The Hells Canyon Case 159 



site and 102,000 kilowatts downstream.^* Potential primary power 

 of about 33,000 kilowatts accordingly would be sacrificed by oper- 

 ating the Hells Canyon three-dam plan as an isolated sub-system. 

 A net annual increase amounting to roughly $1.4 million would 

 result from operations directed toward maximum output for the 

 system. 



To summarize: Gains to be achieved from integrated operation 

 of the two-dam plan of development over independent operation 

 by Idaho Power Company of its preferred three-dam alternative 

 would approximate the magnitudes shown in Table 26. 



A difference between the two plans and probable methods of 

 operation results in a sum approaching $2.7 million annually. 

 This suggests the possibility that an alternative approach to devel- 

 opment could have improved the position of some who could out 

 of their gains ($2.7 million annually) compensate the losers and 

 still have a net gain remaining. 



Summary and Conclusions 



The foregoing analyses suggest a number of conclusions. First, 

 the approach which contemplated the Hells Canyon High Dam 

 appears to be most efficient, if an imputed interest rate of 2.5 per 

 cent is employed. However, at an opportunity cost of capital 

 approaching 5 to 6 per cent, the Hells Canyon High Dam may be 

 inferior to a somewhat small scale of development. The plan of 

 development which appears the more feasible from the standpoint 

 of Idaho Power Company falls short of being best adapted to 

 comprehensive development of the Columbia River and tributary 

 system. In our terminology, the three-dam plan of development is 

 economically less efficient than the two-dam plan — that is, a gieater 

 amount of project services could be produced with a smaller 

 expenditure of society's resources were the two-dam plan to be 

 substituted for the Idaho Power Company plan. This remains true 

 under any assumptions governing the level of interest rates. More- 

 over, the three-dam scheme appears to be as good as the Hells 

 Canyon High Dam only under circumstances which warrant a high 

 imputed interest rate together with other particular conditions. At 



"See FPC, Staff Brief, op. cit., Appendix A, p. 17; and Transcript of Hearing, 

 op. cit., pp. 3544-45. 



