DEBT

The following table presents the long-term debt of the Company as of September 30:



(Thousands)			2011			2010
NJNG
First mortgage bonds:		Maturity date:
Variable	Series AA	August 1, 2030	$	—		$	25,000
Variable	Series BB	August 1, 2030	—			16,000
6.88%	Series CC	October 1, 2010	—			20,000
Variable	Series DD	September 1, 2027	—			13,500
Variable	Series EE	January 1, 2028	—			9,545
Variable	Series FF	January 1, 2028	—			15,000
Variable	Series GG	April 1, 2033	—			18,000
5.00%	Series HH	December 1, 2038	12,000			12,000
4.50%	Series II	August 1, 2023	10,300			10,300
4.60%	Series JJ	August 1, 2024	10,500			10,500
4.90%	Series KK	October 1, 2040	15,000			15,000
5.60%	Series LL	May 15, 2018	125,000			125,000
Variable	Series MM	September 1, 2027	9,545			—
Variable	Series NN	August 1, 2035	41,000			—
Variable	Series OO	August 1, 2041	46,500			—
4.77% Unsecured senior notes		March 15, 2014	60,000			60,000
Capital lease obligation-Buildings		June 1, 2021	23,314			24,611
Capital lease obligation-Meters		Various dates	30,683			34,962
Capital lease obligation-Equipment		December 1, 2013	530			764
Less: Current maturities of long-term debt			(7,575		)	(31,257		)
Total NJNG long-term debt			376,797			378,925
NJR
6.05% Unsecured senior notes		September 24, 2017	50,000			50,000
Total NJR long-term debt			50,000			50,000
Total long-term debt			$	426,797		$	428,925

Annual long-term debt redemption requirements, excluding capital leases, are as follows (in millions):



September 30,	Redemption
2012		$	—
2013		$	—
2014		$	60.0
2015		$	—
2016		$	—
Thereafter		$	319.8

NJNG First Mortgage Bonds

NJNG's mortgage secures its First Mortgage Bonds and represents a lien on substantially all of its property, including natural gas supply contracts. Certain indentures supplemental to the mortgage include restrictions as to cash dividends and other distributions on NJNG's common stock that apply as long as certain series of First Mortgage Bonds are outstanding. Under the most restrictive provision, $288 million of NJNG's retained earnings were available for such purposes at September 30, 2011.

Through September 7, 2011, NJNG was obligated with respect to several loan agreements securing six series of variable rate bonds issued by the New Jersey Economic Development Authority (NJEDA) totaling $97 million. These bonds were commonly referred to as auction-rate securities (ARS) and had an interest rate reset every seven or thirty-five days, depending upon the applicable series. On those dates, an auction was held for the purposes of determining the interest rate of the securities. The interest rates associated with NJNG's variable-rate debt were based on the rates of the related ARS. Through their subsequent redemption, all of the auctions surrounding the ARS had failed, resulting in those bonds bearing interest at their maximum rates, as defined as the lesser of (i) 175 percent of thirty-day London inter-bank offered rate (LIBOR) or (ii) 10 to 12 percent per annum, as applicable to such series of ARS. While the failure of the ARS auctions did not signify or constitute a default on NJNG, the ARS did impact NJNG's borrowing costs of the variable-rate debt.

On August 29, 2011, due to the lack of liquidity in the market for ARS, and the resulting exposure of NJNG to the LIBOR-based maximum rate, NJNG completed a refunding of the ARS, whereby the NJEDA issued three series of Variable Rate Demand Notes (VDRN) with a total principal amount of $97 million and maturity dates ranging from September 2027 to August 2041. The proceeds from the issuance of the VRDN were used to refund the entire $97 million principal amount of ARS, which were retired upon redemption. The First Mortgage Bonds were canceled upon the redemption of the EDA ARS and the corresponding loan agreements were terminated and replaced with a new loan agreement securing the payment of principal and interest on the VRDNs by NJNG. Costs associated with the issuance of the VRDNs, as well as remaining unamortized debt costs associated with the ARS, will be amortized over the life of the VRDNs in accordance with ASC 980, Regulated Operations, therefore, there was no impact to income upon extinguishment of the ARS.

The rates on these types of investments are generally correlated with the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index and will initially accrue interest at a daily rate, with a maximum rate of 12 percent per annum. As of September 30, 2011, the interest rate on these securities was 0.16 percent.

VRDNs are sold to investors on a daily basis with the interest rate set by the remarketing agent. In the case where the remarketing agent is unable to sell the VRDNs to an investor on a given day, NJNG would be required to repurchase the EDA Bonds. Therefore, in conjunction with the issuance of the EDA Bonds, NJNG entered into a $100 million four-year credit facility, which expires on August 31, 2015, to provide liquidity support in the event of a failed remarketing of the EDA Bonds and to ensure payment of principal and interest. There would be no increase in debt if this were to occur.

On October 1, 2010, upon maturity, NJNG redeemed its $20 million, 6.88 percent Series CC First Mortgage bonds.

NJNG Sale-Leasebacks

NJNG's master lease agreement for its headquarters building has a twenty-five and a half-year term that expires in June 2021, with two five-year renewal options. The present value of the agreement's minimum lease payments is reflected as both a capital lease asset and a capital lease obligation, which are included in utility plant and long-term debt, respectively, on the Consolidated Balance Sheets.

NJNG received $5.9 million, $4.9 million and $6.3 million for fiscal 2011, 2010 and 2009, respectively, in connection with the sale-leaseback of its natural gas meters. During the fourth quarter of fiscal 2011, NJNG exercised an early purchase option with respect to a meter lease by making a final principal payment of $3.9 million. This sale-leaseback program is expected to continue on an annual basis.

Contractual commitments for capital lease payments, as of the fiscal year end are as follows (in millions):



Fiscal Year Ended September 30,	Lease Payments
2012		$	9.5
2013		9.9
2014		9.0
2015		8.9
2016		9.5
Thereafter		23.1
Subtotal		69.9
Less: interest component		(15.4		)
Total		$	54.5

NJR Debt

NJR had no long-term variable-rate debt outstanding at September 30, 2011 and 2010.

A summary of NJR's and NJNG's debt shelf and credit facilities are as follows:



	September 30,
(Thousands)	2011			2010
NJR
Debt shelf facilities ⁽¹⁾	$	175,000		$	—
Bank credit facilities⁽²⁾	$	325,000		$	325,000
Amount outstanding at end of period	$	132,850		$	140,600
Weighted average interest rate at end of period	0.54		%	0.64		%
NJNG
Bank credit facility dedicated to EDA Bonds ⁽²⁾	$	100,000		$	—
Bank credit facilities ⁽²⁾	$	200,000		200,000
Amount outstanding at end of period	$	26,500		$	7,000
Weighted average interest rate at end of period	0.24		%	0.26		%


(1)	Uncommitted, long-term debt shelf facilities, which require no commitment fees on the unused amounts.


(2)	Committed credit facilities, which require commitment fees on the unused amounts.

NJR

NJR has a $325 million unsecured committed credit facility expiring in December 2012. As of September 30, 2011, NJR had $132.9 million in borrowings outstanding under the facility.

On January 11, 2011, NJR entered into an agreement for an additional $50 million unsecured committed credit line, which was terminated by NJR on February 22, 2011. The additional credit line, was put in place primarily to provide additional working capital to NJRES to meet any potential margin calls that could have arisen in NJRES' normal course of business.

NJR entered into two new unsecured, uncommitted private placement debt shelf note agreements in the third quarter of fiscal 2011. The first agreement was entered into on May 12, 2011, in the amount of $100 million, and expires on May 10, 2013. The second agreement became effective on June 30, 2011, in the amount of $75 million, and expires on June 30, 2014. Notes issued under these agreements will be guaranteed by certain unregulated subsidiaries of the Company. The additional credit lines will be used for general corporate purposes, including working capital and capital expenditures. As of September 30, 2011, NJR had no borrowings outstanding under these agreements.

As of September 30, 2011, NJR has six letters of credit outstanding totaling $34.3 million. Three of the letters of credit, which total $30.1 million, are on behalf of NJRES. Two letters of credit are on behalf of NJRCEV totaling $3.6 million and another is on behalf of CR&R in the amount of $675,000. These letters of credit reduce the amount available under NJR's committed credit facility by the same amount. NJR does not anticipate that these letters of credit will be drawn upon by the counterparties, and they will be renewed as necessary.

Two of NJRES' letters of credit are used to secure the purchase and/or sale of natural gas; one expires on December 31, 2011, and the other expires on February 1, 2012. A third NJRES letter of credit is used for margin requirements for natural gas transactions and expires on December 31, 2011. CR&R's letter of credit supports development activities and expires on November 27, 2012. NJRCEV' letters of credit secure construction of a ground-mounted solar project and expire on June 22, 2012 and June 28, 2012.

NJNG

NJNG had a $200 million revolving unsecured committed credit facility, which was due to expire in December 2012. On August 24, 2011, NJNG replaced the facility with a new $200 million unsecured committed credit facility expiring August 2014. The credit facility is used to support NJNG's commercial paper program and provides for the issuance of letters of credit. It also permits an increase to the facility, from time to time, with the existing or new lenders, in a minimum of $15 million increments up to a maximum of $50 million at the lending banks' discretion. As of September 30, 2011, NJNG had $26.5 million in borrowings outstanding under the facility.

Neither NJNG nor the results of its operations are obligated or pledged to support the NJR credit facility or NJR private placement debt shelf facilities.