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DERIVATIVE INSTRUMENTS (Tables)
 6 Months Ended
Mar. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Fair Value of Derivative Assets and Liabilities
The following table reflects the fair value of NJR's derivative assets and liabilities recognized on the Unaudited Condensed Consolidated Balance Sheets as of:
 
 
 
Fair Value
 
 
March 31, 2019
 
September 30, 2018
(Thousands)
Balance Sheet Location
Asset
Derivatives
Liability
Derivatives
Asset
Derivatives
Liability
Derivatives
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Natural Gas Distribution:
 
 
 
 
 
 
 
 
 
Physical commodity contracts
Derivatives - current
 
$
91

 
$
49

 
$
85

 
$
192

Financial commodity contracts
Derivatives - current
 
578

 
7

 
94

 
—

Energy Services:
 
 
 
 
 
 
 
 
 
Physical commodity contracts
Derivatives - current
 
4,868

 
17,474

 
7,667

 
18,158

 
Derivatives - noncurrent
 
1,013

 
18,184

 
3,930

 
11,316

Financial commodity contracts
Derivatives - current
 
17,053

 
30,279

 
19,169

 
28,176

 
Derivatives - noncurrent
 
12,264

 
6,599

 
6,630

 
11,548

Foreign currency contracts
Derivatives - current
 
2

 
210

 
—

 
126

 
Derivatives - noncurrent
 
—

 
144

 
—

 
118

Home Services and Other:
 
 
 
 
 
 
 
 
 
Interest rate contracts
Derivatives - current
 
120

 
—

 
381

 
—

Total fair value of derivatives
 
 
$
35,989

 
$
72,946

 
$
37,956

 
$
69,634
Offsetting Assets
The following table summarizes the reported gross amounts, the amounts that the Company has the right to offset but elects not to, financial collateral, as well as the net amounts the Company could present on the Unaudited Condensed Consolidated Balance Sheets but elects not to.
(Thousands)
Amounts Presented on Balance Sheets (1)
Offsetting Derivative Instruments (2)
Financial Collateral Received/Pledged (3)
Net Amounts (4)
As of December 31, 2018:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
5,881

 
$
(1,428
)
 
$
(200
)
 
$
4,253

Financial commodity contracts
 
29,317

 
(25,458
)
 
(2,389
)
 
1,470

Foreign currency contracts
 
2

 
(2
)
 
—

 
—

Total Energy Services
 
$
35,200

 
$
(26,888
)
 
$
(2,589
)
 
$
5,723

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
91

 
$
—

 
$
—

 
$
91

Financial commodity contracts
 
578

 
(7
)
 
(571
)
 
—

Total Natural Gas Distribution
 
$
669

 
$
(7
)
 
$
(571
)
 
$
91

Home Services and Other
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
120

 
$
—

 
$
—

 
$
120

Total Home Services and Other
 
$
120

 
$
—

 
$
—

 
$
120

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
35,658

 
$
(1,428
)
 
$
—

 
$
34,230

Financial commodity contracts
 
36,878

 
(25,458
)
 
(9,032
)
 
2,388

Foreign currency contracts
 
354

 
(2
)
 
—

 
352

Total Energy Services
 
$
72,890

 
$
(26,888
)
 
$
(9,032
)
 
$
36,970

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
49

 
$
—

 
$
—

 
$
49

Financial commodity contracts
 
7

 
(7
)
 
—

 
—

Total Natural Gas Distribution
 
$
56

 
$
(7
)
 
$
—

 
$
49

As of September 30, 2018:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
11,597

 
$
(3,944
)
 
$
(200
)
 
$
7,453

Financial commodity contracts
 
25,799

 
(18,775
)
 
—

 
7,024

Total Energy Services
 
$
37,396

 
$
(22,719
)
 
$
(200
)
 
$
14,477

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
85

 
$
(3
)
 
$
—

 
$
82

Financial commodity contracts
 
94

 
—

 
(94
)
 
—

Total Natural Gas Distribution
 
$
179

 
$
(3
)
 
$
(94
)
 
$
82

Home Services and Other
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
381

 
$
—

 
$
—

 
$
381

Total Home Services and Other
 
$
381

 
$
—

 
$
—

 
$
381

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
29,474

 
$
(3,944
)
 
$
—

 
$
25,530

Financial commodity contracts
 
39,724

 
(18,775
)
 
(20,949
)
 
—

Foreign currency contracts
 
244

 
—

 
—

 
244

Total Energy Services
 
$
69,442

 
$
(22,719
)
 
$
(20,949
)
 
$
25,774

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
192

 
$
(3
)
 
$
—

 
$
189

Total Natural Gas Distribution
 
$
192

 
$
(3
)
 
$
—

 
$
189

(1)
Derivative assets and liabilities are presented on a gross basis on the balance sheet as the Company does not elect balance sheet offsetting under ASC 210-20.
(2)
Includes transactions with NAESB netting election, transactions held by FCMs with net margining and transactions with ISDA netting.
(3)
Financial collateral includes cash balances at FCMs as well as cash received from or pledged to other counterparties.
(4)
Net amounts represent presentation of derivative assets and liabilities if the Company were to elect balance sheet offsetting under ASC 210-20.
Offsetting Liabilities
The following table summarizes the reported gross amounts, the amounts that the Company has the right to offset but elects not to, financial collateral, as well as the net amounts the Company could present on the Unaudited Condensed Consolidated Balance Sheets but elects not to.
(Thousands)
Amounts Presented on Balance Sheets (1)
Offsetting Derivative Instruments (2)
Financial Collateral Received/Pledged (3)
Net Amounts (4)
As of December 31, 2018:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
5,881

 
$
(1,428
)
 
$
(200
)
 
$
4,253

Financial commodity contracts
 
29,317

 
(25,458
)
 
(2,389
)
 
1,470

Foreign currency contracts
 
2

 
(2
)
 
—

 
—

Total Energy Services
 
$
35,200

 
$
(26,888
)
 
$
(2,589
)
 
$
5,723

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
91

 
$
—

 
$
—

 
$
91

Financial commodity contracts
 
578

 
(7
)
 
(571
)
 
—

Total Natural Gas Distribution
 
$
669

 
$
(7
)
 
$
(571
)
 
$
91

Home Services and Other
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
120

 
$
—

 
$
—

 
$
120

Total Home Services and Other
 
$
120

 
$
—

 
$
—

 
$
120

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
35,658

 
$
(1,428
)
 
$
—

 
$
34,230

Financial commodity contracts
 
36,878

 
(25,458
)
 
(9,032
)
 
2,388

Foreign currency contracts
 
354

 
(2
)
 
—

 
352

Total Energy Services
 
$
72,890

 
$
(26,888
)
 
$
(9,032
)
 
$
36,970

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
49

 
$
—

 
$
—

 
$
49

Financial commodity contracts
 
7

 
(7
)
 
—

 
—

Total Natural Gas Distribution
 
$
56

 
$
(7
)
 
$
—

 
$
49

As of September 30, 2018:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
11,597

 
$
(3,944
)
 
$
(200
)
 
$
7,453

Financial commodity contracts
 
25,799

 
(18,775
)
 
—

 
7,024

Total Energy Services
 
$
37,396

 
$
(22,719
)
 
$
(200
)
 
$
14,477

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
85

 
$
(3
)
 
$
—

 
$
82

Financial commodity contracts
 
94

 
—

 
(94
)
 
—

Total Natural Gas Distribution
 
$
179

 
$
(3
)
 
$
(94
)
 
$
82

Home Services and Other
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
381

 
$
—

 
$
—

 
$
381

Total Home Services and Other
 
$
381

 
$
—

 
$
—

 
$
381

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
29,474

 
$
(3,944
)
 
$
—

 
$
25,530

Financial commodity contracts
 
39,724

 
(18,775
)
 
(20,949
)
 
—

Foreign currency contracts
 
244

 
—

 
—

 
244

Total Energy Services
 
$
69,442

 
$
(22,719
)
 
$
(20,949
)
 
$
25,774

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
192

 
$
(3
)
 
$
—

 
$
189

Total Natural Gas Distribution
 
$
192

 
$
(3
)
 
$
—

 
$
189

(1)
Derivative assets and liabilities are presented on a gross basis on the balance sheet as the Company does not elect balance sheet offsetting under ASC 210-20.
(2)
Includes transactions with NAESB netting election, transactions held by FCMs with net margining and transactions with ISDA netting.
(3)
Financial collateral includes cash balances at FCMs as well as cash received from or pledged to other counterparties.
(4)
Net amounts represent presentation of derivative assets and liabilities if the Company were to elect balance sheet offsetting under ASC 210-20.
Effect of Derivative Instruments on Consolidated Statements of Operations
The following table reflects the effect of derivative instruments on the Unaudited Condensed Consolidated Statements of Operations as of:
(Thousands)
Location of gain (loss) recognized in income on derivatives
Amount of gain (loss) recognized
in income on derivatives
 
 
Three Months Ended
Six Months Ended
 
 
March 31,
March 31,
Derivatives not designated as hedging instruments:
2019
 
2018
2019
 
2018
Energy Services:
 
 
 
 
 
 
 
Physical commodity contracts
Operating revenues
$
171

 
$
(11,952
)
$
(1,361
)
 
$
(10,742
)
Physical commodity contracts
Gas purchases
3,306

 
(44,646
)
(2,126
)
 
(67,343
)
Financial commodity contracts
Gas purchases
(2,231
)
 
13,767

(5,187
)
 
(12,230
)
Foreign currency contracts
Gas purchases
121

 
(215
)
(225
)
 
(263
)
Home Services and Other:
 
 
 
 
 
 
 
Interest rate contracts
Interest expense
(62
)
 
121

(185
)
 
121

Total unrealized and realized losses
$
1,305

 
$
(42,925
)
$
(9,084
)
 
$
(90,457
)
Effect of Derivative Instruments Designated as Cash Flow Hedges on OCI
The following table reflects the (losses) gains associated with NJNG's derivative instruments as of:
 
Three Months Ended
Six Months Ended
 
March 31,
March 31,
(Thousands)
2019
 
2018
2019
 
2018
Natural Gas Distribution:
 
 
 
 
 
 
Physical commodity contracts
$
1,436

 
$
(12,879
)
$
4,413

 
$
(15,855
)
Financial commodity contracts
(1,157
)
 
7,232

3,239

 
(1,576
)
Interest rate contracts
—

 
12,534

—

 
8,467

Total unrealized and realized (losses) gains
$
279

 
$
6,887

$
7,652

 
$
(8,964
)
Schedule of Outstanding Long (Short) Derivatives
NJNG and Energy Services had the following outstanding long (short) derivatives as of:
 
 
 
Volume (Bcf)
 
 
 
March 31,
2019
 
September 30,
2018
Natural Gas Distribution
Futures
 
32.1

 
27.9

 
Physical
 
23.6

 
23.1

Energy Services
Futures
 
(4.0
)
 
(7.0
)
 
Physical
 
18.6

 
51.2

 
Swaps
 
(8.5
)
 
(17.3
)
Schedule of Broker Margin Accounts by Company
The balances are as follows:
(Thousands)
Balance Sheet Location
March 31,
2019
September 30,
2018
Natural Gas Distribution
Restricted broker margin accounts
$
2,049

$
2,038

Energy Services
Restricted broker margin accounts
$
58,485

$
51,681
Summary of Gross Credit Exposures
The following is a summary of gross credit exposures grouped by investment and noninvestment grade counterparties, as of March 31, 2019. The amounts presented below have not been reduced by any collateral received or netting and exclude accounts receivable for NJNG retail natural gas sales and services and Clean Energy Ventures residential solar installations.
(Thousands)
Gross Credit Exposure
Investment grade
 
$
187,355

 
Noninvestment grade
 
24,891

 
Internally rated investment grade
 
26,002

 
Internally rated noninvestment grade
 
31,345

 
Total
 
$
269,593