The Hells Canyon Case 153 



take into account the relevant factors on which a private enter- 

 prise unit must base its investment decisions. It, in some measure, 

 must maximize the difference between costs and returns which 

 appear on its own financial accounts, irrespective of any associated 

 costs and gains which, while appearing on social accounts, are not 

 directly relevant for reaching a private investment decision. The 

 economic superiority of the two-dam alternative partly results from 

 the increased downstream power generation — 28,000 kilowatts — for 

 which a private enterprise unit could receive no compensation.^^ 

 The increased storage available for flood control and low-flow 

 regulation to provide navigation services — essentially nonmarket- 

 able services — also would not be given much weight in private 

 investment decisions. In short, for Idaho Power Company, only 

 the at-site power generation would be a significant factor in 

 ordering its investment alternatives. Accordingly, if we assume the 

 same at-site value ($41.58 per kilowatt of prime power) for power 

 production in this case as in our analyses of publicly developed 

 plans, the financial returns to Idaho Power Company from the 

 three-dam plan would approximate $24.3 million annually, about 

 $800,000 more than the two-dam alternative. Annual costs for the 

 alternatives, as indicated in Table 25, show that costs for the three 

 dams would be about $794,000 higher than the two-dam plan. 



In terms of the costs and returns available to a private enterprise 

 unit considering alternate plans of development, the added financial 

 returns from the three-dam plan would about compensate for the 

 added costs — but without any clearly demonstrable advantage. It 

 is unlikely, therefore, that the decision in favor of the three-dam 

 plan was reached in terms of the factors which we have considered. 

 In fact, several factors facing the private utility would differ 

 substantially from those we have considered as controlling. 



^^ The hydroelectric potential in river sites along navigable streams belongs 

 to the federal government (see United States v. Chandler-Dunbar Co., 229 

 U. S. 53, reaffirmed in the recent Supreme Court Opinion, United States v. Twin 

 City Power Company, No. 21, October Term, 1955). Hence, increased generation 

 at federal power installations downstream from a private development of stor- 

 age in the headwaters is considered somewhat as a quid pro quo for granting 

 a license to the firm for private development. Thus, while the Federal Power 

 Act requires private licensees who benefit from federal headwater storage develop- 

 ment to compensate the federal agency providing the regulation, the reverse is 

 not true. 



