ASSET RETIREMENT OBLIGATIONS |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ASSET RETIREMENT OBLIGATIONS | ASSET RETIREMENT OBLIGATIONS The Company recognizes AROs when the legal obligation to retire an asset has been incurred and a reasonable estimate of fair value can be made. Accordingly, NJR recognizes AROs related to the costs associated with cutting and capping its main and service gas distribution pipelines of NJNG, which is required by New Jersey law when taking such gas distribution pipeline out of service. NJR also recognizes AROs related to NJRCEV's solar and wind assets when there are decommissioning provisions in NJRCEV's lease agreements that require removal of the asset. Accretion amounts associated with NJNG's ARO are not reflected as an expense, but rather are deferred as a regulatory asset and netted against NJNG's regulatory liabilities, for presentation purposes, on the Consolidated Balance Sheets. Accretion amounts associated with NJRCEV's ARO are recognized as a component of operations and maintenance expense on NJR's Consolidated Statements of Operations. The following is an analysis of the change in the Company's AROs for the fiscal year ended September 30:
The fiscal 2015 revision in estimated cash flows in the table above reflects a more accurate projection of settlement of NJNG's AROs associated with its main and service assets, which is more in line with the calculated survival curves used in a recent NJNG deprecation study. The change in settlement timing, as well as related changes in the inflation and discount rates used to measure the expected retirement costs, resulted in the $14.8 million decrease in NJNG's ARO liability. Accretion for the next five years is estimated to be as follows:
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