OCR Text |
Show 1. Equal charge theory of allocation. 2. Relative benefit method of allocation. 3. Justifiable expenditure theory. 4. Alternative cost avoidance theory. 5. Relative national benefit theory. 6. Alternative justifiable expenditure theory. 7. Use theories by reservoir content method; or reservoir storage method. 8. The 100 percent method. 9. Allocation according to direct charges. 10. The vendibility theory of allocation. 11. Capitalized income theory. 12. Incremental charge theory. 13. Judgment method. TVA's experience with these various methods has led it to adopt for its reports to the President, Con- gress, and the public, the alternative justifiable ex- penditure theory. In doing this it is understood that there is no exact mathematical formula or other scientific process having automatic or com- pletely logical application to allocation of joint costs of multiple-purpose water control projects. All methods reflect the exercise of informed judg- ment rathier than scientific calculation. Six steps are included in use of the alternative justifiable expenditure method by TVA to allocate joint costs of construction of its 16 multiple-purpose projects: (1) Determination of total over-all cost of the system. (2) Determination of direct costs, i. e., those incurred specifically for navigation, flood control, and power purposes. (3) Preparation of estimates of hypothetical costs of separate single-purpose navigation, flood control, and power systems, capable of affording the same separate results as those provided by the actual multiple-purpose system. (4) Determination of economic justification of each hypothetical system separately, by comparing estimated annual costs with estimated annual benefits. (5) Direct costs of navigation, flood control, and power systems are then deducted separately from the corresponding estimated costs of the alternative systems, the three remainders being called remain- ing alternative costs (RA). (6) Aggregate joint or common costs are then apportioned to the three purposes in direct pro- portion to the RA costs. Investment of the 16 multiple-purpose projects was classified as follows on the date of review. The total investment was $562,774,051; the direct costs total, $217,140,901. Joint costs subject to allocation were $345,633,150. This is shown in table 5. TABLEJ5.-Multiple-purpose system costs, June 30, 1945 Project Total Direct costs Navigation Flood control Power Joint costs Kentucky. . . , Pickwick.... Wilson...... Wheeler_____ Guntersville . . Hales Bar. . . Chickamaug-a Watts Bar. . . Fort Loudoian Norris...... Hiwassee. . . . Cherokee Ghatuge... _ . Nottely..... Fontana..... Douglas..... Total. . $105, 423, 000 35, 645,000 41, 470,000 35, 672, 000 31, 579, 000 16, 072, 000 34, 823, 000 33,060, 000 34, 213, 000 30, 985,000 16, 927, 000 29, 872,000 6, 890,000 5, 286,000 65, 361,000 39, 496, 000 $11,212,000 6, 582, 000 2, 649,000 1, 824, 000 3, 288,000 2, 617,000 4, 850, 000 3,184,000 5,073, 000 $16, 532,000 788,000 1,107,000 1, 952,000 786,000 5, 506,000 1, 356,000 3, 467,000 501,000 587,000 7,623,000 7,057,000 $13,385,000 14,175,000 19,321,000 11,558,000 8, 452,000 3,690, 000 8,700,000 12, 643,000 7,851,000 4,813,000 3, 376, 000 5,119,000 8, 683,000 6,833,000 $64, 293,000 14,100,000 19,500,000 22, 290, 000 19,839,000 9, 765,000 20,167,000 15,281,000 20, 503, 000 20, 666,000 12,195, 000 21, 286,000 6, 389,000 4, 699,000 49, 056,000 25, 607, 000 562, 774,000 41, 279,000 47, 262,000 128,599,000 345, 636,000 740 |