220 MULTIPLE PURPOSE RIVER DEVELOPMENT 



Finally, in the case of private development of the reimbursable 

 feature, the costs appear to fall exclusively on the consumers ot 

 electricity.-" However, utilities have on occasion been regarded as 

 a fruitful source of local governmental revenues which otherwise 

 would have been obtained from levies against property owners or 

 from other tax sources. One reason for this is that utilities have 

 been granted their monopoly privileges by the local bodies and thus 

 are often expected to provide a substantial part of the tax require- 

 ments in compensation. Another reason is the irreversible demand 

 related to the monopolistic nature of the utility's services. Accord- 

 ingly, state and local taxes which are levied against utilities, and 

 indirectly borne by their customers, sometimes may be excessive. 

 In view of the monopoly conditions under which utility services 

 are provided, the political context in which utility rates are set 

 and tax levies against utilities justified, and other considerations, 

 it is likely that charges to electric customers of private utilities in 

 many cases exceed opportunity costs. While we can treat this 

 problem qualitatively in passing, it is not readily amenable to 

 quantitative analysis. 



There are, however, the special circumstances that arise in con- 

 nection with accelerated amortization. Since the need to accelerate 

 additions to electrical capacity was recognized after Korea, private 

 electric utilities have been permitted to depreciate an average of 

 about 45 per cent of their investment involving additions to 

 capacity over a period of five years in computing their federal tax 

 liabilities. 2^ In the case of the Pacific Power and Light Company 

 (in whose behalf the bills, H.R. 8661 and H.R. 4662, were intro- 

 duced to promote co-operative development of the Willamette 

 sites), certificates of necessity for accelerated amortization on from 

 65 to 75 per cent of the investment in new facilities have been 

 granted. 22 This has the effect of shifting federal corporate tax 

 liabilities from the utility to the general public. 



^° There are special circumstances involving the privilege of accelerated 

 amortization in which the costs in part appear to be doubly borne, i.e., by both 

 the consumers of electricity and also partly in addition by the taxpayers. Such 

 a case will be discussed below. 



"Staff of the Joint Committee on Internal Revenue Taxation, A Report on 

 5-Year Amortization of Emergency Facilities under Section 168 of the Internal 

 Revenue Code of 1954, 1956, pp. 23 ff. 



"Pacific Power and Light Company, Annual Report, 1935, pp. 7, 10, 21. 



