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Show Electric Power in the Present and Future Program Electric power is a key feature of the water devel- opment program because it will be the primary basis for increasing employment opportunities in the region. Three features of Columbia Basin Project economics are of interest in this connection: (1) relative costs of development; (2) the use of the basin account and its effect on power rates; and (3) the effect of region-wide power rates. Cost of Hydroelectric Development Strict comparisons of relative power costs involve careful weighting of many different factors, much of which had not been completed for the Columbia Basin as a whole in June 1950. For meaningful comparisons of cost, estimates must be made on a comparable basis. Varying periods of amortiza- tion and rates of interest, and different allowances for risk insurance, taxes, and administrative ex- penses invalidate comparisons of data normally available. The characteristics of the power system may vary a great deal. Load factor, distance from the market^ service availability, reserve require- ments, flexibility, reliability, efficiency, and other factors affecting the economy of the system in which the power is to be utilized are all variables. The cost of hydroelectric power in multiple-purpose projects is affected by the allocation of costs among project purposes. However, certain generalized statements are possible at tliis time. The conditions found in the Columbia RJver Basin are so favorable for hydro- electric power development that at least half of the Columbia River power can be developed at very low cost. This low-cost half of the potential hydro- electric power in the Columbia River Basin will cost less than power from most other important potential sources in th_e United States, with a few exceptions, such as fuel electric power from natural gas in the State of Texas, and hydroelectric power from the redevelopment of Niagara Falls. The St. Lawrence Seaway pow«r may cost approximately the same as the low-cost half of the Columbia River power. The low cost of the St. Lawrence River power is attributable to the large, naturally uniform stream flow, but the head available for the development of power is not comparable with the head available in the Columbia River Basin. Present revenues from power sales to industrial and commercial con- sumers reflect the favorable position of the basin at the present time among the regions of the United States, even though some large sources of low-cost power are not yet in use (table 5). In contrast with the low-cost hydroelectric power in the Columbia River Basin, the fuel electric power in that region costs more than in most areas of the country because of the lack of nearby nat- ural fuel resources. There is almost no high-grade coal in the region, and other coal reserves are very limited. Except for the possibility of importing some Canadian natural gas, the only important accessible energy source is hydroelectricity. Use of the Basin Account and its Effect on Power Rates A "basin account" has been proposed for water resources development on the Columbia and its tributaries, whereby financial accounting for power and irrigation facilities would be pooled on a basin- wide basis rather than on a project-by-project basis. The immediate effect would be one of transfer- ring procedures which are accepted on a project basis to similar use for the Columbia Basin as a whole. The use of interest component on power investment, now administratively deemed available under reclamation law to irrigation project develop- ments with associated power generating facilities,* would be available under the basin account from all power developments for all potential irrigation facilities in the basin, whether or not generating facilities were directly attached to a particular irri- gation project. Another aspect would be the pool- ing of power revenues, so as to place rate-making for electric power on a uniform basis. A part of the basin account proposal involves the use of the interest component of power in- vestment for paying off irrigation capital costs. Insofar as this practice is followed the effect on power rates is nil. With the use of the interest component the cost of the irrigation subsidy is placed on the general public. The issue is: Should subsidy for irrigation be provided by the power users of the region or from the National Treasury through general taxation? Use of in- terest component of the power revenues for the benefit of irrigation serves to obscure the source of such assistance from the Federal Government. If power revenues in addition to the interest compo- 1 According to opinions of the Solicitor of the Depart- ment of the Interior. 30 |
