The Hells Canyon Case 163 



If the value which the Commission attached to private develop- 

 ment is shared to the same extent by the body politic, we might 

 say that by "collective choice" efficiency was here sacrificed for 

 "higher criteria." Even so, we may consider what alternatives 

 would achieve such higher values without sacrificing efficiency 

 goals. Needless to say, while development can be both private and 

 efficient, such a combination will involve sacrificing at least some 

 other values. 



Because of the direct interdependence among facilities in the 

 system, the indivisibility of the site for efficient storage develop- 

 ment, and nonmarketable water derivatives, the enterprise would 

 require access, at least in part, to public revenues to realize the 

 gains inherent in the more efficient development. These gains, to 

 repeat, would accrue at eight downstream federal installations and 

 would involve increases of prime power, average annual flood con- 

 trol benefits, navigation benefits, and a reduction in annual 

 average operating costs. Economic gains approaching $2.7 million 

 annually, therefore, would provide justification for compensating 

 a private firm for any costs which it. might incur in a private 

 accounting sense were it to undertake the two-dam plan rather 

 than its preferred private alternative. If there were machinery 

 whereby the beneficiaries from the substitution of the economically 

 more efficient plan could compensate Idaho Power Company, such 

 compensation could approach $2.7 million annually without leaving 

 the beneficiaries any less well off than in the absence of the socially 

 more efficient alternative. 



In the absence of such machinery for compensation, the gains 

 could be realized only by resort to revenues arising outside of the 

 pricing practices of a private firm. Under certain circumstances, it 

 is conceivable that the FPC could require the most efficient plan 

 as a condition of the license, or permit the privately preferable 

 plan under penalty of charges sufficiently high to induce the private 

 developer to prefer the socially more efficient plan. This approach 

 may have merit under certain circumstances, but in the case of 

 the Hells Canyon Reach, because of the extreme conditions encoun- 

 tered with reference to development by the relatively small power 

 system, it is doubtful that this would have led to early develop- 

 ment of that reach of river. The private developer could refuse 

 the license. The remaining alternative for obtaining private devel- 

 opment in the immediate future would involve a public subsidy 



