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DERIVATIVE INSTRUMENTS (Tables)
 6 Months Ended
Mar. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Fair Value of Derivative Assets and Liabilities
The following table presents the fair value of NJR's derivative assets and liabilities recognized on the Unaudited Condensed Consolidated Balance Sheets as of:
 
 
 
Fair Value
 
 
March 31, 2020
 
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
 
$
131

 
$
175

 
$
67

 
$
245

Financial commodity contracts
Derivatives - current
 
—

 
24

 
382

 
570

Interest rate contracts
Derivatives - current
 
—

 
6,692

 
—

 
—

Energy Services:
 
 
 
 
 
 
 
 
 
Physical commodity contracts
Derivatives - current
 
7,712

 
16,239

 
6,847

 
27,540

 
Derivatives - noncurrent
 
3,366

 
10,568

 
1,710

 
12,641

Financial commodity contracts
Derivatives - current
 
27,585

 
15,641

 
17,806

 
29,057

 
Derivatives - noncurrent
 
5,288

 
1,391

 
5,716

 
6,105

Foreign currency contracts
Derivatives - current
 
—

 
423

 
1

 
211

 
Derivatives - noncurrent
 
—

 
69

 
—

 
75

Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
Home Services and Other:
 
 
 
 
 
 
 
 
 
Interest rate contracts
Derivatives - current
 
—

 
12,492

 
—

 
—

Total fair value of derivatives
 
 
$
44,082

 
$
63,714

 
$
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 March 31, 2020:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
11,078

 
$
(4,493
)
 
$
(200
)
 
$
6,385

Financial commodity contracts
 
32,873

 
(13,067
)
 
—

 
19,806

Total Energy Services
 
$
43,951

 
$
(17,560
)
 
$
(200
)
 
$
26,191

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
131

 
$
(102
)
 
$
—

 
$
29

Total Natural Gas Distribution
 
$
131

 
$
(102
)
 
$
—

 
$
29

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
26,807

 
$
(4,493
)
 
$
—

 
$
22,314

Financial commodity contracts
 
17,032

 
(13,067
)
 
(3,701
)
 
264

Foreign currency contracts
 
492

 
—

 
—

 
492

Total Energy Services
 
$
44,331

 
$
(17,560
)
 
$
(3,701
)
 
$
23,070

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
175

 
$
(102
)
 
$
—

 
$
73

Financial commodity contracts
 
24

 
—

 
(24
)
 
—

Interest rate contracts
 
6,692

 
—

 
—

 
6,692

Total Natural Gas Distribution
 
$
6,891

 
$
(102
)
 
$
(24
)
 
$
6,765

Home Services and Other
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
12,492

 
$
—

 
$
—

 
$
12,492

Total Home Services and Other
 
$
12,492

 
$
—

 
$
—

 
$
12,492

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 March 31, 2020:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
11,078

 
$
(4,493
)
 
$
(200
)
 
$
6,385

Financial commodity contracts
 
32,873

 
(13,067
)
 
—

 
19,806

Total Energy Services
 
$
43,951

 
$
(17,560
)
 
$
(200
)
 
$
26,191

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
131

 
$
(102
)
 
$
—

 
$
29

Total Natural Gas Distribution
 
$
131

 
$
(102
)
 
$
—

 
$
29

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
26,807

 
$
(4,493
)
 
$
—

 
$
22,314

Financial commodity contracts
 
17,032

 
(13,067
)
 
(3,701
)
 
264

Foreign currency contracts
 
492

 
—

 
—

 
492

Total Energy Services
 
$
44,331

 
$
(17,560
)
 
$
(3,701
)
 
$
23,070

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
175

 
$
(102
)
 
$
—

 
$
73

Financial commodity contracts
 
24

 
—

 
(24
)
 
—

Interest rate contracts
 
6,692

 
—

 
—

 
6,692

Total Natural Gas Distribution
 
$
6,891

 
$
(102
)
 
$
(24
)
 
$
6,765

Home Services and Other
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
12,492

 
$
—

 
$
—

 
$
12,492

Total Home Services and Other
 
$
12,492

 
$
—

 
$
—

 
$
12,492

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 presents the effect of derivative instruments recognized on the Unaudited Condensed Consolidated Statements of Operations for the periods set forth below:
(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:
2020
 
2019
2020
 
2019
Energy Services:
 
 
 
 
 
 
 
Physical commodity contracts
Operating revenues
$
12,096

 
$
171

$
21,932

 
$
(1,361
)
Physical commodity contracts
Gas purchases
(1,892
)
 
3,306

(3,302
)
 
(2,126
)
Financial commodity contracts
Gas purchases
23,319

 
(2,231
)
69,412

 
(5,187
)
Foreign currency contracts
Gas purchases
(475
)
 
121

(360
)
 
(225
)
Home Services and Other:
 
 
 
 
 
 
 
Interest rate contracts
Interest expense
—

 
(62
)
—

 
(185
)
Total unrealized and realized gains (losses)
$
33,048

 
$
1,305

$
87,682

 
$
(9,084
)
Effect of Derivative Instruments Designated as Cash Flow Hedges on OCI The following table reflects the (losses) gains associated with NJNG's derivative instruments for the periods set forth below:
 
Three Months Ended
Six Months Ended
 
March 31,
March 31,
(Thousands)
2020
 
2019
2020
 
2019
Natural Gas Distribution:
 
 
 
 
 
 
Physical commodity contracts
$
209

 
$
1,436

$
1,049

 
$
4,413

Financial commodity contracts
(11,434
)
 
(1,157
)
(12,522
)
 
3,239

Interest rate contracts
(6,692
)
 
—

(6,692
)
 
—

Total unrealized and realized (losses) gains
$
(17,917
)
 
$
279

$
(18,165
)
 
$
7,652
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) The following table reflects the effect of derivative instruments designated as cash flow hedges in OCI for the periods set forth below:
(Thousands)
Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion)
Amount of Gain or (Loss) Reclassified from OCI into Income (Effective Portion)
 
Three Months Ended
Three Months Ended
 
March 31,
March 31,
Derivatives in cash flow hedging relationships:
2020
2019
2020
2019
Interest rate contracts
$
(12,492
)
$
—

$
—

$
—

 
Six Months Ended
Six Months Ended
 
March 31,
March 31,
Derivatives in cash flow hedging relationships:
2020
2019
2020
2019
Interest rate contracts
$
(12,492
)
$
—

$
—

$
—
Schedule of Outstanding Long (Short) Derivatives
NJNG and Energy Services had the following outstanding long (short) derivatives as of:
 
 
 
Volume (Bcf)
 
 
 
March 31,
2020
 
September 30,
2019
Natural Gas Distribution
Futures
 
24.1

 
27.6

 
Physical
 
20.0

 
11.6

Energy Services
Futures
 
(27.0
)
 
(29.6
)
 
Physical
 
30.9

 
44.5

 
Swaps
 
(2.9
)
 
(5.0
)
Schedule of Broker Margin Accounts by Company The balances are as follows:
(Thousands)
Balance Sheet Location
March 31,
2020
September 30,
2019
Natural Gas Distribution
Restricted broker margin accounts
$
2,116

$
1,982

Energy Services
Restricted broker margin accounts
$
21,830

$
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 March 31, 2020. 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
 
$
125,043

 
Noninvestment grade
 
12,310

 
Internally rated investment grade
 
28,499

 
Internally rated noninvestment grade
 
32,880

 
Total
 
$
198,732