The Alahaina-Coosa River System 197 



efficient plan of development — or, in the words of the Federal 

 Power Act, "project . . . best adapted to a comprehensive plan . . . 

 including beneficial public uses" — has been developed for the 

 public record. This may be accounted for partly by the ambiguity 

 of Public Law 436 in numerous particulars. Under one interpreta- 

 tion of this legislation, some provisions require that a private 

 developer assume a public responsibility — that is, the provision of 

 a nonmarketable project service, flood control, at "substantial cost" 

 directly to himself and indirectly to ctistomers toward whom he has 

 responsibility as a public utility. Under another interpretation 

 for which there is support, the Act intends that a plan of develop- 

 ment be undertaken such that "the ratio of costs incurred by the 

 licensee to the benefits which it obtains from the development shall 

 be such as to attract the investment of private capital." Such an 

 interpretation of the benefit-cost investment criterion, in cases 

 where there are possibilities for the provision of economically justi- 

 fied nonmarketable project services, would substitute the calculus 

 of private costs and gains in an area where divergence exists between 

 the private and social marginal productivity of capital. This 

 interpretation of the criterion clearly defeats the purpose of benefit- 

 cost analysis and the possibility of defining the most efficient plan 

 of development. The fact that Alabama Power Company has 

 apparently tested out a number of alternative plans — as indicated 

 by the several modifications made to its originally suggested plan 

 of development — does not necessarily mean that it has evolved the 

 most efficient plan of development. For given the perversion of 

 the benefit-cost criterion, comparisons of private costs and gains 

 are substituted for the relevant social costs and gains. The benefit- 

 cost criterion which emerges from this case would require river 

 basin developments inconsistent with provisions of Section 10(a) 

 of the Federal Power Act. 



In spite of the lack of the sort of information required for a 

 determination of the most efficient plan, the record supports the 

 conclusion that Alabama Power Company's plan is more efficient 

 than the alternative plans proposed under public development. 

 Under the plan indicated by its application for a license, Alabama 

 Power Company would develop more power capacity and less flood 

 protection — both changes in the direction of economic efficiency — 

 than a combination of (1) an alternate set of plans proposed by 



