Energy Consumption and Conservation

Are we aware of the future state?

Stone Age saw the very first human invention in form of the accidental spark generated by rubbing two stones, and the first source of energy was unveiled (apart from the already existing natural energy sources such as sunlight, wind, water etc). From then on humans have embarked on a journey of inventions, having found a number of sources of energy and using them for their basic needs of housing, transportation, industrialization etc. In a bid to achieve more, we have managed to over-utilize some of the non-renewable energy sources, such as oil, natural gas and coal and have brought them to the extent of extinction. Thus the time is ripe for everyone to assess their overall energy consumption, how it can be reduced or optimized, and if any alternative sources of energy can be used to elongate the life of non-renewable energy sources.

Like charity, I believe all good things begin at home. My state Connecticut is fifth lowest energy consuming states in 2010 on a per capita basis, and my city Norwich at times beats the overall state and U.S. level metrics in terms of energy usage, as its energy consumption is at times too low to be significant. Residential and transportation sectors are the major chunks in the energy consumption pie as the industrial consumption is almost negligible (U.S. Energy Information Administration: Profile Analysis, 2013).

Connecticut’s energy usage involves both non-renewable and renewable sources of energy. Non-renewable sources include coal, petroleum and natural gas while renewable sources include solar and wind based energy (Connecticut, Profile Analysis, 2013).

My own energy use pattern is quite similar. While commuting I try to use public transport as much as possible. Though the public transport also uses petroleum products (like Amtrak trains which use diesel and electricity), still being a means for mass transit they help in cutting the overall consumption of petroleum products, which are fossil fuels extracted from the remains of animals and plants. Petroleum products serve as efficient transportation fuel, and can be easily transported. They are also very economical to produce. But on the flip side, they produce CO2 emissions resulting in environmental pollution; they need to be transported to places like Norwich and most important fact is that they are non-renewable (Energy4me, n. d.).

Throughout a year, my energy needs change. Like in summer I need some cooling, while in winters I need my place to be warm. Energy is used in cooling and heating appliances, television, refrigerators, heating fuel, electricity, computers, dishwashers, dryers, etc. In summers there is an increase in electricity demand and a reduction in power production efficiency of nuclear power plants and fossil fuel as these plants require water for cooling.

Within my home, the natural gas is the main source of energy which is used for a number of things like cooking, heating, drying clothes etc. Electricity generation also involves use of natural gas. Produced as a byproduct of oil, natural gas is a clean source of energy. It is also used for decreasing pollution in electricity generation by combining it with other fuels. However, it is not easily available in some areas of the U. S. due to lack of infrastructure. Also low level of emission is present and the pipelines have impact on ecosystem.

In Norwich, the main renewable sources of energy are the solar and wind energy. Nowadays Connecticut is encouraging people to use renewable resources e.g. residential solar photovoltaic. According to the state’s Renewable Portfolio Standard (RPS), only 27% of electricity will be sold in the state from renewable energy sources by 2020, so its usage needs to be increased (U.S. Energy Information Administration: profile Analysis, 2013).

Solar energy can be the best form of renewable energy that can be utilized in Norwich, and Connecticut has already started pushing this energy form to various cities. Government is promoting use of solar energy by installing solar panels at subsidized rates – a one-time investment. Solar energy is non-polluting and is the most abundant energy source available, and solar power systems last for about 15-30 years. Main disadvantage is that itdepends on the weather. It also needs supplemental energy in the areas where there is low sunlight. PV cell panels need large physical area for installation and the polysilicon used for making panels has limited availability (Singer, 2013).

Connecticut is also using hydropower as a renewable source of energy to produce electricity. FirstLight Power Resources works with hydro stations during times when electricity demands are high. Hydropower is non-polluting, reliable, can generate power in large amounts, and based on the demands, the output can be regulated. However the hydropower use involves building dams which is expensive, and the dams also impact the environment negatively. Moreover, these dams also get affected by drought (FirstLight, n. d.).

Another form of renewable energy that Connecticut is looking at is the wind energy. NPU and city schools have collaborated to install a 45 foot high tower having a wind turbine for using wind energy for generating electricity. Wind energy is an affordable, non-polluting source with little disruption to ecosystem. However wind energy is not very appropriate for Norwich as its output is dependent on the wind speed. Norwich is not a particularly windy city having average wind speed of just 5 miles per hour which is not sufficient even for rotating the blades of the turbine. Also the initial investment and ongoing maintenance costs of turbine are high (Craven, 2011).

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In addition to finding alternate sources, energy conservation is also an important tool to minimize energy abuse. The first step towards energy conservation is to eliminate the wastage of energy that happens in household, schools or workplaces. The energy consumption of the United States alone is anticipated to increase by 13% in the next two decades and global consumption is also expected to rise by about 44% over the same time period.

I have taken certain steps to conserve energy. I clean and replace the air filters regularly. I also keep adjusting cooling and heating controls to avoid overcooling or overheating. In summers I keep the thermostat at 78°F and in winter, the recommended limit is 68°F which are recommended limits for optimal usage of energy. In addition, I have replaced the light bulbs with compact fluorescent lights and have reduced my television viewing time. These are some steps which have helped me to save energy, and can be implemented by everyone (Energy4me, n. d.).

Being selfish and over consuming the resources is certainly not an option if we want to leave a legacy for our future generations, else their lives will be filled with numerous challenges which could have been avoided had we been a little careful in limiting our energy usage. Energy is precious for everyone, and should be used wisely. If this is not done in a timely manner, then we would run the risk of going back to Stone Age, with no electricity, no fuel and certainly no industries. We need to wake up before it gets too late.

 

 

 

 

References

Craven, James. (2011). Norwich Senior center harnessing wind power. The Bulletin. Retrieevd from: http://www.norwichbulletin.com/x1512112110/Wind-turbine-goes-online

Energy4me. (n.d.). Energy Conservation. Retrieved from: http://www.energy4me.org/energy-facts/energy-conservation/#

Hydroelectric Facilities. (n. d.). FirstLight Power resources. Retrieved from: http://www.firstlightpower.com/generation/hydro.asp

Profile Analysis. (2013). Connecticut. State profile and Energy Estimates, U.S. Energy Information Administration. Retrieved from: http://www.eia.gov/state/analysis.cfm?sid=CT

Singer, S. (2013). Connecticut Pushing hard to expand solar energy to homes. The Bulletin. Retrieved from: www.norwichbulletin.com/article/20131129/NEWS/131129549/10304/LIFESTYLE

Paper on Enron Scandal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Enron Financial Scandal

A review of the financial scandal report

 

 

Aalankhoo

 

 

Name of the college

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Author Note

This paper was prepared for General 101, section .., taught by professor…

        Table of contents:

 

 

        Contents:                                                                                                       Page Number

  1. Abstract                                                                       ………….                              3
  2. Introduction                                                                  ………….                              4
  3. A  Literature review of the Financial Scandal              ………….                              5
  4. Overview of the Enron                                                  ………….                              6
  5. The background of the Company                                         ………….                      7
  6. The description of the Scandal                                    ………….                               8
  7. Why did Enron fall                                                      ………….                               9
  8. Impact of failure of  Enron                                           ………….                             11
  9. How we might avoid similar failure                              ………….                            13
  10. Lessons learned from the collapse of the Enron           ………….                            14
  11. Conclusion                                                                       ………….                          16
  12. References                                                                ………….                                 17
  13. Appendix                                                                  ………….                                 18

 

 

 

 

 

 

 

 

 

 

Introduction:

 

Enron is a Houston based energy firm which was credited to create market trading in energy. In just sixteen years, it becomes the world’s largest energy trading company. Offered its services to thousands of customers around the world including Wholesale Services, Energy Services and Global Services combing broadband and transportation services. It experienced a meteoric rise and has 22th rank in the fortune’s 100 best companies list in America in 2000.

With the energy crisis in California, Enron dilemma was started due to poor handling of deregulation of energy by the company itself. It appears that the success of Enronwas just luck and it seems to have sunk into a financial predicament. The collapse of Enron after 2000, has called into question the validity of assurances to the investors and has responsible to fail the good name of the accountancy industry.

 

AN OVERVIEW OF THE CORPORATION

 

 

HISTORY

 

Enron is a Houston based energy firm which is founded by Kenneth Lay. In its 16 years lifespan, it becomes the world’s largest energy trading company with approximately 37000 miles of pipeline. It was credited to create market trading in energy. It experienced a meteoric rise and has 22th rank in the fortune’s 100 best companies list in America in 2000. It was the first foreign company to begin construction of a power plant in UK. It had offices around the world including Australia, Japan, South America, and Europe.

 

OVERVIEW

 

Enron has three main business units:

  1. Wholesale Services: It was allowed customers to sell or buy commodities on their own terms by marketing a number of wholesale commodity products.
  2. Energy Services: It was the largest Energy services provider with a total value of $2.1 billion in 2000. It was used to develop and execute energy strategies of various companies.
  3. Global Services: It included North American pipeline businesses of Enron transportation services with an international level engineering business. Enron online was the world’s largest e-commerce siting which handle real-time transaction for global commodity.

 

ENRON PROGRESS

  • Employees increases from 15076 in 1985 to 18000+ in 2000.
  • Operating countries number increases from 4 to 30+ in 2000.
  • Its assets value increased from $12.1 billion to $33 billion in 2000.
  • It had 14 power projects under construction in 11 countries and 51 power projects in operation in 15 countries in 2000.

TIMELINE

 

  • In early 1980s with the deregulation of the energy sector, Energy Corporation lobbied Washington to deregulate the business. As a result, the US government began to control the energy distribution. Enron saw it as a chance to make money. It decided to act as middleman and guarantee stable price to its customer. Encouraged by deregulation, Enron turned to electricity and tried to buy into the water business and to hedge London weather.
  • In 1989, Enron trading futures in gas contracts between suppliers and consumers betting against the future price of gas generated energy.
  • In 1990, Enron creating an energy commodities business by offering companies the chance to hedge against the risk of adverse price movements in a range of commodities. It started expanding internationally, moving into water in the UK and power generation in India.
  • In early 2000, with the dot.com boom Enron plan to move into broadband internet networks and trade bandwidth capacity with its stable old-economy energy background.

 

 

Description of the scandal methodology:

The scandal methodology used by Enron is very descriptive. Accounting impropriety that the company has used can be specifying by following points:

  • Enron sets up partnership using stock as funding: It set up independent partnerships which resulted into a flow of money into the firm through new partnerships.
  • Partnership sets up SPE:

There were several manipulative accounting practices which Enron used in the transactions with Special Purpose Entities (SPE). This was done especially to enlarge profits, decrease losses so that it can improve its credit rating and get better credibility in the market.

  • Payment made as investment declines:

Enron’s practices were generally disclosed investors but this inadequacy may result in conflict of interest to ignoring the fact that its top management were enriching them, which simply represents fraud. Enron’s structured finance transactions were so complex that disclosure becomes useless

  • Payment posted as profit, even though it is Enron’s own money:

It was tried by Enron to accomplish favourable financial statement results, not to achieve economic objectives or transfer risk. These partnerships would have been considered legal according to “applicable accounting rules”. The plan fell through, but it helped Enron to made $110 million venture capital cash as profit.

An explanation of how the firm managed to hide their accounting improprieties.

Enron was one of the first energy companies to begin trading through the internet and offering a free service to attract a large number of customers. Enron declared the value of its product was around $880 billion in just two years, but it remained silent about the chances of making money through these trading operations.

Enron had used some powerful accounting techniquesso that the price of its sharebecomes high. These techniques are referred to as aggressive earnings managementtechniques. It set up independent partnerships. This results in investment money flowing into Enron from new partnerships ended up on the books as profits,even though it was linked to specific ventures that were not yet up and running. It used many manipulative accounting practices especially in transactions with Special Purpose Entities (SPE) to decrease losses, enlarge profits, and keep debt away from its financial statements in order to enhance its credit rating and protect its credibility in the market.

It was tried to accomplish favorable financial statement results, not to achieve economic objectives or transfer risk. These partnerships would have been considered legal according to “applicable accounting rules”. The plan fell through, but it helped Enron to made $110 million venture capital cash as profit.

These practices were generally disclosed investors but this inadequacy may result in conflict of interest to ignoring the fact that its top management was enriching them, which simply represents fraud. Enron’s structured finance transactions were so complex that disclosure becomes useless. That is why investors had to rely on their business judgment of Enron’s management, but it is failed due to conflicts of interests. It clears when it was known that most of the senior executives of Enron served as the SPE’s principals, receiving massive amounts of compensation and returns, in order to skew their loyalty in favour of the SPEs.

In this way Enron managed to hide their accounting improprieties and made profits through them.

 

A discussion of whom the scandal effected – both inside, and outside, the firm how it has affected the accounting profession – domestically and globally.

Enron’s scandal effected both inside and outside accounting profession domestically and globally. This can be explained as below:

  1. In Relation to The Exchange: Great care is undertaken in the listing of foreign companies on CASE. It does not allow a company until it conduct due diligence analysis of prospective issuers prior to their listing. Now some regulations enforced to ensure timely and full disclosure of information from issuers by imposing penalties on listed companies that are engaged in fraud or misguide its investors.
  2. In Relation to The Regulator: Regulations passed to ban practices to hide losses from investors and report unrealized profits. Capital market regulators (Central Bank as well as CMA) publish a list of auditing firms that are licensed to carry out auditing for listed companies on CASE and exert effort in the regulation on credit rating agencies, their competency and the credibility of the ratings they publish to the market.
  3. In Relation to Auditing & Accounting Practices: Expected changes in the international accounting standards and the way information is presented in financial statements or corporate report modelling. Now more emphasis placed on the value of reporting where it is expected that capital markets will punish companies whose financial statements are regarded opaque or uncommunicative.
  4. In Relation to Investors: Investors understand the underlying reasons for the rise and fall in stock prices. Now investors reviews the board of the company, its strategy, its industry, its competitive position, analyse long term projections, cash flows, financial terms and changes in the share price before investing in company.
  5. In Relation to Board of Directors & Management: The Board understand the nature of and strategy behind major transactions, including complex business structures and is willing to challenge whether such transactions are beneficial to the company and make good business sense. It is fully aware of major risks inherent in the business, especially in complex financial instruments and structured financial transactions and monitors the integrity of the financials to ensure transparency and disclosure of the firm’s financial position.

 

 Recommendations regarding how we might avoid similar accounting improprieties in the future.

Some recommendations to avoid accounting improprieties are listed as below:

  • Educating investors about the importance of disclosure of listed Companies and make investors able to read financial statements of listed companies.
  • Great care should be undertaken in the listing of foreign companies on CASE to avoid having improprieties. A foreign company must conduct due diligence analysis of prospective issuers prior to their listing.
  • Ensure timely and full disclosure of information from issuers and impose penalties on listed companies that are engaged in fraud or misguide its investors.
  • Market regulators should be aware of sophisticated accounting practices that firms can use to hide losses from investors and report unrealized profits.
  • Regulations should be passed to ban such practices.
  • Capital market regulators should have published a list of auditing firms that are licensed to carry out auditing for listed companies on CASE.
  • Capital market regulators should exert effort in the regulation on credit rating agencies, their competency and the credibility of the ratings they publish to the market.
  • Pension funds regulations should be revised to ensure that investments are properly placed.
  • Barriers should be reinforced between commercial banking, investment banking and insurance arms of the same financial institution to avoid potential conflict of interest. Regulators (Central Bank as well as CMA) should be aware that conflicts of interest within the same organization lead to the demise of corporations such as Enron.
  • Fines should be levied on financial institutions where corporate clients or investors were exploited
  • Separate investment analysts from the underwriters of initial public offerings.
  • Investors must be aware not to follow market rallies blindly. They should understand the underlying reasons for the rise and fall in stock prices. They should be wary of poor recommendations and approvals by market participants, credit rating companies and auditors.
  • There is a critical need for truly independent directors and knowledgeable audit committee members, that are willing to be involved, ask tough questions to management and accountable. The Board must sufficiently understand the nature of business and strategy behind major transactions and must be fully aware of major risks inherent in the business.
  • The board should ensure the effective performance of its role to oversee the general performance of the company and its strategy in the market. The Board should monitor the integrity of the financials and ensure transparency and disclosure of the firm’s financial position.

 

 

 

CONCLUSION

 

Enron’s fall is known as the world’s biggest fraud ever. It embarked several issues for the attention of reformers. It suggests taking a look at the role of business funds in political campaigning, the influence of energy companies on national energy policy, over-exposure to one stock and preventing a company from investing its pension funds in its own stock. To implement these restriction reformers have higher standards of transparency and disclosure in the audit profession, potential conflicts of interest between consultancy and auditing work undertaken by financial houses. It needs tighter regulation on financial derivatives trading. These are the only way that could be done to avoid such Enron like crisis in today emerging markets of accountancy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

 

 

 

Websites:

 

http://news.bbc.co.uk/1/hi/in_depth/business/2002/enron/

http://specials.ft.com/enron/index.html

 

 

 

 

Journal:

 

Benston, G .J.  & Hartgreaves, A.L. (2002) Enron: what happened and what can we learn from it. Journal of Accounting and Public Policy, vol.21, no.2, pp.105-127

 

Clark, W.W. Demirag, & I. Enron (2002): The failure of corporate governance .The Journal of Corporate Citizenship, vol. 8,  p p. 105-122

 

Anon. (2002).Four committees in search of scandal: the politics of Enron. The Economist, vol.362, no.8256, 2002, pp.41-42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix A

 

 

 

Author        Year     Source                Title                                                      Website

  

Anon           2002     The economist    Four committies in search of scandal: www.economist.com

the politics of enron

 

 

Clark w.w.  2002   The journal of         The failure of corporate governance                –

do my homework

corporate citizenship

 

 

Math 101 Volume of an egg

In order to find the volume of an egg, first we need to take the approximation that the shape of an egg can be taken as the shape of the prolate ellipsoid of revolution such that it has two identical semi-minor axis and one semi-major axis. Here we take a as the length of the semi-major axis and b as the length of the semi-minor axis. The shape and dimensions of the prolate ellipsoid of revolution is as shown below.

 

 

 

 

 

 

 

 

 

 

The volume of the egg can be found by integration. First of all, an ellipse of length of semi-major axis a and length of semi-minor axis b can be drawn on the x-y coordinates system. The centre of the ellipse is placed at the origin such that it is positioned as shown below.

 

 

 

 

 

 

 

 

 

 

 

 

 

The shape of the egg, i.e. the shape of the prolate ellipsoid of revolution can be generated by rotating the ellipse about the x-axis.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consider a disc in prolate ellipsoid of revolution at the generic position x from the origin. The disc will have a radius of y and a thickness of dx

 

 

Therefore once we know the length of semi-major axis a and length of semi-minor axis b for an egg, we can plug in the formula

to find the volume of the egg.