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This program would involve total estimated an- nual carrying charges of 28.1 million dollars, with the Federal Government bearing 24.3 million dol- lars and non-Federal agencies 3.8 million dollars. Against these carrying charges are estimated total annual benefits of 22.2 million dollars, practically all of which are from power, with expansions at the six existing Alabama Power Co. plants ac- counting for 5.9 million dollars of the total. Bene- fits from the extension of navigation to Rome are not given since no up-to-date traffic analysis is available. Except for certain relatively minor channel improvement projects, no estimates of flood control benefits have been made. Ninety-two percent of the estimated cost of the approved projects would be borne by the Federal Government. Under present Federal policy the only repayment will be through power revenues, and Federal outlays for navigation and flood con- trol would not be repaid directly. Power and Basin Development Economic and Financial Feasibility Power is the dominant factor in development of water resources in the Alabama-Coosa River Basin. This is particularly true with respect to economic feasibility and justification of projects under pres- ent methods of project selection. Total estimated annual benefits for all projects are given as 33 mil- lion dollars (1949 prices) of which 31 million dol- lars (91 percent) is due to power. Because the benefit data for flood control and navigation are incomplete, this comparison somewhat overstates the case for power but it does not change the main conclusion. The basin-wide program of the Corps of Engi- neers would involve an estimated total construction cost of 678.4 million dollars, 636.2 million dollars of which would be paid by the Federal Government and the remainder of 42.2 million dollars by non- Federal agencies. While no estimate of cost allo- cations is available, a substantial proportion of the Federal outlay would be allocated to power and would, therefore, be repaid to the Federal Govern- ment. Power Rates and Costs Electric power rates in Alabama are considerably below the national average, both in the areas served by public systems and in those served by private systems. Rates have been reduced more in the TVA service area than in the non-TVA service areas but in both, rates have been reduced more in recent years than the average reduction for the United States as a whole (table 3). Use of electric- ity has increased as rates have gone down and aver- age annual income to the utilities has increased. Residential rates in 1950 for 250 kilowatt-hours in three Alabama cities, one supplied by TVA and two by private utility companies, are shown in the following summary: Resi- dential Rate bill for per City Served by 250 kilo- kilo* watt- watt- hour hours Dollars Cents Athens......... Tennessee Valley Au- 4.13 1.7 thority. Birmingham..... Birmingham Power Co. 6.13 2.45 Gadsden........ Alabama Power Go.... 5.60 2.24 The average residential bill for 250 kilowatts per month in Alabama in 1950 was $5.73 or 2.39 cents per kilowatt-hour. The national average is 2.7 cents. Industrial rates for 1,000 kilowatts demand and 400,000 kilowatt-hours are about 1 cent per kilowatt-hour. Several features of production and distribution have influenced rates in the region. Coordinating and pooling arrangements in the Southeast have helped to reduce the cost of production. Low-cost fuel, mined in western Alabama, has enabled rela- tively low-cost production of thermal supplements to hydroelectric generation. In addition, the low rates offered by the TVA, which serves a part of the Alabama-Coosa River Basin, have resulted in increased power sales at lower cost per unit. In general, for both public and private operation it can be said that low rates have stimulated the growth of the region, and this in turn has favored expanding markets for power and maintenance of low energy rates. Table 3 shows comparative data on residential power use, power rates, and average annual income from sale of power for Alabama, the Tennessee Valley Authority area, and the United States from 1933 to 1949. 545 |
