The Hells Canyon Case 165 



required to compensate upstream operators for any services inci- 

 dentally rendered, and if there were adequate machinery to collect 

 such compensation, one further modification of customary practice 

 would be necessary to achieve efficiency. The most efficient design 

 of installations consistent with integrated system development, 

 while necessary, is not enough to ensure economic efficiency in the 

 management of multiple purpose river basin systems. Operation 

 of all of the interdependent units of the system, irrespective of 

 ownership, must be undertaken so as to maximize system output. 

 This in turn would require that all facilities be operated under 

 unified management. For example, the difference in power output 

 between the identical three-dam facilities operated as an isolated 

 subsystem (669,000 kilowatts) and operated as part of an integrated 

 Columbia system (702,000 kilowatts) is 33,000 kilowatts. A net 

 gain, estimated roughly at $1.4 million, would result annually from 

 operating the facilities in the Hells Canyon Reach under integrated 

 management, along with other units of the interdependent Colum- 

 bia system. Sharing the gains available under co-ordinated manage- 

 ment would represent an incentive to both parties — Idaho Powder 

 Company and the federal power system — to transfer the manage- 

 ment responsibilities for the reservoirs on the Snake to an agency of 

 system-wide responsibilities. A precedent for such a co-operative 

 arrangement is to be found in the Fontana Agreement negotiated 

 between Tennessee Valley Authority and Aluminum Company of 

 America. The company transferred management responsibility for 

 its reservoirs on the Little Tennessee to the TVA in exchange for 

 sharing equally in the added power (22,000 kilowatts) made avail- 

 able through hydraulic integration.*^ 



It seems appropriate to observe that where excellent storage 

 sites exist upstream from federal power installations, partnership 

 arrangements involving private development do not, in the absence 

 of a much greater degree of institutional experimentation, promise 

 the ultimate in efficient development. This is, in part, inherent in 

 the political theory and legal doctrine which interpret hydro- 

 electric sites as public assets with ownership residing in the federal 

 government. If both private development and efficiency are highly 

 valued, however, a happy outcome for development of headwater 



"Tennessee Valley Authority, The Fofitana Project, Technical Report No. 12, 

 1950, p. 7. 



