VII The Willamette River Case: 



ANALYSIS OF THE 

 DISTRIBUTION OF COSTS 



Our previous case studies dealt with co-operative arrangements in 

 which a complete project or set of projects was planned by a non- 

 governmental unit under federal license. In the case of Hells 

 Canyon, it became apparent that problems of indivisibility and 

 direct interdependence impede efficient development as a private 

 venture in the absence of extra-market incentives. For the Coosa 

 River, where the circumstances are significantly different, there 

 appears to be a much more promising prospect for efficient develop- 

 ment under private auspices. There, complete hydraulic integra- 

 tion under unified management is possible, and the relatively 

 modest contributions to power output from the river system can 

 be readily absorbed into the developer's electrical system. But even 

 in the case of the Coosa, there remain some problems of providing 

 the project services which do not produce revenue. Although the 

 legislation enabling the Federal Power Commission to license 

 Alabama Power Company for developing the Coosa required pro- 

 vision of a specified amount of nonmarketable project services, 

 some difficulties are encountered in the distribution of the costs 

 and gains; and there is a question of propriety ii» the method 

 advanced to solve that problem. 



As a practical matter, however, the problems of the Coosa are of 

 a much lower order of magnitude than those of Hells Canyon, since 

 they concern a relatively small system from which the predominant 

 share of project services are of the revenue-producing, investment- 

 reimbursing type. This factor must figure prominently in under- 



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