The Hells Canyon Case 151 



TABLE 24. Comparative Costs of Brownlee and Medium-Height 

 Hells Canyon Dams, Assuming Public Development 

 and Different Interest Rates 



Costs ($ thousand) 



Interest at Interest at 



• Item 2.5 per cent 5.5 per cent 



Investment " 204,031 212.461 



Interest and amortization '' 5,386 11,749 



Interim replacement " 961 961 



Payment in lieu of state and local taxes " 1,020 1,062 



Operation and maintenance "^ 1,625 1,625 



Total average annual costs 8,992 15,397 



Increment of average annual cost of High Dam 



over two-dam intermediate plan 6,945 13,509 



' The investment figure was obtained as follows: (1) construction costs at site 

 of $177,935,000 (FPC, Staff Brief, op. cit.. Appendix B, Table 14); (2) construc- 

 tion costs associated with downstream generation, |13,862,000; (3) interest during 

 construction of $6,672,000 at 2.5 per cent and $14,680,000 at 5.5 per cent, respec- 

 tively, over a three-year construction period; (4) interest of $352,000 at 2.5 per 

 cent and $774,000 at 5.5 per cent, respectively, on downstream installation of 

 generators, two-year installation period; and (5) estimated capital cost of facili- 

 ties for migratory fish of $5 million. 



'' Computed alternatively at 25 and 5.5 per cent annual interest and 100-year 

 amortization. 



«• FPC Staff Brief, Appendix B, p. 88. 



" Ibid., Appendix B, p. 89. 



Estimated annual costs, assuming both the 2.5 per cent rate of 

 interest, officially proposed for economic analysis of river basin 

 projects, and the 5.5 per cent, derived by means of our analysis in 

 Chapter IV, are presented in Table 24. The average annual bene- 

 fits of the two-dam plan exceed the costs by a ratio of 3.5:1, if 

 interest is computed at 2.5 per cent, and by a ratio of 2:1 if we 

 employ 5.5 per cent appropriate to the opportunity cost of capital 

 raised by means of federal taxes. 



The added benefits of the Hells Canyon High Dam over the 

 two-dam alternative amount to approximately $11.3 million as an 

 annual average. These benefits would justify the increased invest- 

 ment in terms of the standard procedure (an imputed interest rate 

 of 2.5 per cent and an incremental benefit-cost ratio at least equal 

 to unity). With the opportunity cost estimated at between 5 and 6 



