Table 1 indicates that the period from 1978-1990 is projected to have surpluses 

 of peaking capacity and deficits of average energy. 



Due to a revision in 1975 by the Federal Povjer Commission (now the Federal Energy 

 Regulatory Commission) of the method for calculating hydropower benefits the B/C ratio 

 dropped below 1.0. Because a project can't receive federal funding unless project 

 benefits exceed costs the Corps began a search for cost-cutting measures. In addition 

 trimming non-essential project features, archeological costs were deleted from the tabu- 

 lation of costs. This was defended by noting that they are non-reimbursable costs. 

 This is a violation of the federal guidelines for economic analysis and basic econ- 

 omic principles and produces an understatement of true project costs. 



The benefits of converting Libby Dam to peaking operations are the value of the 

 peaking power gained minus the value of power from current operations that is lost. 

 The value of the proposed operation and the current operations are measured by the 

 least-cost alternatives to these operations. Although the current operations at Libby 

 Dam are semi-peaking because output during peak hours is often several times greater 

 off-peak output the Corps selected as the least-cost alternative to current operations 

 a nuclear plant. Nuclear plants are typically used only for baseload operations be- 

 cause capital costs are very high and operating costs dre low and a change in power 

 output takes several hours. 



The selection of a nuclear plant as the least-cost alternative assumes that 

 currently Libby Dam produces only baseload power and incorrectly calculates the bene- 

 fits of the proposal as the difference in power values between a baseload plant and a 

 peaking plant. If the project were needed the benefits would only be the difference 

 between the power values of a semi-peaking operation and a peaking operation rather 

 than the difference between baseload and peaking operations. The method used by the 

 Corps incorrectly counts current peaking benefits from the existing semi-peaking oper- 

 ation that are available in the absence of the project as benefits of the project. 



The Corps also failed to adequately consider the recreational losses would re- 

 sult from the inundation of 10 more miles of the Kootenai River. Recreators would 

 surely be displaced, being forced to seek an alternate site--perhaps a less desirable 

 one. Other recreational losses would include those associated with the blockage of 

 the Fisher River and those related to option values. Those who would pay for the 

 option of future use, even though they may not be present users, should be consider- 

 ed. Certainly those who pass and sign petitions protesting the project would suffer 

 option losses if they are not regular users. Active opposition by the Libby Rod and 

 Gun Club, among others, clearly indicates that many local residents believe they 

 would suffer a substantial loss if the project is built. 



Endangered Species 



The Endangered Species Conservation Act of 1969 and the Endangered Species Act 

 of 1973 afford protection to plant and animal species deemed by the Secretary of the 

 Interior or the Secretary of Commerce as endangered or threatened with extinction. 

 Section four of the latter gives final authority for the determination of a plant or 

 animal as an endangered species to the Secretary of the Interior. 



Notification of the addition of the bald eagle to the federal endangered species 

 list became formal on flarch 16, 1978. While the bald eagle has not yet been given 

 special designation under Montana's own endangered species provisions, it is antici- 

 pated that the 1979 Legislature may do so. 



The recent designation of the bald eagle as an endangered species has resulted 

 in the need to examine more closely the activities associated with the construction 

 of the reregulating dam below Libby Dam. 



