Betterment Accounting: A Requiem by the SEC

The railroad industry, unlike almost every other industry, has a depreciation accounting system all its own known as betterment accounting. In sharp contrast to generally-accepted methods of depreciation, such as ratable depreciation, where the cost of the capital asset is systematically expensed over the useful life of the asset, under the betterment practice, the initial cost of track structures is recorded as a nondepreciable asset. Subsequent replacement costs are then charged directly to operating expense as an adequately reliable measure of depreciation. Justifications for this unique system of accounting relate primarily to the peculiar nature of railroad track structure-a large number of individual components that can be replaced on a scheduled basis. The American Institute of Certified Public Accountants, noting the historical acceptance of betterment accounting, continues to allow the betterment method in railroad financial reports to shareholders. The Interstate Commerce Commission (ICC) as grappled constantly with the issue since the agency was formed in 1887, but still finds the betterment method acceptable and even requires it in railroad reports submitted to the Commission. The Securities and Exchange Commission (SEC) has a chance to make a fresh, critical examination of the appropriateness of betterment accounting for shareholder reporting purposes. The Railroad Revitalization and Regulatory Reform Act of 1976 [4R Act] gives the SEC expanded authority to issue disclosure requirements for railroads in filings with the SEC and reports to investors. Pursuant to this grant of authority, the SEC in April of 1977 announced a proposed rulemaking to examine the standards for disclosure of railroad industry operations. The SEC requested public comment as to whether betterment accounting should continue to be an acceptable accounting principle for railroads for reporting their financial position and results of operations to shareholders and the SEC. The betterment method and the alternative ratable depreciation approach must be compared in light of the SEC\u27s role in ensuring proper disclosure of financial information to the public: which method yields a more accurate picture of a railroad\u27s operating results and over-all financial health? This article will closely examine these two accounting methods by reviewing the public comment received by the SEC under its rulemaking procedure. First the betterment method currently practiced by railroads will be discussed, followed by an analysis of the more widely-accepted ratable depreciation approach

Quantifying the Resilience Value of Distributed Energy Resources

Extreme weather events, which are occurring with increasing frequency as a result of climate change, threaten the reliability and resilience of the nation\u27s electricity grid. Increased flooding due to intense rainfall, hurricane damage fueled in part by a warmer atmosphere and warmer, higher seas, and widespread wildfires caused by extended drought conditions constitute potential hazards for utility infrastructure and delivery of essential electricity service. As a possible adaptation strategy, increased deployment of distributed energy resources (DERs), which are small-scale generating resources located near-and connected to-a load being served with or without grid interconnection, can improve the resilience of the electric system in the face of the increasing frequency of extreme weather events, by avoiding some of the systemic vulnerabilities of a centralized large grid. The experience of Hurricane Sandy (ultimately downgraded to Superstorm Sandy by the time it hit the coasts of New York and New Jersey in late October 2012) provides a case study of the resilience benefits of DERs, and the lessons that can be learned as utilities plan for increasingly frequent extreme weather events of the future. Superstorm Sandy was the deadliest and most destructive hurricane of the 2012 Atlantic hurricane season, resulting in 286 deaths and $68 billion in damages. The storm\u27s diameter extended almost 1,000 miles, and produced a storm surge of 14 feet at the Battery in lower Manhattan that was at least three feet higher than prior reported storm tides. Approximately 8.5 million utility customers along the eastern U.S. lost power during Sandy. Apart from the sheer magnitude of the disaster in terms of fatalities and destruction, Superstorm Sandy provided a wake up call for energy providers, and electric utilities in particular, on the need to adopt a different set of long-term planning tools to improve the resilience of the electric system to cope with the anticipated extreme weather events of the future. One such tool is an expanded role for DERs and microgrids. If the electrical grid is impaired, DERs can be configured to island from the grid, thereby ensuring an uninterrupted supplyof power to utility customers within a microgrid. That was the experience from Superstorm Sandy, where the use of microgrids and DERs enabled power to be provided to pockets of consumers in the face of widespread outages of central power plants and the associated transmission and distribution (T&D) systems. While extended power outages affected the region for days, many commercial and industrial facilities and educational institutions in the area (including Princeton University\u27s campus in New Jersey and New York University\u27s campus in lower Manhattan) were able to continue operating uninterrupted, due to on-site DG facilities, primarily cogeneration or combined heat and power (CHP) facilities. DG resources offer the opportunity to improve the resilience of the electrical grid, mitigating the impacts of an emergency by keeping critical facilities running without any interruption in service. At the same time, it is difficult to quantify the resilience value of DERs and microgrids. To what extent is the grid more resilient due to the presence of DERs? What are the tools available to place a value on this increased resilience? Is it possible to place a value on the continued availability of critical facilities during an extended grid outage? As states move away from compensating DERs through net metering-based on the serving utility\u27s retail rate toward a system based on paying DERs according to their actual contributions to the grid-it becomes increasingly important to try to place a value on the resilience benefits that DERs provide to the grid, to ensure that DER owners and operators receive accurate price signals to stimulate an economically efficient level of investment. This article describes the experience of Superstorm Sandy and the resilience benefits that were provided by DERs and mircrogrids during that particular extreme weather event. The article then discusses recent developments in the approaches for compensating DERs, which is driving the need to quantify the resilience benefits of DERs. Next, the article will review recent efforts to place a value on the resilience benefits of DERs, followed by some concluding observations

Keeping the Lights on during Superstorm Sandy: Climate Change and Adaptation and the Resiliency Benefits of Distributed Generation

Hurricane Sandy (ultimately downgraded to Superstorm Sandy by the time it hit the coasts of New York and New Jersey in late October 2012) was the most lethal and destructive hurricane in 2012, resulting in 285 deaths, $68 billion in damages, and 8.5 million utility customers in the eastern United States losing power. Superstorm Sandy provided a wake-up call for electric utilities on the need to adopt a different set of long-term planning tools to improve the resilience of the electric system against anticipated extreme weather events. The experience of Superstorm Sandy provides a case study of the system resiliency benefits of distributed generation (DG) resources and microgrids, and valuable lessons that can be learned as utilities plan for increasingly frequent extreme weather events of the future. This Article examines legal and regulatory tools available to encourage electric utilities to move in the direction of a DG-based model, and it focuses in particular on the Consolidated Edison Company of New York (Con Edison) rate proceeding in New York. In that recently concluded proceeding, utility regulators had an opportunity to consider a traditional approach proposed by the utility-featuring transmission and distribution infrastructure investments-alongside a competing view of a utility of the future offered by environmental parties, geared toward a more resilient system that integrates DG resources and microgrids. In a precedent-setting order issued by the New York State Public Service Commission (PSC) on February 21, 2014, the PSC required Con Edison to make significant investments to enhance system reliability, to achieve a higher level of storm hardening and resiliency in the face of anticipated climate change and sea level rise. Con Edison was directed to take specific steps to use DG resources as an alternative to traditional infrastructure, to facilitate DG installations in its service territory, and to develop an implementation plan for microgrids in its service territory. More broadly, utilities in New York were directed to integrate predicted impacts from climate change into their long-term system planning processes. The article also examines other legal theories that can be used in utility regulatory proceedings to move utilities toward a new utility paradigm that features DG resources, including the prudent investment standard, the doctrine of used and useful, and the requirement to set cost-based rates

Inhibition of acetyl-CoA carboxylase suppresses fatty acid synthesis and tumor growth of non-small-cell lung cancer in preclinical models.

Continuous de novo fatty acid synthesis is a common feature of cancer that is required to meet the biosynthetic demands of a growing tumor. This process is controlled by the rate-limiting enzyme acetyl-CoA carboxylase (ACC), an attractive but traditionally intractable drug target. Here we provide genetic and pharmacological evidence that in preclinical models ACC is required to maintain the de novo fatty acid synthesis needed for growth and viability of non-small-cell lung cancer (NSCLC) cells. We describe the ability of ND-646-an allosteric inhibitor of the ACC enzymes ACC1 and ACC2 that prevents ACC subunit dimerization-to suppress fatty acid synthesis in vitro and in vivo. Chronic ND-646 treatment of xenograft and genetically engineered mouse models of NSCLC inhibited tumor growth. When administered as a single agent or in combination with the standard-of-care drug carboplatin, ND-646 markedly suppressed lung tumor growth in the Kras;Trp53-/- (also known as KRAS p53) and Kras;Stk11-/- (also known as KRAS Lkb1) mouse models of NSCLC. These findings demonstrate that ACC mediates a metabolic liability of NSCLC and that ACC inhibition by ND-646 is detrimental to NSCLC growth, supporting further examination of the use of ACC inhibitors in oncology