Market Mechanics 67 



upstream, the figures for primary releases are not to be used as addi- 

 tions to both the upstream storage dams and the downstream run- 

 of-river plants. For instance, if Wilson Dam were operated by itself 

 before any of the rest of the system was in operation, it would have 

 a primary output of only 39,000 kilowatts. But since it is part of 

 the system, primary power generated there from natural stream 

 flow and its own storage is 156,000 kilowatts. The much greater 

 amount results from the higher minimum flow and the longer 

 critical period of the system. Moreover, this is increased to 184,200 

 by co-ordinating storage releases from twenty upstream plants. The 

 difference between 184,200 and 156,000 kilowatts, however, is not 

 to be credited both to Wilson Dam and to the upstream plants. 



There is, in addition, a third type of unit in the system, as repre- 

 sented by Apalachia, which is of interest. Table 2 shows that the 

 plant provides 33,700 kilowatts of primary power from natural 

 streamflow, which is increased to 42,800 kilowatts by co-ordinating 

 storage releases from three upstream dams. However, if Apalachia 

 had been built as an isolated project without the other dams in 

 the system, it would have generated only 11,700 kilowatts of pri- 

 mary power. 



Any hydroelectric plant constructed as an isolated structure will 

 produce, in addition to primary power, a certain amount of second- 

 ary and dump power. This may be sold at only very low rates, if 

 at all. Although the exact data are not available, it is nonetheless 

 true that when operated in a system as large as the TVA's much 

 of the secondary and dump power is converted into primary power 

 through electrical integration, and enjoys a higher economic value 

 than it would otherwise have. In the total TVA system, there is 

 virtually no dump power. ^^ 



Direct interdependence on the scale discussed above creates in- 

 vestment indivisibility or, expressed differently, creates comple- 

 mentary investment opportunities. Efficient investment in river 



■^ The preceding material relating to TVA"s hydroelectric system is based on 

 data supplied by the Project Planning Branch, Division of Water Control Plan- 

 ning, TVA. In using Table 2 for purposes of illustration, we have employed 

 data which refer to primary power only. A comprehensive analysis would also 

 require a complete study of the average annual energy and the capacity of the 

 thirty-three-plant system, as well as the continuous prime power. Such an 

 analysis, however, would require time and resources not available for this study. 

 The previous observations, therefore, should be read with this limitation in 



