164 MULTIPLE PURPOSE RIVER DEVELOPMENT 



of the private utility, to achieve the pubHc functions inherent in 

 the most efficient development of that reach of river. 



A public subsidy could take several forms. The twin goals of 

 private development by the most efficient plan — if these goals are 

 sufficiently valued — could be promoted by congressional appropria- 

 tions to subsidize Idaho Power Company in an amount up to the 

 present value of the added annual benefits of the two-dam plan 

 over the company's preferred plan. Or the value of the increased 

 generation at federal power installations downstream conceivably 

 could provide the wherewithal to compensate Idaho Power Com- 

 pany for the storage services it would develop through the most 

 efficient scheme. 



Such compensation from downstream installations, however, raises 

 significant policy issues. Consistent with tradition, reaffirmed by 

 several Supreme Court rulings *^ that the hydroelectric potential is 

 a public resource, the Federal Power Act contains numerous provi- 

 sions to the effect that private developers must incur costs for 

 public purposes as compensation for the privilege of developing a 

 resource that is owned by the public. Accordingly, in order to 

 permit compensation for private headwater storage by downstream 

 federal hydroelectric operations, the application of the Federal 

 Power Act would have to be modified in numerous instances. In 

 turn, this would require major changes in existing law. In light 

 of the wide ramifications of such a change and the conceivable 

 relevance of "higher criteria," a judgment on the desirability of 

 such a change remains outside the scope of this study.^^ Neverthe- 

 less, if efficient development under private auspices is sought, 

 arrangements similar in effect to the ones suggested would be 

 needed. The other choice, if efficiency is sufficiently valued, is to 

 continue development of storage sites under federal auspices in 

 those cases where the federal government owns and operates run-of- 

 river downstream installations. 



If downstream beneficiaries, whether public or private, were 



*^ United States v. Chandler-Dunbar Co., op. cit.; United States v. Appalachian 

 Power Co., 311 U. S., 377; and United States v. Tiuin City Power Company, 

 op. cit. 



^ For a discussion of some of the issues involved, see Headwater Benefits, 

 Hearings before the Subcommittee on Irrigation and Reclamation of the Com- 

 mittee on Interior and Insular Affairs, United States Senate, 84th Congress, 1st 

 Session, on S. 1574, May 27, June 29, and July 12, 1955. 



