XML 148 R34.htm IDEA: XBRL DOCUMENT v3.19.3
DERIVATIVE INSTRUMENTS (Tables)
 12 Months Ended
Sep. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Fair Value of Derivative Assets and Liabilities
The following table reflects the fair value of the Company’s derivative assets and liabilities recognized on the Consolidated Balance Sheets as of September 30:
 
 
 
Fair Value
 
 
 
2019
 
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
 
$
67

 
$
245

 
$
85

 
$
192

Financial commodity contracts
Derivatives - current
 
382

 
570

 
94

 
—

Energy Services:
 
 
 
 
 
 
 
 
 
Physical commodity contracts
Derivatives - current
 
6,847

 
27,540

 
7,667

 
18,158

 
Derivatives - noncurrent
 
1,710

 
12,641

 
3,930

 
11,316

Financial commodity contracts
Derivatives - current
 
17,806

 
29,057

 
19,169

 
28,176

 
Derivatives - noncurrent
 
5,716

 
6,105

 
6,630

 
11,548

Foreign currency contracts
Derivatives - current
 
1

 
211

 
—

 
126

 
Derivatives - noncurrent
 
—

 
75

 
—

 
118

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

 
—

 
381

 
—

Total fair value of derivatives
 
 
$
32,529

 
$
76,444

 
$
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 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 September 30, 2019:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
8,557

 
$
(2,906
)
 
$
(200
)
 
$
5,451

Financial commodity contracts
 
23,522

 
(19,646
)
 
—

 
3,876

Foreign currency contracts
 
1

 
(1
)
 
—

 
—

Total Energy Services
 
$
32,080

 
$
(22,553
)
 
$
(200
)
 
$
9,327

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
67

 
$
(9
)
 
$
—

 
$
58

Financial commodity contracts
 
382

 
(382
)
 
—

 
—

Total Natural Gas Distribution
 
$
449

 
$
(391
)
 
$
—

 
$
58

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
40,181

 
$
(2,906
)
 
$
—

 
$
37,275

Financial commodity contracts
 
35,162

 
(19,646
)
 
(15,516
)
 
—

Foreign currency contracts
 
286

 
(1
)
 
—

 
285

Total Energy Services
 
$
75,629

 
$
(22,553
)
 
$
(15,516
)
 
$
37,560

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
245

 
$
(9
)
 
$
—

 
$
236

Financial commodity contracts
 
570

 
(382
)
 
(188
)
 
—

Total Natural Gas Distribution
 
$
815

 
$
(391
)
 
$
(188
)
 
$
236

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 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 September 30, 2019:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
8,557

 
$
(2,906
)
 
$
(200
)
 
$
5,451

Financial commodity contracts
 
23,522

 
(19,646
)
 
—

 
3,876

Foreign currency contracts
 
1

 
(1
)
 
—

 
—

Total Energy Services
 
$
32,080

 
$
(22,553
)
 
$
(200
)
 
$
9,327

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
67

 
$
(9
)
 
$
—

 
$
58

Financial commodity contracts
 
382

 
(382
)
 
—

 
—

Total Natural Gas Distribution
 
$
449

 
$
(391
)
 
$
—

 
$
58

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
40,181

 
$
(2,906
)
 
$
—

 
$
37,275

Financial commodity contracts
 
35,162

 
(19,646
)
 
(15,516
)
 
—

Foreign currency contracts
 
286

 
(1
)
 
—

 
285

Total Energy Services
 
$
75,629

 
$
(22,553
)
 
$
(15,516
)
 
$
37,560

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
245

 
$
(9
)
 
$
—

 
$
236

Financial commodity contracts
 
570

 
(382
)
 
(188
)
 
—

Total Natural Gas Distribution
 
$
815

 
$
(391
)
 
$
(188
)
 
$
236

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 the Consolidated Statements of Operations
The following table reflects the effect of derivative instruments on the Consolidated Statements of Operations as of September 30:
(Thousands)
Location of gain (loss) recognized in income on derivatives
Amount of gain (loss) recognized
in income on derivatives
Derivatives not designated as hedging instruments:
2019
 
2018
 
2017
Energy Services:
 
 
 
 
 
 
Physical commodity contracts
Operating revenues
$
(5,732
)
 
$
(9,311
)
 
$
8,912

Physical commodity contracts
Gas purchases
(521
)
 
(197
)
 
(27,461
)
Financial commodity contracts
Gas purchases
(643
)
 
(24,622
)
 
26,563

Foreign currency contracts
Gas purchases
(283
)
 
(379
)
 
41

Home Services and Other:
 
 
 
 
 
 
Interest rate contracts
Interest expense
(233
)
 
334

 
—

Total unrealized and realized (losses) gains
$
(7,412
)
 
$
(34,175
)
 
$
8,055
Effect of Derivative Instruments Designated as Cash Flow Hedges on OCI The following table reflects the gains (losses) associated with NJNG’s derivative instruments as of September 30:
(Thousands)
2019
 
2018
 
2017
Natural Gas Distribution:
 
 
 
 
 
Physical commodity contracts
$
5,926

 
$
1,232

 
$
(12,303
)
Financial commodity contracts
(7,700
)
 
1,844

 
5,595

Interest rate contracts
—

 
8,467

 
14,606

Total unrealized and realized (losses) gains
$
(1,774
)
 
$
11,543

 
$
7,898
Schedule of Outstanding Long (Short) Derivatives
NJNG and Energy Services had the following outstanding long (short) derivatives as of September 30:
 
 
 
Volume (Bcf)
 
 
 
2019
 
2018
Natural Gas Distribution
Futures
 
27.6

 
27.9

 
Physical
 
11.6

 
23.1

Energy Services
Futures
 
(29.6
)
 
(7.0
)
 
Physical
 
44.5

 
51.2
Schedule of Broker Margin Accounts by Company The balances as of September 30, by segment, are as follows:
(Thousands)
Balance Sheet Location
2019
2018
Natural Gas Distribution
Restricted broker margin accounts
$
1,982

$
2,038

Energy Services
Restricted broker margin accounts
$
71,741

$
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 September 30, 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
 
$
141,930

 
Noninvestment grade
 
17,997

 
Internally-rated investment grade
 
27,948

 
Internally-rated noninvestment grade
 
29,324

 
Total
 
$
217,199