244 MULTIPLE PURPOSE RIVER DEVELOPMENT 



distribution of the equity shares in the utility undertaking. We 

 can work this through for illustrative purposes. 



Look at a case in which a private utility would retain 50 per cent 

 of the gains as increased profits and pass on the remainder in lower 

 commercial and industrial rates to business establishments. If the 

 utility obtained 34.4 per cent of the output of the federal project, 

 this would represent a saving amounting to about $512,000 

 annually, compared with annual operating costs if such power were 

 provided by its own financing of the reimbursable project feature.* 

 Taking up, first, the gains associated with that part of the savings 

 which appears as increased profits to the private electric utility 

 (1256,000, of which $128,000 is shared with the Internal Revenue 

 Service), what can we say about their distribution? 



To obtain an estimate of the regional locus of these gains, we 

 need some idea of the distribution of the utility's common stock 

 ownership. Although such information is seldom a matter of public 

 record, the regional distribution of common stock ownership for a 

 utility in the Northwest has been made public and can be used 

 here as the basis of an approximation.^ The distribution of junior 

 equity securities by regions indicates the distribution of that part 

 of the after-tax gains to the private electric utility retained from 

 the savings in costs of power supplied through federal development. 

 This is shown in Table 51, along with the distribution of gains 

 from the assumed reduction in the general tax burden associated 

 with the utility's increased tax liability. 



The distribution of both forms of gains from the profits earned 

 by the private utility appears to be about $32,700 in the region 

 and $222,300 among residents of other parts of the country. 



Next, consider the distribution of gains relating to that part of 

 the savings in cost of power passed on to the utility's commercial 

 and industrial customers. We assume that the before-tax gains will 

 be about 55 per cent of the total savings, or $140,800; and, of this, 

 that 50 per cent will be absorbed by an increase in the enterprise's 

 federal tax liabilities. On the assumption that this permits an 



• See Tables 48 and 38. 



' The data employed in the following analysis appear as insert sheets 8a and 

 8b of the Idaho Power Company's Annual Report to the Federal Poiuer Com- 

 mission for the year 1955, adjusted to represent a Willamette Basin develop- 

 ment by transposing the data for the states of Idaho and Oregon. 



