XML 28 R14.htm IDEA: XBRL DOCUMENT v3.20.2
REGULATION
9 Months Ended
Jun. 30, 2020
Regulated Operations [Abstract]  
REGULATION
4. REGULATION

NJNG is subject to cost-based regulation, therefore, it is permitted to recover authorized operating expenses and earn a reasonable return on its utility capital investments based on the BPU's approval. The impact of the ratemaking process and decisions authorized by the BPU allows NJNG to capitalize or defer certain costs that are expected to be recovered from its customers as regulatory assets and to recognize certain obligations representing amounts that are probable future expenditures as regulatory liabilities in accordance with accounting guidance applicable to regulated operations.

NJNG's recovery of costs is facilitated through its base rates, BGSS and other regulatory tariff riders. NJNG is required to make annual filings to the BPU for review of its BGSS, CIP and various other programs and related rates. Annual rate changes are typically requested to be effective at the beginning of the following fiscal year. All rate and program changes are subject to
proper notification and BPU review and approval. In addition, NJNG is permitted to implement certain BGSS rate changes on a provisional basis with proper notification to the BPU.

Regulatory assets and liabilities included on the Unaudited Condensed Consolidated Balance Sheets are comprised of the following:
(Thousands)
June 30,
2020
September 30,
2019
Regulatory assets-current
 
 
New Jersey Clean Energy Program
$
17,062

$
15,468

Under-recovered gas costs

9,506

Conservation Incentive Program
20,836

3,371

Derivatives at fair value, net
9,845

4,526

Other
4,508


Total current regulatory assets
$
52,251

$
32,871

Regulatory assets-noncurrent
 
 
Environmental remediation costs
 
 
Expended, net of recoveries
$
36,053

$
38,351

Liability for future expenditures
128,886

131,080

Deferred income taxes
22,477

19,631

Derivatives at fair value, net

486

SAVEGREEN
15,229

10,201

Postemployment and other benefit costs
161,847

212,461

Deferred storm damage costs
7,058

8,687

Cost of removal
62,831

65,660

Other noncurrent regulatory assets
16,720

10,080

Total noncurrent regulatory assets
$
451,101

$
496,637

Regulatory liabilities-current
 
 
Over-recovered gas costs
6,774


Total current regulatory liabilities
$
6,774

$

Regulatory liabilities-noncurrent
 
 
Tax Act impact (1)
$
196,705

$
200,417

New Jersey Clean Energy Program
128

197

Other noncurrent regulatory liabilities
448

1,821

Total noncurrent regulatory liabilities
$
197,281

$
202,435


(1)
Reflects the re-measurement and subsequent amortization of NJNG's net deferred tax liabilities as a result of the change in federal tax rates enacted in the Tax Act.
Regulatory filings and/or actions that occurred during the current fiscal year include the following:

On October 25, 2019, the BPU approved NJNG’s annual filing to increase its EE recovery rate, which resulted in an annual recovery of approximately $11.3 million, effective November 1, 2019.

On November 13, 2019, the BPU issued an order adopting a stipulation of settlement approving a $62.2 million increase to base rates, effective on November 15, 2019. The increase includes an overall rate of return on rate base of 6.95 percent, return on common equity of 9.6 percent, a common equity ratio of 54 percent and a depreciation rate of 2.78 percent.

On March 16, 2020, a stipulation was signed in NJNG's annual SBC application which included an increase in the RAC rate of $1.2 million annually and a decrease to the NJCEP factor of $600,000. The stipulation is pending BPU approval.

On March 30, 2020, NJNG filed a petition with the BPU requesting a base rate increase of approximately $7.4 million for the recovery associated with NJ RISE and SAFE II capital investments cost of approximately $57.9 million made through June 30, 2020. On July 24, 2020, the Company updated this filing for actual information through June 30, 2020 and the revised rate increase requested is $7.1 million based on $55.1 million of actual capital investments. Changes to base rates are anticipated to be effective October 1, 2020.

On May 29, 2020, NJNG filed its annual petition with the BPU to decrease its BGSS rate for residential and small commercial customers. The rate changes will result in a $20.4 million decrease to the annual revenues credited to BGSS, a $3.9 million annual decrease related to its balancing charge, as well as changes to CIP rates, which will result in a $22.3 million annual recovery increase, anticipated to be effective October 1, 2020.
On May 29, 2020, NJNG filed a petition with the BPU to increase its EE recovery rate, which will result in an annual decrease of approximately $70,000, anticipated to be effective October 1, 2020.

On June 25, 2020, NJNG filed its annual USF compliance filing proposing a decrease to the statewide USF rate, which will result in the annual recovery decreasing by approximately $400,000, to be effective October 1, 2020.

On July 2, 2020, the BPU issued an order which authorized New Jersey utilities to create a regulatory asset by deferring incremental COVID-19 related costs and required a related quarterly report be filed for the COVID-19-related costs and savings incurred.

Regulatory assets at Adelphia, not included in the table above, were immaterial as of June 30, 2020.