The Hells Canyon Case 141 



factor services to be discussed below — in exchange for the oppor- 

 tunity to utilize the water power site for which the federal govern- 

 ment is the custodian and has the obligation to require develop- 

 ment "best adapted to a comprehensive plan." * 



The first question to be asked is: Does this form of licensing 

 arrangement, under conditions similar to those found in the Hells 

 Canyon Reach of the Snake River, represent the most efficient 

 method by which to exploit returns awaiting development of this 

 reach of the tributary system? An answer to this question can be 

 approached in terms of the principles outlined in preceding 

 chapters. 



We shall evaluate the efficiency of this type of partnership 

 arrangement by analyzing the extent to which it permits the most 

 efficient investment or developmental plan. To do this, we com- 

 pare the costs and gains under the alternative plans of develop- 

 ment, as provided in the record of the public hearings preceding 

 the licensing of Idaho Power Company by the FPC.^ Since account- 

 ing costs differ between private and governmental operations, the 

 evaluation of alternative plans of development must proceed on 

 the assumption that the two plans represent alternative investment 

 opportunities for the same enterprise unit, whether public or 

 private. 



Some uncompensated gains would appear in the operation of 

 either plan; ^ our interest here centers on economic costs and gains 

 whether or not they would appear on the financial accounts of the 

 enterprise. Consequently, we first evaluate the alternative plans 

 as if they were being considered for investment by a public agency. 

 Finally, in order to translate the physical characteristics of the 



'Federal Power Act (Washington: U. S. Government Printing Office, 1955), 

 Section 10(a), pp. 10-11. 



' FPC, Transcript of Hearings, op. cit. At the outset of this task, we must 

 acknowledge that our analysis can provide results no better than the data on 

 which it is based — and, that the precision, relevance, and accuracy of data which 

 can be culled from the record of a public hearing often leave something to be 

 desired. In spite of limitations of this sort, there are a number of illustrative 

 uses to which our result can be put. 



* Even under the three-dam plan, a certain amount of storage capacity would 

 be utilized to control flood flows downstream, provide navigation benefits for 

 which a private firm would not be compensated, and contril)ute to increased 

 prime power output at downstream installations. 



