sidering the best use of water and the related land resources. Construction of a steamplant as an alternate to the Passamaquoddy-Dickey project would not contribute to the foregoing aims. TABLE 8-2.-Project formulation, integrated operation-Dickey and Passamaquoddy with pumped1 storage (2-hour peaking) 1 Pumping to upper pool from lower pool during periods of neap tides, only. 2 Transmission to Boston, Mass., area. B. BENEFITS AND COSTS Construction of the proposed Passamaquoddy-Dickey power development would create annual equivalent benefits of $46,859,000. (This includes power benefits analyzed under a 2-hour peaking operation at Dickey and Passamaquoddy.) The associated annual equivalent Federal project costs are $31,956,000. The resulting benefit-cost ratio is 1.47 to 1. C. PURPOSES Ꭺ Benefits creditable to the project were analyzed for five project purposespower, recreation, area redevelopment, flood control, and fish and wildlife. discussion of the benefits for each of these purposes follows. 1. Power benefits The annual power benefits creditable to the proposed Passamaquoddy-Dickey developments are estimated to be $42,511,000 based on the standard energycapacity approach. The annual value of capacity and energy that would be produced by the project was computed using energy and capacity unit values furnished by the Federal Power Commission. These unit values represent the alternative costs of producing energy and capacity in New England from highly efficient, large-scale, conventional steamplants under private financing. Inasmuch as transmission system costs have been included in the project cost estimates, power benefits have been computed for at-market conditions. Transmission losses of 9.5 percent for capacity and 7.1 percent for energy were deducted in the power benefit analysis. 36-941-643 Composite at-market unit power values of 3 mills per kilowatt-hour of energy and $27.70 per kilowatt of dependable capacity were adopted for use in evaluating power benefits. These composite values reflect the projected amounts of energy and capacity produced by the project that would be marketed in Boston and Maine powerload centers. Maine__ Energy values Capacity values Mills per kilowatt-hour 3.31 2.79 3.00 Dollars per kilowatt Maine_ Composite--- --- 29.51 26.02 27.70 Estimates of dependable capacity, average annual energy generation, and power benefits are summarized in table 8-3. TABLE 8-3.-Power benefits and related data proposed Passamaquoddy-Dickey power developments 2-hour peaking operation 1 Net production after deducting pumping energy used in pumped-storage operation at Passamaquoddy, during neap tide periods. 2. Recreation benefits The recreational aspects of the potential Passamaquoddy tidal development have been studied by the Bureau of Outdoor Recreation. This Bureau estimates the annual recreational visitation to Passamaquoddy would be 500,000 visitordays under 1975 conditions. The number of visitors is expected to increase to 4,675,000 by the year 2025. The average annual benefits associated with this recreation activity adjusted for changes over time are estimated to be $2,030,000 based on recreational values of $0.80 per visitor-day. 3. Area redevelopment benefits Both the Passamaquoddy and Dickey power developments are located within counties which are designated as "redevelopment areas" based on criteria set forth in the Area Redevelopment Act of 1961 (75 Stat. 47); therefore, construction of the potential project would significantly reduce unemployment in these two areas. Current evaluation procedures require the measurement of benefits attributable to the value of labor required for the construction and operation of a project that otherwise would not be fully utilized. Such benefits are identified in this analysis as area redevelopment benefits. In evaluating the benefits which would accrue from area redevelopment, wages paid to skilled and unskilled labor required for project construction and salaries paid to personnel for project operation were considered. Labor inputs necessary for the construction of the potential project were estimated through use of information obtained from the Corps of Engineers. Information on the present extent of unemployment in the affected labor market areas and the character of the unemployed labor force was obtained from the Employment Security Commission, State of Maine. Utilizing this information, the available local unemployed labor force was compared with the projected construction work requirements by construction years to estimate the amount of increased employment of the local labor force creditable to project construction. The associated construction wages converted to annual equivalent values for a 100year period of analysis were used as the construction employment component of the area redevelopment benefits. Salaries and wages paid to the permanent operating personnel were estimated and used in evaluating the contribution of project operation to local employment. However, in accordance with current procedures of the Department of Commerce, the overall employment period was established at 20 years from initiation of construction at the Dickey and the Passamaquoddy sites, and a declining scale of values reaching zero in the 21st year was utilized. The employment benefits associated with project operation were evaluated as the annual equivalent of this series of declining values when spread over the 100year period of analysis for the project. The annual area redevelopment benefits creditable to the Passamaquoddy-Dickey power development, as estimated in the manner described, are $2,278,000, annually. Additional information relating to the area redevelopment analysis is presented in table 8-4. TABLE 8-4.—Area redevelopment benefits, Passamaquoddy-Dickey power Construction of Dickey dam and reservoir is expected to provide local flood control benefits at Fort Kent of $40,000 annually. 5. Fish and wildlife benefits Fish and wildlife benefits are not included in the project. The costs for mitigating damages to fish and wildlife have been included as project costs and have been allocated as joint costs of the project. D. FEDERAL POWER COSTS Annual Federal costs associated with the benefits for the potential Passamaquoddy-Dickey power development are estimated at $31,956,000 based on a 100year analysis and 3-percent interest. The derivation of this estimate is shown in the following tabulation: The costs of the potential project have been allocated among the four functions of power, recreation, flood control, and area redevelopment, using the separable costs-remaining benefits method of allocation, a 100-year period of analysis and 3-percent interest. The costs to be allocated are summarized below: The results of the cost allocation are summarized in table 8-5, and the basic allocation is shown in table 8-6. TABLE 8-6.-Cost allocation, Passamaquoddy-Dickey power developments 13 percent annum. 1 Cost of alternative exceeds benefits, hence the justifiable expenditure is limited to the benefits. F. REPAYMENT Reimbursable costs The construction costs and interest during construction allocated to power is $796.292,000 and is asumed to be fully reimbursable with interest. For fiscal year 1964, the applicable interest rate is 3 percent per annum. The balance of the project construction costs and interest during construction, $100,097,000, is assumed to be nonreimbursable. Under existing statutes, costs allocated to flood control are nonreimbursable. It is proposed that the costs allocated to area redevelopment and recreation be authorized as fully nonreimbursable. However, if the costs allocated to recreation were made nonreimbursable only within the limits established in the proposed bill, H.R. 9032, only $26,256,000 of the construction costs and $1.701,000 of the interest during construction allocated to recreation would be reimbursable. Power repayment Power payout studies for the potential Passamaquoddy-Dickey power development were made to determine the rates at which the power would have to be marketed to achieve reimbursement of the power investment costs in 50 years. The power payout studies disclosed that power rates as shown below would be adequate to achieve repayment of the total power investment, including the transmission system, in 50 years after each unit becomes revenue producing. Moreover, the power payout studies disclosed that the rates would be adequate to achieve repayment of the power investment allocations for each stage of the development within its own 50-year repayment period. The at-market power rates used in the power payout analysis are: Dependable capacity: $19.75 per kilowatt-year. |