BUSINESS SEGMENT AND OTHER OPERATIONS DATA (Notes)

9 Months Ended

Jun. 30, 2011

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

BUSINESS SEGMENT AND OTHER OPERATIONS DATA

NJR organizes its businesses based on its products and services as well as regulatory environment. As a result, the Company manages the businesses through the following reportable segments and other operations: the Natural Gas Distribution segment consists of regulated energy and off-system, capacity and storage management operations; the Energy Services segment consists of unregulated wholesale energy operations; the Midstream Asset segment consists of NJR's investments in natural gas transportation and storage facilities; the Retail and Other operations consist of appliance and installation services, commercial real estate development, renewable energy and other investments and general corporate activities.

During fiscal 2010, NJR entered the solar energy markets and began planning for capital investments primarily consisting of residential and commercial rooftop and ground mount solar projects. NJR expects that both the capital expenditures and earnings contributions from these investments will be significant during fiscal 2011. In anticipation of the implementation of these planned projects, effective October 1, 2010, NJR established Clean Energy Ventures as a new reportable segment.

Information related to the Company's various business segments and other operations is detailed below:

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
(Thousands)	2011			2010			2011			2010
Operating revenues
Natural Gas Distribution
External customers	$	138,149		$	105,130		$	862,073		$	794,311
Intercompany	—			—			—			8,047
Energy Services
External customers	498,834			364,776			1,449,252			1,193,912
Intercompany	1,579			24			55,010			13,254
Clean Energy Ventures	328			—			328			—
Segment subtotal	638,890			469,930			2,366,663			2,009,524
Retail and Other	10,951			10,058			26,903			19,803
Eliminations	(1,672		)	(94		)	(55,258		)	(21,541		)
Total	$	648,169		$	479,894		$	2,338,308		$	2,007,786
Depreciation and amortization
Natural Gas Distribution	$	8,192		$	7,939		$	24,650		$	23,321
Energy Services	15			37			46			136
Midstream Assets	1			1			4			4
Clean Energy Ventures	115			—			143			—
Segment subtotal	8,323			7,977			24,843			23,461
Retail and Other	191			159			602			475
Total	$	8,514		$	8,136		$	25,445		$	23,936
Interest income (1)
Natural Gas Distribution	$	304		$	608		$	844		$	1,508
Energy Services	1			7			9			11
Midstream Assets	225			227			677			658
Segment subtotal	530			842			1,530			2,177
Retail and Other	1			(4		)	2			3
Eliminations	(220		)	(216		)	(658		)	(642		)
Total	$	311		$	622		$	874		$	1,538

(1) Included in other income in the Unaudited Condensed Consolidated Statement of Operations.

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
(Thousands)	2011			2010			2011			2010
Interest expense, net of capitalized interest
Natural Gas Distribution	$	3,630		$	4,139		$	11,454		$	12,545
Energy Services	193			425			792			917
Midstream Assets	803			380			2,428			2,037
Clean Energy Ventures	14			—			21			—
Segment subtotal	4,640			4,944			14,695			15,499
Retail and Other	104			294			390			447
Total	$	4,744		$	5,238		$	15,085		$	15,946
Income tax provision (benefit)
Natural Gas Distribution	$	3,283		$	2,081		$	44,162		$	41,326
Energy Services	1,949			(13,316		)	8,632			25,506
Midstream Assets	1,281			1,173			3,951			3,073
Clean Energy Ventures	(898		)	—			(7,608		)	—
Segment subtotal	5,615			(10,062		)	49,137			69,905
Retail and Other	605			269			(439		)	(1,751		)
Eliminations	(23		)	(762		)	(36		)	(88		)
Total	$	6,197		$	(10,555	)	$	48,662		$	68,066
Equity in earnings of affiliates
Midstream Assets	$	3,891		$	2,538		$	11,871		$	10,261
Segment subtotal	3,891			2,538			11,871			10,261
Eliminations	(934		)	(557		)	(2,387		)	(2,376		)
Total	$	2,957		$	1,981		$	9,484		$	7,885
Net financial earnings (loss)
Natural Gas Distribution	$	5,979		$	6,109		$	74,375		$	70,087
Energy Services	213			3,336			19,381			29,347
Midstream Assets	1,847			1,828			5,705			5,218
Clean Energy Ventures	259			—			5,484			—
Segment subtotal	8,298			11,273			104,945			104,652
Retail and Other	1,401			314			913			(1,641		)
Total	$	9,699		$	11,587		$	105,858		$	103,011
Capital expenditures
Natural Gas Distribution	$	30,783		$	23,778		$	77,969		$	55,948
Clean Energy Ventures	7,040			—			16,977			—
Segment subtotal	37,823			23,778			94,946			55,948
Retail and Other	1,012			367			2,975			460
Total	$	38,835		$	24,145		$	97,921		$	56,408
Investments in equity method investees
Midstream Assets	$	—		$	—		$	—		$	4,300
Total	$	—		$	—		$	—		$	4,300

The chief operating decision maker of the Company is the Chief Executive Officer (CEO). The CEO uses net financial earnings as a measure of profit or loss in measuring the results of the Company's segments and operations. A reconciliation of consolidated net financial earnings to consolidated net income is as follows:

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
(Thousands)	2011			2010			2011			2010
Consolidated net financial earnings	$	9,699		$	11,587		$	105,858		$	103,011
Less:
Unrealized (gain) loss from derivative instruments and related transactions, net of taxes (1)	(2,875		)	15,886			33,835			3,936
Effects of economic hedging related to natural gas inventory, net of taxes	(7,800		)	5,878			(36,787		)	(16,867		)
Consolidated net income (loss)	$	20,374		$	(10,177	)	$	108,810		$	115,942

(1) Excludes unrealized losses (gains) related to an intercompany transaction between NJNG and NJRES that have been eliminated in consolidation of $42,000 and $16,000 for the three months ended and $74,000 and $144,000 for the nine months endedJune 30, 2011 and 2010, respectively.

The Company uses derivative instruments as economic hedges of purchases and sales of physical gas inventory. For GAAP purposes, these derivatives are recorded at fair value and related changes in fair value are included in reported earnings. Revenues and cost of gas related to physical gas flow is recognized as the gas is delivered to customers. Consequently, there is a mismatch in the timing of earnings recognition between the economic hedges and physical gas flows. Timing differences occur in two ways:

• Unrealized gains and losses on derivatives are recognized in reported earnings in periods prior to physical gas inventory flows; and

• Unrealized gains and losses of prior periods are reclassified as realized gains and losses when derivatives are settled in the same period as physical gas inventory movements occur.

Net financial earnings is a measure of the earnings based on eliminating these timing differences, to effectively match the earnings effects of the economic hedges with the physical sale of gas. Consequently, to reconcile between GAAP and net financial earnings, current period unrealized gains and losses on the derivatives are excluded from net financial earnings as a reconciling item. Additionally, realized derivative gains and losses are also included in current period net income, however net financial earnings include only realized gains and losses related to natural gas sold out of inventory, effectively matching the full earnings effects of the derivatives with realized margins on physical gas flows.

The Company's assets for the various business segments and business operations are detailed below:

(Thousands)	June 30, 2011			September 30, 2010
Assets at end of period:
Natural Gas Distribution	$	1,906,403		$	1,904,545
Energy Services	442,980			432,380
Midstream Assets	162,516			159,882
Clean Energy Ventures	17,728			—
Segment subtotal	2,529,627			2,496,807
Retail and Other	72,598			85,864
Intercompany assets (1)	(28,269		)	(19,538		)
Total	$	2,573,956		$	2,563,133

(1) Consists of transactions between subsidiaries that are eliminated and reclassified in consolidation.