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DERIVATIVE INSTRUMENTS (Tables)
 3 Months Ended
Dec. 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
 
 
December 31, 2019
 
September 30, 2019
(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
 
$
26

 
$
162

 
$
67

 
$
245

Financial commodity contracts
Derivatives - current
 
—

 
363

 
382

 
570

Energy Services:
 
 
 
 
 
 
 
 
 
Physical commodity contracts
Derivatives - current
 
12,706

 
22,259

 
6,847

 
27,540

 
Derivatives - noncurrent
 
2,453

 
15,369

 
1,710

 
12,641

Financial commodity contracts
Derivatives - current
 
35,813

 
14,100

 
17,806

 
29,057

 
Derivatives - noncurrent
 
3,133

 
9,683

 
5,716

 
6,105

Foreign currency contracts
Derivatives - current
 
7

 
103

 
1

 
211

 
Derivatives - noncurrent
 
8

 
21

 
—

 
75

Total fair value of derivatives
 
 
$
54,146

 
$
62,060

 
$
32,529

 
$
76,444
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, 2019:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
15,159

 
$
(3,569
)
 
$
(200
)
 
$
11,390

Financial commodity contracts
 
38,946

 
(21,988
)
 
—

 
16,958

Foreign currency contracts
 
15

 
(15
)
 
—

 
—

Total Energy Services
 
$
54,120

 
$
(25,572
)
 
$
(200
)
 
$
28,348

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
26

 
$
(2
)
 
$
—

 
$
24

Total Natural Gas Distribution
 
$
26

 
$
(2
)
 
$
—

 
$
24

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
37,628

 
$
(3,569
)
 
$
—

 
$
34,059

Financial commodity contracts
 
23,783

 
(21,988
)
 
(1,671
)
 
124

Foreign currency contracts
 
124

 
(15
)
 
—

 
109

Total Energy Services
 
$
61,535

 
$
(25,572
)
 
$
(1,671
)
 
$
34,292

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
162

 
$
(2
)
 
$
—

 
$
160

Financial commodity contracts
 
363

 
—

 
(363
)
 
—

Total Natural Gas Distribution
 
$
525

 
$
(2
)
 
$
(363
)
 
$
160

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

(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, 2019:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
15,159

 
$
(3,569
)
 
$
(200
)
 
$
11,390

Financial commodity contracts
 
38,946

 
(21,988
)
 
—

 
16,958

Foreign currency contracts
 
15

 
(15
)
 
—

 
—

Total Energy Services
 
$
54,120

 
$
(25,572
)
 
$
(200
)
 
$
28,348

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
26

 
$
(2
)
 
$
—

 
$
24

Total Natural Gas Distribution
 
$
26

 
$
(2
)
 
$
—

 
$
24

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
37,628

 
$
(3,569
)
 
$
—

 
$
34,059

Financial commodity contracts
 
23,783

 
(21,988
)
 
(1,671
)
 
124

Foreign currency contracts
 
124

 
(15
)
 
—

 
109

Total Energy Services
 
$
61,535

 
$
(25,572
)
 
$
(1,671
)
 
$
34,292

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
162

 
$
(2
)
 
$
—

 
$
160

Financial commodity contracts
 
363

 
—

 
(363
)
 
—

Total Natural Gas Distribution
 
$
525

 
$
(2
)
 
$
(363
)
 
$
160

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

(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
 
 
December 31,
Derivatives not designated as hedging instruments:
2019
 
2018
Energy Services:
 
 
 
 
Physical commodity contracts
Operating revenues
$
9,836

 
$
(1,532
)
Physical commodity contracts
Gas purchases
(1,410
)
 
(5,432
)
Financial commodity contracts
Gas purchases
46,093

 
(2,956
)
Foreign currency contracts
Gas purchases
115

 
(346
)
Home Services and Other:
 
 
 
 
Interest rate contracts
Interest expense
—

 
(123
)
Total unrealized and realized gains (losses)
$
54,634

 
$
(10,389
)
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
 
December 31,
(Thousands)
2019
 
2018
Natural Gas Distribution:
 
 
 
Physical commodity contracts
$
840

 
$
2,977

Financial commodity contracts
(1,088
)
 
4,396

Total unrealized and realized (losses) gains
$
(248
)
 
$
7,373
Schedule of Outstanding Long (Short) Derivatives
NJNG and Energy Services had the following outstanding long (short) derivatives as of:
 
 
 
Volume (Bcf)
 
 
 
December 31,
2019
 
September 30,
2019
Natural Gas Distribution
Futures
 
27.6

 
27.6

 
Physical
 
4.9

 
11.6

Energy Services
Futures
 
(34.6
)
 
(29.6
)
 
Physical
 
46.8

 
44.5

 
Swaps
 
(3.8
)
 
(5.0
)
Schedule of Broker Margin Accounts by Company The balances are as follows:
(Thousands)
Balance Sheet Location
December 31,
2019
September 30,
2019
Natural Gas Distribution
Restricted broker margin accounts
$
4,140

$
1,982

Energy Services
Restricted broker margin accounts
$
38,972

$
71,741
Summary of Gross Credit Exposures
The following is a summary of gross credit exposures grouped by investment and noninvestment grade counterparties, as of December 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
 
$
197,369

 
Noninvestment grade
 
17,822

 
Internally rated investment grade
 
38,312

 
Internally rated noninvestment grade
 
35,331

 
Total
 
$
288,834