FOREST SERVICE. 371 



the holders of 4,538 permits, inchiding 171 for the use of hind in 

 connection with water-power development. These receij^ts represent 

 profitable use of the Forests by over 30,000. contractoi-s and jjermittees. 



The most important form of special use of National Forest land is 

 its use for the develoj)ment of hydro-electric power. Durin<:: the 

 year carefid consideration was fjiven to revisino; the form of a,2:ree- 

 ment under which such use of National Forest land is permitted. 

 All the details of the proposed new forms have been discussed, point 

 by point, with representatives of power companies and with capable 

 en£:ineers, in order to insure conditions entirely fair both to the 

 interests of the public as represented by the Government and to 

 private interests desirous of occupj'ing power sites, under the simplest 

 and least cumbersome ])rocedure. 



The essential features of the new permit and stipulation, wdiich will 

 replace the old atjreement, can best oe brouf2;ht out by comparing the 

 new with the old. Under the latter the Government charged for 

 occupancy of its land by a power company an annual sum computed 

 on the basis of the actual output of energ}', with a deduction for 

 water used by the company from artificial storage supplies which the 

 company may have created. Deductions were also allowed in pro- 

 portion to the part of the total drainage basin not contained within 

 National Forests, and for various other specified reasons. Deter- 

 mination of the amount to be collected, therefore, involved constant 

 measurements, both of the actual output of power and of the water 

 flow from storage reservoirs, where these had been constructed. This 

 meant both much trouble to the Government to find out what to 

 charge and fertile grounds of dissatisfaction and dispute. Further, 

 the old form of agreement did not seem to provide sufficient safe- 

 guards against the speculative holding of sites without prompt de- 

 velopment of the power. 



The new rate will be based, primarily, on the value of the land 

 occupied for power purposes, as measured by its capacity for the 

 development of power, with a deduction for distance from market 

 and for portions of the land to be occupied which do not belong to 

 the Government. A fixed rate of SI per net electrical horsepower 

 per year is the full charge. This rate is equivalent to one sixty- 

 sixth of a cent ])er kilowatt-hoiu', which is about one-thousandth of 

 the rate at which power is generally supj)lied for lighting pur})oses 

 and about one two-liundredths of the average charge for all purposes. 

 It is therefore so light that it could under no circumstances consti- 

 tute an obstacle to development. Comi)ared with the fixed charges 

 which represent the cost of construction of a power })lant, the charge 

 made by the Government would not amount to more than one-half 

 of 1 per cent of these charges. 



In imposing this charge it is recognized, on the one hand, that 

 there will be a nonproductive period followed by a partially pro- 

 ductive i)eriod before the company occupying the land will be in 

 position to profit by the full jiower capacity of the site, and, on the 

 other hand, that dilatoriness in j)ressing forward developjuent may 

 be encountered if collecticm of the charge does not begin until after 

 the plant is in operation, for water rights may be acquired rather 

 with a view to preventing them from falling uito the hands of some 

 one else than with a view to i)uttiug tlieiu to innuetliale use. There- 

 fore, from the time the permit is granted, the permittee must pay 



