflected in net income based on the market value at the award date, or the period-end price for shares not yet vested. No stock-based employee compensation cost is reflected in net income for stock options, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. IDACORP and IPC have adopted the disclosure only provision of Statement of Financial Accounting Standards (SFAS) 123, "Accounting for Stock-Based Compensation." The following table illustrates the effect on net income (loss) and EPS if the fair value recognition provisions of SFAS 123 had been applied to stock-based employee compensation (in thousands of dollars except for per share amounts):

			Three Months Ended				Six Months Ended
			June 30,				June 30,
			2004		2003		2004		2003

Net income (loss), as reported			$	12,992	$	(879)	$	32,651	$	(3,952)
Add: Stock-based employee compensation
	expense included in reported net income
	(loss), net of related tax effects			110		80		231		61
Deduct: Total stock-based employee
	compensation expense determined under
	fair value based method for all awards, net
	of related tax effects			313		396		656		560
		Pro forma net income (loss)	$	12,789	$	(1,195)	$	32,226	$	(4,451)
EPS of common stock:
	Basic and diluted - as reported		$	0.34	$	(0.02)	$	0.85	$	(0.10)
	Basic and diluted - pro forma			0.33		(0.03)		0.84		(0.12)

Adopted Accounting Pronouncement
In January 2004, IDACORP and IPC adopted Financial Accounting Standards Board Interpretation (FIN) 46R, "Consolidation of Variable Interest Entities - an interpretation of ARB No. 51," which addresses consolidation by business enterprises of VIEs, which have one or more of the following characteristics:

1. The equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by any parties, including the equity holders.

2. The equity investors lack one or more of the following essential characteristics of a controlling financial interest:

a. The direct or indirect ability to make decisions about the entity's activities through voting rights or similar rights.

b. The obligation to absorb the expected losses of the entity.

c. The right to receive the expected residual returns of the entity.

3. The equity investors have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.

IDACORP and IPC evaluated their investments, contracts and other potential variable interests that would be subject to the provisions of FIN 46R, and IDACORP determined that it must consolidate two entities under those provisions. At adoption, total assets and liabilities each increased by $29 million and consisted primarily of property and long-term debt. Net income and cash flows were not affected by the adoption of the interpretation.

Reclassifications
Certain items previously reported for periods prior to June 30, 2004 have been reclassified to conform to the current period's presentation. Net income (loss) and shareholders' equity were not affected by these reclassifications.

2. INCOME TAXES:

IDACORP uses an estimated annual effective tax rate for computing its provision for income taxes on an interim basis. IDACORP's effective rate for the six months ended June 30, 2004 was 3.8 percent, compared to an effective rate of zero for the six months ended June 30, 2003. For 2003, it was expected that available tax benefits from tax credits and regulatory flow-through tax adjustments would approximately offset the tax expense on pre-tax book income, resulting in a zero effective tax rate. The increase in the 2004 estimated tax rate is due primarily to the increase in pre-tax earnings, net of tax credit benefits. For the three months ended June 30, 2004, the income tax benefit was primarily the result of tax credits exceeding income tax expense on pre-tax earnings.

3. CAPITAL STOCK:

Common Stock
During the six months ended June 30, 2004, IDACORP purchased 45,988 shares for its Restricted Stock Plan, issued 1,167 shares to shareholders of Rocky Mountain Communications Holdings, the parent company of Velocitus, and issued 4,000 shares pursuant to the exercise of stock options granted under the Long-Term Incentive and Compensation Plan.

Preferred Stock of IPC
During the six months ended June 30, 2004, IPC reacquired and retired 675 shares of 4% preferred stock.

4. FINANCING:

The following table summarizes long-term debt (in thousands of dollars):

			June 30,		December 31,
			2004		2003
First mortgage bonds:
	8 % Series due 2004		$	-	$	50,000
	5.83% Series due 2005			60,000		60,000
	7.38% Series due 2007			80,000		80,000
	7.20% Series due 2009			80,000		80,000
	6.60% Series due 2011			120,000		120,000
	4.75% Series due 2012			100,000		100,000
	4.25% Series due 2013			70,000		70,000
	6 % Series due 2032			100,000		100,000
	5.50% Series due 2033			70,000		70,000
	5.50% Series due 2034			50,000		-
		Total first mortgage bonds		730,000		730,000
Pollution control revenue bonds:
	Variable Auction Rate Series 2003 due 2024 (a)			49,800		49,800
	6.05% Series 1996A due 2026			68,100		68,100
	Variable Rate Series 1996B due 2026			24,200		24,200
	Variable Rate Series 1996C due 2026			24,000		24,000
	Variable Rate Series 2000 due 2027			4,360		4,360
		Total pollution control revenue bonds		170,460		170,460

REA notes				1,064		1,105

American Falls bond guarantee				19,885		19,885

Milner Dam note guarantee				11,700		11,700

Unamortized premium/(discount) - net				(2,490)		(2,205)

Debt related to investments in affordable housing				73,870		82,715

Other subsidiary debt				8,164		97
	Total			1,012,653		1,013,757
Current maturities of long-term debt				(17,443)		(67,923)

		Total long-term debt	$	995,210	$	945,834

(a) Humboldt County Pollution Control Revenue bonds are secured by first mortgage bonds, bringing the total first mortgage
	bonds outstanding at June 30, 2004 to $779.8 million.

IDACORP currently has two shelf registration statements totaling $800 million that can be used for the issuance of unsecured debt (including medium-term notes) and preferred or common stock. At June 30, 2004, none had been issued.

On March 14, 2003, IPC filed a $300 million shelf registration statement that could be used for first mortgage bonds (including medium-term notes), unsecured debt and preferred stock. On May 8, 2003, IPC issued $140 million of secured medium-term notes in two series: $70 million First Mortgage Bonds 4.25% Series due 2013 and $70 million First Mortgage Bonds 5.50% Series due 2033. Proceeds were used to pay down IPC short-term borrowings incurred from the payment at maturity of $80 million First Mortgage Bonds 6.40% Series due 2003 and the early redemption of $80 million First Mortgage Bonds 7.50% Series due 2023, on May 1, 2003. On March 26, 2004, IPC issued $50 million First Mortgage Bonds 5.50% Series due 2034. Proceeds were used to reduce short-term borrowings and replace short-term investments, which were used on March 15, 2004 to pay at maturity the $50 million First Mortgage Bonds 8% Series due 2004. At June 30, 2004, $110 million remained available to be issued on this shelf registration statement.

IDACORP has a $150 million credit facility that expires on March 16, 2007. Under this facility IDACORP pays a facility fee on the commitment, quarterly in arrears, based on its rating for senior unsecured long-term debt securities without third-party credit enhancement as provided by Moody's Investors Service (Moody's) and Standard & Poor's Ratings Services (S&P). Commercial paper may be issued up to the amounts supported by the bank credit facilities. At June 30, 2004, $50 million of commercial paper was outstanding.

At June 30, 2004, IPC had regulatory authority to incur up to $250 million of short-term indebtedness. IPC has a $200 million credit facility that expires on March 16, 2007. Under this facility IPC pays a facility fee on the commitment, quarterly in arrears, based on its rating for senior unsecured long-term debt securities without third-party credit enhancement as provided by Moody's and S&P. IPC's commercial paper may be issued up to the amounts supported by the bank credit facilities. At June 30, 2004, $27 million of commercial paper was outstanding.

At June 30, 2004, IFS had $74 million of debt related to investments in affordable housing with interest rates ranging from 3.65 percent to 8.59 percent due 2004 to 2010. The investments in affordable housing developments, that collateralize this debt,had a net book value of $110 million at June 30, 2004.

IFS's $18 million Series 2003-1 tax credit note is non-recourse to both IFS and IDACORP. The $12 million Series 2003-2 tax credit note and $21 million of borrowings from a corporate lender are recourse only to IFS.

In June 2004, Ida-West purchased from a third party $18 million of debt issued by Marysville Hydro Partners, a 50-percent-owned, consolidated joint venture, for $11 million. This debt, previously consolidated under the provisions of FIN 46R, is now eliminated in consolidation. Ida-West borrowed $6 million from IDACORP for this transaction, resulting in increased short-term borrowings at IDACORP.

As a result of IDACORP's adoption of FIN46R in January 2004, other subsidiary debt increased from December 31, 2003. This debt is non-recourse to IDACORP.

5. COMMITMENTS AND CONTINGENT LIABILITIES:

From time to time IDACORP and IPC are a party to various legal claims, actions and complaints in addition to those discussed below. IDACORP and IPC believe that they have meritorious defenses to all lawsuits and legal proceedings. Although they will vigorously defend against them, they are unable to predict with certainty whether or not they will ultimately be successful. However, based on the companies' evaluation, they believe that the resolution of these matters will not have a material adverse effect on IDACORP's or IPC's consolidated financial positions, results of operations or cash flows.

Legal Proceedings
Vierstra Dairy: On August 11, 2000, Mike and Susan Vierstra, dairy operators from Twin Falls, Idaho, brought suit against IPC in Idaho State District Court, Fifth Judicial District, Twin Falls County. The plaintiffs sought monetary damages of approximately $8 million for negligence and nuisance (allegedly allowing electrical current to flow in the earth and adversely affect the health of the plaintiffs' dairy cows) and punitive damages of approximately $40 million.

On February 10, 2004, a jury verdict was entered in favor of the plaintiffs, awarding approximately $7 million in compensatory damages and $10 million in punitive damages. In March 2004, IPC filed with the Idaho State District Court motions for new trial and for judgment notwithstanding the verdict. These motions were heard by the court on April 26, 2004. On June 7, 2004, the court denied the motions. IPC filed its notice of appeal of this decision with the Idaho Supreme Court on July 13, 2004, with an amended notice filed on July 15, 2004.

IPC is unable to predict the outcome of this matter; however, based upon the information provided to date, IPC's insurance carrier has confirmed coverage. IPC has previously expensed the full amount of its self-insured retention. With coverage, this matter will not have a material adverse effect on IPC's consolidated financial position, results of operations or cash flows.

Public Utility District No. 1 of Grays Harbor County, Washington: On October 15, 2002, Public Utility District No. 1 of Grays Harbor County, Washington (Grays Harbor) filed a lawsuit in the Superior Court of the State of Washington, for the County of Grays Harbor, against IDACORP, IPC and IE. On March 9, 2001, Grays Harbor entered into a 20 Megawatt (MW) purchase transaction with IPC for the purchase of electric power from October 1, 2001 through March 31, 2002, at a rate of $249 per Megawatt-hour (MWh). In June 2001, with the consent of Grays Harbor, IPC assigned all of its rights and obligations under the contract to IE. In its lawsuit, Grays Harbor alleged that the assignment was void and unenforceable, and sought restitution from IE and IDACORP, or in the alternative, Grays Harbor alleged that the contract should be rescinded or reformed. Grays Harbor sought as damages an amount equal to the difference between $249 per MWh and the "fair value" of electric power delivered by IE during the period October 1, 2001 through March 31, 2002.

IDACORP, IPC and IE had this action removed from the state court to the United States District Court for the Western District of Washington at Tacoma. On November 12, 2002, the companies filed a motion to dismiss Grays Harbor's complaint, asserting that the United States District Court lacked jurisdiction because the FERC has exclusive jurisdiction over wholesale power transactions and thus the matter is preempted under the Federal Power Act (FPA) and barred by the filed-rate doctrine. The court ruled in favor of the companies' motion to dismiss and dismissed the case with prejudice on January 28, 2003. On February 25, 2003, Grays Harbor filed a Notice of Appeal, appealing the final judgment of dismissal to the United States Court of Appeals for the Ninth Circuit. Briefing on the appeal was completed in August 2003. The court heard oral argument on the appeal on June 10, 2004, but has yet to issue a ruling. The companies intend to vigorously defend their position in this proceeding and believe this matter will not have a material adverse effect on their consolidated financial positions, results of operations or cash flows.

Port of Seattle: On May 21, 2003, the Port of Seattle, a Washington municipal corporation, filed a lawsuit against 20 energy firms, including IPC and IDACORP, in the United States District Court for the Western District of Washington at Seattle. The Port of Seattle's complaint alleges fraud and violations of state and federal antitrust laws and the Racketeer Influenced and Corrupt Organizations Act. On December 4, 2003, the Judicial Panel on Multidistrict Litigation transferred the case to the Southern District of California for inclusion with several similar multidistrict actions currently pending before the Honorable Robert H. Whaley.

All defendants, including IPC and IDACORP, moved to dismiss the complaint in lieu of answering it. The motions were based on the ground that the complaint seeks to set alternative electrical rates, which are exclusively within the jurisdiction of the FERC and are barred by the filed-rate doctrine. A hearing on the motion to dismiss was heard on March 26, 2004. On May 28, 2004, the court granted IPC and IDACORP's motion to dismiss. In June 2004, the Port of Seattle appealed the court's decision to the United States Court of Appeals for the Ninth Circuit. The companies intend to vigorously defend their position in this proceeding and believe these matters will not have a material adverse effect on their consolidated financial positions, results of operations or cash flows.

Wah Chang: On May 5, 2004, Wah Chang, a division of TDY Industries, Inc., filed two lawsuits in the United States District Court for the District of Oregon against numerous defendants. IDACORP, IE and IPC are named as defendants in one of the lawsuits. The complaints allege violations of federal antitrust laws, violations of the Racketeer Influenced and Corrupt Organizations Act, violations of Oregon antitrust laws and wrongful interference with contracts. Wah Chang's complaint is based on allegations relating to the western energy situation. These allegations include bid rigging, falsely creating congestion and misrepresenting the source and destination of energy. The plaintiff seeks compensatory damages of $30 million and treble damages.

On May 28, 2004, certain defendants in the Wah Chang actions took steps to have the cases transferred and consolidated with other similar cases currently pending before the Honorable Robert H. Whaley, sitting by designation in the Southern District of California and presiding over Multidistrict Litigation Docket No. 1405, In re California Wholesale Electricity Antitrust Litigation. IDACORP, IE and IPC have not answered the complaint as a response is not yet required. The companies intend to vigorously defend their position in this proceeding and believe this matter will not have a material adverse effect on their consolidated financial positions, results of operations or cash flows.

City of Tacoma: On June 7, 2004, the City of Tacoma, Washington (Tacoma) filed a lawsuit in the United States District Court for the Western District of Washington at Tacoma against numerous defendants including IDACORP, IE and IPC. Tacoma's complaint alleges violations of the Sherman Antitrust Act. The claimed antitrust violations are based on allegations of energy market manipulation, false load scheduling and bid rigging and misrepresentation or withholding of energy supply. The plaintiff seeks compensatory damages of not less than $175 million.

On June 22, 2004, IDACORP, IE and IPC, along with other defendants, took steps to have this case transferred and consolidated with other similar cases currently pending before the Honorable Robert H. Whaley, sitting by designation in the Southern District of California and presiding over Multidistrict Litigation Docket No. 1405, In re California Wholesale Electricity Antitrust Litigation. IDACORP, IE and IPC have not answered the complaint, as a response is not yet required. The companies intend to vigorously defend their position in this proceeding and believe this matter will not have a material adverse effect on their consolidated financial positions, results of operations or cash flows.

State of California Attorney General: The California Attorney General (AG) filed the complaint in this case in the California Superior Court in San Francisco on May 30, 2002. This is one of thirteen virtually identical cases brought by the AG against various sellers of power in the California market, seeking civil penalties pursuant to California's Unfair Competition Law, Business and Professions Code Section 17200. Section 17200 defines unfair competition as any "unlawful, unfair or fraudulent business act or practice . . . .." The AG alleges that IPC engaged in unlawful conduct by violating the FPA in two respects: (1) by failing to file its rates with the FERC and (2) charging unjust and unreasonable rates. The AG alleged that there were "thousands of . . . sales or purchases" for which IPC failed to file its rates, and that IPC charged unjust and unreasonable rates on "thousands of occasions." Pursuant to Business and Professions Code Section 17206, the AG seeks civil penalties of up to $2,500 for each alleged violation. On June 25, 2002, IPC removed the action to federal court, and on July 25, 2002, the AG filed a motion to remand back to state court. On March 25, 2003, the court denied the AG's motion to remand and granted IPC's motion to dismiss the case based upon grounds of federal preemption and the filed-rate doctrine. On March 28, 2003, the AG filed a Notice of Appeal to the United States Court of Appeals for the Ninth Circuit, appealing the court's decision granting IPC's motion to dismiss. Briefing on the appeal was completed in October 2003. The court heard oral argument on the appeal on June 14, 2004, but has yet to issue a ruling. IPC intends to vigorously defend its position in this proceeding and believes this matter will not have a material adverse effect on its consolidated financial position, results of operations or cash flows.

Wholesale Electricity Antitrust Cases I & II: These cross-actions against IE and IPC emerged from multiple California state court proceedings first initiated in late 2000 against various power generators/marketers by various California municipalities and citizens. Suit was filed against entities including Reliant Energy Services, Inc., Reliant Ormond Beach, L.L.C., Reliant Energy Etiwanda, L.L.C., Reliant Energy Ellwood, L.L.C., Reliant Energy Mandalay, L.L.C. and Reliant Energy Coolwater, L.L.C. (collectively, Reliant); and Duke Energy Trading and Marketing, L.L.C., Duke Energy Morro Bay, L.L.C., Duke Energy Moss Landing, L.L.C., Duke Energy South Bay, L.L.C. and Duke Energy Oakland, L.L.C. (collectively, Duke). While varying in some particulars, these cases made a common claim that Reliant, Duke and certain others (not including IE or IPC) colluded to influence the price of electricity in the California wholesale electricity market. Plaintiffs asserted various claims that the defendants violated the California Antitrust Law (the Cartwright Act), Business and Professions Code Section 16720 and California's Unfair Competition Law, Business and Professions Code Section 17200. Among the acts complained of are bid rigging, information exchanges, withholding of power and other wrongful acts. These actions were subsequently consolidated, resulting in the filing of Plaintiffs' Master Complaint (PMC) in San Diego Superior Court on March 8, 2002.

On April 22, 2002, more than a year after the initial complaints had been filed, two of the original defendants, Duke and Reliant, filed separate cross-complaints against IPC and IE, and approximately 30 other cross-defendants. Duke and Reliant's cross-complaints seek indemnity from IPC, IE and the other cross-defendants for an unspecified share of any amounts they must pay in the underlying suits because, they allege, other market participants like IPC and IE engaged in the same conduct at issue in the PMC. Duke and Reliant also seek declaratory relief as to the respective liability and conduct of each of the cross-defendants in the actions alleged in the PMC. Reliant has also asserted a claim against IPC for alleged violations of the California Unfair Competition Law, Business and Professions Code Section 17200. As a buyer of electricity in California, Reliant seeks the same relief from the cross-defendants, including IPC, as that sought by plaintiffs in the PMC as to any power Reliant purchased through the California markets.

Some of the newly added defendants (foreign citizens and federal agencies) removed that litigation to federal court. IPC and IE, together with numerous other defendants added by the cross-complaints, have moved to dismiss these claims, and those motions were heard in September 2002, together with motions to remand the case back to state court filed by the original plaintiffs. On December 13, 2002, the United States District Court granted Plaintiffs' Motion to Remand to state court, but did not issue a ruling on IPC and IE's motion to dismiss. The Ninth Circuit has granted certain Defendants and Cross-Defendants' Motions to Stay the Remand Order while they appeal the order. The briefing on the appeal was completed in December 2003. The court heard oral argument on the remand issue on June 14, 2004, but has yet to issue a ruling. As a result of the various motions, no trial date is set. The companies intend to vigorously defend their position in this proceeding and believe these matters will not have a material adverse effect on their consolidated financial positions, results of operations or cash flows.

Western Energy Proceedings at the FERC:
California Power Exchange Chargeback
As a component of IPC's non-utility energy trading in the State of California, IPC, in January 1999, entered into a participation agreement with the California Power Exchange (CalPX), a California non-profit public benefit corporation. The CalPX, at that time, operated a wholesale electricity market in California by acting as a clearinghouse through which electricity was bought and sold. Pursuant to the participation agreement, IPC could sell power to the CalPX under the terms and conditions of the CalPX Tariff. Under the participation agreement, if a participant in the CalPX exchange defaulted on a payment to the exchange, the other participants were required to pay their allocated share of the default amount to the exchange. The allocated shares were based upon the level of trading activity, which included both power sales and purchases, of each participant during the preceding three-month period.

On January 18, 2001, the CalPX sent IPC an invoice for $2 million - a "default share invoice" - - as a result of an alleged Southern California Edison (SCE) payment default of $215 million for power purchases. IPC made this payment. On January 24, 2001, IPC terminated the participation agreement. On February 8, 2001, the CalPX sent a further invoice for $5 million, due February 20, 2001, as a result of alleged payment defaults by SCE, Pacific Gas and Electric Company (PG&E) and others. However, because the CalPX owed IPC $11 million for power sold to the CalPX in November and December 2000, IPC did not pay the February 8th invoice. The CalPX later reversed IPC's payment of the January 18, 2001 invoice, but on June 20, 2001 invoiced IPC for an additional $2 million which the CalPX has not reversed. The CalPX owes IPC $14 million for power sold in November and December including $2 million associated with the default share invoice dated June 20, 2001. IPC essentially discontinued energy trading with the CalPX and the California Independent System Operator (Cal ISO) in December 2000.

IPC believes that the default invoices were not proper and that IPC owes no further amounts to the CalPX. IPC has pursued all available remedies in its efforts to collect amounts owed to it by the CalPX. On February 20, 2001, IPC filed a petition with the FERC to intervene in a proceeding that requested the FERC to suspend the use of the CalPX chargeback methodology and provide for further oversight in the CalPX's implementation of its default mitigation procedures.

A preliminary injunction was granted by a federal judge in the United States District Court for the Central District of California enjoining the CalPX from declaring any CalPX participant in default under the terms of the CalPX Tariff. On March 9, 2001, the CalPX filed for Chapter 11 protection with the United States Bankruptcy Court, Central District of California.

In April 2001, PG&E filed for bankruptcy. The CalPX and the Cal ISO were among the creditors of PG&E. To the extent that PG&E's bankruptcy filing affects the collectibility of the receivables from the CalPX and the Cal ISO, the receivables from these entities are at greater risk.

The FERC issued an order on April 6, 2001 requiring the CalPX to rescind all chargeback actions related to PG&E's and SCE's liabilities. Shortly after that time, the CalPX segregated the CalPX chargeback amounts it had collected in a separate account. The CalPX claims it is awaiting further orders of the FERC and the bankruptcy court before distributing the funds that it collected under its chargeback tariff mechanism. Although certain parties to the California refund proceeding urged the FERC's Presiding Administrative Law Judge (ALJ) to consider the chargeback amounts in his determination of who owes what to whom, in his Certification of Proposed Findings on California Refund Liability, he concluded that the matter already was pending before the FERC for disposition.

California Refund
In April 2001, the FERC issued an order stating that it was establishing price mitigation for sales in the California wholesale electricity market. Subsequently, in its June 19, 2001 order, the FERC expanded that price mitigation plan to the entire western United States electrically interconnected system. That plan included the potential for orders directing electricity sellers into California since October 2, 2000 to refund portions of their spot market sales prices if the FERC determined that those prices were not just and reasonable, and therefore not in compliance with the FPA. The June 19 order also required all buyers and sellers in the Cal ISO market during the subject time frame to participate in settlement discussions to explore the potential for resolution of these issues without further FERC action. The settlement discussions failed to bring resolution of the refund issue and as a result, the FERC's Chief ALJ submitted a Report and Recommendation to the FERC recommending that the FERC adopt the methodology set forth in the report and set for evidentiary hearing an analysis of the Cal ISO's and the CalPX's spot markets to determine what refunds may be due upon application of that methodology.

On July 25, 2001, the FERC issued an order establishing evidentiary hearing procedures related to the scope and methodology for calculating refunds related to transactions in the spot markets operated by the Cal ISO and the CalPX during the period October 2, 2000 through June 20, 2001.

This case had been complicated by an August 13, 2002 FERC Staff (Staff) Report which included the recommendation to replace the published California indices for gas prices that the FERC previously established as just and reasonable for calculating a Mitigated Market Clearing Price (MMCP) to calculate refunds with other published indices for producing basin prices plus a transportation allowance. The Staff's recommendation is grounded on speculation that some sellers had an incentive to report exaggerated prices to publishers of the indices, resulting in overstated published index prices. The Staff based its speculation in large part on a statistical correlation analysis of Henry Hub and California prices. IE, in conjunction with others, submitted comments on the Staff recommendation - asserting that the Staff's conclusions were incorrect because the Staff's correlation study ignored evidence of normal market forces and scarcity that created the pricing variations that the Staff observed, rather than improper manipulation of reported prices.

The ALJ issued a Certification of Proposed Findings on California Refund Liability on December 12, 2002.

The FERC issued its Order on Proposed Findings on Refund Liability on March 26, 2003. In large part, the FERC affirmed the recommendations of its ALJ. However, the FERC changed a component of the formula the ALJ was to apply when it adopted findings of its staff that published California spot market prices for gas did not reliably reflect the prices a gas market that had not been manipulated would have produced, despite the fact that many gas buyers paid those amounts. The findings of the ALJ, as adjusted by the FERC's March 26, 2003 order, are expected to increase the offsets to amounts still owed by the Cal ISO and the CalPX to the companies. Calculations remain uncertain because the FERC has required the Cal ISO to correct a number of defects in its calculations and because the FERC has stated that if refunds will prevent a seller from recovering its California portfolio costs during the refund period, it will provide an opportunity for a cost showing by such a respondent. As a result, IE is unsure of the impact this ruling will have on the refunds due from California. However, as to potential refunds, if any, IE believes its exposure is likely to be offset by amounts due from California entities.

IE, along with a number of other parties, filed an application with the FERC on April 25, 2003 seeking rehearing of the March 26, 2003 order. On October 16, 2003, the FERC issued two orders denying rehearing of most contentions that had been advanced and directing the Cal ISO to prepare its compliance filing calculating revised MMCPs and refund amounts within five months. The Cal ISO has since requested additional time to complete its compliance filings. By order of February 3, 2004, the FERC granted additional time. In a February 10, 2004 report to the FERC, the Cal ISO asserted its belief that it will complete re-running the data and financial clearing of amounts due by August 2004, subject to a number of events that must occur in the interim, including FERC disposition of a number of pending issues. This Cal ISO compliance filing has since been delayed until at least December 2004. The Cal ISO is required to update the FERC on its progress monthly. After receipt of the compliance filing, the FERC will consider cost-based filings from sellers to reduce their refund exposure.

On December 2, 2003, IE petitioned the Ninth Circuit for review of the FERC's orders, and since that time, dozens of other petitions for review have been filed. The Ninth Circuit has consolidated IE's and the other parties' petitions with the petitions for review arising from earlier FERC orders in this proceeding, bringing the total number of consolidated petitions to more than 80. The Ninth Circuit has held the appeals in abeyance pending the disposition of the market manipulation claims discussed below and the development of a comprehensive plan to brief this complicated case. Certain parties also sought further rehearing and clarification before the FERC. On July 27, 2004, the Ninth Circuit directed that the consolidated cases be subject to case management proceedings, a procedure reserved for complex cases.

On May 12, 2004, the FERC issued an order clarifying portions of its earlier refund orders and, among other things, denying a proposal made by Duke Energy North America and Duke Energy Trading and Marketing (and supported by IE) to lodge as evidence a contested settlement in a separate complaint proceeding, California Public Utilities Commission (CPUC) v. El Paso et al. The CPUC's complaint alleged that the El Paso companies manipulated California energy markets by withholding pipeline transportation capacity into California in order to drive up natural gas prices immediately before and during the California energy crisis in 2000-2001. The settlement will result in the payment by El Paso of some $1.69 billion. Duke claimed that the relief afforded by the settlement was duplicative of the remedies imposed by the FERC in its March 26, 2003 order changing the gas cost component of its refund calculation methodology. IE, along with other parties, has sought rehearing of the May 12, 2004 order. These latter applications remain pending before the FERC.

In June 2001, IPC transferred its non-utility wholesale electricity marketing operations to IE. Effective with this transfer, the outstanding receivables and payables with the CalPX and the Cal ISO were assigned from IPC to IE. At June 30, 2004, with respect to the CalPX chargeback and the California refund proceedings discussed above, the CalPX and the Cal ISO owed $14 million and $30 million, respectively, for energy sales made to them by IPC in November and December 2000. IE has accrued a reserve of $42 million against these receivables. This reserve was calculated taking into account the uncertainty of collection given the California energy situation. Based on the reserve recorded as of June 30, 2004, IDACORP believes that the future collectibility of these receivables or any potential refunds ordered by the FERC would not have a material adverse effect on its consolidated financial position, results of operations or cash flows.

On March 20, 2002, the AG filed a complaint with the FERC against various sellers in the wholesale power market, including IE and IPC, alleging that the FERC's market-based rate requirements violate the FPA, and, even if the market-based rate requirements are valid, that the quarterly transaction reports filed by sellers do not contain the transaction-specific information mandated by the FPA and the FERC. The complaint stated that refunds for amounts charged between market-based rates and cost-based rates should be ordered. The FERC denied the challenge to market-based rates and refused to order refunds, but did require sellers, including IE and IPC, to refile their quarterly reports to include transaction-specific data. The AG appealed the FERC's decision to the United States Court of Appeals for the Ninth Circuit. The AG contends that the failure of all market-based rate authority sellers of power to have rates on file with the FERC in advance of sales is impermissible. The Ninth Circuit heard oral argument on October 9, 2003, but has not yet issued its decision. The companies cannot predict the outcome of this matter.

Market Manipulation
In a November 20, 2002 order, the FERC permitted discovery and the submission of evidence respecting market manipulation by various sellers during the western power crises of 2000 and 2001.

On March 3, 2003, the California Parties (certain investor owned utilities, the California AG, the California Electricity Oversight Board and the CPUC) filed voluminous documentation asserting that a number of wholesale power suppliers, including IE and IPC, had engaged in a variety of forms of conduct that the California Parties contended were impermissible. Although the contentions of the California Parties were contained in more than 11 compact discs of data and testimony, approximately 12,000 pages, IE and IPC were mentioned in limited contexts - the overwhelming majority of the claims of the California Parties related to the conduct of other parties.

The California Parties urged the FERC to apply the precepts of its earlier decision, to replace actual prices charged in every hour starting May 1, 2000 through the beginning of the existing refund period (October 2, 2000) with an MMCP, seeking approximately $8 billion in refunds to the Cal ISO and the CalPX. On March 20, 2003, numerous parties, including IE and IPC, submitted briefs and responsive testimony.

In its March 26, 2003 order, discussed previously, the FERC declined to generically apply its refund determinations across the board to sales by all market participants, although it stated that it reserved the right to provide remedies for the market against parties shown to have engaged in proscribed conduct.

On June 25, 2003, the FERC ordered over 50 entities that participated in the western wholesale power markets between January 1, 2000 and June 20, 2001, including IPC, to show cause why certain trading practices did not constitute gaming or anomalous market behavior in violation of the Cal ISO and the CalPX Tariffs. The Cal ISO was ordered to provide data on each entity's trading practices within 21 days of the order, and each entity was to respond explaining their trading practices within 45 days of receipt of the Cal ISO data. IPC submitted its responses to the show cause orders on September 2 and 4, 2003. On October 16, 2003, IPC reached agreement with the Staff on the two orders commonly referred to as the "gaming" and "partnership" show cause orders. Regarding the gaming order, the Staff determined it had no basis to proceed with allegations of false imports and paper trading and IPC agreed to pay $83,373 to settle allegations of circular scheduling. IPC believed that it had defenses to the circular scheduling allegation but determined that the cost of settlement was less than the cost of litigation. In the settlement, IPC did not admit any wrongdoing or violation of any law. With respect to the "partnership" order, the Staff submitted a motion to the FERC to dismiss the proceeding because materials submitted by IPC demonstrated that IPC did not use the "parking" and "lending" arrangement with Public Service Company of New Mexico to engage in "gaming" or anomalous market behavior ("partnership"). The "gaming" settlement was approved by the FERC on March 3, 2004. Eight parties have requested rehearing of the FERC's March 3, 2004 order, but the FERC has not yet acted on those requests. The motion to dismiss the "partnership" proceeding was approved by the FERC in an order issued January 23, 2004 and rehearing of that order was not sought within the time allowed by statute. Some of the California Parties and other parties have petitioned the Ninth Circuit and the District of Columbia Circuit for review of the FERC's orders initiating the show cause proceedings. Some of the parties contend that the scope of the proceedings initiated by the FERC was too narrow. Other parties contend that the orders initiating the show cause proceedings were impermissible. Under the rules for multidistrict litigation, a lottery was held and, subject to motions by adversely affected parties, these cases are to be considered in the District of Columbia Circuit. The FERC has moved the District of Columbia Circuit to dismiss these petitions on the grounds of prematurity and lack of ripeness and finality. The District of Columbia Circuit has not yet ruled on the FERC's motion and a briefing schedule has not yet been set. The company is not able to predict the outcome of the judicial determination of these issues.

On June 25, 2003, the FERC also issued an order instituting an investigation of anomalous bidding behavior and practices in the western wholesale power markets. In this investigation, the FERC was to review evidence of alleged economic withholding of generation. The FERC has determined that all bids into the CalPX and the Cal ISO markets for more than $250 per MWh for the time period May 1, 2000 through October 1, 2000 will be considered prima facie evidence of economic withholding. The Staff issued data requests in this investigation to over 60 market participants including IPC. IPC responded to the FERC's data requests. In a letter dated May 12, 2004, the FERC's Office of Market Oversight and Investigations advised that it was terminating the investigation as to IPC.

Pacific Northwest Refund
On July 25, 2001, the FERC issued an order establishing another proceeding to explore whether there may have been unjust and unreasonable charges for spot market sales in the Pacific Northwest during the period December 25, 2000 through June 20, 2001. The FERC ALJ submitted recommendations and findings to the FERC on September 24, 2001. The ALJ found that prices should be governed by the Mobile-Sierra standard of the public interest rather than the just and reasonable standard, that the Pacific Northwest spot markets were competitive and that no refunds should be allowed. Procedurally, the ALJ's decision is a recommendation to the commissioners of the FERC. Multiple parties submitted comments to the FERC with respect to the ALJ's recommendations. The ALJ's recommended findings had been pending before the FERC, when at the request of the City of Tacoma and the Port of Seattle on December 19, 2002, the FERC reopened the proceedings to allow the submission of additional evidence related to alleged manipulation of the power market by Enron and others. As was the case in the California refund proceeding, at the conclusion of the discovery period, parties alleging market manipulation were to submit their claims to the FERC and responses were due on March 20, 2003. Grays Harbor, whose civil litigation claims were dismissed, as noted above, intervened in this FERC proceeding, asserting on March 3, 2003 that its six-month forward contract, for which performance has been completed, should be treated as a spot market contract for purposes of the FERC's consideration of refunds and is requesting refunds from IPC of $5 million. Grays Harbor did not suggest that there was any misconduct by IPC or IE. The companies submitted responsive testimony defending vigorously against Grays Harbor's refund claims.

In addition, the Port of Seattle, the City of Tacoma and the City of Seattle made filings with the FERC on March 3, 2003 claiming that because some market participants drove prices up throughout the west through acts of manipulation, prices for contracts throughout the Pacific Northwest market should be re-set starting in May 2000 using the same factors the FERC would use for California markets. Although the majority of the claims of these parties are generic, they named a number of power market suppliers, including IPC and IE, as having used parking services provided by other parties under FERC-approved tariffs and thus as being candidates for claims of improperly having received congestion revenues from the Cal ISO. On June 25, 2003, after having considered oral argument held earlier in the month, the FERC issued its Order Granting Rehearing, Denying Request to Withdraw Complaint and Terminating Proceeding, in which it terminated the proceeding and denied claims that refunds should be paid. The FERC denied rehearing on November 10, 2003, triggering the right to file for review. The Port of Seattle, the City of Tacoma, the City of Seattle, the California AG, the CPUC and Puget Sound Energy Inc. filed petitions for review in the Ninth Circuit within the time permitted. However, during the time when petitions for review were permitted to be filed, the California AG also sought further rehearing before the FERC. The FERC denied the second request for rehearing of the California AG on February 9, 2004 and the California AG then filed for review. These petitions have not yet been consolidated. Grays Harbor did not file a petition for review, although it has sought to intervene in the proceedings initiated by the petitions of others. The FERC has certified the record to the Ninth Circuit, which has established a briefing schedule for the case under which briefing would be completed by January 10, 2005. A date for argument has not yet been set. Accordingly, the FERC's orders remain subject to review by the Ninth Circuit. On July 21, 2004, the City of Seattle submitted to the Ninth Circuit Court of Appeals in the Pacific Northwest refund petition for review a motion requesting leave to offer additional evidence before the FERC in order to try to secure another opportunity for reconsideration by the FERC of its earlier rulings. The evidence that the City of Seattle seeks to introduce before the FERC consists of audio tapes of what purports to be Enron trader conversations containing inflammatory language that have been the subject of recent coverage in the press. Under Section 313(b) of the FPA, a court is empowered to direct the introduction of additional evidence if it is material and could not have been introduced during the underlying proceeding. The City of Seattle also requested that the current briefing schedule, which required briefs to be filed by August 5, 2004, be delayed. Answers to the motions are not due to be filed until August 5, 2004, the same date initial briefs were originally due. On August 2, 2004, the Ninth Circuit Court of Appeals held the briefing schedule in abeyance until resolution of the motion to offer additional evidence. On August 2, 2004 and August 3, 2004, respectively, the FERC and a group of parties, including IE, filed their answers in opposition to the motion to offer additional evidence.

The companies are unable to predict the outcome of these matters.

On July 21, 2004, CAlifornians for Renewable Energy, Inc. (CARE) filed a motion with the FERC in connection with the California Refund proceedings, the Pacific Northwest refund proceedings and the show cause proceedings, both gaming and partnership, including those in which IPC was the respondent. CARE has participated in many of the FERC proceedings dealing with California energy matters, having appointed itself as a representative of low-income communities and other groups that it claims are otherwise not represented. The FERC permitted CARE to participate in the cases as an intervenor. In its current motion, CARE requests that the FERC radically restructure its approach to California and western energy proceedings involving the events of 2000 and 2001 by revoking market-based rate authority from the date of their approvals, replacing market-based rates with cost-of-service rates by requiring refunds back to the date of the orders granting market-based rate authority, revising long-term energy contracts negotiated during 2000 and 2001 (it appears that the contracts that CARE identified do not include any to which IPC is a party), deferring further refund settlements, establishing a direct pass-through refund mechanism for California consumers and having "previously executed settlement agreements rejected." CARE also requested that the FERC revoke market-based rates for those entities identified in the June 25, 2003 show cause orders, which would include IPC. IPC intends to vigorously defend itself in this motion and is unable to predict how the FERC will respond to CARE's motion.

Nevada Power Company: In February and April of 2001, IPC entered into two transactions under the Western Systems Power Pool (WSPP) Agreement whereby IPC agreed to deliver to Nevada Power Company (NPC) 25 MW during the third quarter of 2002. NPC agreed to pay IPC $250 per MWh for heavy load deliveries and $155 per MWh for light load deliveries. IPC assigned the contracts to IE with NPC's consent and the assignment was subsequently approved by the FERC. Based upon the uncertain financial condition of NPC, and pursuant to the terms of the WSPP Agreement, IE requested NPC to provide assurances of its ability to pay for the power if IE made the deliveries. NPC failed to provide appropriate credit assurances; therefore, in accordance with the WSPP Agreement procedures, IE terminated all WSPP Agreement transactions with NPC effective July 8, 2002. Pursuant to the WSPP Agreement, IE notified NPC of the liquidated damages amount and NPC responded with a letter, which described their view of rights under the WSPP Agreement and suggested a negotiated resolution. IE and NPC attempted to mediate a resolution to this dispute, but were initially unsuccessful.

IE filed a complaint against NPC on April 25, 2003, in Idaho State District Court in and for the County of Ada. This complaint was served on NPC on May 14, 2003. IE asked the Idaho State District Court for damages in excess of $9 million pursuant to the contracts. On May 14, 2003, NPC filed a separate action against IPC, IE and IDACORP, seeking declaratory judgment in the United States District Court, District of Nevada, involving the same subject matter as the complaint filed by IE against NPC. NPC has never served IE with the complaint for declaratory judgment filed in the United States District Court in Nevada.

On September 23, 2003, NPC filed and served IE, IPC and IDACORP with a Declaratory Action filed with the Nevada State Court in and for the County of Clark concerning the same subject matter of the pending Idaho State District Court action filed by IE on April 25, 2003. NPC sought declaratory judgment on the following issues: that the assignment of the February and April 2001 energy supply contracts from IPC to IE was void or voidable; that IE did not comply with the WSPP Agreement when requesting reasonable assurances; and that NPC was relieved of its obligations to pay under the contracts by reason of force majeure. IE filed a motion to dismiss NPC's Nevada State Court claims. That motion was heard, and denied, on November 17, 2003. Trial of the Nevada State Court action was scheduled to commence on February 7, 2005.

These actions were dismissed with prejudice on June 28, 2004, incident to the closing of an acquisition by IDACOMM of certain Sierra Pacific Communications fiber-optic networks in Las Vegas, Nevada and Reno, Nevada. Sierra Pacific Communications and NPC are both subsidiaries of Sierra Pacific Resources. IDACORP and Sierra Pacific Resources agreed to use settlement of the NPC and IE litigation as a portion of the consideration in connection with this transaction.

Alves Dairy: On May 18, 2004, Herculano and Frances Alves, dairy operators from Twin Falls, Idaho, brought suit against IPC in Idaho State District Court, Fifth Judicial District, Twin Falls County. The plaintiffs seek unspecified monetary damages for negligence and nuisance (allegedly allowing electrical current to flow in the earth, injuring the plaintiffs' right to use and enjoy their property and adversely affecting their dairy herd). On July 16, 2004, IPC filed an answer to Mr. and Mrs. Alves's complaint, denying all liability to the plaintiffs, and asserting certain affirmative defenses. No trial date has been scheduled.

IPC intends to vigorously defend its position in this proceeding and believes this matter will not have a material adverse effect on its consolidated financial position, results of operations or cash flows.

Shareholder Lawsuits: On May 26, 2004 and June 22, 2004, respectively, two shareholder lawsuits were filed against IDACORP and certain of its directors and officers. The lawsuits, captioned Powell, et al. v. IDACORP, Inc., et al. and Shorthouse, et al. v. IDACORP, Inc., et al., raise largely similar allegations. The lawsuits are putative class actions brought on behalf of purchasers of IDACORP stock between February 1, 2002 and June 4, 2002, and were filed in the United States District Court for the District of Idaho. The named defendants in each suit, in addition to IDACORP, are Jon H. Miller, Jan B. Packwood, J. LaMont Keen and Darrel T. Anderson.

The complaints allege that, during the purported class period, IDACORP and/or certain of its officers and/or directors made materially false and misleading statements or omissions about the company's financial outlook in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5, thereby causing investors to purchase the company's common stock at artificially inflated prices. More specifically, the complaints allege that the company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) the company failed to appreciate the negative impact that lower volatility and reduced pricing spreads in the western wholesale energy market would have on its marketing subsidiary, IE; (2) the company was forced to limit its origination activities to shorter-term transactions due to increasing regulatory uncertainty and continued deterioration of creditworthy counterparties; (3) the company failed to discount for the fact that IPC may not recover from the lingering effects of the prior year's regional drought and (4) as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the company and their earnings projections. The Powell complaint also alleges that the defendants' conduct artificially inflated the price of the company's common stock. The actions seek an unspecified amount of damages, as well as other forms of relief. IDACORP and the other defendants intend to defend themselves vigorously against the allegations. The company cannot, however, predict the outcome of these matters.

Other Legal Issues
Idaho Power Company Transmission Line Rights-of-Way Across Fort Hall Indian Reservation: IPC has multiple transmission lines that cross the Shoshone-Bannock Tribes' (Tribes) Fort Hall Indian Reservation near the City of Pocatello in southeastern Idaho. IPC has been working since 1996 to renew five of the right-of-way permits for the transmission lines, which have stated permit expiration dates between 1996 and 2003. IPC filed applications with the United States Department of the Interior, Bureau of Indian Affairs, to renew the five rights-of-way for 25 years, including payment of the independently appraised value of the rights-of-way to the Tribes (and the Tribal allottees who own portions of the rights-of-way). The Tribes have refused to renew the rights-of-way and have demanded payment of $19 million, including an up-front payment of $4 million with the remainder to be paid over the 25-year term of the permits, or in the alternative $11 million including an up-front payment of $4 million with the remainder paid over the first three years of the permits. These amounts are based on an "opportunity cost" methodology, which calculates the value of the rights-of-way as a percentage of the cost to IPC of relocating the transmission lines off the Reservation. Both parties have discussed potential legal action regarding renewal of the rights-of-way, but no such action has been taken to date. The probable cost of renewing the rights-of-way is difficult to ascertain due to the lack of definitive legal guidelines for the renewals. IPC plans to obtain Idaho Public Utilities Commission (IPUC) approval for the recovery of any renewal payment in its utility rates as a prerequisite to any settlement of the right-of-way renewals with the Tribes.

6. REGULATORY MATTERS:

General Rate Case
Idaho: IPC filed its Idaho general rate case with the IPUC on October 16, 2003. IPC originally requested approximately $86 million annually in additional revenue, an average 17.7 percent increase to base rates. On rebuttal, IPC lowered its overall requested increase to $70 million annually, an average of 14.5 percent. The IPUC conducted formal hearings on the matter from March 29, 2004 through April 5, 2004. The IPUC approved an increase of $25 million in IPC's electric rates, an average of 5.2 percent, in an order issued on May 25, 2004. The rate increase became effective on June 1, 2004.

The IPUC also disallowed several costs in the order, including $12 million annually related to the determination of IPC's income tax expense, $8 million of incentive payments capitalized in prior years and $2 million of capitalized pension expense. On June 15, 2004, IPC filed with the IPUC a petition for reconsideration of these and other items. On July 13, 2004, the IPUC granted this petition in part, agreeing to reconsider issues relating to the determination of IPC's income tax expense and, in light of the IPUC Staff's computational errors, ordering rates increased by approximately $3 million on or before August 1, 2004. IPC recorded an impairment of assets of $10 million in the second quarter related to the disallowed incentive payments and the disallowed capitalized pension expenses. On August 2, 2004, the IPUC notified the parties of record that the IPUC Staff and IPC had begun settlement negotiations on the income tax issue. If a settlement does not occur, the IPUC will hold additional hearings or before September 14, 2004 and rule by October 12, 2004.

In the general rate case order, the IPUC approved higher rates for residential and small-commercial customers during the summer months to encourage conservation. The 12.6 percent higher summer rate applies to use over 300 kilowatt-hours. The IPUC also ordered time-of-use rates to be phased in for industrial customers, asked IPC to submit a proposal for a conservation program for industrial customers and ordered increased low-income weatherization funding of $1 million annually.

In addition, the IPUC noted several other issues to be addressed in separate proceedings and potentially handled in workshops instead of formal hearings. These include: (1) addressing the Expense Adjustment Rate for Growth component of the Power Cost Adjustment (PCA), (2) investigating approaches to removing financial disincentives to IPC for investing in effective energy efficiency and clean distributed generation and (3) investigating various cost of service issues raised in the general rate case, including those associated with load growth. The first two matters are expected to be addressed through workshops beginning in August 2004 and concluding later in 2004. No action has yet been taken on the cost of service investigation. The outcome of these additional issues is unknown at this time.

Oregon: IPC is preparing to file an Oregon general rate case later this year. IPC has met with the Oregon Public Utility Commission (OPUC) Staff and previewed the rate case issue. The overall request will be for approximately $4 million. IPC cannot predict what level of rate relief the OPUC will grant.

Deferred Power Supply Costs
IPC's deferred power supply costs consisted of the following (in thousands of dollars):

		June 30,		December 31,
		2004		2003
Oregon deferral		$	12,906	$	13,620
Idaho PCA current year power supply cost deferrals:
	Deferral for 2004-2005 rate year		-		44,664
	Deferral for 2005-2006 rate year		13,086		-
Idaho PCA true-up awaiting recovery:
	Remaining true-up authorized May 2003		-		13,646
	Remaining true-up authorized May 2004		34,817		-
	Total deferral	$	60,809	$	71,930

Idaho: IPC has a PCA mechanism that provides for annual adjustments to the rates charged to its Idaho retail customers. These adjustments are based on forecasts of net power supply costs (fuel and purchased power less off-system sales) and the true-up of the prior year's forecast. During the year, 90 percent of the difference between the actual and forecasted costs is deferred with interest. The ending balance of this deferral, called the true-up for the current year's portion and the true-up of the true-up for the prior years' portions, is then included in the calculation of the next year's PCA adjustment.

On April 15, 2004, IPC filed its 2004-2005 PCA with the IPUC, with a proposed effective date of June 1, 2004, requesting to collect $71 million above 2004 base rates. On May 25, 2004, the IPUC issued Order No. 29506 approving IPC's filing with an additional instruction for IPC and the IPUC Staff to examine the cost of replacement power attributable to an unplanned outage in the summer of 2003 at one of the two units of the North Valmy Steam Electric Generating Plant and advise the IPUC whether an adjustment to next year's PCA is reasonable. The cost of replacement power due to the Valmy power outage is estimated to be $7 million.

On April 15, 2003, IPC filed its 2003-2004 PCA with the IPUC, and, with a small adjustment to the filing, the rates were approved by the IPUC and became effective on May 16, 2003. As approved, IPC's rates were adjusted to collect $81 million above 1993 base rates.

On April 15, 2002, the IPUC issued Order No. 28992 disallowing recovery of $12 million of lost revenues resulting from the Irrigation Load Reduction Program that was in place in 2001. IPC believes that this IPUC order is inconsistent with Order No. 28699, dated May 25, 2001, that allowed recovery of such costs, and IPC filed a Petition for Reconsideration on May 2, 2002. On August 29, 2002, the IPUC issued Order No. 29103 denying the Petition for Reconsideration. As a result of this order, approximately $12 million was expensed in September 2002. IPC believes it is entitled to recover this amount and argued its position before the Idaho Supreme Court on December 5, 2003. On March 30, 2004, the Supreme Court set aside the IPUC denial of the recovery of lost revenues and remanded the matter to the IPUC to determine the amount of lost revenues to be recovered. The IPUC petitioned for reconsideration on April 20, 2004. On May 27, 2004, the IPUC petition was denied and further commission action is pending. IPC submitted its calculation of lost revenues of $12 million in the earlier IPUC proceeding. IPC expects to recognize benefits from this case in the last half of 2004.

Oregon: IPC is also recovering calendar year 2001 extraordinary power supply costs applicable to the Oregon jurisdiction. In two separate 2001 orders, the OPUC approved rate increases totaling six percent, which was the maximum annual rate of recovery allowed under Oregon state law at that time. These increases were recovering approximately $2 million annually. During the 2003 Oregon legislative session, the maximum annual rate of recovery was raised to ten percent under certain circumstances. IPC requested and received authority to increase the surcharge to ten percent. As a result of the increased recovery rate, which became effective on April 9, 2004, IPC will recover approximately $3 million annually.

7. INDUSTRY SEGMENT INFORMATION:

IDACORP has identified three reportable segments: utility operations, energy marketing and IFS.

The utility operations segment has two primary sources of revenue: the regulated operations of IPC and income from Bridger Coal Company, an unconsolidated joint venture also subject to regulation. IPC's regulated operations include the generation, transmission, distribution, purchase and sale of electricity.

The energy marketing segment reflects the results of IE's electricity and natural gas marketing operations. See Note 8 - Restructuring Costs for a discussion on the wind down of energy marketing.

IFS represents that subsidiary's investments in affordable housing developments and historic rehabilitation projects.

The following table summarizes the segment information for IDACORP's utility operations, energy marketing operations, IFS and the total of all other segments, and reconciles this information to total enterprise amounts (in thousands of dollars):

			Utility		Energy								Consolidated
			Operations		Marketing		IFS		Other		Eliminations		Total
Three months ended
June 30, 2004:
		Revenues	$	206,909	$	(9)	$	-	$	4,972	$	-	$	211,872
		Net income (loss)		7,937		721		4,564		(230)		-		12,992

Total assets at June 30,
	2004		$	2,859,568	$	57,358	$	153,099	$	129,557	$	(92,895)	$	3,106,687

Three months ended
	June 30, 2003:
		Revenues	$	197,628	$	(1,053)	$	-	$	3,701	$	-	$	200,276
		Net income (loss)		11,767		(4,171)		2,572		(11,047)		-		(879)

Total assets at December
	31, 2003:		$	2,820,711	$	50,802	$	141,286	$	158,547	$	(69,620)	$	3,101,726

Six months ended
June 30, 2004:
		Revenues	$	390,512	$	77	$	-	$	9,472	$	-	$	400,061
		Net income (loss)		27,347		580		7,149		(2,425)		-		32,651

Six months ended
	June 30, 2003:
		Revenues	$	401,050	$	2,540	$	-	$	8,614	$	-	$	412,204
		Net income (loss)		25,480		(14,783)		5,042		(19,691)		-		(3,952)

8. RESTRUCTURING COSTS:

IE wound down its power marketing operations, closed its business locations and sold its forward book of electricity trading contracts to Sempra Energy Trading in 2003. As part of the sale of the forward book of electricity trading contracts, IE entered into an Indemnity Agreement with Sempra Energy Trading, guaranteeing the performance of one of the counterparties. The maximum amount payable by IE under the Indemnity Agreement is $20 million. The Indemnity Agreement has been accounted for in accordance with FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" and did not have a material effect on IDACORP's financial statements.

The following table presents the change in accrued restructuring charges during the period (in thousands of dollars):

		Severance		Lease
		and Other		Termination
		Benefits		Costs		Other		Total

Balance at December 31, 2003		$	1,807	$	2,022	$	33	$	3,862
	Amounts reversed		-		-		(33)		(33)
	Amounts paid		(1,171)		(449)		-		(1,620)
Balance at June 30, 2004		$	636	$	1,573	$	-	$	2,209

The remaining involuntary employee termination benefit accrual will be paid out in 2004 and the remaining lease termination accrual will be paid out through 2008. Restructuring accruals are presented as Other Liabilities on the Consolidated Balance Sheets.

9. BENEFIT PLANS

The following table shows the components of net periodic benefit cost for the three months ended June 30 (in thousands of dollars):

						Deferred				Other
		Pension Plan				Compensation Plan				Benefits
		2004		2003		2004		2003		2004		2003
Service cost		$	2,948	$	2,543	$	340	$	303	$	344	$	302
Interest cost			5,109		4,866		578		604		999		1,004
Expected return on plan assets			(6,978)		(5,861)		-		-		(565)		(483)
Amortization of net obligation
	at transition		-		-		153		153		-		-
Amortization of prior service
	cost		193		182		(90)		(86)		(141)		(141)
Amortization of net (gain)/loss			-		-		219		186		-		-
Recognized actuarial loss			-		90		-		-		357		351
Recognized net initial (asset)
	obligation		(66)		(66)		-		-		510		510
Net periodic benefit cost		$	1,206	$	1,754	$	1,200	$	1,160	$	1,504	$	1,543

The following table shows the components of net periodic benefit cost for the six months ended June 30 (in thousands of dollars):

						Deferred				Other
		Pension Plan				Compensation Plan				Benefits
		2004		2003		2004		2003		2004		2003
Service cost		$	5,896	$	5,086	$	680	$	606	$	688	$	604
Interest cost			10,218		9,732		1,156		1,208		1,998		2,008
Expected return on plan assets			(13,956)		(11,722)		-		-		(1,130)		(966)
Amortization of net obligation
	at transition		-		-		306		306		-		-
Amortization of prior service
	cost		386		364		(180)		(172)		(282)		(282)
Amortization of net (gain)/loss			-		-		438		372		-		-
Recognized actuarial loss			-		180		-		-		714		702
Recognized net initial (asset)
	obligation		(132)		(132)		-		-		1,020		1,020
Net periodic benefit cost		$	2,412	$	3,508	$	2,400	$	2,320	$	3,008	$	3,086

As previously disclosed in their consolidated financial statements for the year ended December 31, 2003, IDACORP and IPC do not expect to contribute to their pension plan in 2004. As of June 30, 2004, no contributions have been made.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of IDACORP, Inc.
Boise, Idaho

We have reviewed the accompanying consolidated balance sheet of IDACORP, Inc. and subsidiaries as of June 30, 2004, and the related consolidated statements of operations and of comprehensive income (loss) for the three and six month periods ended June 30, 2004 and 2003 and the consolidated statements of cash flows for the six month periods ended June 30, 2004 and 2003. These interim financial statements are the responsibility of the Corporation's management.

We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of IDACORP, Inc. and subsidiaries as of December 31, 2003, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for the year then ended (not presented herein); and in our report dated February 27, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2003 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

DELOITTE & TOUCHE LLP

Boise, Idaho
August 4, 2004

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Idaho Power Company
Consolidated Statements of Income
(unaudited)

			Three Months Ended
			June 30,
			2004		2003
			(thousands of dollars)
OPERATING REVENUES:
	General business		$	158,305	$	166,613
	Off-system sales			36,809		19,839
	Other revenues			10,579		10,813
		Total operating revenues		205,693		197,265

OPERATING EXPENSES:
	Operation:
		Purchased power		64,766		32,019
		Fuel expense		21,569		23,908
		Power cost adjustment		(1,746)		25,383
		Other		44,985		41,296
	Maintenance			17,303		17,790
	Depreciation			25,271		24,279
	Taxes other than income taxes			5,378		5,251
	Impairment of assets			9,756		-
		Total operating expenses		187,282		169,926

INCOME FROM OPERATIONS				18,411		27,339

OTHER INCOME (EXPENSE):
	Allowance for equity funds used during construction			1,024		642
	Other income			4,573		3,602
	Other expense			(2,518)		(2,431)
		Total other income (expense)		3,079		1,813

INTEREST CHARGES:
	Interest on long-term debt			12,197		13,561
	Other interest			937		1,257
	Allowance for borrowed funds used during construction			(707)		(756)
		Total interest charges		12,427		14,062

INCOME BEFORE INCOME TAXES				9,063		15,090

INCOME TAX EXPENSE				273		2,457

NET INCOME				8,790		12,633

DIVIDENDS ON PREFERRED STOCK				853		866

EARNINGS ON COMMON STOCK			$	7,937	$	11,767

The accompanying notes are an integral part of these statements.

Idaho Power Company
Consolidated Statements of Income
(unaudited)

			Six Months Ended
			June 30,
			2004		2003
			(thousands of dollars)
OPERATING REVENUES:
	General business		$	304,462	$	341,675
	Off-system sales			64,930		38,447
	Other revenues			19,628		20,133
		Total operating revenues		389,020		400,255

OPERATING EXPENSES:
	Operation:
		Purchased power		83,270		45,625
		Fuel expense		49,073		49,446
		Power cost adjustment		10,818		77,230
		Other		84,610		78,087
	Maintenance			31,123		31,374
	Depreciation			50,161		48,413
	Taxes other than income taxes			10,943		10,408
	Impairment of assets			9,756		-
		Total operating expenses		329,754		340,583

INCOME FROM OPERATIONS				59,266		59,672

OTHER INCOME (EXPENSE):
	Allowance for equity funds used during construction			2,026		1,493
	Other income			10,315		9,279
	Other expense			(4,105)		(3,815)
		Total other income (expense)		8,236		6,957

INTEREST CHARGES:
	Interest on long-term debt			24,533		28,053
	Other interest			1,936		2,588
	Allowance for borrowed funds used during construction			(1,462)		(1,576)
		Total interest charges		25,007		29,065

INCOME BEFORE INCOME TAXES				42,495		37,564

INCOME TAX EXPENSE				13,441		10,350

NET INCOME				29,054		27,214

DIVIDENDS ON PREFERRED STOCK				1,707		1,734

EARNINGS ON COMMON STOCK			$	27,347	$	25,480

The accompanying notes are an integral part of these statements.

Idaho Power Company
Consolidated Balance Sheets
(unaudited)

				June 30,		December 31,
				2004		2003
ASSETS				(thousands of dollars)

ELECTRIC PLANT:
	In service (at original cost)			$	3,259,287	$	3,220,228
	Accumulated provision for depreciation				(1,289,868)		(1,239,604)
		In service - Net			1,969,419		1,980,624
	Construction work in progress				129,706		96,086
	Held for future use				2,468		2,438

			Electric plant - Net		2,101,593		2,079,148

INVESTMENTS AND OTHER PROPERTY					53,817		49,739

CURRENT ASSETS:
	Cash and cash equivalents				11,557		4,031
	Receivables:
		Customer			46,388		43,694
		Allowance for uncollectible accounts			(1,662)		(1,466)
		Notes			3,141		3,186
		Employee notes			3,637		3,347
		Related parties			388		1,143
		Other			4,164		4,848
	Accrued unbilled revenues				40,492		30,869
	Materials and supplies (at average cost)				25,760		19,755
	Fuel stock (at average cost)				7,876		6,228
	Prepayments				29,300		26,835
	Regulatory assets				4,226		6,269

			Total current assets		175,267		148,739


DEFERRED DEBITS:
	American Falls and Milner water rights				31,585		31,585
	Company-owned life insurance				35,676		35,624
	Regulatory assets				414,717		427,760
	Employee notes				4,370		4,775
	Other				42,543		43,341

			Total deferred debits		528,891		543,085

	TOTAL			$	2,859,568	$	2,820,711

The accompanying notes are an integral part of these statements.

Idaho Power Company
Consolidated Balance Sheets
(unaudited)

				June 30,		December 31,
				2004		2003
CAPITALIZATION AND LIABILITIES				(thousands of dollars)

CAPITALIZATION:
	Common stock equity:
		Common stock, $2.50 par value (50,000,000 shares
			authorized; 39,150,812 shares outstanding)	$	97,877	$	97,877
		Premium on capital stock			398,245		398,231
		Capital stock expense			(2,710)		(2,686)
		Retained earnings			325,159		320,735
		Accumulated other comprehensive income (loss)			(2,753)		(2,630)

			Total common stock equity		815,818		811,527

	Preferred stock				52,299		52,366

	Long-term debt				930,541		880,868

			Total capitalization		1,798,658		1,744,761

CURRENT LIABILITIES:
	Long-term debt due within one year				78		50,077
	Notes payable				27,000		-
	Accounts payable				47,567		45,529
	Notes and accounts payable to related parties				687		75
	Taxes accrued				58,066		55,383
	Interest accrued				12,457		12,893
	Deferred income taxes				4,226		6,179
	Other				29,579		20,985

			Total current liabilities		179,660		191,121

DEFERRED CREDITS:
	Deferred income taxes				523,717		546,205
	Regulatory liabilities				261,788		258,524
	Other				95,745		80,100

			Total deferred credits		881,250		884,829


COMMITMENTS AND CONTINGENT LIABILITIES

			TOTAL	$	2,859,568	$	2,820,711

The accompanying notes are an integral part of these statements.

Idaho Power Company
Consolidated Statements of Capitalization
(unaudited)

				June 30,				December 31,
				2004		%		2003		%
				(thousands of dollars)
COMMON STOCK EQUITY:
	Common stock			$	97,877			$	97,877
	Premium on capital stock				398,245				398,231
	Capital stock expense				(2,710)				(2,686)
	Retained earnings				325,159				320,735
	Accumulated other comprehensive loss				(2,753)				(2,630)
		Total common stock equity			815,818		45		811,527		47

PREFERRED STOCK:
	4% preferred stock				12,299				12,366
	7.68% Series, serial preferred stock				15,000				15,000
	7.07% Series, serial preferred stock				25,000				25,000
		Total preferred stock			52,299		3		52,366		3

LONG-TERM DEBT:
	First mortgage bonds:
		8 % Series due 2004			-				50,000
		5.83% Series due 2005			60,000				60,000
		7.38% Series due 2007			80,000				80,000
		7.20% Series due 2009			80,000				80,000
		6.60% Series due 2011			120,000				120,000
		4.75% Series due 2012			100,000				100,000
		4.25% Series due 2013			70,000				70,000
		6 % Series due 2032			100,000				100,000
		5.50% Series due 2033			70,000				70,000
		5.50% Series due 2034			50,000				-
			Total first mortgage bonds		730,000				730,000
		Amount due within one year			-				(50,000)
			Net first mortgage bonds		730,000				680,000

	Pollution control revenue bonds:
		Variable Auction Rate Series 2003 due 2024			49,800				49,800
		6.05% Series 1996A due 2026			68,100				68,100
		Variable Rate Series 1996B due 2026			24,200				24,200
		Variable Rate Series 1996C due 2026			24,000				24,000
		Variable Rate Series 2000 due 2027			4,360				4,360
			Total pollution control revenue bonds		170,460				170,460

	REA notes				1,064				1,105
		Amount due within one year			(78)				(77)
			Net REA notes		986				1,028

	American Falls bond guarantee				19,885				19,885

	Milner Dam note guarantee				11,700				11,700

	Unamortized premium/discount - net				(2,490)				(2,205)

			Total long-term debt		930,541		52		880,868		50

TOTAL CAPITALIZATION				$	1,798,658		100	$	1,744,761		100

The accompanying notes are an integral part of these statements.

Idaho Power Company
Consolidated Statements of Cash Flows
(unaudited)

				Six Months Ended
				June 30,
				2004		2003
				(thousands of dollars)
OPERATING ACTIVITIES:
	Net income			$	29,054	$	27,214
	Adjustments to reconcile net income to net cash provided by
		operating activities:
		Allowance for uncollectible accounts			180		(263)
		Depreciation and amortization			55,358		54,717
		Deferred taxes and investment tax credits			(23,247)		(29,101)
		Accrued PCA costs			9,946		75,314
		Impairment of assets			9,756		-
		Change in:
			Receivables and prepayments		(3,131)		17,720
			Accrued unbilled revenue		(9,623)		309
			Materials and supplies and fuel stock		(2,378)		(2,362)
			Accounts payable		2,038		(17,041)
			Taxes receivable/accrued		2,684		(9,942)
			Other current liabilities		7,980		(458)
		Other assets			(1,684)		(1,247)
		Other liabilities			12,062		1,328
			Net cash provided by operating activities		88,995		116,188

INVESTING ACTIVITIES:
	Additions to utility plant				(83,375)		(57,012)
	Note receivable advance to parent				-		(2,302)
	Other assets				(347)		(11)
		Net cash used in investing activities			(83,722)		(59,325)

FINANCING ACTIVITIES:
	Issuance of first mortgage bonds				50,000		140,000
	Retirement of first mortgage bonds				(50,000)		(160,000)
	Retirement of preferred stock				(77)		(831)
	Dividends on common stock				(22,923)		(35,487)
	Dividends on preferred stock				(1,707)		(1,734)
	Increase (decrease) in short-term borrowings				27,000		(1,700)
	Other assets				-		(2,693)
	Other liabilities				(40)		(332)
		Net cash provided by (used in) financing activities			2,253		(62,777)

Net increase (decrease) in cash and cash equivalents					7,526		(5,914)

Cash and cash equivalents at beginning of period					4,031		12,699

Cash and cash equivalents at end of period				$	11,557	$	6,785

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid during the period for:
		Income taxes paid to parent		$	35,131	$	50,090
		Interest (net of amount capitalized)		$	24,248	$	27,864

The accompanying notes are an integral part of these statements.

Idaho Power Company
Consolidated Statements of Comprehensive Income
(unaudited)

				Three Months Ended
				June 30,
				2004		2003
				(thousands of dollars)

NET INCOME				$	8,790	$	12,633

OTHER COMPREHENSIVE INCOME (LOSS):
	Unrealized gains (losses) on securities:
		Unrealized holding gains (losses) arising during the period,
			net of tax of ($65) and $1,788		(145)		3,001
		Reclassification adjustment for (gains) losses included
			in net income, net of tax of ($218) and $19		(339)		30
			Net unrealized gains (losses)		(484)		3,031

TOTAL COMPREHENSIVE INCOME				$	8,306	$	15,664

				Six Months Ended
				June 30,
				2004		2003
				(thousands of dollars)

NET INCOME				$	29,054	$	27,214

OTHER COMPREHENSIVE INCOME (LOSS):
	Unrealized gains (losses) on securities:
		Unrealized holding gains arising during the period,
			net of tax of $284 and $996		471		1,667
		Reclassification adjustment for (gains) losses included
			in net income, net of tax of ($381) and $230		(594)		359
			Net unrealized gains (losses)		(123)		2,026

TOTAL COMPREHENSIVE INCOME				$	28,931	$	29,240

The accompanying notes are an integral part of these statements.

IDAHO POWER COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The outstanding shares of IPC's common stock were exchanged on a share-for-share basis into common stock of IDACORP on October 1, 1998 and are no longer actively traded. IPC's preferred stock and debt securities were unaffected.

Except as modified below, the Notes to the Consolidated Financial Statements of IDACORP included in this Quarterly Report on Form 10-Q are incorporated herein by reference insofar as they relate to IPC.

Note 1 - Summary of Significant Accounting Policies
Note 3 - Capital Stock
Note 4 - Financing
Note 5 - Commitments and Contingent Liabilities
Note 6 - Regulatory Matters
Note 9 - Benefit Plans

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Stock-Based Compensation
The following table illustrates the effect on net income if the fair value recognition provisions of SFAS 123 had been applied to stock-based employee compensation (in thousands of dollars):

			Three Months Ended				Six Months Ended
			June 30,				June 30,
			2004		2003		2004		2003

Net income, as reported			$	8,790	$	12,633	$	29,054	$	27,214
Add: Stock-based employee compensation
	expense included in reported net income,
	net of related tax effects			87		62		183		54
Deduct: Total stock-based employee
	compensation expense determined under
	fair value based method for all awards, net
	of related tax effects			279		318		543		476
		Pro forma net income	$	8,598	$	12,377	$	28,694	$	26,792

2. INCOME TAXES:

IPC uses an estimated annual effective tax rate for computing its provision for income taxes on an interim basis. IPC's effective tax rate for the six months ended June 30, 2004 was 31.6 percent, compared with an effective tax rate of 27.6 percent for the six months ended June 30, 2003. The increase in the 2004 estimated tax rate is due primarily to the favorable settlement of a prior year tax issue in the first half of 2003, increased pre-tax book income and timing of regulatory flow-through tax adjustments.

4. FINANCING:

IPC's $49.8 million Humboldt County Pollution Control Revenue bonds are secured by first mortgage bonds, bringing the total first mortgage bonds outstanding at June 30, 2004 to $779.8 million.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of Idaho Power Company
Boise, Idaho

We have reviewed the accompanying consolidated balance sheet and statement of capitalization of Idaho Power Company and its subsidiary as of June 30, 2004, and the related consolidated statements of income and of comprehensive income for the three and six month periods ended June 30, 2004 and 2003 and the consolidated statements of cash flows for the six month periods ended June 30, 2004 and 2003. These interim financial statements are the responsibility of the Corporation's management.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet and statement of capitalization of Idaho Power Company and its subsidiary as of December 31, 2003, and the related consolidated statements of income, comprehensive income, retained earnings and cash flows for the year then ended (not presented herein); and in our report dated February 27, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet and statement of capitalization as of December 31, 2003 is fairly stated, in all material respects, in relation to the consolidated balance sheet and statement of capitalization from which it has been derived.

DELOITTE & TOUCHE LLP

Boise, Idaho
August 4, 2004

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollar amounts are in thousands unless otherwise indicated. Megawatt-hours (MWh) are in thousands.)

INTRODUCTION:

In Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A), the general financial condition and results of operations for IDACORP, Inc. and its subsidiaries (collectively, IDACORP) and Idaho Power Company and its subsidiary (collectively, IPC) are discussed. IDACORP is a holding company formed in 1998 as the parent of IPC and several other entities.

IPC is an electric utility with a service territory covering over 20,000 square miles, primarily in southern Idaho and eastern Oregon. IPC is the parent of Idaho Energy Resources Co., a joint venturer in Bridger Coal Company, which supplies coal to the Jim Bridger generating plant owned in part by IPC.

IDACORP's other operating subsidiaries include:

IdaTech - developer of integrated fuel cell systems;

IDACORP Financial Services, Inc. (IFS) - affordable housing and other real estate investments;

Velocitus - commercial and residential Internet service provider;

IDACOMM - provider of telecommunications services;

Ida-West Energy (Ida-West) - operator of independent power projects; and

IDACORP Energy (IE) - marketer of electricity and natural gas.

IE wound down its operations during 2003. Also in 2003, Ida-West discontinued its project development operations and is managing its independent power projects with a reduced workforce. See further discussions in "RESULTS OF OPERATIONS - Energy Marketing" and "OTHER MATTERS - Ida-West" later in the MD&A.

This MD&A should be read in conjunction with the accompanying consolidated financial statements. This discussion updates the MD&A included in the Annual Report on Form 10-K for the year ended December 31, 2003 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and should be read in conjunction with the discussions in those reports.

FORWARD-LOOKING INFORMATION:

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), IDACORP and IPC are hereby filing cautionary statements identifying important factors that could cause actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of IDACORP or IPC in this Quarterly Report on Form 10-Q, in presentations, in response to questions or otherwise. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "will likely result," "will continue" or similar expressions) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties and are qualified in their entirety by reference to, and are accompanied by, the following important factors, which are difficult to predict, contain uncertainties, are beyond our control and may cause actual results to differ materially from those contained in forward-looking statements:

Changes in governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission (FERC), the Idaho Public Utilities Commission (IPUC) and the Oregon Public Utility Commission (OPUC), with respect to allowed rates of return, industry and rate structure, acquisition and disposal of assets and facilities, operation and construction of plant facilities, relicensing of hydroelectric projects, recovery of purchased power, recovery of other capital investments, present or prospective wholesale and retail competition (including but not limited to retail wheeling and transmission costs) and other refund proceedings;

Litigation and regulatory proceedings resulting from the energy situation in the western United States;

Economic, geographic and political factors and risks;

Changes in and compliance with environmental, endangered species and safety laws and policies;

Weather variations affecting hydroelectric generating conditions and customer energy usage;

Operating performance of plants and other facilities;

System conditions and operating costs;

Population growth rates and demographic patterns;

Pricing and transportation of commodities;

Market demand and prices for energy, including structural market changes;

Changes in capacity, fuel availability and prices;

Changes in tax rates or policies, interest rates or rates of inflation;

Changes in actuarial assumptions;

Adoption of or changes in critical accounting policies or estimates;

Exposure to operational, market and credit risk;

Changes in operating expenses and capital expenditures;

Capital market conditions;

Rating actions by Moody's Investors Service (Moody's), Standard & Poor's Ratings Services (S&P) and Fitch, Inc. (Fitch);

Competition for new energy development opportunities;

Results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general economic conditions;

Natural disasters, acts of war or terrorism;

Increasing health care costs and the resulting effect on health insurance premiums paid for employees;

Increasing costs of insurance, changes in coverage terms and the ability to obtain insurance;

Technological developments that could affect the operations and prospects of our subsidiaries or their competitors;

Legal and administrative proceedings, whether civil or criminal, and settlements that influence business and profitability; and

New accounting or Securities and Exchange Commission requirements, or new interpretation or application of existing requirements.

Any forward-looking statement speaks only as of the date on which such statement is made. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

RISK FACTORS:

The following are important factors that could have a significant impact on the operations and financial results of IDACORP, Inc. and Idaho Power Company and could cause actual results or outcomes to differ materially from those discussed in any forward-looking statements:

Reduced hydroelectric generation can significantly affect operating results. Idaho Power Company has a predominately hydroelectric generating base. Because of Idaho Power Company's heavy reliance on hydroelectric generation, the weather can significantly affect Idaho Power Company's operations. Idaho Power Company is experiencing its fifth consecutive year of below normal water conditions. When hydroelectric generation is reduced, Idaho Power Company must increase its use of more expensive thermal generating resources and purchased power. Through its power cost adjustment in Idaho, Idaho Power Company can expect to recover approximately 90 percent of the increase in its Idaho jurisdictional net power supply costs, which are fuel and purchased power less off-system sales, above the level included in its base rates. The power cost adjustment recovery includes both a forecast and deferrals that are subject to the regulatory process. The non-Idaho power supply costs, which are fuel and purchased power less off-system sales, are subject to periodic recovery from its Oregon and Federal Energy Regulatory Commission jurisdictional customers.

Changes in temperature can reduce power sales and affect operating results. Warmer than normal winters or cooler than normal summers will reduce retail revenues from power sales.

The Idaho Public Utilities Commission's grant of less rate relief than requested will negatively affect Idaho Power Company's earnings and cash flows. Idaho Power Company filed its general rate case in October 2003, requesting the Idaho Public Utilities Commission to approve an increase in its annual revenues of $86 million, or 17.7 percent. In its rebuttal testimony filed in March 2004, Idaho Power Company reduced that request to approximately $70 million, an average of 14.5 percent. The Idaho Public Utilities Commission approved an increase of $25 million in Idaho Power Company's electric rates, an average of 5.2 percent, in an order issued on May 25, 2004. On June 15, 2004, Idaho Power Company filed with the Idaho Public Utilities Commission a petition for reconsideration of portions of the order. On July 13, 2004, the Idaho Public Utilities Commission granted this petition in part, agreeing to reconsider issues relating to the determination of Idaho Power Company's income tax expense and, in light of the IPUC Staff's computational errors, ordering rates increased by approximately $3 million on or before August 1, 2004. The income tax issue is valued at $12 million annually. Because the Idaho Public Utilities Commission did not grant the full amount of rate relief requested, Idaho Power Company's earnings for the second quarter were negatively affected. Its future earnings and cash flows will also be negatively impacted and its credit ratings may be downgraded.

A downgrade in IDACORP, Inc. and Idaho Power Company's credit ratings could negatively affect the companies' ability to access capital. During the quarter ended June 30, 2004, Moody's Investors Service, Standard & Poor's Ratings Services and Fitch, Inc. placed certain of IDACORP, Inc. and Idaho Power Company's ratings under review for possible downgrade. If the ratings agencies were to downgrade any credit ratings of IDACORP, Inc. or Idaho Power Company, the companies' ability to access the capital markets, including the commercial paper markets, could be hindered. In addition, IDACORP, Inc. and Idaho Power Company would likely be required to pay a higher interest rate on existing variable rate debt and in future financings.

Conditions that may be imposed in connection with hydroelectric license renewals may negatively affect earnings. Idaho Power Company is currently involved in renewing federal licenses for several of its hydroelectric projects. On July 28, 2004, the Federal Energy Regulatory Commission issued new licenses for Idaho Power Company's five middle Snake River region hydroelectric plants. In addition, Idaho Power Company filed its license application on July 18, 2003 for the Hells Canyon Complex, which provides 40 percent of Idaho Power Company's total generating capacity. Conditions with respect to environmental, operating and other matters that the Federal Energy Regulatory Commission may impose in connection with the renewal of these licenses could have a negative effect on Idaho Power Company's operations and earnings.

The cost of complying with environmental regulations can significantly affect operating results. IDACORP, Inc. and Idaho Power Company are subject to extensive federal, state and local environmental statutes, rules and regulations relating to air quality, water quality, natural resources and health and safety. Compliance with these environmental statutes, rules and regulations involves significant capital, operating and other costs, and those costs could be even more significant in the future as a result of changes in legislation and enforcement policies and additional requirements imposed in connection with the relicensing of Idaho Power Company's hydroelectric projects.

Terrorist threats and activities can significantly affect operating results. IDACORP, Inc. and Idaho Power Company are subject to direct and indirect effects of terrorist threats and activities. Potential targets include generation and transmission facilities. The effects of terrorist threats and activities could prevent Idaho Power Company from purchasing, generating or transmitting power and result in lost revenues and increased costs.

IDACORP, Inc., IDACORP Energy and Idaho Power Company are subject to costs and other effects of legal and regulatory proceedings, settlements, investigations and claims, including those that have arisen out of the western energy situation. IDACORP, Inc., IDACORP Energy and Idaho Power Company are involved in a number of proceedings including a complaint filed against sellers of power in California, based on California's unfair competition law, a cross-action wholesale electric antitrust case against various sellers and generators of power in California and the California refund proceeding at the Federal Energy Regulatory Commission. Other cases that are the direct or indirect result of the western energy situation include a refund proceeding affecting sellers of wholesale power in the spot market in the Pacific Northwest, in which the Federal Energy Regulatory Commission directed that no refunds be paid, but which is now pending on appeal before the United States Court of Appeals for the Ninth Circuit; efforts by certain public parties to reform or terminate contracts for the purchase of power from IDACORP Energy; show cause proceedings at the Federal Energy Regulatory Commission, which have been settled but are the subject of motions for rehearing or have been appealed and efforts by the California Attorney General to secure a reversal from the United States Court of Appeals for the Ninth Circuit of Federal Energy Regulatory Commission rulings that market-based sellers' transactional reports satisfy the Federal Energy Regulatory Commission's filed-rate doctrine requirements as a means of expanding refunds from all sellers of wholesale power. To the extent the companies are required to make payments, earnings will be negatively affected. It is possible that additional proceedings related to the western energy situation may be filed in the future against IDACORP, Inc., IDACORP Energy or Idaho Power Company.

Pending shareholder litigation could be costly, time consuming and, if adversely decided, could result in substantial liabilities. Two securities shareholder lawsuits have recently been filed against IDACORP, Inc. and certain of its officers and directors. Securities litigation can be costly, time-consuming and disruptive to normal business operations. Certain costs below a self-insured retention are not covered by insurance policies. While IDACORP, Inc. cannot predict the outcome of these matters and these matters will take time to resolve, damages arising from these lawsuits if resolved against IDACORP, Inc. or in connection with any settlement, absent insurance coverage or damages in excess of insurance coverage, could have a material adverse effect on the financial position, results of operations or cash flows of IDACORP, Inc.

Litigation relating to stray voltage, if adversely decided, could result in liabilities, reducing earnings, and encourage the commencement of additional lawsuits. In three instances, dairy farmers have brought actions against Idaho Power Company claiming loss of milk production and other damages to livestock due to stray voltage from Idaho Power Company's electrical system. In the first proceeding, the jury ruled in Idaho Power Company's favor. In the most recent proceeding, a jury verdict was entered in favor of the plaintiffs, awarding approximately $7 million in compensatory damages and $10 million in punitive damages. Idaho Power Company has appealed this decision. Adverse court rulings in these proceedings could increase the number of future claims. The costs of defending these lawsuits could be significant, and certain costs, such as those below a deductible amount, are not covered by insurance policies.

Increased capital expenditures can significantly affect liquidity. Increases in both the number of customers and the demand for energy require expansion and reinforcement of transmission, distribution and generating systems. Because the Idaho Public Utilities Commission did not grant the full amount of rate relief Idaho Power Company requested, Idaho Power Company will have to rely more on external debt financing for its planned utility construction expenditures in the 2004 through 2006 period; these large planned expenditures may weaken the consolidated financial profile of Idaho Power Company and IDACORP, Inc. Additionally, a significant portion of Idaho Power Company's facilities was constructed many years ago. Aging equipment, even if maintained in accordance with good engineering practices, may require significant capital expenditures. Failure of equipment or facilities used in Idaho Power Company's systems could potentially increase repair and maintenance expenses, purchased power expenses and capital expenditures.

SUMMARY OF SECOND QUARTER 2004 AND OUTLOOK:

This section presents an overview of what management believes are the most critical issues that IDACORP and IPC are facing and the significant items that affected IDACORP's and IPC's second quarter 2004 operating results.

Financial Results
IDACORP's basic and diluted earnings per share (EPS) for the quarter of $0.34 was a $0.36 per share increase over 2003's second quarter $0.02 per share loss. Several key factors impacted 2004's second quarter results:

IPC earned $0.21 per share during the three months ended June 30, 2004, a $0.10 per share decrease from the second quarter last year. EPS decreased primarily due to $10 million of asset impairments related to capitalized items disallowed in IPC's Idaho general rate case. IPC's future operating results are largely dependent upon weather conditions, hydroelectric generating conditions and decisions made by the IPUC regarding base rates and the annual Power Cost Adjustment (PCA).

IE: During the second quarter, IE settled litigation with Nevada Power Company (NPC) and Pacific Gas and Electric Company (PG&E) resulting in a $0.02 per share contribution to EPS. IE's 2003 second quarter loss of $0.11 per share was attributable to its wind down. IE will continue to pay its remaining involuntary employee termination benefit accrual through 2004 and its remaining lease termination accrual through 2008. IE's future results are dependent upon the resolution of legal issues relating to the western energy situation, the outcome of which cannot be predicted.

IFS contributed $0.12 per share for the quarter, principally from the generation of federal income tax credits and tax depreciation benefits as well as a gain on the sale of its investment in the El Cortez Hotel in San Diego, California. In June 2000, IFS invested $4 million to assist in the renovation of the historic El Cortez into upscale apartment units. Upon exiting the investment on April 22, 2004, IFS recognized a gain on sale of $5 million, income taxes of $3 million and a net gain of $2 million. The gain is included in Other Income on IDACORP's Consolidated Statements of Operations. IFS is expected to continue generating tax benefits at current levels.

Ida-West: In June 2004, Ida-West purchased from a third party $18 million of debt issued by Marysville Hydro Partners, a 50-percent-owned, consolidated joint venture, for $11 million. A gain on extinguishment of debt of approximately $7 million is reported in Other Income on IDACORP's Consolidated Statements of Operations. The amount of gain attributable to the 50-percent minority interest is reported in Other Expenses on IDACORP's Consolidated Statements of Operations.

Other: The holding company and its other subsidiaries had a loss of $0.07 per share for the three months ended June 30, 2004 compared to a loss of $0.30 per share in the second quarter last year. The decreased loss is due primarily to the intra-period allocation of tax benefits for the second quarter of 2003 to later quarters in 2003.

IPUC Matters
General Rate Case: IPC filed its Idaho general rate case with the IPUC on October 16, 2003. The IPUC approved an increase of $25 million in IPC's electric rates, an average of 5.2 percent, in an order issued on May 25, 2004. The rate increase became effective on June 1, 2004.

The IPUC also disallowed several costs in the order, including $12 million annually related to the determination of IPC's income tax expense, $8 million of incentive payments capitalized in prior years and $2 million of capitalized pension expense. On June 15, 2004, IPC filed with the IPUC a petition for reconsideration of these and other items. On July 13, 2004, the IPUC granted this petition in part, agreeing to reconsider issues relating to the determination of IPC's income tax expense and, in light of the IPUC Staff's computational errors, ordering rates increased by approximately $3 million on or before August 1, 2004. IPC recorded an impairment of assets of $10 million in the second quarter related to the disallowed incentive payments and the disallowed capitalized pension expenses. On August 2, 2004, the IPUC notified the parties of record that the IPUC Staff and IPC had begun settlement negotiations on the income tax issue. If a settlement does not occur, the IPUC will hold additional hearings on or before September 14, 2004 and rule by October 12, 2004.

Because the IPUC did not grant the full amount of the rate relief requested, IPC's earnings were negatively affected for the second quarter, its future earnings and cash flows will be negatively impacted and its credit ratings may be downgraded. IPC is exploring possible ways to reduce its 2005 through 2006 operations and maintenance expense budget and is examining its construction program for 2005 through 2006 for possible deferrals and reprioritization. IPC modified its 2004 salary adjustments, is currently operating with a number of open positions in its workforce and is limiting discretionary expenses such as outside services, training and travel.

PCA: IPC filed its 2004-2005 PCA with the IPUC on April 15, 2004. IPC's request to collect $71 million above 2004 base rates was granted on May 25, 2004 and was implemented on June 1, 2004.

Irrigation Lost Revenues: IPC filed a Petition for Reconsideration with the IPUC in May 2002 regarding the disallowance of $12 million of lost revenues from the Irrigation Load Reduction Program. The IPUC denied this petition in August 2002 and IPC argued its position before the Idaho Supreme Court in December 2003. On March 30, 2004, the Idaho Supreme Court set aside the IPUC denial and remanded the matter to the IPUC to determine the amount of lost revenues to be recovered. The IPUC petitioned the Supreme Court for reconsideration on April 20, 2004. The IPUC petition was denied and further commission action is pending. IPC submitted its calculation of lost revenues of $12 million in the earlier IPUC proceeding. IPC expects to recognize benefits from this case in the last half of 2004.

Relicensing
IPC is actively pursuing the relicensing of several of its hydroelectric projects. On July 28, 2004, the FERC announced that it had granted new 30-year licenses for each of IPC's five hydroelectric projects on the middle Snake River.

The most significant ongoing relicensing effort is the Hells Canyon Complex (HCC), which provides approximately two-thirds of IPC's hydroelectric generating capacity and 40 percent of its total generating capacity. The current license expires in July 2005 and IPC filed the relicensing application in July 2003.

The FERC received a number of additional study requests (ASRs) from intervenors in the HCC relicensing process and on May 4, 2004 issued additional information requests (AIRs) to IPC. On June 8, 2004, IPC filed a letter with the FERC objecting to certain of the AIRs and also requesting clarification, modification or extensions of time as to others. On June 29, 2004, the FERC Staff denied IPC's objections to the AIRs but did grant extensions of time and provide clarification for certain AIRs. On July 29, 2004, IPC filed a petition for rehearing with the FERC contesting the staff's decision denying IPC's objections to the AIRs.

Hydroelectric Generation and Power Supply Costs
IPC relies on low-cost hydroelectric generation for a significant portion of its power supply. Because below normal hydroelectric generating conditions are continuing for the fifth consecutive year, IPC must increase its reliance on higher-cost thermal generation and purchased power. This year's dry spring weather conditions caused purchased power expense to more than double for the second quarter of 2004. IPC expects power supply costs to continue to increase as below normal water conditions persist.

Capital Requirements
IDACORP expects internal cash generation after dividends will provide less than the full amount of total capital requirements for 2004 through 2006. Current forecasts indicate total utility construction expenditures to be $643 million, excluding Allowance for Funds Used During Construction (AFDC), for 2004 through 2006. As a result of the IPUC granting less than IPC's request in the general rate case, IPC is considering alternative strategies such as the filing of another rate request with the IPUC, deferral or reprioritization of certain capital expenditures for 2005 through 2006 and other cost containment measures. IDACORP and IPC expect to continue financing the utility construction program and other capital requirements with internally generated funds and with increased reliance on externally financed capital.

In connection with IPC's 2002 Integrated Resource Plan (IRP) and the identification of the need for additional resources, the 162-megawatt (MW) gas-fired Bennett Mountain Power Plant is currently under construction. As of June 30, 2004, $15 million of construction costs were included in Construction Work in Progress. Total construction costs of the plant are expected to be $61 million.

IPC is currently developing its 2004 IRP, which is due to be filed with the IPUC and OPUC by August 31, 2004. The current draft IRP includes several elements that may require significant capital expenditures in the future.

Legal Issues and Regulatory Matters

Vierstra Dairy: In February 2004, Vierstra Dairy was awarded approximately $17 million in damages for the alleged effect of electrical current on the health of Vierstra's dairy cows. In March 2004, IPC filed motions for new trial and judgment notwithstanding the verdict. These motions were denied on June 7, 2004. IPC filed its notice of appeal of this decision with the Idaho Supreme Court on July 13, 2004, with an amended notice filed on July 15, 2004. IPC is unable to predict the outcome of this matter; however, based upon the information provided to date, IPC's insurance carrier has confirmed coverage. IPC has previously expensed the full amount of its self-insured retention.

Western Energy Proceedings: IE and IPC are involved in a number of FERC proceedings in connection with the western energy situation and claims that dysfunctions in the organized California markets contributed to or caused unjust and unreasonable prices in Pacific Northwest spot markets, and may have been the result of manipulations of gas or electric power markets. They include proceedings involving (1) the chargeback provisions of the California Power Exchange (CalPX) participation agreement triggered by a participant's default on a payment to the CalPX; (2) efforts by the State of California to obtain refunds for a portion of the spot market sales prices from sellers of electricity into California from October 2, 2000 through June 20, 2001; (3) the Pacific Northwest refund proceedings where it was alleged that the spot market in the Pacific Northwest was affected by the dysfunction in the California market and (4) two cases that result from a ruling of the United States Court of Appeals for the Ninth Circuit that the FERC permit the California parties in the California refund proceeding to submit materials to the FERC demonstrating market manipulation by various sellers of electricity into California.

Credit Rating Agency Actions
During the quarter ended June 30, 2004, Moody's, S&P and Fitch placed certain of IDACORP's and IPC's ratings under review for possible downgrade. If the rating agencies were to downgrade any credit ratings of IDACORP or IPC, the companies' ability to access the capital markets, including the commercial paper markets, could be hindered. In addition, IDACORP and IPC would likely be required to pay a higher interest rate on existing variable interest rate debt and in future financings. The rating agencies' stated reasons for the actions were the IPUC's general rate case order, potentially higher external fundings for IPC's estimated capital expenditures over the next three years and the fifth year of drought conditions and resulting higher costs of power supply.

Strategy
IDACORP continues to focus on a strategy called "Electricity Plus," a back-to-basics strategy that emphasizes IPC as IDACORP's core business. IPC continues to experience strong customer growth in its service area and this revised corporate strategy recognizes that IPC must make substantial investments in infrastructure to ensure adequate supply and reliable service. The "Plus" recognizes that through modest investments in IdaTech and IDACOMM, IDACORP can preserve the potential for additional growth in shareowner value. IFS, with its affordable housing and historic rehabilitation portfolio, remains a key component of the revised corporate strategy.

CRITICAL ACCOUNTING POLICIES:

IDACORP's and IPC's discussion and analysis of their financial condition and results of operations are based upon their consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these financial statements requires IDACORP and IPC to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, IDACORP and IPC evaluate these estimates, including those related to rate regulation, benefit costs, contingencies, litigation, impairment of assets, income taxes, restructuring costs and bad debt. These estimates are based on historical experience and on various other assumptions and factors that are believed to be reasonable under the circumstances, and are the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. IDACORP and IPC, based on their ongoing reviews, make adjustments when facts and circumstances dictate.

IDACORP's and IPC's critical accounting policies are discussed in more detail in the Annual Report on Form 10-K for the year ended December 31, 2003. IDACORP's and IPC's critical accounting policies have not changed materially from the discussions included in the 2003 Annual Report on Form 10-K.

RESULTS OF OPERATIONS:

This section of the MD&A takes a closer look at the significant factors that affected IDACORP's and IPC's earnings during the three and six months ended June 30, 2004 and 2003. In this analysis, the results of 2004 are compared to 2003. The analysis is organized by IDACORP's reportable segments, which are Utility Operations, Energy Marketing and IFS. The following table presents EPS for each reportable segment as well as for the holding company and its other subsidiaries combined for the three and six months ended June 30:

EPS of common stock	Three months ended				Six months ended
	June 30,				June 30,
	2004		2003		2004		2003
Utility operations	$	0.21	$	0.31	$	0.72	$	0.67
Energy marketing		0.02		(0.11)		0.02		(0.39)
IFS		0.12		0.07		0.19		0.13
Other		(0.01)		(0.29)		(0.08)		(0.51)
Total EPS	$	0.34	$	(0.02)	$	0.85	$	(0.10)

Utility Operations
This section discusses IPC's utility operations, which are subject to regulation by, among others, the state public utility commissions of Idaho and Oregon and by the FERC.

The decrease in EPS from utility operations during the second quarter of 2004 was primarily the result of recording asset impairments of $10 million related to capitalized items disallowed in IPC's Idaho general rate case. These impairments were partially offset by a $3 million increase in revenues due to customer growth. Also, contributing to the year-to-date results were increased sales due to colder temperatures in January and February.

Generation: IPC relies on its hydroelectric plants for a significant portion of its power supply. The availability of hydroelectric generation can significantly affect the amount IPC incurs for net power supply costs (fuel and purchased power less off-system sales). Most, but not all, of the power supply costs are recovered through the rates charged to customers. Generally, lower hydroelectric generation increases power supply costs, thereby increasing the amount of these costs that IPC absorbs.

IPC's system is dual peaking, with the larger peak demand generally occurring in the summer. IPC's record system peak of 2,963 MW occurred on July 12, 2002. Peak demand so far in 2004 was 2,843 MW on June 24, 2004. IPC was able to meet system load requirements and off-system sales requirements and had sufficient system reserves in place.

On June 23, 2004, two downed transmission lines in the Hells Canyon area caused IPC to shed 157 MW of electrical load and declare a Stage Three Power Emergency. The Stage Three Emergency lasted approximately 90 minutes and IPC employed all of its available generation resources during this time and purchased power from the wholesale markets. IPC shed 100 MW for the entire 90 minutes and an additional 57 MW for 30 of the 90 minutes. This occurrence did not have a significant impact on IPC's second quarter financial results.

The following table presents IPC's system generation for the three and six months ended June 30:

		Three months ended June 30,				Six months ended June 30,
				% of Total				% of Total
		MWh		Generation		MWh		Generation
		2004	2003	2004	2003	2004	2003	2004	2003
Hydroelectric		1,619	1,953	52%	57%	3,370	3,525	50%	52%
Thermal		1,497	1,481	48%	43%	3,409	3,311	50%	48%
	Total system generation	3,116	3,434	100%	100%	6,779	6,836	100%	100%

Streamflow conditions have remained below average in 2004. April through July inflow into Brownlee Reservoir was 3.2 million acre-feet (maf). The thirty-year average April through July Brownlee inflow reported by the Northwest River Forecast Center is 6.3 maf. The actual 2004 volume is approximately 50 percent of the thirty-year average, making this the fifth consecutive year of below average inflow. Streamflows are forecasted to remain below average through at least September 2004.

The continuing below average hydrologic conditions are expected to reduce IPC's hydroelectric generation, and would require it to use wholesale purchases from the energy markets and higher-cost thermal generation when necessary to meet its energy needs through 2004. Generation from IPC's hydroelectric facilities is expected to be 6.4 million MWh in 2004, compared to 6.1 million MWh in 2003 and normal generation of 9.3 million MWh.

General Business Revenue: The following table presents IPC's general business revenues and MWh sales for the three and six months ended June 30:

		Three months ended June 30,						Six months ended June 30,
		Revenue				MWh		Revenue				MWh
		2004		2003		2004	2003	2004		2003		2004	2003
Residential		$	54,281	$	60,031	897	937	$	132,009	$	144,239	2,258	2,136
Commercial			38,713		42,450	829	820		78,836		90,860	1,723	1,664
Industrial			27,399		29,661	789	758		55,062		71,920	1,616	1,528
Irrigation			37,912		34,471	755	676		38,555		34,656	765	677
	Total	$	158,305	$	166,613	3,270	3,191	$	304,462	$	341,675	6,362	6,005

Decreased average rates, mainly resulting from the 2003-2004 PCA, reduced revenues by approximately $15 million and $53 million for the three and six months ended June 30, 2004. New base rates, implemented on June 1, 2004, caused a $3 million increase in quarterly and year-to-date revenues. The general rate case and the PCA are discussed in more detail below in "REGULATORY ISSUES - General Rate Case" and "REGULATORY ISSUES - Deferred Power Supply Costs";

Revenues increased by approximately $13 million for the six months ended June 30, 2004 due primarily to colder weather in January and February 2004. Heating degree-days during the first three months of 2004 were 16.4 percent higher than the same period in 2003. Heating degree-days are a common measure used in the utility industry to analyze the demand for electricity and indicate when a customer would use electricity for heating;

The expiration in March 2003 of a take-or-pay contract with FMC/Astaris caused a $9 million decrease in revenues for the six months ended June 30, 2004. FMC/Astaris, formerly IPC's largest volume customer, closed its plants late in 2001 but was required under the contract to pay IPC for generation capacity regardless of delivery; and

A three percent increase in general business customers increased revenue $3 million and $7 million for the three and six months ended June 30, 2004.

IPC is experiencing strong customer growth in its service territory, adding more than 13,000 general business customers in the last 12 months. IPC expects that the number of general business customers will grow from the December 2003 level of 426,600 to about 438,000 at year-end 2004 and to about 450,000 at year-end 2005.

Off-system sales: Off-system sales consist primarily of long-term sales contracts and opportunity sales of surplus system energy. The following table presents IPC's off-system sales for the three and six months ended June 30:

	Three months ended				Six months ended
	June 30,				June 30,
	2004			2003		2004	2003

Revenue	$	36,809	$	19,839	$	64,930	$	38,447
MWh sold		975		569		1,649		982
Revenue per MWh	$	37.74	$	34.88	$	39.38	$	39.16

Quarterly and year-to-date revenues from off-system sales nearly doubled last year's results due to 71 percent and 68 percent increases in energy sales volumes and an eight percent increase in second quarter average price per MWh sold. In large part, the increased volumes sold are a result of power supply hedge activity in late spring based on improved hydroelectric generation. Although overall hydroelectric generating conditions continue to be below normal, May 2004 precipitation was above normal and reservoir storage space was limited. Consequently, IPC generated more hydroelectric power than previously planned for May and June 2004. Earlier hedge purchase activity combined with increased hydroelectric generation caused IPC to sell surplus energy.

Purchased power: The following table presents IPC's purchased power for the three and six months ended June 30:

		Three months ended				Six months ended
		June 30,				June 30,
		2004		2003		2004		2003
Purchased power:
	Purchases	$	64,766	$	32,019	$	83,270	$	42,495
	Load reduction costs		-		-		-		3,130

MWh purchased			1,527		795		1,948		1,014
Cost per MWh purchased		$	42.41	$	40.28	$	42.75	$	41.90

Purchased power expense increased due to 92 percent increases in volumes purchased for both the three and six months ended June 30, 2004. The increased volumes purchased are a result of power supply hedge activity in early spring based on expectations of reduced hydroelectric generation. Average prices in the wholesale electricity markets increased five percent and two percent for the three and six months ended June 30, 2004. Load reduction costs decreased from $3 million to zero due to the expiration of the take-or-pay contract with FMC/Astaris in March 2003. IPC expects purchased power expense to increase during 2004 due to the ongoing effects of the fifth consecutive year of below normal water conditions.

Fuel expense: The following table presents IPC's fuel expenses and generation at its thermal generating plants for the three and six months ended June 30:

	Three months ended				Six months ended
	June 30,				June 30,
	2004			2003		2004	2003

Fuel expense	$	21,569	$	23,908	$	49,073	$	49,446
Thermal MWh generated		1,497		1,481		3,409		3,311
Cost per MWh	$	14.41	$	16.15	$	14.40	$	14.93

PCA: PCA expense represents the effect of IPC's PCA regulatory mechanism, which is discussed in more detail below in "REGULATORY ISSUES - Deferred Power Supply Costs." In 2004 and 2003, net power supply costs (fuel and purchased power less off-system sales) exceeded those anticipated in the annual PCA forecast, resulting in the deferral of a portion of those costs to subsequent years when they are to be recovered in rates. As the revenues are being recovered, the deferred balances are amortized.

The following table presents the components of PCA expense for the three and six months ended June 30:

		Three months ended				Six months ended
		June 30,				June 30,
		2004			2003		2004	2003
Current year power supply cost deferral		$	(13,549)	$	(3,540)	$	(13,414)	$	(3,163)
FMC/Astaris and irrigation program cost deferral			-		-		-		(2,245)
Amortization of prior year authorized balances			11,803		28,875		24,232		82,590
Write-off of disallowed costs			-		48		-		48
	Total power cost adjustment	$	(1,746)	$	25,383	$	10,818	$	77,230

Impairment of assets: In the second quarter, IPC recorded $10 million of asset impairments relating to disallowed items in the Idaho general rate case. The IPUC disallowed several items in the rate case, including $8 million of incentive payments capitalized in prior years and $2 million of capitalized pension expense. On June 15, 2004, IPC filed with the IPUC a petition for reconsideration of these and other items. On July 13, 2004, the IPUC issued an order denying reconsideration of the capitalized incentive payments and the capitalized pension expense, resulting in the impairments.

Other: In connection with mitigation measures developed by the Bonneville Power Administration (BPA) and the U.S. Army Corps of Engineers related to the effects of the operation and maintenance of the Federal Columbia River Power System on ESA-listed threatened and endangered fish in the Columbia River Basin, BPA contacted IPC about acquiring an option to have IPC release 100,000 acre-feet of storage water from Brownlee Reservoir during the month of July 2004. On June 9, 2004, BPA and IPC entered into an option agreement, wherein IPC, in return for the sum of $1 million, granted BPA an exclusive option to have IPC release 100,000 acre-feet of storage water from Brownlee Reservoir during the month of July 2004. On June 23, 2004, BPA exercised the option by paying IPC an additional $3 million. The total $4 million is included in Other Current Liabilities on the Consolidated Balance Sheet as of June 30, 2004. IPC released storage water from Brownlee Reservoir under the terms of the agreement in July 2004, and recognized the $4 million as Other Operating Revenue in July 2004. This will flow through the PCA mechanism as a benefit to IPC's Idaho customers.

Energy Marketing
IE wound down its power marketing operations, closed its business locations and sold its forward book of electricity trading contracts to Sempra Energy Trading in 2003. As part of the sale of the forward book of electricity trading contracts, IE entered into an Indemnity Agreement with Sempra Energy Trading, guaranteeing the performance of one of the counterparties. The maximum amount payable by IE under the Indemnity Agreement is $20 million. The Indemnity Agreement has been accounted for in accordance with Financial Accounting Standards Board Interpretation (FIN) 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" and did not have a material effect on IDACORP's financial statements.

At December 31, 2003, IE had accrued $2 million of involuntary employee termination benefit expenses and $2 million of lease termination and other exit-related costs. In the second quarter of 2004, IE paid $0.6 million of involuntary employee termination benefits and $0.1 million of lease termination and other exit-related costs. The remaining employee termination benefit accrual will be paid out in 2004 and the remaining lease termination accrual will be paid out through 2008. Restructuring accruals are presented as Other liabilities on IDACORP's Consolidated Balance Sheets.

During the second quarter of 2004, IE recorded an approximate $2 million gain on the settlement of legal disputes with NPC and PG&E. In the second quarter of 2003, IE incurred approximately $6 million of general and administrative expenses for involuntary employee termination benefit expenses, lease terminations and legal fees. IE's year-to-date results for 2003 also include a net $11 million loss on the settlement of legal disputes with Truckee-Donner Public Utility District, Overton Power District No. 5 and Enron as well as approximately $7 million of general and administrative expenses incurred in the first quarter for involuntary employee termination benefit expenses, lease terminations and legal fees.

IFS
IFS contributed $0.12 per share for the quarter, principally from the generation of federal income tax credits and tax depreciation benefits as well as a gain on the sale of its investment in the El Cortez Hotel in San Diego, California. In June 2000, IFS invested $4 million to assist in the renovation of the historic El Cortez into upscale apartment units. Upon exiting the investment on April 22, 2004, IFS recognized a gain on sale of $5 million, income taxes of $3 million and a net gain of $2 million. The gain is included in Other Income on IDACORP's Consolidated Statements of Operations.

IFS generates federal income tax credits and accelerated tax depreciation benefits related to its investments in affordable housing and historic rehabilitation developments. Net reductions in consolidated income taxes related to IFS tax credits were approximately the same for 2004 and 2003, $5 million and $10 million for the three and six months ended both June 30, 2004 and 2003. IFS is expected to continue generating tax benefits at current levels.

INCOME TAXES:

IDACORP's effective tax rate increased to 3.8 percent for the six months ended June 30, 2004 from an effective rate of zero for the same period last year. In the first half of 2003, it was expected that available tax benefits from tax credits and regulatory flow-through tax adjustments would approximately offset tax expense on pre-tax book income, resulting in a zero effective tax rate. The current year rate is primarily the result of the increase in pre-tax earnings, net of the benefits generated by the IFS tax credits. For the three months ended June 30, 2004, the income tax benefit was primarily the result of tax credits exceeding income tax expense on pre-tax earnings.

LIQUIDITY AND CAPITAL RESOURCES:

Operating Cash Flows
IDACORP's operating cash flows for the six months ended June 30, 2004 were $90 million compared to $138 million for the six months ended June 30, 2003. The primary reasons for the decrease are a $36 million decrease in PCA recovery, partially offset by a $7 million decrease in income taxes paid during the periods.

IPC's operating cash flows for the six months ended June 30, 2004 were $89 million compared to $116 million for the six months ended June 30, 2003. Rate decreases resulting from the 2003-2004 PCA reduced cash received for electricity sales by $36 million.

For the year ending December 31, 2004, net cash provided by operating activities will be driven by IPC where general business revenues and the costs to supply power to general business customers have the greatest impact on operating cash flows. The costs to supply IPC's customers are expected to be greater than originally planned in 2004 as a result of the fifth year of below normal water conditions. While a significant portion of the deferred purchased power costs is expected to be recovered through IPC's PCA mechanism, recovery will not take place until the 2005-2006 PCA year. The revenues received from IPC's general business customers are expected to be less than the amounts initially forecast due to the allowed base rate increase of only 5.2 percent. Additionally, IPC's 2004-2005 PCA is $10 million less than the 2003-2004 PCA. As a result of these items, IDACORP and IPC expect to incur more short-term debt during 2004 than previously anticipated.

Working Capital
The changes in working capital are due primarily to timing and normal business activity.

Insurance Expenses
IPC forecasts that its 2004 medical, property and liability insurance costs will increase modestly from the amounts recorded in 2003.

Dividend Reduction
In September 2003, IDACORP's annual dividend was reduced to $1.20 per share from $1.86 per share. This action was taken in order to strengthen IDACORP's financial position and its ability to fund IPC's growing capital expenditure needs. IPC's construction program is discussed below in "Capital Requirements." The dividend reduction was also made to improve cash flows and help maintain credit ratings. During the six months ended June 30, 2004, IDACORP paid dividends on common stock of $23 million compared to $35 million in the first half of 2003. IPC paid dividends to IDACORP on a quarterly basis sufficient to pay IDACORP's quarterly dividend.

Contractual Obligations
IDACORP's contractual cash obligations have increased from $2.0 billion at December 31, 2003 to $2.1 billion at June 30, 2004. This change is primarily due to an increase in IPC's contractual cash obligations, which increased from $1.9 billion at December 31, 2003 to $2.0 billion at June 30, 2004. The most significant changes include cogeneration and small power production obligations, which increased from $635 million to $699 million, purchased power and transmission, which increased from $40 million to $75 million, and maintenance and service agreements, which increased from $49 million to $73 million.

Off-Balance Sheet Arrangements
The federal Surface Mining Control and Reclamation Act of 1977 and similar state statutes establish operational, reclamation and closure standards that must be met during and upon completion of mining activities. These obligations mandate that mine property be restored consistent with specific standards and the approved reclamation plan. The mining operations at the Bridger Coal Company are subject to these reclamation and closure requirements.

IPC has guaranteed the performance of coal mine reclamation activities of its Bridger Coal Company joint venture. This guarantee, which is renewed each December, was $60 million at June 30, 2004. Bridger Coal has a reclamation trust fund set aside specifically for the purpose of paying these reclamation costs and expects that the fund will be sufficient to cover all such costs. Because of the existence of the fund, the estimated fair value as well as the impact on the consolidated financial statements of this guarantee was minimal.

In August 2003, IE sold its forward book of electricity trading contracts to Sempra Energy Trading. As part of the sale of the forward book of electricity trading contracts IE entered into an Indemnity Agreement with Sempra Eenergy Trading, guaranteeing the performance of one of the counterparties. The maximum amount payable by IE under the Indemnity Agreement is $20 million. The impact of this guarantee on the consolidated financial statements was minimal.

Credit Ratings
During the quarter ended June 30, 2004, Moody's, S&P and Fitch placed certain of IDACORP's and IPC's ratings under review for possible downgrade. Any downgrade would be expected to increase the cost of new debt and other issued securities going forward.

Moody's: On June 8, 2004, Moody's placed the long-term ratings of IDACORP and the long-term and short-term ratings of IPC under review for possible downgrade. Moody's stated that its review of the ratings reflected concerns about (1) the lower than expected rate increase granted in IPC's general rate case, (2) potentially higher external funding for IPC's estimated capital expenditures of $643 million over the next three years and (3) the fifth year of drought conditions and resulting higher costs of power supply. IDACORP's commercial paper rating was affirmed at P-2.

S&P: On June 15, 2004, S&P announced that it had placed the corporate credit rating and long-term ratings of IDACORP and IPC on CreditWatch with negative implications. IDACORP's and IPC's commercial paper rating was affirmed at A-2.

S&P stated that its decision was prompted by the IPUC order issued May 25, 2004 authorizing only a $25 million (5.2 percent) increase in base rates. In S&P's view, the IPUC order gave rise to the following credit issues: (1) the order likely reflects pressure on the IPUC to moderate rate increases given the rate hikes of the past few years and the regional economic conditions, (2) IPC will have to rely more on external debt funding for its approximately $640 million in planned capital expenditures in the 2004-06 period, (3) the drought in the region continues for the fifth consecutive year, raising costs for customers, (4) income tax issues related to the order could potentially lead to issues with deferred federal taxes because of violation of accelerated depreciation rules since the IPUC ordered the benefit of tax refunds to go to ratepayers and (5) the order, coupled with large planned capital expenditures, will weaken IDACORP's consolidated financial profile, with forecast funds from operations coverage of debt below 20 percent and total debt to capitalization at about 55 percent or higher.

S&P stated that it would resolve its CreditWatch listing following the final resolution of the IPUC's response to IPC's petition for reconsideration of this ruling and that IDACORP would also have the opportunity to put in place cost reduction or make other changes to its financial plan to mitigate the impact of the ruling.

In addition, on June 2, 2004, S&P assigned new business profile scores and revised the financial guidelines for U.S. utility and power companies. As a result, S&P changed IDACORP and IPC's business risk profile to a 5 from a 4 on a 10-point scale, where 1 is the least risky. The new business scores and financial guidelines did not represent a change in S&P's ratings criteria or methodology, and IDACORP and IPC's ratings remained unchanged.

Fitch: On June 22, 2004, Fitch announced that it had placed the corporate credit ratings and long-term ratings of IDACORP and IPC on Rating Watch Negative. IDACORP's commercial paper rating was affirmed at F-2.

Fitch stated that the Rating Watch Negative status related to the adverse effect of the IPUC's general rate case order. Fitch indicated that additional items of concern were the fifth consecutive year of drought and its effects on the expenses associated with lower amounts of water for generation, the duration of the drought and its negative effect on IPC 's financial trends, particularly IPC's debt burden over the last five years.

Fitch stated that in resolving IPC's Rating Watch Negative status, it will also consider whether the IPUC order signals a deteriorating Idaho regulatory environment, at a time when IPC faces meaningful capital spending increases to maintain reliability and service quality, and the regional drought. The review will also consider IDACORP's improved business risk profile given its exit from the energy marketing and trading operation and wind-down of Ida-West.

Summary: The following chart outlines the current S&P, Moody's and Fitch ratings of IDACORP's and IPC's securities, with the ratings currently under review marked with an asterisk:

		S&P		Moody's		Fitch
		IPC	IDACORP	IPC	IDACORP	IPC	IDACORP
Corporate Credit Rating		A-*	A-*	A3*	Baa1*	None	None
Senior Secured Debt		A*	None	A2*	None	A*	None
Senior Unsecured Debt		BBB+*	BBB+*	A3*	Baa1*	A-*	BBB+*
Preferred Stock		BBB*	None	Baa2*	None	BBB+*	None
Trust Preferred Stock		None	BBB*	None	Baa2*	None	BBB*
Short-Term Tax-Exempt		BBB+/	None	A3/	None	None	None
	Debt	A-2		VMIG-1*
Commercial Paper		A-2	A-2	P-1*	P-2	F-1*	F-2
Rating Outlook		Negative	Negative	Negative	Negative	Negative	Negative

These security ratings reflect the views of the rating agencies. An explanation of the significance of these ratings may be obtained from each rating agency. Such ratings are not a recommendation to buy, sell or hold securities. Any rating can be revised upward or downward or withdrawn at any time by a rating agency if it decides that the circumstances warrant the change. Each rating should be evaluated independently of any other rating.

Capital Requirements
IDACORP's forecasts indicate that internal cash generation after dividends is expected to provide less than the full amount of total capital requirements for 2004 through 2006. IDACORP's internal cash generation is dependent primarily on the contribution of IPC's cash flows from operations, which are subject to risks and uncertainties relating to weather and water conditions and the results of regulatory processes. IPC is in its fifth consecutive year of below normal water conditions and must rely on higher-cost thermal generation and purchased power during these conditions.

IDACORP's internally generated cash after dividends is expected to provide 61 percent of 2004 capital requirements, where capital requirements are defined as utility construction expenditures, excluding AFDC, plus other regulated and non-regulated investments. This excludes mandatory or optional principal payments on debt obligations. IPC's construction expenditures represent over 86 percent of these capital requirements.

The current expectation of 61 percent is a decline from the 88 percent anticipated earlier in the year. The majority of the decline, over 18 percent, is due to increased reliance on higher-cost thermal generation and purchased power as a result of the ongoing below normal water conditions. An additional component of the decline is the result of the IPUC not granting the full amount of rate relief requested by IPC. IDACORP and IPC expect to continue financing the utility construction program and other capital requirements with internally generated funds and with increased reliance on externally financed capital.

Utility Construction Program: Utility construction expenditures were $83 million for the six months ended June 30, 2004 as compared to $57 million for the six months ended June 30, 2003. The increase is related to relicensing of hydroelectric projects and construction of the Bennett Mountain Power Plant.

IPC's total construction expenditures are expected to be $643 million, excluding AFDC, from 2004 through 2006. IPC expects to spend approximately $207 million, excluding AFDC, in 2004 and a total of approximately $436 million, excluding AFDC, for 2005 and 2006 combined. With reduced rate relief from what IPC originally anticipated, one area under review is the utility construction program. Given current requirements, significant reductions in this program are not anticipated in 2004; however, IPC is reviewing the 2005 through 2006 utility construction program in connection with the draft 2004 IRP to determine the extent that capital expenditures can either be delayed or reprioritized. See "REGULATORY ISSUES - Integrated Resource Plan" for a discussion of IPC's 2004 draft IRP.

Aging facilities, relicensing costs and projected load growth may increase construction expenditures. IPC's coal-fired plants are approaching their fourth decade of service and plant utilization has increased due to both load growth and reduced hydroelectric generation resulting from below normal water conditions. These factors result in increased upgrade and replacement requirements and plant additions such as the new Bennett Mountain Power Plant.

IPC's 2002 IRP identified the need for additional resources to address potential electricity shortfalls within IPC's utility service territory by mid-2005. The Bennett Mountain Power Plant, a 162-MW gas-fired generating plant, is currently under construction and will be used to overcome the majority of the potential shortfalls. The estimated project cost includes plant construction of $54 million and associated transmission system upgrades of $7 million. At June 30, 2004, $15 million of construction costs were included in Construction Work in Progress.

In January 2004, the IPUC approved IPC's application for a Certificate of Public Convenience and Necessity, which will allow IPC to place reasonable and prudent capital costs of the Bennett Mountain Power Plant into its Idaho base rates when the plant is operational. The plant is scheduled to be online by the summer of 2005 and will be used primarily to meet peak electrical needs during high-use summer and winter months. The IPUC's order allows IPC to reasonably expect to recover approximately $45 million from rates after the plant is completed. Additional construction costs up to a cap of $54 million may also be included in rates after they are found to be reasonable and prudent.

Based upon present environmental laws and regulations, IPC estimates its 2004 capital expenditures for environmental matters, excluding AFDC, will total $16 million. Studies and measures related to environmental concerns at IPC's hydroelectric facilities account for $13 million and investments in environmental equipment and facilities at the thermal plants account for $3 million. From 2005 through 2006, environmental-related capital expenditures, excluding AFDC, are estimated to be $49 million. Anticipated expenses related to IPC's hydroelectric facilities account for $38 million and thermal plant expenses are expected to total $11 million. As of June 30, 2004, environmental-related capital expenditures, excluding AFDC, for IPC's hydroelectric facilities totaled $4 million and for thermal plants totaled $0.4 million.

Variations in the timing and amounts of capital expenditures will result from regulatory and environmental factors, load growth and other resource acquisition needs and the timing of relicensing expenditures. IDACORP and IPC are in the beginning phase of the annual long-term planning process and will prioritize capital expenditures while considering the effects of the outcome of IPC's general rate case, the need for additional resources in order for IPC to supply power to a growing number of customers and the maintenance of corporate credit ratings.

Financing Programs
Credit facilities: On March 17, 2004, IDACORP entered into a $150 million three-year credit agreement with various lenders, Bank One, NA (merged with JP Morgan Chase Corporation on July 1, 2004), as co-lead arranger and administrative agent and Wachovia Bank, National Association, as co-lead arranger and syndication agent (IDACORP Facility). The IDACORP Facility replaced IDACORP's two credit agreements, a $175 million facility that expired on March 17, 2004 and a $140 million facility that was to expire on March 25, 2005. The IDACORP Facility, which will be used for general corporate purposes and commercial paper back-up, will terminate on March 16, 2007. The IDACORP facility provides for the issuance of loans and standby letters of credit not to exceed the aggregate principal amount of $150 million, provided that the aggregate amount of the standby letters of credit may not exceed $75 million. At June 30, 2004, no loans were outstanding and $50 million of commercial paper was outstanding.

Under the terms of the IDACORP Facility, IDACORP may borrow floating rate advances and eurodollar rate advances. The floating rate is equal to the higher of (i) the prime rate announced by Bank One or its parent and (ii) the sum of the federal funds effective rate for such day plus 1/2 percent per annum, plus, in each case, an applicable margin. The eurodollar rate is based upon the British Bankers' Association interest settlement rate for deposits in U.S. dollars, as adjusted by the applicable reserve requirement for eurocurrency liabilities imposed under Regulation D of the Board of Governors of the Federal Reserve System, for periods of one, two, three or six months plus the applicable margin. The applicable margin is based on IDACORP's rating for senior unsecured long-term debt securities without third-party credit enhancement as provided by Moody's and S&P. The applicable margin for the floating rate advances is zero percent unless IDACORP's rating falls below Baa3 from Moody's or BBB- from S&P, at which time it would equal 0.50 percent. The applicable margin for eurodollar rate advances ranges from 0.54 percent to 1.65 percent depending upon the credit rating. At June 30, 2004, the applicable margin was zero percent for floating rate advances and 0.85 percent for eurodollar rate advances. A facility fee, payable quarterly by IDACORP, is calculated on the average daily aggregate commitment of the lenders under the IDACORP Facility and is also based on IDACORP's rating from Moody's or S&P as indicated above. At June 30, 2004, the facility fee was 0.15 percent.

In connection with the issuance of letters of credit, IDACORP must pay (i) a fee equal to the applicable margin for eurodollar rate advances on the average daily undrawn stated amount under such letters of credit, payable quarterly in arrears, (ii) a fronting fee in an amount agreed upon with the letter of credit issuer, payable quarterly in arrears, and (iii) documentary and processing charges in accordance with the letter of credit issuer's standard schedule for such charges.

A ratings downgrade would result in an increase in the cost of borrowing and of maintaining letters of credit, but would not result in any default or acceleration of the debt under the IDACORP Facility.

The events of default under the IDACORP Facility include (i) nonpayment of principal when due and nonpayment of interest or other fees within five days after becoming due, (ii) materially false representations or warranties made on behalf of IDACORP or any of its subsidiaries on the date as of which made, (iii) breach of covenants, subject in some instances to grace periods, (iv) voluntary and involuntary bankruptcy of IDACORP or any material subsidiary, (v) the non-consensual appointment of a receiver or similar official for IDACORP or any of its material subsidiaries or any substantial portion (as defined in the IDACORP Facility) of its property, (vi) condemnation of all or any substantial portion of the property of IDACORP or its subsidiaries, (vii) default in the payment of indebtedness in excess of $25 million or a default by IDACORP or any of its subsidiaries under any agreement under which such debt was created or governed which will cause or permit the acceleration of such debt or if any of such debt is declared to be due and payable prior to its stated maturity, (viii) IDACORP or any of its subsidiaries not paying, or admitting in writing its inability to pay, its debts as they become due, (ix) the acquisition by any person or two or more persons acting in concert of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934) of 20 percent or more of the outstanding shares of voting stock of IDACORP, (x) the failure of IDACORP to own free and clear of all liens, at least 80 percent of the outstanding shares of voting stock of IPC on a fully diluted basis, (xi) certain liabilities under the Employee Retirement Income Security Act of 1974 exceeding $25 million and (xii) IDACORP or any subsidiary being subject to any proceeding or investigation pertaining to the release of any toxic or hazardous waste or substance into the environment or any violation of any environmental law (as defined in the IDACORP Facility) which could reasonably be expected to have a material adverse effect (as defined in the IDACORP Facility). A default or an acceleration of indebtedness of IPC under the IPC Facility described below will result in a cross default under the IDACORP Facility, provided that such indebtedness is equal to at least $25 million.

Upon any event of default relating to the voluntary or involuntary bankruptcy of IDACORP or the appointment of a receiver, the obligations of the lenders to make loans under the facility and of the letter of credit issuer to issue letters of credit will automatically terminate and all unpaid obligations will become due and payable. Upon any other event of default, the lenders holding 51 percent of the outstanding loans or 51 percent of the aggregate commitments (required lenders) or the administrative agent with the consent of the required lenders may terminate or suspend the obligations of the lenders to make loans under the facility and of the letter of credit issuer to issue letters of credit under the facility or declare the obligations to be due and payable. IDACORP will also be required to deposit into a collateral account an amount equal to the aggregate undrawn stated amount under all outstanding letters of credit and the aggregate unpaid reimbursement obligations thereunder.

On March 17, 2004, IPC entered into a $200 million three-year credit agreement with various lenders, Bank One, NA (merged with JP Morgan Chase Corporation on July 1, 2004), as co-lead arranger and administrative agent and Wachovia Bank, National Association, as co-lead arranger and syndication agent (IPC Facility). The IPC Facility replaced IPC's $200 million credit agreement, which expired on March 17, 2004. The IPC Facility, which expires on March 16, 2007, will be used for general corporate purposes and commercial paper back-up. At June 30, 2004, no loans were outstanding and $27 million of commercial paper was outstanding. Under the terms of the IPC Facility, IPC may borrow floating rate advances and eurodollar rate advances. The methods of calculating the floating rate and the eurodollar rate are the same as set forth above for the IDACORP Facility. The applicable margin for the IPC Facility is also dependent upon IPC's rating for senior unsecured long-term debt securities without third-party credit enhancement as provided by Moody's and S&P. At June 30, 2004, the applicable margin for the IPC Facility was zero percent for floating rate advances and 0.75 percent for eurodollar rate advances. A facility fee, payable quarterly by IPC, is calculated on the average daily aggregate commitment of the lenders under the IPC Facility and is also based on IPC's rating from Moody's or S&P as indicated above. At June 30, 2004, the facility fee was 0.125 percent. A ratings downgrade would result in an increase in the cost of borrowing, but would not result in any default or acceleration of the debt under the IPC Facility.

The events of default under the IPC Facility are the same as under the IDACORP Facility.

Upon any event of default relating to the voluntary or involuntary bankruptcy of IPC or the appointment of a receiver, the obligations of the lenders to make loans under the facility will automatically terminate and all unpaid obligations of IPC will become due and payable. Upon any other event of default, the required lenders (or the administrative agent with the consent of the required lenders) may terminate or suspend the obligation of the lenders to make loans under the IPC Facility or declare IPC's unpaid obligations to be due and payable.

Short-term financings: At June 30, 2004, IDACORP's commercial paper borrowings totaled $50 million, compared to $94 million at December 31, 2003. At June 30, 2004, IPC's commercial paper borrowings totaled $27 million and there were no short-term borrowings at December 31, 2003. IDACORP's and IPC's short-term borrowings are expected to increase during 2004 mainly due to increased power supply costs at IPC caused by the continued impacts of the fifth consecutive year of below normal water conditions. A portion of IPC's power supply costs are recovered through its PCA regulatory mechanism discussed in "REGULATORY ISSUES - Deferred Power Supply Costs."

Long-term financings: IDACORP currently has two shelf registration statements totaling $800 million that can be used for the issuance of unsecured debt (including medium-term notes) and preferred or common stock. At June 30, 2004, none had been issued.

IPC plans to issue approximately $55 million of first mortgage bonds in August 2004.

The amount of first mortgage bonds issuable by IPC is limited to a maximum of $1.1 billion and by property, earnings and other provisions of the mortgage and supplemental indentures thereto. IPC may amend the indenture and increase this amount without consent of the holders of the first mortgage bonds. Substantially all of the electric utility plant is subject to the lien of the mortgage. As of June 30, 2004, IPC could issue under the mortgage approximately $640 million of additional first mortgage bonds based on unfunded property additions and $392 million of additional first mortgage bonds based on retired first mortgage bonds. At June 30, 2004, unfunded property additions, which consist of electric property, were approximately $1 billion.

At June 30, 2004, IFS had $74 million of debt related to investments in affordable housing with interest rates ranging from 3.65 percent to 8.59 percent due 2004 to 2010. The investments in affordable housing developments, that collateralize this debt, had a net book value of $110 million at June 30, 2004.

In June 2004, Ida-West purchased from a third party $18 million of debt issued by Marysville Hydro Partners, a 50-percent-owned, consolidated joint venture, for $11 million. This debt, previously consolidated under the provisions of FIN 46R, "Consolidation of Variable Interest Entities - an interpretation of ARB No. 51," is now eliminated in consolidation. Ida-West borrowed $6 million from IDACORP for this transaction, resulting in increased short-term borrowings at IDACORP.

Debt Covenants: The IDACORP Facility and the IPC Facility contain a covenant requiring IDACORP and IPC, respectively, to maintain a leverage ratio of consolidated indebtedness to consolidated total capitalization of no more than 65 percent as of the end of each fiscal quarter. At June 30, 2004, the leverage ratios for IDACORP and IPC were 54 percent and 52 percent, respectively.

Other covenants in the IPC Facility include (i) prohibitions against investments and acquisitions by IPC or any subsidiary without the consent of the required lenders, subject to exclusions for investments in cash equivalents or securities of IPC, investments by IPC and its subsidiaries in any business trust controlled, directly or indirectly, by IPC to the extent such business trust purchases securities of IPC, investments and acquisitions related to the energy business of IPC and its subsidiaries not exceeding $500 million in the aggregate at any one time outstanding, investments by IPC or a subsidiary in connection with a permitted receivables securitization (as defined in the IPC Facility), (ii) prohibitions against IPC or any material subsidiary merging or consolidating with any other person or selling or disposing of all or substantially all of its property to another person without the consent of the required lenders, subject to exclusions for mergers into or dispositions to IPC or a wholly owned subsidiary and dispositions in connection with a permitted receivables securitization, (iii) restrictions on the creation of liens by IPC or any material subsidiary and (iv) prohibitions on any material subsidiary entering into any agreement restricting its ability to declare or pay dividends to IPC except pursuant to a permitted receivables securitization. At June 30, 2004, IPC was in compliance with all of the covenants of the facility.

Other covenants in the IDACORP Facility include (i) prohibitions against investments and acquisitions by IDACORP or any subsidiary without the consent of the required lenders subject to exclusions for investments in cash equivalents or securities of IDACORP, investments by IDACORP and its subsidiaries in any business trust controlled, directly or indirectly, by IDACORP to the extent such business trust purchases securities of IDACORP, investments and acquisitions related to the energy business or other business of IDACORP and its subsidiaries not exceeding $500 million in the aggregate at any one time outstanding (provided that investments in non-energy related businesses not exceed $150 million), investments by IDACORP or a subsidiary in connection with a permitted receivables securitization (as defined in the IDACORP Facility), (ii) prohibitions against IDACORP or any material subsidiary merging or consolidating with any other person or selling or disposing of all or substantially all of its property to another person without the consent of the required lenders, subject to exclusions for mergers into or dispositions to IDACORP or a wholly owned subsidiary and dispositions in connection with a permitted receivables securitization, (iii) restrictions on the creation of liens by IDACORP or any material subsidiary and (iv) prohibitions on any material subsidiary entering into any agreement restricting its ability to declare or pay dividends to IDACORP except pursuant to a permitted receivables securitization.

IDACORP is also required to maintain an interest coverage ratio of Credit Agreement EBITDA to consolidated interest charges equal to at least 2.75 to 1.00 as of the end of any fiscal quarter. Credit Agreement EBITDA is a financial measure that is used in the IDACORP Facility and is not a defined term under GAAP. Credit Agreement EBITDA differs from the term "EBITDA" (earnings before interest expense, income tax expense and depreciation and amortization) as it is commonly used. Credit Agreement EBITDA is defined as consolidated net income plus interest charges, income taxes, depreciation and all non-cash items that reduce such consolidated net income minus all non-cash items that increase consolidated net income. At June 30, 2004, IDACORP was in compliance with all of the covenants of the facility.

LEGAL AND ENVIRONMENTAL ISSUES:

Legal and Other Proceedings
Vierstra Dairy: On August 11, 2000, Mike and Susan Vierstra, dairy operators from Twin Falls, Idaho, brought suit against IPC in Idaho State District Court, Fifth Judicial District, Twin Falls County. The plaintiffs sought monetary damages of approximately $8 million for negligence and nuisance (allegedly allowing electrical current to flow in the earth and adversely affect the health of the plaintiffs' dairy cows) and punitive damages of approximately $40 million.

On May 28, 2004, certain defendants in the Wah Chang actions took steps to have the cases transferred and consolidated with other similar cases currently pending before the Honorable Robert H. Whaley, sitting by designation in the Southern District of California and presiding over Multidistrict Litigation Docket No. 1405, In re California Wholesale Electricity Antitrust Litigation. IDACORP, IE and IPC have not answered the complaint filed against them, as a response is not yet required. The companies intend to vigorously defend their position in this proceeding and believe this matter will not have a material adverse effect on their consolidated financial positions, results of operations or cash flows.

On June 22, 2004, IDACORP, IE and IPC, along with other defendants, took steps to have this case transferred and consolidated with other similar cases currently pending before the Honorable Robert H. Whaley, sitting by designation in the Southern District of California and presiding over Multidistrict Litigation Docket No. 1405, In re California Wholesale Electricity Antitrust Litigation. IDACORP, IE and IPC have not answered this complaint, as a response is not yet required. The companies intend to vigorously defend their position in this proceeding and believe this matter will not have a material adverse effect on their consolidated financial positions, results of operations or cash flows.

The complaints allege that, during the purported class period, IDACORP and/or certain of its officers and/or directors made materially false and misleading statements or omissions about the company's financial outlook in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5, thereby causing investors to purchase the company's common stock at artificially inflated prices. More specifically, the complaints allege that the company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) the company failed to appreciate the negative impact that lower volatility and reduced pricing spreads in the western wholesale energy market would have on its marketing subsidiary, IE; (2) the company was forced to limit its origination activities to shorter-term transactions due to increasing regulatory uncertainty and continued deterioration of creditworthy counterparties; (3) the company failed to discount for the fact that IPC may not recover from the lingering effects of the prior year's regional drought; and (4) as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the company and their earnings projections. The Powell complaint also alleges that the defendants' conduct artificially inflated the price of the company's common stock. The actions seek an unspecified amount of damages, as well as other forms of relief. IDACORP and the other defendants intend to defend themselves vigorously against the allegations. The company cannot, however, predict the outcome of these matters.

Western Energy Proceedings at the FERC: IE and IPC are involved in a number of FERC proceedings arising out of the western energy situation and claims that dysfunctions in the organized California markets contributed to or caused unjust and unreasonable prices in Pacific Northwest spot markets, and may have been the result of manipulations of gas or electric power markets. They include proceedings involving: (1) the chargeback provisions of the CalPX participation agreement, which was triggered when a participant defaulted on a payment to the CalPX. Upon such a default, other participants were required to pay their allocated share of the default amount to the CalPX. This provision was first triggered by the Southern California Edison (SCE) default and later by the PG&E default. The FERC has ordered the CalPX to rescind all chargeback actions related to the SCE and PG&E liabilities. The CalPX is awaiting further orders from the FERC and bankruptcy court before distributing the funds it collected under the chargeback mechanism; (2) efforts by the State of California to obtain refunds for a portion of the spot market sales prices from sellers of electricity into California from October 2, 2000 through June 20, 2001. California is claiming that the prices were not just and reasonable and were not in compliance with the Federal Power Act (FPA). The FERC issued an order on refund liability on March 26, 2003 which multiple parties, including IE, sought rehearing on. On October 16, 2003, the FERC denied the requests for rehearing and required the California Independent System Operator (Cal ISO) to make a compliance filing regarding refund amounts by December 2004. On May 12, 2004, the FERC issued an order clarifying its earlier refund orders denying a request by certain parties to present as evidence an earlier settlement between the California Public Utilities Commission and El Paso related to manipulation of gas pipeline capacity claiming that the settlement dollars California is receiving from El Paso ($1.69 billion) are duplicative of the FERC order changing the gas component of its refund methodology. At June 30, 2004, with respect to the CalPX chargeback and the California Refund proceedings discussed above, the CalPX and the Cal ISO owed $14 million and $30 million, respectively, for energy sales made to them by IPC in November and December 2000. IE has accrued a reserve of $42 million against these receivables. This reserve was calculated taking into account the uncertainty of collection, given the California energy situation. Based on the reserve recorded as of June 30, 2004, IDACORP believes that the future collectibility of these receivables or any potential refunds ordered by the FERC would not have a material adverse effect on its consolidated financial position, results of operations or cash flows; (3) in the Pacific Northwest refund proceedings it was argued that the spot market in the Pacific Northwest was affected by the dysfunction in the California market, warranting refunds. The FERC rejected this claim on June 25, 2003 and denied rehearing on November 11, 2003 and February 9, 2004. The FERC orders have been appealed to the Court of Appeals for the Ninth Circuit with briefing due to be completed by January 2005. IE and IPC are unable to predict the outcome of these matters. On July 21, 2004, the City of Seattle petitioned the Ninth Circuit Court of Appeals requesting the court to direct the FERC to permit additional evidence consisting of audio tapes of Enron trader conversations and a delay in the briefing schedule in the Pacific Northwest refund. On August 2, 2004, the Ninth Circuit Court of Appeals held the briefing schedule in abeyance until resolution of the motion to offer additional evidence. On August 2, 2004 and August 3, 2004, respectively, the FERC and a group of parties, including IE, filed their answers in opposition to the motion to offer additional evidence and (4) two cases which result from a ruling of the United States Court of Appeals for the Ninth Circuit that the FERC permit the California parties in the California refund proceeding to submit materials to the FERC demonstrating market manipulation by various sellers of electricity into California. On June 25, 2003, the FERC ordered a large number of parties including IPC to show cause why certain trading practices did not constitute gaming ("gaming") or anomalous market behavior ("partnership") in violation of the Cal ISO and CalPX Tariffs. On October 16, 2003, IPC reached agreement with the FERC Staff on the show cause orders. The "gaming" settlement was approved by the FERC on March 3, 2004. The FERC approved the motion to dismiss the "partnership" proceeding on January 23, 2004. Although the orders establishing the scope of the show cause proceedings are presently the subject of review petitions in the Ninth Circuit, the order dismissing IPC from the "partnership" proceedings was not the subject of rehearing requests. Eight parties have requested rehearing of the FERC's March 3, 2004 order approving the "gaming" settlement but the FERC has not yet acted on those requests.

On July 21, 2004, CAlifornians for Renewable Energy (CARE) filed a motion with the FERC in connection with the California refund, the Pacific Northwest refund and the market manipulation cases requesting the FERC to revise its approach to the 2000-2001 western energy situation by (1) revoking market-based rate authority and replacing it with cost-of-service rates and requiring refunds back to the date of the order granting the market-based rate authority, (2) revising long-term contracts entered into during the western energy situtation and (3) deferring new and rejecting existing refund settlements. IPC is unable to predict how the FERC will respond to CARE's motion.

The FERC also issued an order instituting an investigation of anomalous bidding behavior and practices in the western wholesale power markets. IPC submitted all data and information requested by the FERC Staff, and in a letter dated May 12, 2004, the FERC's Office of Market Oversight and Investigations advised that it was terminating the investigation as to IPC.

These matters are discussed in more detail in Note 5 to IDACORP's Consolidated Financial Statements.

Other Legal Proceedings: IDACORP, IPC and/or IE are involved in various lawsuits and legal proceedings, discussed above and in Note 5 to IDACORP's Consolidated Financial Statements. The companies believe they have meritorious defenses to all lawsuits and legal proceedings where they have been named as defendants. Resolution of any of these matters will take time, and the companies cannot predict the outcome of any of these proceedings. The companies believe that their reserves are adequate for these matters.

Other Legal Issues
U.S. Commodity Futures Trading Commission Investigations Regarding Trading Practices: On October 2, 2002, the U.S. Commodity Futures Trading Commission (CFTC) issued a subpoena to IPC requesting, among other things, all records related to all natural gas and electricity trades by IPC involving "round trip trades," also known as "wash trades," or "sell/buyback trades" including, but not limited to those made outside the Western Systems Coordinating Council region. The subpoena applies to both IE and IPC. By letter from the CFTC dated October 7, 2002, the Division of Enforcement agreed to hold in abeyance until a later date all items requested in the subpoena with the exception of one paragraph which related to three trades on a certain date with a specific party. The companies provided the requested information.

On January 14, 2003, IPC received a request from the CFTC, pursuant to the October 2002 subpoena, for documents related to "round trip" or "wash trades" and information supplied to energy industry publications. The request applies to both IPC and IE. The companies stated in their response to the CFTC that they did not engage in any "round trip" or "wash trade" transactions and that they believe the only information provided to energy industry publications was actual transaction data. The companies have provided the requested information and have heard nothing further from the CFTC.

Idaho Power Company Transmission Line Rights-of-Way Across Fort Hall Indian Reservation: IPC has multiple transmission lines that cross the Shoshone-Bannock Tribes' (Tribes) Fort Hall Indian Reservation near the City of Pocatello in southeastern Idaho. IPC has been working since 1996 to renew five of the right-of-way permits for the transmission lines, which have stated permit expiration dates between 1996 and 2003. IPC filed applications with the United States Department of the Interior, Bureau of Indian Affairs, to renew the five rights-of-way for 25-years, including payment of the independently appraised value of the rights-of-way to the Tribes (and the Tribal allottees who own portions of the rights-of-way). The Tribes have refused to renew the rights-of-way and have demanded payment of $19 million, including an up-front payment of $4 million with the remainder to be paid over the 25-year term of the permits, or in the alternative $11 million including an up-front payment of $4 million with the remainder paid over the first three years of the permits. These amounts are based on an "opportunity cost" methodology, which calculates the value of the rights-of-way as a percentage of the cost to IPC of relocating the transmission lines off the Reservation. Both parties have discussed potential legal action regarding renewal of the rights-of-way, but no such action has been taken to date. The probable cost of renewing the rights-of-way is difficult to ascertain due to the lack of definitive legal guidelines for the renewals. IPC plans to obtain IPUC approval for the recovery of any renewal payment in its utility rates as a prerequisite to any settlement of the right-of-way renewals with the Tribes.

Environmental Issues
Threatened and Endangered Snails: In December 1992, the United States Fish and Wildlife Service (USFWS) listed five species of snails that inhabit the middle Snake River as threatened or endangered species under the ESA. In 1995, in preparation for the FERC relicensing of several of IPC's hydroelectric projects on the middle Snake River (Bliss, Upper Salmon Falls, Lower Salmon Falls, Shoshone Falls and CJ Strike), IPC obtained a permit from the USFWS to study the listed snails. Since that date, IPC has been collecting field data and conducting studies in an effort to determine the status of the listed snails and how they may be affected by a variety of factors, including hydroelectric production, water quality and irrigation practices.

Based upon the studies and in an effort to resolve issues associated with the relicensing of the projects and the threatened and endangered snails, in August 2003, IPC and the USFWS initiated efforts to reach a cooperative resolution of outstanding fish and wildlife issues associated with the relicensing of the IPC middle Snake River projects.

As a result of those efforts, on February 12, 2004, IPC, on behalf of itself and the USFWS, presented an Offer of Settlement, including a signed Settlement Agreement and attached Appendices, to the FERC addressing issues associated with the ESA-listed threatened and endangered snails and the relicensing of the IPC projects on the middle Snake River. Pursuant to FERC regulations, participants in the licensing proceeding and other interested persons had until March 3, 2004 to comment on the proposed settlement. The Idaho Department of Fish and Game and Idaho Rivers United filed comments with the FERC. IPC responded to the comments on March 25, 2004. On July 28, 2004, the FERC announced that it had granted new 30-year licenses for each of the IPC hydroelectric projects on the middle Snake River. Upon receipt of the licenses, IPC will undertake a detailed review of the license conditions, including any potential effects on project operations. Based upon current information, IPC does not expect any conditions of the licenses to be inconsistent with the Settlement Agreement.

The Settlement Agreement provided for additional studies and analyses to more accurately assess the effect, if any, that the middle Snake River projects may have on one or more of the listed snail species. It provides for an operational regime for the five projects that will permit six years of studies and analyses of various project operations on the listed snail species, while providing interim protection of the listed species. After the studies are completed, IPC and the USFWS intend to jointly develop a plan that will address project operations and the protection of listed snails for the remainder of the new license terms.

Idaho Water Management Issues: IPC holds water rights for hydroelectric purposes at each of its hydroelectric projects. The Snake River, at various places throughout its reach from Rexburg, Idaho to King Hill, Idaho, is connected to the Eastern Snake Plain Aquifer (Aquifer), a large underground aquifer that has been estimated to hold between 200-300 maf of water. In certain times of the year, the flows into the Snake River below Milner Dam are heavily dependent on the outflow from springs that are connected to and fed by the Aquifer in the Thousand Springs reach of the Snake River. The majority of IPC's hydroelectric projects are below Milner Dam.

In August 2001, the Idaho Department of Water Resources (IDWR) designated portions of the Aquifer that are tributary to the Thousand Springs reach of the Snake River as a Ground Water Management Area due to the effect, exacerbated by several years of drought, of junior priority ground water withdrawals on senior surface water rights. Subsequently, in late 2001 and early 2002, junior ground water interests entered into a stipulated agreement with certain affected senior surface water users in an effort to mitigate the effects of ground water pumping. The IDWR established two ground water districts to facilitate the operation of the agreement. However, in 2003, surface water users that were not parties to the stipulated agreement filed delivery calls with the IDWR, demanding that it manage ground water withdrawals pursuant to the prior appropriation doctrine of "first in time is first in right" and curtail junior ground water rights that are depleting the Aquifer and affecting flows to senior surface water rights. These delivery calls resulted in several administrative actions before the IDWR and a judicial action before the State District Court in Ada County, Idaho. Because IPC holds water rights in the Thousand Springs area that are dependent on spring flows and the overall condition of the Aquifer, IPC intervened in these actions to protect its interests and encourage the development of a long-term management plan that will protect the Aquifer from further depletion.

In March 2004, the State of Idaho negotiated an interim agreement between various ground and surface water users in an effort to allow the State to develop short and long-term goals and objectives for effectively managing the Aquifer and ensuring that senior water rights are protected consistent with the prior appropriation doctrine and state law. As part of the interim agreement, the pending administrative and judicial processes are stayed until March 15, 2005 and the Idaho Legislature directed the Natural Resources Interim Committee, a standing committee, to meet and evaluate ways to stabilize and properly manage the Aquifer. As the Aquifer and the Snake River are connected resources, they must be managed conjunctively. Management alternatives that may be considered by the committee include, among others, using surface water from the Snake River to artificially recharge the Aquifer. Recharge, and other management alternatives considered by the Committee, may negatively impact IPC's water rights for hydroelectric generation on the Snake River. As such, IPC will participate in the Interim Committee process and other processes related to the conjunctive management of the Aquifer and Snake River to protect its existing hydroelectric generation water rights.

REGULATORY ISSUES:

In the order, the IPUC approved a return on equity of 10.25 percent, compared to the 11.2 percent IPC requested, an overall rate of return of 7.9 percent, compared to the 8.3 percent the company requested. The IPUC reduced the $1.55 billion in rate base requested for IPC's Idaho jurisdiction to $1.52 billion. The IPUC also disallowed several costs in the order, including $12 million annually related to the determination of IPC's income tax expense, $8 million of incentive payments capitalized in prior years and $2 million of capitalized pension expense. On June 15, 2004, IPC filed with the IPUC a petition for reconsideration of these and other items. On July 13, 2004, the IPUC granted this petition in part, agreeing to reconsider issues relating to the determination of IPC's income tax expense and, in light of the IPUC Staff's computational errors, ordering rates increased by approximately $3 million on or before August 1, 2004. IPC recorded an impairment of assets of $10 million in the second quarter related to the disallowed incentive payments and the disallowed capitalized pension expenses. On August 2, 2004, the IPUC notified the parties of record that the IPUC Staff and IPC had begun settlement negotiations on the income tax issue. If a settlement does not occur, the IPUC will hold additional hearings on or before September 14, 2004 and rule by October 12, 2004.

In the general rate case order, the IPUC approved higher rates for residential and small-commercial customers during the summer months to encourge conservation. The 12.6 percent higher summer rate applies to use over 300 kilowatt-hours. The IPUC also ordered time-of-use rates to be phased in for industrial customers, asked IPC to submit a proposal for a conservation program for industrial customers and ordered increased low-income weatherization funding of $1 million annually.

In addition, the IPUC noted several other issues to be addressed in separate proceedings and potentially handled in workshops instead of formal hearings. These include: (1) addressing the Expense Adjustment Rate for Growth component of the PCA, (2) investigating approaches to removing financial disincentives to IPC for investing in effective energy efficiency and clean distributed generation and (3) investigating various cost of service issues raised in the general rate case, including those associated with load growth. The first two matters are expected to be addressed through workshops beginning in August 2004 and concluding later in 2004. No action has yet been taken on the cost of service investigation. The outcome of these additional issues is unknown at this time.

Oregon: IPC is preparing to file an Oregon general rate case later this year. IPC has met with the OPUC Staff and previewed the rate case issue. The overall request will be for approximately $4 million. IPC cannot predict what level of rate relief the OPUC will grant.

Deferred Power Supply Costs
IPC's deferred power supply costs consisted of the following:

		June 30,		December 31,
		2004		2003
Oregon deferral		$	12,906	$	13,620
Idaho PCA current year power supply cost deferrals:
	Deferral for 2004-2005 rate year		-		44,664
	Deferral for 2005-2006 rate year		13,086		-
Idaho PCA true-up awaiting recovery:
	Remaining true-up authorized May 2003		-		13,646
	Remaining true-up authorized May 2004		34,817		-
	Total deferral	$	60,809	$	71,930

The true-up of the true-up portion of the PCA provides a tracking of the collection or the refund of true-up amounts. Each month, the collection or the refund of the true-up amount is quantified based upon the true-up portion of the PCA rate and the consumption of energy by customers. At the end of the PCA year, the total collection or refund is compared to the previously determined amount to be collected or refunded. Any difference between authorized amounts and amounts actually collected or refunded are then reflected in the following PCA year, which becomes the true-up of the true up. Over time, the actual collection or refund of authorized true-up dollars matches the amounts authorized.

Integrated Resource Plan
IPC is currently developing its 2004 IRP. The 2004 IRP reviews the load and resource situation for the next ten years, analyzes potential supply-and demand-side options and sets near-term and long-term action items. The two primary goals of the 2004 IRP are to: (1) identify sufficient resources to reliably serve the growing demand for energy service within IPC's service area throughout the 10-year planning period and (2) ensure that the portfolio of resources selected balances cost, risk and environmental concerns. In addition, there are two secondary goals: (1) to give equal and balanced treatment to both supply-side resources and demand-side measures and (2) to involve the public in the planning process in a meaningful way.

The IRP is filed every two years with both the IPUC and the OPUC. Prior to filing, the IRP requires extensive involvement by IPC, the IPUC Staff and the OPUC Staff, as well as customer, technological and environmental representatives and is the starting point for demonstrating prudence in IPC's resource decisions. The filing deadline is August 31, 2004 for both commissions. IPC expects that the commissions will acknowledge the plan by the end of 2004. The current draft IRP includes the following elements, which may require significant capital expenditures in the future:

76-MW demand response programs;

48-MW energy efficiency programs;

350-MW wind-powered generation;

100-MW geothermal-powered generation;

48-MW combined heat and power at customer facilities;

88-MW simple-cycle natural gas fired combustion turbine;

62-MW combustion turbine, distributed general or market purchases; and

500-MW coal-fired generation.

The draft IRP identifies specific actions to be taken by IPC prior to the next IRP in 2006. In fall 2004, IPC plans to issue a request for proposal (RFP) for a 200-MW wind resource and issue an RFP for a combustion turbine peaking resource. In 2005, IPC will design demand-side measures in coordination with the Energy Efficiency Advisory Group and both commissions, issue an RFP for a 12-MW combined heat and power (co-generation) facility and issue an RFP for a 100-MW geothermal resource. The final IRP may differ from the current draft due to comments received from public meetings or written comments received by IPC.

Advanced Meter Reading
On February 21, 2003, the IPUC issued Order No. 29196, which directed IPC to submit a plan no later than March 20, 2003 to replace its existing meters with advanced meters that are capable of both automated meter reading and time-of-use pricing. On April 15, 2003, the IPUC issued Order No. 29226, which modified and clarified Order No. 29196. The requirement to commence installation in 2003 was removed; however, IPC was expected to implement Advanced Meter Reading (AMR) as soon as practicable, subject to updated analysis showing AMR to be cost effective for customers. As ordered by the IPUC, IPC submitted an updated analysis on May 9, 2003. A workshop with the IPUC Staff and other interested parties to discuss the analysis was held on May 19, 2003. The IPUC issued Order No. 29291 on July 14, 2003, providing interested parties the opportunity to submit comments regarding IPC's updated analysis. On October 24, 2003, the IPUC issued Order No. 29362, which directed IPC to collaboratively develop and submit a Phase One AMR Implementation Plan to replace current residential meters with advanced meters in selected service areas. IPC complied with this order on December 23, 2003 by filing a Phase One Implementation Plan that targeted the Emmett, Idaho and McCall, Idaho areas for 2004 installation and 2005 implementation. Approximately 23,000 meters will be installed between April 19, 2004 and December 31, 2004. Phase One is estimated to cost $6 million. IPC will include these costs in future rate filings. IPC will submit a report to the IPUC by December 31, 2005, summarizing the AMR project and associated benefits and costs.

Relicensing of Hydroelectric Projects
IPC, like other utilities that operate nonfederal hydroelectric projects, obtains licenses for its hydroelectric projects from the FERC. These licenses last for 30 to 50 years depending on the size and complexity of the project. Currently, the license for one hydroelectric project has expired. This project continues to operate under an annual license until the FERC issues a new multi-year license. Two more of IPC's hydroelectric project licenses will expire by 2010.

IPC is actively pursuing the relicensing of these projects, a process that may continue for the next ten to 15 years. The current status of IPC's relicensing efforts is summarized in the table below:

Projects	Current status
Middle Snake River Projects
Bliss, Upper Salmon Falls, Lower Salmon	30-year FERC licenses issued on July 28, 2004.
Falls, Shoshone Falls and CJ Strike

Malad
Upper Malad and Lower Malad	License expired on August 1, 2004. New license application filed in
	July 2002. Annual licenses issued under terms and conditions of the
	expired multi-year license.

HCC
Brownlee-Oxbow-HCC	License expires in 2005. New license application filed in July 2003.

On July 28, 2004, the FERC announced that it had granted new 30-year licenses for each of the IPC hydroelectric projects on the middle Snake River. Upon receipt of the licenses, IPC will undertake a detailed review of the license conditions, including any potential effects on project operations. These five projects can generate nearly 265-MW of electricity. The middle Snake River projects (Bliss, Upper Salmon Falls, Lower Salmon Falls, Shoshone Falls and CJ Strike) may affect five species of snails listed under the ESA. See previous discussion in "LEGAL AND ENVIRONMENTAL ISSUES - Environmental Issues - Threatened and Endangered Snails."

The most significant ongoing relicensing effort is the HCC, which provides approximately two-thirds of IPC's hydroelectric generating capacity and 40 percent of its total generating capacity. IPC developed the license application for the HCC through a collaborative process involving representatives of state and federal agencies, businesses, environmental, tribal, customer, local government and local landowner interests. The license application for the HCC was filed in July 2003. The application includes continuation of existing and proposed new protection, mitigation and enhancement (PM&E) measures estimated to total (assuming a 30-year license) approximately $106 million in the first five years of the license and $218 million over the following 25 years. However, the actual costs of the PM&E measures and other costs associated with the relicensing of the project will not be known until the new license is issued by the FERC. The current license for the project expires in July 2005. IPC will thereafter operate the project under annual licenses issued by the FERC until the new multi-year license is issued.

In connection with the relicensing of the HCC, IPC is also engaged with the FERC and relevant federal and state agencies on the effects, if any, of the relicensing of the project on species listed as threatened or endangered under the ESA. The National Marine Fisheries Service (NMFS) listed Snake River sockeye as endangered in 1991, Snake River spring, summer and fall chinook as threatened in 1992 and Snake River steelhead as threatened in 1997. In June 1998, the USFWS also listed bull trout in the Columbia and Klamath River basins as threatened. Since 1997 IPC has been engaged in informal discussions with the NMFS and other federal, state and tribal interests on issues associated with the effect of the HCC operations on ESA-listed species and aquatic resources below the HCC in the context of the Snake River Basin Adjudication mediation.

In a letter to the FERC dated April 23, 2004, the USFWS recommended that IPC be designated as the non-federal representative of the FERC for purposes of Section 7 consultation under the ESA for the HCC. In a letter to the FERC dated May 17, 2004, IPC concurred with that request and consented to serving as the FERC's non-federal representative for such purposes. Also on May 17, 2004, IPC and the NMFS sent a joint status update to the FERC on the progress of their previous discussions and requested that the FERC also designate IPC as its non-federal representative for purposes of ESA informal consultation with the NMFS. By letter dated May 19, 2004 to the NMFS and the USFWS, the FERC designated IPC as its non-federal representative to conduct informal consultation under the ESA. In that capacity, IPC has initiated discussions with the NMFS and the USFWS relative to issues associated with the ESA and the relicensing of the HCC. On July 9, 2004 the FERC also requested formal consultation with the NMFS with respect to the effects of the HCC on ESA-listed species.

On May 4, 2004, the FERC Staff (Staff) responded to the ASRs submitted to the FERC by intervenors in the HCC relicensing process. These ASRs were submitted in response to the FERC's Notice of Tendering Application issued July 31, 2003. The FERC received a total of 123 ASRs. In the May 4, 2004 response, the Staff acted on the 123 ASRs, issuing to IPC a total of fourteen AIRs.

On June 8, 2004, IPC filed a letter with the FERC objecting to certain of the AIRs and also requesting clarification, modification or extensions of time as to others. IPC objected to some of the AIRs on the basis that there was no nexus between the HCC operations and the asserted effects on the resources that were the subject of the AIRs, submitting that under the FPA, the FERC's authority to impose terms and conditions in a project license for the PM&E of fish and wildlife resources is limited to resources that are affected by the development, operation and management of the project. In the case of several of the AIRs, IPC contended that the resources at issue were affected by the development and operation of federal hydroelectric projects downstream from the HCC, not by the HCC.

IPC objected to other AIRs relating to various limitations on flow, ramping rates and other operational restrictions intended to benefit recreational navigation below the HCC on the basis that the Hells Canyon National Recreation Area Act (HCNRAA), enacted by Congress in 1975, grandfathers the HCC and prohibits flow requirements of any kind on waters of the Snake River below the HCC.

On June 29, 2004, the Staff denied IPC's objections to the AIRs, advising that their review of the license application indicates that the HCC has the potential to affect downstream aquatic and terrestrial resources and disagreeing that the HCNRAA places any restriction on requirements that can be included in the license for the HCC. The Staff also granted extensions of time and provided clarification for certain other AIRs. On July 29, 2004, IPC filed a Petition for Rehearing with the FERC contesting the Staff's decision denying IPC's objections to the AIRs.

On June 11, 2004, American Rivers and Idaho Rivers United filed an interlocutory appeal of the Staff's denial of fish passage study requests, one of the ASRs that the Staff did not adopt in the May 4, 2004 response to the ASRs. IPC filed a response to the interlocutory appeal on June 28, 2004. By order dated July 15, 2004, the FERC dismissed the interlocutory appeal filed by American Rivers.

At June 30, 2004, $65 million of relicensing costs were included in Construction Work in Progress and $9 million of relicensing costs were included in Electric Plant in Service. The relicensing costs are recorded and held in Construction Work in Progress until a new multi-year license or annual license is issued by the FERC, at which time the charges are transferred to Electric Plant in Service. Relicensing costs and costs related to the new licenses, as discussed above, will be submitted to regulators for recovery through the rate-making process.

American Rivers Petition: On May 1, 2003, American Rivers and Idaho Rivers United petitioned the United States Court of Appeals for the District of Columbia Circuit requesting that the court issue a Writ of Mandamus compelling the FERC to respond to a petition American Rivers filed with the FERC in 1997 requesting that the FERC initiate formal consultation pursuant to Section 7(a)(2) of the ESA with the NMFS on the effects of the ongoing operations of IPC's HCC on four species of Snake River salmon and steelhead trout that are listed as threatened or endangered under the ESA. American Rivers contends that consultation is necessary because the operations of the HCC have a current, adverse impact on the listed anadromous fish.

IPC contested the 1997 petition before the FERC on two principal bases: first, that there is no evidence to support the American Rivers contention that the operations of the HCC have an adverse impact on ESA listed species; and second, that neither the ESA nor the FPA grant the FERC the type of discretionary federal control that constitutes the consultation-triggering federal action required under Section 7(a)(2) of the ESA. Since 1997, the FERC has taken no action on the pending petition, but has been engaged in informal discussions with IPC and the NMFS on issues associated with the effect of HCC operations on fishery resources below the HCC. Some of these discussions have occurred in the context of the Snake River Basin Adjudication mediation, which is subject to a court imposed confidentiality order.

On June 30, 2003, the FERC filed a response to the Petition for Mandamus. The FERC opposed the petition, first, because there was no federal action before the FERC to trigger a consultation responsibility under ESA Section 7(a)(2); second, because there was no evidence to substantiate the allegations of the petitioners that the ESA-listed species have continued to decline since the filing of the original petition with the FERC in 1997; and lastly, because there were no grounds to support the allegations of unreasonable delay given the ongoing interaction between the FERC, IPC and other interested parties with regard to issues associated with the ESA-listed species and the HCC. IPC moved to intervene in the case and filed a brief in support of the FERC's position on July 3, 2003. The petitioners filed a reply in support of the Petition for Mandamus with the court on July 8, 2003. The case was argued on March 16, 2004. On June 22, 2004, the court issued a decision in the case ordering the FERC to issue a judicially reviewable response to the 1997 petition within 45 days. The FERC has not yet responded to the petition.

Regional Transmission Organizations
In December 1999, the FERC, in its Order No. 2000, said that all companies with transmission assets must file to form Regional Transmission Organizations (RTOs) or explain why they cannot do so. Order No. 2000 was a follow up to Order Nos. 888 and 889 issued in 1996, which require transmission owners to provide non-discriminatory transmission service to third parties. By encouraging the formation of RTOs, the FERC seeks to further facilitate the formation of efficient, competitive wholesale electricity markets.

In October 2000 and March 2002, in response to FERC Order No. 2000, IPC and nine other regional transmission owners filed Stage One and Stage Two plans to form RTO West, an entity that would operate the transmission grid in the northwest and British Columbia. In September 2002, the FERC issued an order granting in part RTO West's Stage Two request for a declaratory order, approving the majority of the proposed plan. With further development of detail and some modification, the FERC stated that the proposal "will satisfy not only the Order No. 2000 requirements, but that it can also provide a basic framework for standard market design for the West." Before implementation, additional filings and State approvals will be necessary.

In April 2003, the FERC issued its "White Paper: Wholesale Market Platform," and "Appendix A: Comparison of the Proposed Wholesale Market Platform (WMP) with the RTO Requirements of Order No. 2000." The White Paper set forth the FERC's then current thinking on issues under consideration in the Standard Market Design (SMD) proceeding. It focused in particular on the elements that must be in place for well-functioning wholesale markets. Appendix A provided a comparison of Order No. 2000's existing requirements for RTOs with the proposed requirements of the WMP that would apply to RTOs and independent system operators (ISOs). The FERC committed to consider all comments on the White Paper, as well as pending legislation, prior to the issuance of a Final Rule. To date, the FERC has not issued a Final Rule in its SMD proceeding.

In mid-2003, the RTO West Regional Representatives Group (RRG), in an effort to bolster regional support, began a new phase of discussions related to the development of an independent entity to manage the regional transmission system and improve related wholesale markets. These discussions began with wide-ranging consideration of current transmission problems and opportunities within the region.

In late summer and fall 2003, task groups from the RRG focused on developing different option packages to address the region's transmission problems and opportunities. As this effort proceeded, however, many regional parties felt it would be preferable to work toward a single proposal that could gain broad regional support. To further this goal, the RRG formed a small task group to take into account the perspectives, priorities and concerns that regional parties had identified during the course of discussions since June 2003, and, working on behalf of the RRG as a whole, to develop the best proposal possible in view of these considerations.

As a result of this effort, the task group developed a regional proposal that received support from the RRG in February 2004. The regional proposal provides a framework that seeks to better manage the regional transmission system and enhance wholesale power markets through the creation of an independent entity that will manage the region's combined transmission services, operate certain aspects of the combined system such as transmission reservation and scheduling, provide monitoring of regional power markets, perform comprehensive transmission system-wide planning and facilitate other aspects of transmission system operation. The region continues to further develop this proposal. In March 2004, the RRG also changed the name of RTO West to Grid West.

Bylaws that would create an independent board to implement Grid West have been developed and reviewed by the RRG. BPA is undertaking further review of these bylaws during summer 2004 in preparation for an anticipated bylaw adoption in fall 2004. If the bylaws are approved, the next steps will include engaging an executive search firm to help identify possible developmental board candidates, and the developmental board could be seated as early as spring 2005.

OTHER MATTERS:

Ida-West
In 2003, IDACORP made the decision to discontinue Ida-West's project development operations. This decision resulted from the development of IDACORP's new corporate strategy. The new strategy does not include the development or acquisition of merchant generation, which had been Ida-West's focus. IDACORP reported that it would either sell Ida-West or retain its remaining properties and manage them with a smaller staff. Currently, Ida-West continues to manage its independent power projects and has reduced its workforce from 16 to 12 full-time employees.

IDACOMM
On June 29, 2004, IDACOMM acquired Sierra-Pacific Communications' fiber-optic network in the Las Vegas, Nevada and Reno, Nevada metro areas. The acquisition includes 170 route-miles of metro area fiber-optic network, Sierra Pacific Communications' customers, the network's supporting infrastructure, five employees, offices and business equipment. This transaction enables IDACOMM to expand its business and strengthen its position in attractive markets without building new networks.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

IDACORP and IPC are exposed to various market risks, including changes in interest rates, commodity prices, credit risk and equity price risk. The following discussion summarizes these risks and the financial instruments, derivative instruments and derivative commodity instruments sensitive to changes in interest rates, commodity prices and equity prices that were held at June 30, 2004.

Interest Rate Risk
IDACORP and IPC manage interest expense and short and long-term liquidity though a combination of fixed rate and variable rate debt. Generally, the amount of each type of debt is managed through market issuance, but interest rate swap and cap agreements with highly rated financial institutions may be used to achieve the desired combination.

Variable Rate Debt: As of June 30, 2004, IDACORP and IPC had $188 million and $138 million, respectively, in variable rate debt net of temporary investments. Assuming no change in either company's financial structure, if variable interest rates were to average one percentage point higher than the average rate on June 30, 2004, interest rate expense would increase and pre-tax earnings would decrease by approximately $2 million for IDACORP and $1 million for IPC.

Fixed Rate Debt: As of June 30, 2004, IDACORP and IPC had outstanding fixed rate debt of $885 million and $811 million, respectively. The fair market value of this debt was $892 million and $815 million, respectively. These instruments are fixed rate, and therefore do not expose IDACORP or IPC to a loss in earnings due to changes in market interest rates. However, the fair value of these instruments would increase by approximately $70 million for IDACORP and $68 million for IPC if interest rates were to decline by one percentage point from their June 30, 2004 levels.

Commodity Price Risk
Utility: IPC's commodity price risk has not changed materially from that reported in the Annual Report on Form 10-K for the year ended December 31, 2003.

Credit Risk
Utility: IPC's credit risk has not changed materially from that reported in the Annual Report on Form 10-K for the year ended December 31, 2003.

Energy: As part of the sale of the forward book of electricity trading contracts, IE entered into an Indemnity Agreement with Sempra Energy Trading, guaranteeing the performance of one of the counterparties. The maximum amount payable by IE under the Indemnity Agreement is $20 million. The Indemnity Agreement has been accounted for in accordance with FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" and did not have a significant effect on IDACORP's financial statements.

Equity Price Risk
IDACORP and IPC's equity price risk has not changed materially from that reported in the Annual Report on Form 10-K for the year ended December 31, 2003.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures:

The Chief Executive Officer and Chief Financial Officer of IDACORP, based on their evaluation of IDACORP's disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of June 30, 2004, have concluded that IDACORP's disclosure controls and procedures are effective.

The Chief Executive Officer and Chief Financial Officer of IPC, based on their evaluation of IPC's disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of June 30, 2004, have concluded that IPC's disclosure controls and procedures are effective.

(b) Changes in internal control over financial reporting:

Section 404 of the Sarbanes-Oxley Act of 2002 (SOX) requires that effective for the 2004 fiscal year, IDACORP's Chief Executive Officer and Chief Financial Officer certify the effectiveness of IDACORP's, internal controls over financial reporting. To satisfy this requirement, IDACORP developed and has been applying a SOX 404 process which includes steps to (i) identify significant accounts and disclosures and related financial statement assertions, (ii) document the existing control activities for each significant account, and disclosure and related assertions, (iii) test each of those control activities, (iv) identify control deficiencies, if any, (v) remediate the identified control deficiencies and (vi) test the remediated control activity to ensure that the identified control deficiencies have been properly remediated. Once the SOX 404 process has been completed and the Chief Executive Officer and Chief Financial Officer have certified, for the 2004 fiscal year, the effectiveness of IDACORP's internal controls over financial reporting, the internal controls will be subject to ongoing monitoring and testing to support future certifications. IDACORP expects to identify and remediate control deficiencies identified during the SOX 404 process in preparation for its first management report on internal controls over financial reporting with respect to 2004.

In connection with the SOX 404 process, IDACORP reported in its first quarter 10-Q that it had identified several control deficiencies in Information Technology controls over financial reporting related to disclosure controls and procedures. These deficiencies were in the areas of program development, program changes, computer operations and access to programs and data. Policies and procedures have been developed and implemented to remediate the identified control deficiencies. IDACORP plans to test the remediated control activities in the third quarter of 2004.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Reference is made to Note 5 to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2004.

ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES

As part of their compensation, directors of IDACORP, Inc. who are not employees each received a grant of 611 shares of common stock, equal to $16,000, on July 19, 2004. The stock was issued without registration under the Securities Act of 1933 in reliance upon Section 4(2) of the Act.

Issuer Purchases of Equity Securities:

Idaho Power Company Preferred Stock					(d) Maximum
					Number (or
					Approximate
				(c) Total Number	Dollar
				of Shares	Value) of
				Purchased	Shares that
				as Part of	May Yet Be
	(a) Total			Publicly	Purchased
	Number	(b) Average		Announced	Under the
	of Shares	Price Paid		Plans or	Plans or
Period	Purchased	per Share		Programs	Programs
April 1 - April 30, 2004	-	$	-
May 1 - May 31, 2004	322		72.91
June 1 - June 30, 2004	-		-
Total	322 (1)	$	72.91

(1) These shares of 4% preferred stock were purchased in open market transactions and retired.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

IDACORP, Inc.:

(a)

Regular annual meeting of IDACORP, Inc.'s stockholders, held May 20, 2004 in Boise,

Idaho.

(b)

Directors elected at the meeting for a three-year term:

Rotchford L. Barker

Robert A. Tinstman

Jon H. Miller

Continuing Directors:

Christopher L. Culp

Jan B. Packwood

Jack K. Lemley

Richard G. Reiten

Gary G. Michael

Thomas J. Wilford

Peter S. O'Neill

(c)

To elect three Director Nominees:

Name

For

Withheld

Total Voted

Rotchford L. Barker

29,909,723

1,253,191

31,162,914

Jon H. Miller

30,229,225

933,689

31,162,914

Robert A. Tinstman

30,176,076

986,838

31,162,914

To ratify the selection of Deloitte & Touche LLP as independent auditors for

the fiscal year ending December 31, 2004:

Class of Stock

For

Against

Abstain

Total Voted

Common

30,130,971

811,816

220,127

31,162,914

To act upon a shareholder proposal requesting IDACORP, Inc. to publish annually in the

Proxy Statement an explanation of Board procedures governing donations to and a list

of Board-approved private foundations:

Class

Broker

of Stock

For

Against

Abstain

Non-Votes

Total Voted

Common

3,331,857

17,364,932

1,537,260

8,928,865

31,162,914

Idaho Power Company:

(a)		Regular annual meeting of Idaho Power Company's stockholders, held May 20,
		2004 in Boise, Idaho.

(b)		Directors elected at the meeting for a three-year term:
				Rotchford L. Barker						Robert A. Tinstman
				Jon H. Miller

		Continuing Directors:
				Christopher L. Culp						Jan B. Packwood
				Jack K. Lemley						Richard G. Reiten
				Gary G. Michael						Thomas J. Wilford
				Peter S. O'Neill

(c)	1)	To elect three Director Nominees:

						Common			4% Preferred				7.68% Preferred
		Name				For	Withheld		For			Withheld	For		Withheld
		Rotchford L. Barker				39,150,812	-		1,643,700			72,220	94,200		1,045
		Jon H. Miller				39,150,812	-		1,610,900			105,020	94,200		1,045
		Robert A. Tinstman				39,150,812	-		1,642,600			73,320	94,200		1,045

	2)	To ratify the selection of Deloitte & Touche LLP as independent auditors for
		the fiscal year ending December 31, 2004:

		Class of Stock			For			Against			Abstain			Total Voted
		Common			39,150,812			-			-			39,150,812
		4% Preferred			1,612,200			67,840			35,880			1,715,920
		7.68% Preferred			93,975			555			715			95,245
			Total		40,856,987			68,395			36,595			40,961,977

ITEM 5. OTHER INFORMATION

Board of Directors
IDACORP, Inc. Executive Vice President and Idaho Power Company President and Chief Operating Officer, J. LaMont Keen, was elected to the IDACORP, Inc. and Idaho Power Company Boards of Directors on July 15, 2004.

Officers
IDACORP, Inc. and Idaho Power Company Vice President, General Counsel and Secretary Robert W. Stahman will retire at the end of 2004. Thomas R. Saldin, former Executive Vice President and General Counsel for Albertson's, Inc., will replace Mr. Stahman effective October 1, 2004.

Effective June 30, 2004, Vice President of Power Supply John P. Prescott left Idaho Power Company to pursue other opportunities.

On July 1, 2004, Idaho Power Company Senior Vice President of Delivery James C. Miller became the Senior Vice President of Power Supply of Idaho Power Company; IDACORP, Inc. and Idaho Power Company Vice President of Administrative Services and Human Resources Daniel B. Minor assumed the responsibilities of Senior Vice President of Delivery of Idaho Power Company; IDACORP, Inc. and Idaho Power Company Vice President, Chief Financial Officer and Treasurer Darrel T. Anderson expanded his duties to become the Senior Vice President - Administrative Services and Chief Financial Officer of IDACORP, Inc. and Idaho Power Company.

On July 15, 2004, Lori D. Smith was elected Vice President of Finance and Chief Risk Officer of IDACORP, Inc. and Idaho Power Company and Dennis C. Gribble was elected Vice President and Treasurer of IDACORP, Inc. and Idaho Power Company.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

*Previously Filed and Incorporated Herein by Reference

Exhibit	File Number	As Exhibit

*2	333-48031	2	Agreement and Plan of Exchange between IDACORP, Inc., and IPC dated as of February 2, 1998.

*3(a)	33-00440	4(a)(xiii)	Restated Articles of Incorporation of IPC as filed with the Secretary of State of Idaho on June 30, 1989.

*3(a)(i)	33-65720	4(a)(ii)	Statement of Resolution Establishing Terms of Flexible Auction Series A, Serial Preferred Stock, Without Par Value (cumulative stated value of $100,000 per share) of IPC, as filed with the Secretary of State of Idaho on November 5, 1991.

*3(a)(ii)	33-65720	4(a)(iii)	Statement of Resolution Establishing Terms of 7.07% Serial Preferred Stock, Without Par Value (cumulative stated value of $100 per share) of IPC, as filed with the Secretary of State of Idaho on June 30, 1993.

*3(a)(iii)	1-3198 Form 10-Q for the quarter ended 6/30/00	3(a)(iii)	Articles of Amendment to Restated Articles of Incorporation of IPC as filed with the Secretary of State of Idaho on June 15, 2000.

*3(b)	1-3198 Form 10-Q for the quarter ended 3/31/03	3(b)	Bylaws of IPC amended on March 20, 2003, and presently in effect.

*3(c)	33-56071	3(d)	Articles of Share Exchange, as filed with the Secretary of State of Idaho on September 29, 1998.

*3(d)	333-64737	3.1	Articles of Incorporation of IDACORP, Inc.

*3(d)(i)	333-64737	3.2	Articles of Amendment to Articles of Incorporation of IDACORP, Inc. as filed with the Secretary of State of Idaho on March 9, 1998.



*3(d)(ii)	333-00139	3(b)	Articles of Amendment to Articles of Incorporation of IDACORP, Inc. creating A Series Preferred Stock, without par value, as filed with the Secretary of State of Idaho on September 17, 1998.

*3(e)	333-104254	4(e)	Amended Bylaws of IDACORP, Inc. amended on March 20, 2003, and presently in effect.

*4(a)(i)	2-3413	B-2	Mortgage and Deed of Trust, dated as of October 1, 1937, between IPC and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company) and R. G. Page, as Trustees.

*4(a)(ii)			IPC Supplemental Indentures to Mortgage and Deed of Trust:

			Number	Dated
	1-MD	B-2-a	First	July 1, 1939
	2-5395	7-a-3	Second	November 15, 1943
	2-7237	7-a-4	Third	February 1, 1947
	2-7502	7-a-5	Fourth	May 1, 1948
	2-8398	7-a-6	Fifth	November 1, 1949
	2-8973	7-a-7	Sixth	October 1, 1951
	2-12941	2-C-8	Seventh	January 1, 1957
	2-13688	4-J	Eighth	July 15, 1957
	2-13689	4-K	Ninth	November 15, 1957
	2-14245	4-L	Tenth	April 1, 1958
	2-14366	2-L	Eleventh	October 15, 1958
	2-14935	4-N	Twelfth	May 15, 1959
	2-18976	4-O	Thirteenth	November 15, 1960
	2-18977	4-Q	Fourteenth	November 1, 1961
	2-22988	4-B-16	Fifteenth	September 15, 1964
	2-24578	4-B-17	Sixteenth	April 1, 1966
	2-25479	4-B-18	Seventeenth	October 1, 1966
	2-45260	2(c)	Eighteenth	September 1, 1972
	2-49854	2(c)	Nineteenth	January 15, 1974
	2-51722	2(c)(i)	Twentieth	August 1, 1974
	2-51722	2(c)(ii)	Twenty-first	October 15, 1974
	2-57374	2(c)	Twenty-second	November 15, 1976
	2-62035	2(c)	Twenty-third	August 15, 1978
	33-34222	4(d)(iii)	Twenty-fourth	September 1, 1979
	33-34222	4(d)(iv)	Twenty-fifth	November 1, 1981
	33-34222	4(d)(v)	Twenty-sixth	May 1, 1982
	33-34222	4(d)(vi)	Twenty-seventh	May 1, 1986
	33-00440	4(c)(iv)	Twenty-eighth	June 30, 1989
	33-34222	4(d)(vii)	Twenty-ninth	January 1, 1990
	33-65720	4(d)(iii)	Thirtieth	January 1, 1991
	33-65720	4(d)(iv)	Thirty-first	August 15, 1991
	33-65720	4(d)(v)	Thirty-second	March 15, 1992
	33-65720	4(d)(vi)	Thirty-third	April 1, 1993
	1-3198 Form 8-K Dated 12/17/93	4	Thirty-fourth	December 1, 1993
	1-3198 Form 8-K Dated 11/21/00	4	Thirty-fifth	November 1, 2000
	1-3198 Form 8-K Dated 9/27/01	4	Thirty-sixth	October 1, 2001


	1-3198 Form 8-K Dated 4/15/03	4	Thirty-seventh	April 1, 2003
	1-3198 Form 10-Q for the quarter ended 6/30/03	4(a)(iii)	Thirty-eighth	May 15, 2003
	1-3198 Form 10-Q for the quarter ended 9/30/03	4(a)(iii)	Thirty-ninth	October 1, 2003

*4(b)	1-3198 Form 10-Q for the quarter ended 6/30/00	4(b)	Instruments relating to IPC American Falls bond guarantee (see Exhibit 10(c)).

*4(c)(i)	33-65720	4(f)	Agreement of IPC to furnish certain debt instruments.

*4(c)(ii)	1-11465 Form 10-Q for the quarter ended 9/30/03	4(c)(ii)	Agreement of IDACORP, Inc. to furnish certain debt instruments.

*4(d)	33-00440	2(a)(iii)	Agreement and Plan of Merger dated March 10, 1989, between Idaho Power Company, a Maine Corporation, and Idaho Power Migrating Corporation.

*4(e)	1-14465 Form 8-K dated September 15, 1998	4	Rights Agreement, dated as of September 10, 1998, between IDACORP, Inc. and Wells Fargo Bank, N.A., as successor to The Bank of New York, as Rights Agent.

*4(f)	1-14465 Form 8-K dated February 28, 2001	4.1	Indenture for Senior Debt Securities dated as of February 1, 2001, between IDACORP, Inc. and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company), as trustee.

*4(g)	1-14465 Form 8-K dated February 28, 2001	4.2	First Supplemental Indenture dated as of February 1, 2001 to Indenture for Senior Debt Securities dated as of February 1, 2001 between IDACORP, Inc. and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company), as trustee.


*4(h)	333-67748	4.13	Indenture for Debt Securities dated as of August 1, 2001 between Idaho Power Company and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company), as trustee.

*10(a)	2-49584	5(b)	Agreements, dated September 22, 1969, between IPC and Pacific Power & Light Company relating to the operation, construction and ownership of the Jim Bridger Project.

*10(a)(i)	2-51762	5(c)	Amendment, dated February 1, 1974, relating to operation agreement filed as Exhibit 10(a).

*10(b)	2-49584	5(c)	Agreement, dated as of October 11, 1973, between IPC and Pacific Power & Light Company.

*10(c)	1-3198 Form 10-Q for the quarter ended 6/30/00	10(c)	Guaranty Agreement, dated April 11, 2000, between IPC and Bank One Trust Company, N.A., as Trustee, relating to $19,885,000 American Falls Replacement Dam Refinancing Bonds of the American Falls Reservoir District, Idaho.

*10(d)	2-62034	5(r)	Guaranty Agreement, dated as of August 30, 1974, between IPC and Pacific Power & Light Company.

*10(e)	2-56513	5(i)	Letter Agreement, dated January 23, 1976, between IPC and Portland General Electric Company.

*10(e)(i)	2-62034	5(s)	Agreement for Construction, Ownership and Operation of the Number One Boardman Station on Carty Reservoir, dated as of October 15, 1976, between Portland General Electric Company and IPC.

*10(e)(ii)	2-62034	5(t)	Amendment, dated September 30, 1977, relating to agreement filed as Exhibit 10(e).

*10(e)(iii)	2-62034	5(u)	Amendment, dated October 31, 1977, relating to agreement filed as Exhibit 10(e).

*10(e)(iv)	2-62034	5(v)	Amendment, dated January 23, 1978, relating to agreement filed as Exhibit 10(e).

*10(e)(v)	2-62034	5(w)	Amendment, dated February 15, 1978, relating to agreement filed as Exhibit 10(e).

*10(e)(vi)	2-68574	5(x)	Amendment, dated September 1, 1979, relating to agreement filed as Exhibit 10(e).

*10(f)	2-68574	5(z)	Participation Agreement, dated September 1, 1979, relating to the sale and leaseback of coal handling facilities at the Number One Boardman Station on Carty Reservoir.

*10(g)	2-64910	5(y)	Agreements for the Operation, Construction and Ownership of the North Valmy Power Plant Project, dated December 12, 1978, between Sierra Pacific Power Company and IPC.

*10(h)(i)1	1-14465 1-3198 Form 10-Q for the quarter ended 3/31/04	10(h)(i)	The Revised Security Plan for Senior Management Employees - a non-qualified, deferred compensation plan, amended and restated effective November 20, 2003.

*10(h)(ii)1	1-14465 1-3198 Form 10-K for 2003	10(h)(ii)	IDACORP, Inc. 2003 Executive Incentive Plan.

*10(h)(iii) 1	1-3198 Form 10-K for 1994	10(n)(iii)	The 1994 Restricted Stock Plan for officers and key executives of IDACORP, Inc. and IPC effective July 1, 1994.

*10(h)(iv)1	1-14465 1-3198 Form 10-K for 1998	10(h)(iv)	The Revised Security Plan for Board of Directors - a non-qualified, deferred compensation plan effective August 1, 1996, revised March 8, 1999, as amended.

*10(h)(v)1	1-14465 1-3198 Form 10-K for 2002	10(h)(v)	IDACORP, Inc. Non-Employee Directors Stock Compensation Plan as of May 17, 1999, as amended.

*10(h)(vi)	1-14465 Form 10-Q for the quarter ended 9/30/99	10(h)	Agreement between IDACORP, Inc. and Jan B. Packwood, J. LaMont Keen, James C. Miller, Darrel T. Anderson, Bryan Kearney and Robert W. Stahman.

*10(h)(vii)1	1-14465 1-3198 Form 10-Q for the quarter ended 3/31/02	10(i) 10(h)(ix)	IDACORP, Inc. 2000 Long-Term Incentive and Compensation Plan, as amended.

10(h)(viii)			Form of Officer Indemnification Agreement as signed by all Officers of IDACORP, Inc. and IPC.

10(h)(ix)			Form of Director Indemnification Agreement as signed by all Directors of IDACORP, Inc.

*10(i)	33-65720	10(h)	Framework Agreement, dated October 1, 1984, between the State of Idaho and IPC relating to IPC's Swan Falls and Snake River water rights.

1 Compensatory plan

*10(i)(i)	33-65720	10(h)(i)	Agreement, dated October 25, 1984, between the State of Idaho and IPC relating to the agreement filed as Exhibit 10(i).

*10(i)(ii)	33-65720	10(h)(ii)	Contract to Implement, dated October 25, 1984, between the State of Idaho and IPC relating to the agreement filed as Exhibit 10(i).

*10(j)	33-65720	10(m)	Agreement Regarding the Ownership, Construction, Operation and Maintenance of the Milner Hydroelectric Project (FERC No. 2899), dated January 22, 1990, between IPC and the Twin Falls Canal Company and the Northside Canal Company Limited.

*10(j)(i)	33-65720	10(m)(i)	Guaranty Agreement, dated February 10, 1992, between IPC and New York Life Insurance Company, as Note Purchaser, relating to $11,700,000 Guaranteed Notes due 2017 of Milner Dam Inc.

*10(k)	1-3198 Form 10-Q for the quarter ended 6/30/03	10(k)	Power Purchase Agreement between IPC and PPL Montana, LLC, dated March 1, 2003 and Revised Confirmation Agreement dated May 9, 2003.

12			Statement Re: Computation of Ratio of Earnings to Fixed Charges. (IDACORP, Inc.)

12(a)			Statement Re: Computation of Supplemental Ratio of Earnings to Fixed Charges. (IDACORP, Inc.)

12(b)			Statement Re: Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements. (IDACORP, Inc.)

12(c)			Statement Re: Computation of Supplemental Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements. (IDACORP, Inc.)

12(d)			Statement Re: Computation of Ratio of Earnings to Fixed Charges. (IPC)

12(e)			Statement Re: Computation of Supplemental Ratio of Earnings to Fixed Charges. (IPC)

12(f)			Statement Re: Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements. (IPC)

12(g)			Statement Re: Computation of Supplemental Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements. (IPC)

15			Letter Re: Unaudited Interim Financial Information.

*21	1-14465 1-3198 Form 10-K for 2003	21	Subsidiaries of IDACORP, Inc. and IPC.

31(a)			IDACORP, Inc. Rule 13a-14(a) certification.

31(b)			IDACORP, Inc. Rule 13a-14(a) certification.

31(c)			IPC Rule 13a-14(a) certification.

31(d)			IPC Rule 13a-14(a) certification.

32(a)			IDACORP, Inc. Section 1350 certification.

32(b)			IPC Section 1350 certification.

99			Earnings press release for second quarter 2004.

(b) Reports on SEC Form 8-K. The following Reports on Form 8-K were filed for the three months ended June 30, 2004:

Items Reported	Date of Report	Date Filed	Filed by
Item 5 - Other Events and Regulation FD Disclosure	May 12, 2004	May 19, 2004	IDACORP, Inc. and IPC
Item 5 - Other Events and Regulation FD Disclosure	May 25, 2004	May 26, 2004	IDACORP, Inc. and IPC
Item 5 - Other Events and Regulation FD Disclosure	May 26, 2004	May 27, 2004	IDACORP, Inc. and IPC
Item 5 - Other Events and Regulation FD Disclosure	May 27, 2004	June 9, 2004	IDACORP, Inc. and IPC
Item 5 - Other Events and Regulation FD Disclosure	June 15, 2004	June 16, 2004	IDACORP, Inc. and IPC
Item 5 - Other Events and Regulation FD Disclosure	June 22, 2004	June 23, 2004	IDACORP, Inc. and IPC

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

IDACORP, Inc.

(Registrant)

Date	August 5, 2004	By:	/s/	Jan B. Packwood
				Jan B. Packwood
				President and Chief Executive Officer
				and Director

Date	August 5, 2004	By:	/s/	Darrel T. Anderson
				Darrel T. Anderson
				Senior Vice President - Administrative
				Services and Chief Financial Officer
				(Principal Accounting Officer)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

IDAHO POWER COMPANY

(Registrant)

Date	August 5, 2004	By:	/s/	J. LaMont Keen
				J. LaMont Keen
				President and Chief Operating Officer and
				Director

Date	August 5, 2004	By:	/s/	Darrel T. Anderson
				Darrel T. Anderson
				Senior Vice President - Administrative
				Services and Chief Financial Officer
				(Principal Accounting Officer)

EXHIBIT INDEX


Exhibit Number

10(h)(viii)		Officer Indemnification Agreement. (IDACORP, Inc.)

10(h)(ix)		Director Indemnification Agreement. (IDACORP, Inc.)

12		Statement Re: Computation of Ratio of Earnings to Fixed Charges. (IDACORP, Inc.)

12(a)		Statement Re: Computation of Supplemental Ratio of Earnings to Fixed Charges.
		(IDACORP, Inc.)

12(b)		Statement Re: Computation of Ratio of Earnings to Combined Fixed Charges and
		Preferred Dividend Requirements. (IDACORP, Inc.)

12(c)		Statement Re: Computation of Supplemental Ratio of Earnings to Combined Fixed
		Charges and Preferred Dividend Requirements. (IDACORP, Inc.)

12(d)		Statement Re: Computation of Ratio of Earnings to Fixed Charges. (IPC)

12(e)		Statement Re: Computation of Supplemental Ratio of Earnings to Fixed Charges. (IPC)

12(f)		Statement Re: Computation of Ratio of Earnings to Combined Fixed Charges and
		Preferred Dividend Requirements. (IPC)

12(g)		Statement Re: Computation of Supplemental Ratio of Earnings to Combined Fixed
		Charges and Preferred Dividend Requirements. (IPC)

15		Letter Re: Unaudited Interim Financial Information.

31(a)		Rule 13a-14(a) certification. (IDACORP, Inc.)

31(b)		Rule 13a-14(a) certification. (IDACORP, Inc.)

31(c)		Rule 13a-14(a) certification. (IPC)

31(d)		Rule 13a-14(a) certification. (IPC)

32(a)		Section 1350 certification. (IDACORP, Inc.)

32(b)		Section 1350 certification. (IPC)

99		Earnings press release for second quarter 2004.

	Exact name of registrants as specified	I.R.S. Employer
Commission File	in their charters, address of principal	Identification
Number	executive offices, and telephone number	Number
1-14465	IDACORP, Inc.	82-0505802
1-3198	Idaho Power Company	82-0130980
	1221 W. Idaho Street
	Boise, ID 83702-5627
	(208) 388-2200
	State of Incorporation: Idaho
	Web site: www.idacorpinc.com
www.idahopower.com
None

	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
	EXCHANGE ACT OF 1934

IDACORP, Inc.:	38,188,622
Idaho Power Company:	39,150,812, all held by IDACORP, Inc.

COMMONLY USED TERMS

AFDC	-	Allowance for Funds Used During Construction
AG	-	Attorney General
AIRs	-	Additional Information Requests
ALJ	-	Administrative Law Judge
ASRs	-	Additional Study Requests
Cal ISO	-	California Independent System Operator
CalPX	-	California Power Exchange
CPUC	-	California Public Utilities Commission
EPS	-	Earnings per share
ESA	-	Endangered Species Act
FERC	-	Federal Energy Regulatory Commission
FIN	-	Financial Accounting Standards Board Interpretation
FPA	-	Federal Power Act
GAAP	-	Accounting Principles Generally Accepted in the United States of
			America
HCC	-	Hells Canyon Complex
Ida-West	-	Ida-West Energy, a subsidiary of IDACORP, Inc.
IE	-	IDACORP Energy, a subsidiary of IDACORP, Inc.
IFS	-	IDACORP Financial Services, a subsidiary of IDACORP, Inc.
IPC	-	Idaho Power Company, a subsidiary of IDACORP, Inc.
IPUC	-	Idaho Public Utilities Commission
IRP	-	Integrated Resource Plan
maf	-	Million acre-feet
MD&A	-	Management's Discussion and Analysis of Financial Condition and
			Results of Operations
MMCP	-	Mitigated Market Clearing Price
Moody's	-	Moody's Investors Service
MW	-	Megawatt
MWh	-	Megawatt-hour
NMFS	-	National Marine Fisheries Service
NPC	-	Nevada Power Company
OPUC	-	Oregon Public Utility Commission
PCA	-	Power Cost Adjustment
PG&E	-	Pacific Gas and Electric Company
PM&E	-	Protection, Mitigation and Enhancement
PMC	-	Plaintiff's Master Complaint
REA	-	Rural Electrification Administration
RTOs	-	Regional Transmission Organizations
SCE	-	Southern California Edison
S&P	-	Standard & Poor's Ratings Services
SFAS	-	Statement of Financial Accounting Standards
VIEs	-	Variable Interest Entities
WSPP	-	Western Systems Power Pool

Page

Part I. Financial Information:
	Item 1. Financial Statements (unaudited)
		IDACORP, Inc.:
			Consolidated Statements of Operations	1-2
			Consolidated Balance Sheets	3-4
			Consolidated Statements of Cash Flows	5
			Consolidated Statements of Comprehensive Income (Loss)	6
			Notes to Consolidated Financial Statements	7-25
			Report of Independent Registered Public Accounting Firm	26
		Idaho Power Company:
			Consolidated Statements of Income	28-29
			Consolidated Balance Sheets	30-31
			Consolidated Statements of Capitalization	32
			Consolidated Statements of Cash Flows	33
			Consolidated Statements of Comprehensive Income	34
			Notes to Consolidated Financial Statements	35
			Report of Independent Registered Public Accounting Firm	36

	Item 2. Management's Discussion and Analysis of Financial
		Condition and Results of Operations		37-70

	Item 3. Quantitative and Qualitative Disclosures about Market Risk			70

	Item 4. Controls and Procedures			71

Part II. Other Information:

	Item 1. Legal Proceedings			72

	Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
		Securities		72

	Item 4. Submission of Matters to a Vote of Security Holders			73-74

	Item 5. Other Information			74-75

	Item 6. Exhibits and Reports on Form 8-K			75-81

Signatures				82-83

Three Months Ended

Six Months Ended

Number