152 MULTIPLE PURPOSE RIVER DEVELOPMENT 



per cent, however, the added cost, $13.5 million, would exceed the 

 added benefits. In fact, at any rate exceeding 4.5 per cent, the 

 added benefits would not compensate for the costs of developing 

 the incremental opportunity in the Hells Canyon Reach of the 

 Snake.2i 



Evaluation of these two projects is particularly sensitive to the 

 choice of data, both the physical output and the value per kilowatt 

 of prime power, as well as to the assumed time distribution and 

 the discount factor. To a large extent, the conclusions are condi- 

 tioned on imponderables; there is no definitive answer as to whether 

 the High Dam or the two dams would be more efficient. 



While there may be room for doubt involving comparisons 

 between the High Dam and the two dams, there is a considerably 

 more clear-cut case when the two-dam and three-dam plans are 

 compared. The two-dam plan would provide more power, flood 

 control, and navigation benefits than would the three-dam plan. 

 These benefits are estimated to total around $825,000 more, as an 

 annual average, than the value of output from the three-dam plan. 

 Coupled with this, total investment for the two dams would 

 approximate $5 million less, and annual costs about $472,000 less 

 than the three-dam scheme. 



Analysis of Two and Three Dams, Assuming Construction 

 and Operation by Idaho Power Company 



In view of the marked economic superiority of the two-dam plan 

 as compared with the Idaho Power Company three-dam plan, the 

 question arises: Why did Idaho Power Company seek a license 

 for construction of the three dams instead of the socially more 

 efficient two-dam alternative? An answer to this question must 



" If we use Riter's estimates for the prime power output of the two-dam 

 scheme, which drops from an original 677,000 to 508,000 kilowatts by the end 

 of the amortization period, we would have to alter our conclusions. Discounting 

 the annual operating and maintenance costs for the two plans, we get a differ- 

 ence in terms of current costs of $284 million between the two plans. The 

 difference in present value of benefits from the two plans of development 

 approximates $307 million when both streams are discounted at 5.5 per cent. 

 The incremental benefits-to-cost ratio, in terms of these data and evaluation 

 methods, would approximate 1.1:1, tending to favor slightly the High Dam. 



