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

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 whose principal operating subsidiary is IPC. IDACORP is subject to the provisions of the Public Utility Holding Company Act of 2005, which provides certain access to books and records to the Federal Energy Regulatory Commission (FERC) and state utility regulatory commissions and imposes certain record retention and reporting requirements on IDACORP.

IPC is an electric utility with a service territory covering approximately 24,000 square miles in southern Idaho and eastern Oregon. IPC is regulated by the FERC and the state regulatory commissions of Idaho and Oregon. IPC is the parent of Idaho Energy Resources Co. (IERCo), a joint venturer in Bridger Coal Company, which supplies coal to the Jim Bridger generating plant owned in part by IPC.

IDACORP's other subsidiaries include:

• IDACORP Financial Services, Inc. (IFS), an investor in affordable housing and other real estate investments;

• Ida-West Energy Company (Ida-West), an operator of small hydroelectric generation projects that satisfy the requirements of the Public Utility Regulatory Policies Act of 1978 (PURPA); and

• IDACORP Energy (IE), a marketer of energy commodities, which wound down operations in 2003.

While reading the MD&A, please refer to the accompanying Condensed Consolidated Financial Statements of IDACORP and IPC. This discussion updates the MD&A included in the Annual Report on Form 10-K for the year ended December 31, 2008 and should be read in conjunction with the discussions in that report.

FORWARD-LOOKING INFORMATION:

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, 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," "may result," "may 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 IDACORP's or IPC's control and may cause actual results to differ materially from those contained in forward-looking statements:

• The effect of regulatory decisions by the Idaho Public Utility Commission, the Oregon Public Utility Commission and the Federal Energy Regulatory Commission affecting our ability to recover costs and/or earn a reasonable rate of return including, but not limited to, the disallowance of costs that have been deferred;

• Changes in and compliance with state and federal laws, policies and regulations, including new interpretations by oversight bodies, which include the Federal Energy Regulatory Commission, the North American Electric Reliability Corporation, the Western Electricity Coordinating Council, the Idaho Public Utilities Commission and the Oregon Public Utility Commission, of existing policies and regulations that affect the cost of compliance, investigations and audits, penalties and costs of remediation that may or may not be recoverable through rates;

• Changes in tax laws or related regulations or new interpretations of applicable law by the Internal Revenue Service or other taxing jurisdiction;

• Litigation and regulatory proceedings, including those resulting from the energy situation in the western United States, and penalties and settlements that influence business and profitability;

• Changes in and compliance with laws, regulations and policies including changes in law and compliance with environmental, natural resources, endangered species and safety laws, regulations and policies and the adoption of laws and regulations addressing greenhouse gas emissions, global climate change, and energy policies;

• Global climate change and regional weather variations affecting customer demand and hydroelectric generation;

• Over-appropriation of surface and groundwater in the Snake River Basin resulting in reduced generation at hydroelectric facilities;

• Construction of power generation, transmission and distribution facilities, including an inability to obtain required governmental permits and approvals, rights-of-way and siting, and risks related to contracting, construction and start-up;

• Operation of power generating facilities including performance below expected levels, breakdown or failure of equipment, availability of transmission and fuel supply;

• Changes in operating expenses and capital expenditures, including costs and availability of materials, fuel and commodities;

• Blackouts or other disruptions of Idaho Power Company's transmission system or the western interconnected transmission system;

•        Population growth rates and other demographic patterns;

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

•        Increases in uncollectible customer receivables;

•        Fluctuations in sources and uses of cash;

•        Results of financing efforts, including the ability to obtain financing

• Actions by credit rating agencies, including changes in rating criteria and new interpretations of existing criteria;

• Changes in interest rates or rates of inflation;

• Performance of the stock market, interest rates, credit spreads and other financial market conditions, as well as changes in government regulations, which affect the amount and timing of required contributions to pension plans and the reported costs of providing pension and other postretirement benefits;

• Increases in health care costs and the resulting effect on medical benefits paid for employees;

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

•        Homeland security, acts of war or terrorism;

•        Natural disasters and other natural risks, such as earthquake, flood,
drought, lightning, wind and fire;

•        Adoption of or changes in critical accounting policies or estimates;
and

•        New accounting or Securities and Exchange Commission requirements, or

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.

EXECUTIVE OVERVIEW:

First Quarter 2009 Financial Results
A summary of net income attributable to IDACORP, Inc. and earnings per diluted
share is as follows:

                                             Three months ended
                                                  March 31,
                                               2009       2008
Net income attributable to IDACORP, Inc.     $   18,884  $ 21,716
Average outstanding shares - diluted (000s)      46,876    45,047
Earnings per diluted share                   $     0.40  $   0.48

IPC's electric utility operating income declined $9.4 million primarily due to a May 2008 Idaho Public Utilities Commission (IPUC) Order that required IPC to change the method for recording base power supply costs which impacted the PCA expense levels during the first and second quarter 2008. As a result, PCA expenses in the first quarter of 2008 were approximately $6.4 million lower (thereby increasing earnings) than what would have been recorded had the orders been effective by the end of the first quarter 2008.

IPC's sales volumes decreased five percent due in part to weather-related factors and the decline in commercial and industrial sales quarter-over-quarter. The impact of this reduction is partially mitigated by the Load Growth Adjustment Rate (LGAR) and Fixed Cost Adjustment (FCA) Mechanisms, both of which were put in place to manage the impact of changes in sales volumes (PCA) and customer usage (FCA) as compared to the levels included in base rates.

Utility operating income was further impacted by the Idaho general rate case which required IPC to reverse part of the refund of the Federal Energy Regulatory Commission fees recognized in 2006 decreasing income $1.7 million. A reduction in the open access transmission rates also reduced operating income $1.7 million.

Partially offsetting these items was a $4.1 million improvement in earnings from Bridger Coal Company, which had experienced losses in the first quarter of 2008 primarily due to difficulties related to the longwall mining operation, a $2.2 million increase in Other Income from life insurance investments and a $1.6 million increase in interest income primarily related to a federal income tax refund.

The following table presents a reconciliation of net income attributable to IDACORP, Inc. for the three months ended March 31, 2008 to March 31, 2009 (in thousands):

March 31, 2008 Net income attributable to IDACORP, Inc. $ 21,716

Change in IPC Net Income:
  PCA allocation change                           $  (6,400)
  FERC fees refund reversal                          (1,707)
  Other revenue decrease due to lower OATT rate      (1,729)
  Increased income at Bridger Coal Company            4,097
  Life Insurance benefits                             2,189
  Increased interest income                           1,621
  Tax and Other                                         (58)
Total Change in IPC Net Income                                 (1,987)
Decreased net income at IFS (shown net of tax)                   (660)
Other net decreases (shown net of tax)                           (185)

Capital Requirements
Major Projects: IPC has several major projects in development. These projects are summarized here and are discussed further in "LIQUIDITY AND CAPITAL RESOURCES - Capital Requirements - Major Projects."

• Langley Gulch power plant (2012 baseload resource): On March 6, 2009, IPC filed an application with the IPUC for a Certificate of Public Convenience and Necessity (CPCN) authorizing IPC to construct, own and operate the Langley Gulch power plant (Langley Gulch). Langley Gulch will be a natural gas-fired combined cycle combustion turbine (CCCT) generating plant with a summer nameplate capacity of approximately 300 MWs and a winter capacity of approximately 330 MWs and is anticipated to be in operation by December 2012. IPC proposes to construct Langley Gulch in Payette County, approximately four miles south of New Plymouth, Idaho, commencing in summer 2010 at an estimated cost of $427 million.

• Gateway West transmission project: IPC and PacifiCorp are jointly exploring the Gateway West Project to build transmission lines between Windstar, a substation located near Douglas, Wyoming and Hemingway, a substation located in the vicinity of Melba and Murphy, Idaho near Boise. The estimated cost range for IPC's share of the project is between $500 million and $600 million. The lines will provide transmission service for existing network and native load customers and their forecasted growth and provides for existing third party transmission service requests. This project is expected to relieve existing congestion by increasing transmission capacity and improving reliability to ensure compliance with mandatory regulatory reliability requirements.

• Boardman-Hemingway transmission project: IPC is also exploring alternatives for the construction of a 500-kV line between southwestern Idaho at the Hemingway substation and the Northwest at Boardman substation. Currently, IPC estimates construction costs of $600 million and IPC expects to seek partners for up to 50 percent of the project when construction commences. The Boardman-Hemingway Line will provide transmission service for existing network and native load customers and their forecasted growth and provides for existing third party transmission service requests. This project is expected to relieve existing congestion by increasing transmission capacity and improving reliability to ensure compliance with mandatory regulatory reliability requirements.

Liquidity
Pension Plan: Financial market volatility and disruption caused a significant decline in the value of qualified pension assets. Current provisions of the Pension Protection Act and relief provisions of the Worker, Retiree, and Employer Recovery Act require that if a company is not 94 percent funded as of January 1, 2009, then, the company will need to make additional contributions to improve the funded status of the plan. Based on the value of pension assets and interest rates as of December 31, 2008, the estimated minimum required contributions would be approximately $45 million in 2010 and $33 million in each of 2011, 2012, and 2013.

American Recovery and Reinvestment Act of 2009: The American Recovery and Reinvestment Act of 2009, enacted on February 17, 2009, provides tax and appropriation benefits to the utility industry. IPC is currently evaluating the impact of and opportunities under the Act.

Regulatory Matters
Idaho 2008 General Rate Case: On January 30, 2009, the IPUC issued its final order approving an average annual increase in Idaho base rates, effective February 1, 2009, of 3.1 percent (approximately $20.9 million annually), a return on equity of 10.5 percent and an overall rate of return of 8.18 percent. On March 19, 2009, in response to IPC's request for reconsideration, the IPUC issued an order which increased IPC's Idaho revenue requirement by approximately $6.1 million to approximately $27 million. The request for reconsideration is discussed in more detail in "REGULATORY MATTERS - Idaho Rate Cases - 2008 General Rate Case."

Idaho Ratemaking Treatment Act: This legislation allows the IPUC to authorize and pre-approve ratemaking treatment for qualified capital construction projects of IPC and other Idaho utilities. The legislation will become effective July 1, 2009, and provide greater assurance to capital markets of IPC's ability to recover costs for large projects authorized by the IPUC.
Idaho PCA: PCA workshops were conducted in the fall of 2008 and the resulting settlement stipulation became effective February 1, 2009. The stipulation includes, among other things, a change in the sharing percentage between customers and shareholders, the inclusion of third-party transmission expense in the PCA and a new LGAR rate. The stipulation is discussed in more detail in "REGULATORY MATTERS - Deferred Net Power Supply Costs - PCA Workshops."

Integrated Resource Plan: IPC is currently preparing the 2009 IRP, which was originally expected to be completed in June 2009. In light of the economic changes since September 2008 and in response to the OPUC's desire for additional analysis regarding the Boardman to Hemingway Transmission Project, on April 24, 2009 IPC filed a request for an extension with the IPUC and OPUC to delay the filing of the 2009 IRP until December 2009.

OATT: Effective June 1, 2006, IPC's Open Access Transmission Tariff (OATT) was made a formula rate based on financial and operational data IPC is required to file annually with the FERC in its Form 1. On January 15, 2009, the FERC issued an unfavorable order affecting the way IPC calculates its OATT. The order required IPC to reduce its transmission service rates to FERC jurisdictional customers and make refunds in the total amount of $13.3 million (including $1.1 million in interest) for the period since June 2006, which IPC did on February 25, 2009. IPC has filed a request for rehearing with the FERC. On March 18, 2009, the FERC issued a tolling order that effectively relieves it from acting on the request for reconsideration for an indefinite period of time. The OATT is discussed in more detail in "REGULATORY MATTERS - Federal Regulatory Matters
- OATT."

Environmental Issues
IPC is actively tracking state, regional and federal developments in the climate change area and the related proposals for renewable portfolio standards. IPC is also monitoring changes in air quality standards, including possible changes in the National Ambient Air Quality Standards and the development of Maximum Achievable Control Technology standards for mercury emissions from coal-fired power plants. These issues are discussed in more detail in "LEGAL AND ENVIRONMENTAL ISSUES - Environmental Issues."

Idaho Water Management Issues: Power generation at the IPC hydroelectric power plants on the Snake River is dependent upon the state water rights held by IPC and the long-term sustainability of the Snake River, tributary spring flows and the Eastern Snake Plain Aquifer that is connected to the Snake River. IPC continues to participate in water management issues in Idaho that may affect those water rights and resources with the goal to preserve, to the fullest extent possible, the long-term availability of water for use at IPC's hydroelectric projects on the Snake River. On March 25, 2009, IPC and the State of Idaho (State) entered into a settlement agreement with respect to the 1984 Swan Falls Agreement and IPC's water rights under the Swan Falls Agreement, which settlement agreement is subject to certain conditions. The settlement agreement will also resolve litigation between IPC and the State relating to the Swan Falls Agreement that was filed by IPC on May 10, 2007 with the Idaho District Court for the Fifth Judicial Circuit, which has jurisdiction over SRBA matters. For a further discussion of water management issues see "LEGAL AND ENVIRONMENTAL ISSUES - Environmental Issues - Idaho Water Management Issues."

2009 Operating and Financial Metrics Outlook

The outlook for key operating and financial metrics for 2009 is:

                                                           2009 Estimates
           Key Operating & Financial Metrics              Current  Previous
IPC Operation & Maintenance Expense (Millions)           No change $280-$290
IPC Capital Expenditures (Millions) (1)                  No change $220-$230
IPC Hydroelectric Generation (Million MWh) (2)           No change  6.5-8.5
Non-regulated Subsidiary Earnings and Holding Company
                            Expenses (Millions)          No change $0.0-$3.0
Effective Tax Rates:
                            IPC                          No change  31%-35%
                            Consolidated - IDACORP       No change  24%-28%

(1) For the three-year period, 2009-2011, IPC expects to spend approximately $780 - $800 million. This amount includes expenditures for the siting and permitting of major transmission expansions for Boardman to Hemingway, Gateway West, Hemingway Station and the Hemingway Hubbard facilities, but excludes the costs for the Langley Gulch power plant. On March 6, 2009, IPC filed an application with the IPUC for a Certificate of Public Convenience and Necessity (CPCN) authorizing IPC to construct, own and operate the Langley Gulch power plant. A decision from the IPUC is expected later this year. If the IPUC grants the CPCN, IPC expects to spend between $45-$50 million during 2009 on this project. IPC's estimate for construction of Langley Gulch power plant is $427 million, including transmission interconnection costs.

(2) The projected range for annual hydroelectric generation is based on 2008-09 Snake River Basin snowpack at 91 percent of average on April 30 with reservoir levels approximately 108 percent above normal.

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 months ended March 31, 2009. In this analysis, the first quarter results for 2009 are compared to the same period in 2008.

The following table presents net income (losses) for IDACORP and its subsidiaries:

                                               Three months ended
                                                    March 31,
                                                 2009       2008
IPC - Utility operations                       $  19,284  $ 21,271
IDACORP Financial Services                           141       801
Ida-West Energy                                      188        55
IDACORP Energy                                       (19)      (12)
Holding company                                     (710)     (399)
   Net income attributable to IDACORP, Inc.    $   18,884 $ 21,716
Average common shares outstanding (diluted)        46,876   45,047
Earnings per diluted share                     $     0.40 $   0.48

Utility Operations

Operating environment: IPC is one of the nation's few investor-owned utilities with a predominantly hydroelectric generating base. Because of its reliance on hydroelectric generation, IPC's generation operations can be significantly affected by water conditions. The availability of hydroelectric power depends on the amount of snow pack in the mountains upstream of IPC's hydroelectric facilities, springtime snow pack run-off, river base flows, spring flows, rainfall and other weather and stream flow management considerations. During low water years, when stream flows into IPC's hydroelectric projects are reduced, IPC's hydroelectric generation is reduced. This results in less generation from IPC's resource portfolio (hydroelectric, coal-fired and gas-fired) available for off-system sales and, most likely, an increased use of purchased power to meet load requirements. Both of these situations - a reduction in off-system sales and an increased use of more expensive purchased power - result in increased power supply costs. During high water years, increased off-system sales and the decreased need for purchased power reduce net power supply costs.

Operations plans are developed during the year to provide guidance for generation resource utilization and energy market activities (off-system sales and power purchases). The plans incorporate forecasts for generation unit availability, reservoir storage and stream flows, gas and coal prices, customer loads, energy market prices and other pertinent inputs. Consideration is given to when to use IPC's available resources to meet forecast loads and when to transact in the wholesale energy market. The allocation of hydroelectric generation between heavy load and light load hours or calendar periods is considered in development of the operating plans. This allocation is intended to utilize the flexibility of the hydroelectric system to shift generation to high value periods, while operating within the constraints imposed on the system. IPC's energy risk management policy, unit operating requirements and other obligations provide the framework for the plans.

Hydroelectric generation for the first quarter of 2009 was five percent below the same period in 2008 and 29 percent below the 30 year average due to a combination of below normal rainfall and near record low flows in the Snake River from several years of drought.

As of April 30, 2009, reservoir levels in selected federal reservoirs upstream of Brownlee were at 108 percent of average. The stream flow forecast released on April 30, 2009, by the NWRFC predicts that Brownlee reservoir inflow for April through July 2009 will be 5.0 million acre-feet (maf), or 80 percent of the NWRFC average, an increase over the 2008 April through July inflow of 4.4 maf, or 70 percent of average. With current and forecasted stream flow conditions, IPC expects to generate between 6.5 and 8.5 million MWh from its hydroelectric facilities in 2009, compared to 6.9 million MWh in 2008.

On December 30, 2008, IPC issued a request for proposals (RFP) seeking to acquire additional water through leases. Proposals were received in February 2009 and have been evaluated. IPC is currently negotiating possible leases for 2009. This action was taken in part to offset the impact of drought and changing water use patterns in southern Idaho and increase our ability to meet mid-summer electricity demands with lower cost hydroelectric generation. Acquiring water through lease also helps IPC improve water quality and temperature conditions in the Snake River as part of ongoing relicensing efforts associated with the Hells Canyon Complex. IPC includes these costs in its annual PCA filing.

IPC's system is dual peaking, with the larger peak demand occurring in the summer. The all-time system peak demand is 3,214 MW, set on June 30, 2008. Although IPC was able to meet all of its load requirements during this period of increased demand, all available resources of IPC's system were fully committed during this and other similar heavy load periods. The all-time winter peak demand is 2,464 MW, set on January 24, 2008.

The following table presents IPC's power supply for the three month period ended March 31:

MWh Hydroelectric Thermal Total System Purchased

                       Generation   Generation  Generation    Power   Total
Three months ended:
   March 31, 2009             1,586      1,966        3,552       661 4,213
   March 31, 2008             1,663      1,979        3,642       687 4,329

General business revenue: The following table presents IPC's general business revenues, MWh sales, average number of customers and Boise, Idaho weather conditions for the three months ended March 31:

. . .