The Willamette River Case: Gains 235 



Analysis of First-Round Effects 



The most immediate gains from development of a hydroelectric 

 site go to customers who receive power at less cost than would be 

 possible from the next most attractive alternative. The federal 

 power agencies do not engage in retail distribution of electrical 

 energy; the immediate beneficiaries of federally developed hydro- 

 electricity are either the institutions which obtain the power for 

 sale directly or those which use such enormous quantities of energy 

 in their operations that they purchase it only at the wholesale 

 level. Sales to these buyers represent the first-round effects in our 

 case involving federal development. If the site were developed as a 

 nonfederal undertaking, the savings at retail of either the local 

 public or the private undertaking would constitute the first-round 

 effects. In view of this difference, a preliminary analysis of the 

 wholesaling activities of the federal power agency is a starting 

 point for comparing alternative approaches. 



When the federal government develops a total project, the 

 distribution of gains from the project's reimbursable hydroelectric 

 feature will be influenced by the operation of the preference 

 clause. The preference clause that would apply to the hypothetical 

 Willamette River site relates to provisions of Section 4-A of the 

 Bonneville Act. This requires that public bodies and co-operatives 

 be given preference in the distribution of electric energy from 

 federally developed projects "for benefit of the general public 

 and particularly of domestic and rural consumers." ^ If the federal 

 government were to finance as well as build all of the features of 

 the multiple purpose 80,000-kw. hydroelectric feature used as an 

 example in the previous chapter, the power would be distributed 

 in conformance with this preference clause. Municipalities, public 

 utility districts (PUD's), and rural electric co-operatives would 

 receive first consideration in the meeting of area requirements. 

 Only after their needs were met would any surplus be available for 

 disposal to private electric utilities in the Bonneville Power 

 Administration's marketing territory. 



Insight into the probable distribution of the power from our 

 hypothetical Willamette River site developed as a federal under- 



^ Bonneville Act, as amended, Public Law No. 329, 75th Congress. 



