Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from [Refa Hitaffi]
[Refa Hitaffi]
Do you have the number, the impact to earnings in 2008 because of the below average hydro versus normal?
Darrel Anderson
We don't have that number available today as it relates to normal. We do know that we had improved results over 2008 versus 2007
[Refa Hitaffi]
But you would say though that in '08 there was a negative affect because of below average hydro, right?
Darrel Anderson
That's correct.
[Refa Hitaffi]
Could you talk about the hydro impact going forward? It seems like with the rate case settlement that with the ability to forecast hydro conditions and changing the sharing to 95/5, your exposure to hydro should be pretty minimal going forward. Am I understanding it correctly?
Darrel Anderson
I'll start and if we need to go into more detail we'll get some other folks, but a couple of things, one of the things that we do believe, a very successful regulatory activity was the changes in our PC methodology where we first of all changed the sharing from 90/10 to 95/5 for Idaho. That's number one.
Number two, the changes around the forecast methodology we think is a really big plus from a cash flow perspective and now we rely on our internal forecast versus relying on a different methodology that was more based on a regression formula. So those two pieces we believe are very good benefits in trying to manage the risks around the hydro system.
[Refa Hitaffi]
It sounds like the earnings impact from, or the earnings volatility from below average hydro or even above average hydro should be sort of minimal going forward.
Darrel Anderson
We do expect that. That is one of the outputs of going from 90/10 to 95/5. And, also changing the forecast methodology.
[Refa Hitaffi]
A question on Algar, do you expect to see an improvement in '09 versus 2008 in reference to Algar because I guess the Algar rates are a little bit lower now and also my understanding is that the normalized load associated with Algar calculations is now higher. Is that correct?
Lori Smith
We would expect that to be a reduced impact in 2009 just for the reasons that you just stated. The 2008 rate case will give us new normalized load that will measure against, and so we'll be even more current than we were in the full year of 2008.
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