160 MULTIPLE PURPOSE RIVER DEVELOPMENT 



any rate of interest below 5 per cent, the three-dam plan seems 

 inferior to the High Dam as well as to the two-dam alternative. 



It therefore appears that Idaho Power Company preferred the 

 three-dam plan rather than the economically superior two-dam 

 plan primarily because of the relatively small system which Idaho 

 Power Company operates — at least small in comparison with the 

 hydroelectric potential in the Hells Canyon Reach. The more 

 efficient plan represented such an extreme case of indivisibility 

 that Idaho Power found it necessary in coping with the problem 

 to select an economically inferior plan. Part of the superiority of 

 the two-dam alternative, also, is accounted for by the increase in 

 downstream generation through turbines of fiscally independent 

 parties which would result from improved stream regulation, as 

 well as increased output of nonmarketable project services which 

 would escape appropriation by pricing practices. 



In view of the relatively inefficient plan of development which 

 was licensed, what alternatives might be considered for achieving 

 more efficient development in similar or related cases? This ques- 

 tion must be approached against the backdrop of the recent 

 history of the Hells Canyon case. 



One alternative, of course, would be to have the federal govern- 

 ment undertake the development under provisions of Section 7 (b) 

 of the Federal Power Act. This could be defended in view of three 

 major considerations: There is the size of the development and 

 the enormous hydroelectric potential in relation to all but the 

 federal system in the Pacific Northwest. Also, significant external 

 economies would appear in the federal installations downstream, 

 for which a private developer of upstream storage could not receive 

 compensation under provisions of the Federal Power Act. Finally, 

 there would be a significant amount of nonmarketable project out- 

 put. The history of proposed legislation to authorize federal 

 development of the Hells Canyon site, however, reflects a stalemate 

 between the advocates and opponents of federal development. Such 

 legislation has consistently failed of passage in the Congress. More- 

 over, since 1953, the executive branch of the government has with- 

 drawn support for development under federal auspices. Without 

 forceful support, the prospects for development as a federal under- 

 taking appear very slight. 



A second alternative would be development by either a local 

 public body or a combination of two or more such organizations. 



