The Alabama-Coosa River System 191 



of tax-raised funds is reflected in the benefit-cost analysis, the Howell 

 Mill Shoals project as of the Corps' 1954 design is not economically 

 justified. ^3 This casts doubts on the economic justification for the 



TABLE 34. Alternative Plans of Public Development for Howell 

 Mill Shoals Imputing the Opportunity Cost of 5.5 

 Per Cent for Federal Tax-Raised Investment Funds 



Plan I Plan II 



($ thousand) ($ thousand) 



Investment " 73,037 104,804 



Annual costs: 



Interest and amortization '' 4,036 5,792 



Interim replacement 112 146 



Payment in lieu of taxes 365 534 



Operation and maintenance 174 188 



Total 4,687 6,660 



Total annual benefits 2,677 4,734 



Average benefit-cost ratio: 



Plan I 0.57:1 



Plan II ' 0.71:1 



Increment in costs of II over I 1,973 



Increment in benefits of II over I 2,057 



Incremental benefit-cost ratio 1.04:1 



' Interest during construction computed at 5.5 per cent over a five-year period 

 on an average of one-half of the total construction cost. 



*• Interest at 5.5 per cent with a 100-year amortization schedule. 



comparison is made within the range of increasing returns; hence, despite the 

 excess of incremental gains over incremental costs, total gains fall short of 

 total costs and a net social loss would result. There is a discontinuity in the 

 relation between scale and net gains, however, for beyond the scale correspond- 

 ing to Plan II, the reservoir would inundate large industrial tracts in the city of 

 Gadsden, Alabama, so that a sharp rise in costs would attend any mucn larger 

 scale of plant. 



'^ The Howell Mill Shoals Dam, representing an investment of $104.8 million 

 and providing close to 200,000 kilowatts of installed generator capacity, as well 

 as flood control valued at $424,000 annually, can be contrasted with Alabama 

 Power Company's total complement of structures in that reach of river. The 

 latter represents an investment of $103.7 million and provides for about 422,000 



