Results of a study on the evaluation of potential for geothermal energy development and utilization in California are reported. This is Volume II of the two-volume report. The first four chapters of this volume present a generic analysis of several decisions facing government in the field of hydrothermal energy. The analysis develops a framework for estimating the potential overall benefits of hydrothermal power (detailed in Appendix A). Chapter V contains a site-specific analysis of the decision to fund a demonstration plant at Heber, California. This analysis is performed from the point of view of both the government and the local-electricity consumer. The specific numerical results presented are limited to electrical power generated by hot water systems. (JGB)