62 MULTIPLE PURPOSE RIVER DEVELOPMENT 



are assumed to prevail. A short-term power surplus — of say five 

 years or so — will normally be disposed of under conditions of bar- 

 gaining where bilateral monopoly is the more appropriate theoret- 

 ical model to explain the setting of rates and disposition of output. 

 While a short-term surplus may prevail, the only bidder for the 

 surplus power may be a bargain-hunting member of the electro- 

 process industry, interested in an assured supply over the economic 

 life of its production facilities. Long-term contracts at dump-power 

 prices may have to be negotiated in order to dispose of a relatively 

 short-term or intermediate-term surplus. This may be of substan- 

 tial advantage to the attracted buyer,^- but cold comfort to the 

 investor in the hydroelectric development. 



TABLE I. Technological External Economies of Hungry Horse Project 



Plants Kilowatts Plant owners 



Hungry Horse, at-site 212,000 U. S. government 



Downstream installations: 



Kerr 78,000 Montana Power Company 



Thompson Falls 12,000 Montana Power Company 



Cabinet Gorge 50,000 Washington Water Power Co. 



Albeni Falls 7,000 U. S. government 



Box Canyon 14,000 Pend Oreille County Public Utility 



District 



Waneta 70,000 West Kootenay Power & Light Co. 



(British Columbia, Canada) 



Grand Coulee 163,000 U. S. government 



Chief Joseph 83,000 U. S. government 



Rock Island 16,000 Chelan Public Utility District 



McNary 49,000 U. S. government 



The Dalles 52,000 U. S. government 



Bonneville 34,000 U. S. government 



Total downstream 628,000 



Total prime power from 



Hungry Horse 840,000 



Source: Bonneville Power Administration. 



^ It does not follow that electro-process industries obtaining power at dump- 

 power rates find a substantial net advantage in purchasing such power, however. 

 They may have to incur greater costs — particularly transport costs if the power 

 is provided in a region remote from their markets — for other factor inputs to 

 take advantage of the lower-cost power. This problem is treated in our discus- 

 sion of the income redistribution consequences of a given project in Chapter 

 VIII. 



