The Hells Canyon Case 167 



irrigated acreages upstream, and the length of critical period appro- 

 priate to the analysis. (See FPC Decision, p. 45, and Staff Brief, 

 Appendix A, p. 6, and Appendix B, pp. 4 and 10.) 



Interest During Construction. Estimates of the length of con- 

 struction period involved for each of the alternative plans were 

 taken from the summary presented in the FPC Staff Brief, Appen- 

 dix B, Table 9. Interest during construction for downstream 

 facilities assumed a construction period of two years as reflected in 

 the FPC Staff Brief, Appendix B, p. 29. The interest rate for com- 

 paring alternate plans under federal construction was taken at 2.5 

 per cent and 5.5 per cent, respectively, for Tables 20 and 22 in the 

 text. A rate of 5 per cent was used in analysis of alternate plans 

 assuming construction by Idaho Power Company (see FPC Staff 

 Brief, Appendix B, p. 94). 



Incidental Capital Outlays. The figure for fish facilities was 

 taken as $5 million, representing the capital costs estimated in only 

 approximate terms by expert witnesses for this item of investment 

 (see FPC Staff Brief, Appendix B, Table 14). 



2. ANNUAL COSTS 



Interest and Amortization. Annual capital charges under federal 

 operation were computed on the assumption of a 100-year sinking 

 fund at 2.5 and 5.5 per cent interest rate, rcsj)ectively, for analyses 

 given in Tables 20 and 22. A 100-year amortization schedule under 

 federal operation was used in light of the extreme durability and 

 anticipated economic life of this type of project (see Otto Eckstein, 

 Water Resources Development: The Economics of Project Evalua- 

 tion [Cambridge: Harvard University Press, 1958], Chapter IV). 

 An amorization period of fifty years was taken as relevant imdcr 

 the assumption of private operation, in view of the recapture 

 provision in licenses granted private parties imdcr the Federal 

 Power Act. 



Interim Replacement Charges. These were computed at 0.387 

 per cent of investment (in all cases employing a 2.5 per cent rate 

 of interest during construction) for the Hells Canyon High Dam; 

 0.471 per cent for the two-dam alternate; and 0.513 per cent for 

 the three-dam plan consistent with procedures of the FPC staff's 

 Witness Frogatt (see FPC Staf[ Brief, Appendix B, p. 88). 



Payments in Lieu of Taxes. On the assumption that alternate 



