FAIR VALUE

6 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

FAIR VALUE

Fair Value of Assets and Liabilities

The fair value of cash and temporary investments, commercial paper and borrowings under revolving credit facilities are estimated to equal their carrying amounts due to the short maturity of those instruments. The estimated fair value of long-term debt, including current maturities is as follows:

(Thousands)	March 31, 2012		September 30, 2011
Carrying value	$	437,567	$	434,372
Fair market value	$	478,010	$	471,022

Effective January 1, 2012, NJR changed its valuation technique from a market approach to an income approach. NJR considers the discounted cash flow method to provide a more consistently reliable fair value. Inputs include U.S. Treasury securities and credit spreads, both of which are observable inputs. Any adjustments to the measurement for duration, as applicable, are not considered to be significant, therefore, NJR classifies its debt within Level 2 of the fair value hierarchy.

Fair Value Hierarchy

NJR applies fair value measurement guidance to its financial assets and liabilities, as appropriate, which include financial derivatives and physical commodity contracts qualifying as derivatives, available for sale securities and other financial assets and liabilities. In addition, authoritative accounting literature prescribes the use of a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based on the source of the data used to develop the price inputs. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to inputs that are based on unobservable market data and include the following:

Level 1 Unadjusted quoted prices for identical assets or liabilities in active markets; NJR's Level 1 assets and liabilities include exchange traded futures contracts, listed equities, and money market funds.

Level 2 Price data, which includes both commodity and basis price data other than Level 1 quotes, that is observed either directly or indirectly from publications or pricing services; NJR's Level 2 assets and liabilities include over-the-counter physical forward commodity contracts and swap contracts or derivatives that are initially valued using observable quotes and are subsequently adjusted to include time value, credit risk or estimated transport pricing components for which no basis price is available. These additional adjustments are not considered significant to the ultimate recognized values.

Level 3 Inputs derived from a significant amount of unobservable market data; these include NJR's best estimate of fair value and are derived primarily through the use of internal valuation methodologies.

NJNG's and NJRES' financial derivatives portfolios consist mainly of futures, options and swaps. NJR primarily uses the market approach and its policy is to use actively quoted market prices when available. The principal market for its derivative transactions is the natural gas wholesale market, therefore, the primary source for its price inputs is the New York Mercantile (NYMEX) exchange. NJRES also uses Natural Gas Exchange (NGX) for Canadian delivery points and Platts and NYMEX ClearPort for certain over-the-counter physical forward commodity contracts. However, NJRES also engages in transactions that result in transporting natural gas to delivery points for which there is no actively quoted market price. In most instances, the cost to transport to the final delivery location is not significant to the overall valuation. If required, NJRES' policy is to use the best information available to determine fair value based on internal pricing models, which would include estimates extrapolated from broker quotes or pricing services.

NJR also has available for sale securities and other financial assets that include listed equities, mutual funds and money market funds for which there are active exchange quotes available.

When NJR determines fair values, measurements are adjusted, as needed, for credit risk associated with its counterparties, as well as its own credit risk. NJR determines these adjustments by using historical default probabilities that correspond to the applicable Standard and Poor's issuer ratings, while also taking into consideration collateral and netting arrangements that serve to mitigate risk.

Assets and liabilities measured at fair value on a recurring basis are summarized as follows:

	Quoted Prices in Active Markets for Identical Assets			Significant Other Observable Inputs			Significant Unobservable Inputs
(Thousands)	(Level 1)			(Level 2)			(Level 3)			Total
As of March 31, 2012:
Assets:
Physical forward commodity contracts		$	—		$	22,119		$	—	$	22,119
Financial derivative contracts - natural gas		47,212			37,288			—		84,500
Financial commodity contracts - foreign exchange		—			220			—		220
Available for sale equity securities - energy industry (1)		10,408			—			—		10,408
Other		3,865			—			—		3,865
Total assets at fair value		$	61,485		$	59,627		$	—	$	121,112
Liabilities:
Physical forward commodity contracts		$	—		$	11,754		$	—	$	11,754
Financial commodity contracts - natural gas		61,351			22,609			—		83,960
Financial commodity contracts - foreign exchange		—			65			—		65
Other		729			—			—		729
Total liabilities at fair value		$	62,080		$	34,428		$	—	$	96,508
As of September 30, 2011:
Assets:
Physical forward commodity contracts		$	—		$	37,690		$	—	$	37,690
Financial derivative contracts - natural gas		25,617			43,266			—		68,883
Financial commodity contracts - foreign exchange		—			280					280
Available for sale equity securities - energy industry(1)		10,348			—			—		10,348
Other		2,820			—			—		2,820
Total assets at fair value		$	38,785		$	81,236		$	—	$	120,021
Liabilities:
Physical forward commodity contracts		$	—		$	11,351		$	—	$	11,351
Financial derivative contracts - natural gas		23,715			39,959			—		63,674
Financial commodity contracts - foreign exchange		—			14			—		14
Other		616			—			—		616
Total liabilities at fair value		$	24,331		$	51,324		$	—	$	75,655

(1) Included in other noncurrent assets in the Unaudited Condensed Consolidated Balance Sheets.