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**Idaho Power Company**

Exhibit 10.51

 

 

                                                                                    December16, 2008

 

 

 

 

 

 

Re:       Modificationsto your Deferred CompensationAgreement with Idaho Power Company           

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**This letter agreement willserve as an amendment to your Deferred Compensation Agreement and is intendedto reflect recent changes in the interest rate on deferred compensation and tobring your Deferred Compensation Agreement into documentary compliance withSection 409A of the Internal Revenue Code.  Please read this letter and theattachments carefully and if you agree to the amendments reflected in Annex B,please sign where indicated and return to me as soon as possible, but in noevent later than December 31, 2008. **

 

Dear   :

 

As part of ourreview of the Company’s compensation plans for compliance with Section 409A ofthe Internal Revenue Code, we have reviewed the director deferred compensationagreements and determined that they should be amended to help ensure theycomply with Section 409A.  A copy of your deferred compensation agreement andany amendments thereto is attached hereto as Annex A (the “DeferralAgreement”).

 

Section 409Aimposes significant, adverse taxes on individuals whose compensation isdeferred (including accelerated income tax recognition and imposition of a 20%additional tax and interest) if the terms of the governing deferredcompensation plan or agreement do not comply with Section 409A and relatedregulations by the end of 2008.

 

            Inaddition, the Compensation Committee of the Board of Directors (the “Board”) ofthe Company recently approved changes to how interest will be credited underthe Deferral Agreement.  Any cash director fees that you deferred before 2009for your service as a member of the Board will continue to be credited with thepreceding month’s average Moody’s Long-Term Corporate Bond Yield for utilities(the “Moody’s Rate”) plus three percent, as stated in the Deferral Agreement,until January 1, 2019 when the interest rate will change to the Moody’s Rate. All cash fees that you defer for service as a member of the Board beginningJanuary 1, 2009 will be credited with interest at the Moody’s Rate, rather thanat the Moody’s Rate plus three percent.  Interest is calculated on a pro ratabasis each month using a 360-day year and the average Moody’s Rate for the precedingmonth.  

 

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December 16, 2008

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**Description of Section 409AAmendments**

 

Following arethe amendments that will be made to your Deferral Agreement, together with anexplanation of why the amendments are necessary.

 

•                    **“Separation from Service.” **Under Section 409A, deferredcompensation generally must be paid on a specified date or dates or on apayment event listed in Section 409A.  A “separation from service,” as thatterm is used in Section 409A, is a permissible payment event.

Sections 3(a)and 3(b) of your Deferral Agreement provide that payments will be made (orannual installments will commence) after “Director ceases to be a member of theBoard.”  Section 3(a) is hereby amended to read instead “Director experiences aseparation from service, as that term is used in Section 409A(a)(2)(A)(i) ofthe Internal Revenue Code of 1986, as amended (“Separation from Service”), withthe Company.”  Section 3(b) is hereby amended to read instead “Directorexperiences a Separation from Service with the Company.”

It ispossible for a director to cease being a member of the Board, but not have a“separation from service,” as that term is used in Section 409A.  For example,if a director were to provide substantial services to the company as aconsultant after ceasing to be a member of the Board, that may not constitute aseparation from service for purposes of Section 409A.  Making a payment to thedirector in that case would violate Section 409A.

•                    **Specifying a Payment Date. **As noted above, Section 409Apermits payment of deferred compensation on a specified date or dates or on apayment event listed in Section 409A.  A date can be a pre-specified date (suchas January 1, 2012) or it can be a date that is tied to a permissible paymentevent (such as the first anniversary of separation from service).  A specifieddate can also be a period within one taxable year (such as the first 90 days of2012 or the first 90 days of the calendar year following the year of separationfrom service).

*Lump SumPayments. *Your Deferral Agreement allowed you to elect to receive yourpayments either in a lump sum or in up to ten annual installments.  The lumpsum payment provision (Section 3(a)) states that payment will be made “as soonas practicable” after the first business day of the calendar year following theyear the director ceases to be a member of the Board.  Because making payments“as soon as practicable” after an event, without further limitation, may notcomply with Section 409A, this provision is hereby amended to add “(but notmore than 90 days)” after “as soon as practicable.”

 

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December 16, 2008

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*InstallmentPayments*.  Your Deferral Agreement’s installment payment provision (Section3(b)) provides for annual cash installment payments to be made commencing “onthe first business day of the calendar year” following the year in which youcease to be a member of the Board.  This provision is hereby amended to statethat each installment payment will be made on the first business day of thecalendar year.

*PaymentFollowing Death. *Your Deferral Agreement’s payment provision relating topayment at death (Section 6) provides that payment will be made “as soon aspracticable after the death of Director.” Because providing for payment to bemade “as soon as practicable” after an event, without further limitation, maynot comply with Section 409A, this provision is hereby amended to add “(but notlater than 90 days)” after “as soon as practicable.”

Annex B heretoreflects Sections 3(a), 3(b) and 6, as amended hereby.

 

If you have anyquestions, please contact me at (208) 388-2878.

 

 

                                                                                                Verytruly yours,

 

 

                                                                                                PatrickA. Harrington

                                                                                                CorporateSecretary

 

AGREED:

 

 

___________________________                              ____________________

________________                                                    Date

 

 

Attachments

 

 

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**ANNEX A**

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**ANNEX B**

 

Section 3(a), as amended, reads as follows:

 

(a)        ___      apayment of cash as soon as practicable (but notmore than 90 days) after the first business day of the calendar yearfollowing the year in which Director [ceases to be a member of the Board] experiences a separation from service, as that term isused in Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, asamended (“Separation from Service”), with the Company, such amount equalto the credit balance of Director’s interest account as provided in Section 4below.

 

Section 3(b), as amended, reads asfollows:

 

(b)        ___      ina series of ____ annual cash installment payments (not more than 10) to be made [commencing] on the first businessday of the calendar year commencing with thecalendar year following the year in which Director [ceases to be amember of the Board] experiences a Separationfrom Service with the Company.  The unpaid credit balance of thedeferred Fees shall continue to be adjusted, as provided in Section 4 of thisAgreement, during the period that Director or Director’s beneficiary isreceiving such installment payments.

 

Section 6, as amended, reads asfollows:

 

            6.         PaymentofDeferredFeesintheEventofDeath. In the event of the death of Director while a member of the Board or prior tothe full payment to Director of the Fees deferred under this Agreement then thecredit balance remaining in Director’s interest account shall be paid in asingle lump sum payment to Director’s designated beneficiary or beneficiaries. Such single sum payment shall be made as soon as practicable (but not later than 90 days) after the death ofDirector.  If any dispute shall arise as to the entitlement of any person toany portion of the deferred Fees, the Company’s obligations under thisAgreement will be satisfied if it makes payment to Director’s estate.                          

 

 

**[bracketedlanguage in Annex B deleted]**

 

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