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REPORTING SEGMENT AND OTHER OPERATIONS DATA
 3 Months Ended
Dec. 31, 2020
Segment Reporting [Abstract]  
REPORTING SEGMENT AND OTHER OPERATIONS DATA
15. REPORTING SEGMENT AND OTHER OPERATIONS DATA

The Company organizes its businesses based on a combination of factors, including its products and its regulatory environment. As a result, the Company manages its businesses through the following reporting segments and other operations: the Natural Gas Distribution segment consists of regulated energy and off-system, capacity and storage management operations; the Clean Energy Ventures segment consists of capital investments in clean energy projects; the Energy Services segment consists of unregulated wholesale and retail energy operations; the Storage and Transportation segment consists of the Company’s investments in natural gas transportation and storage facilities; the Home Services and Other operations consist of heating, cooling and water appliance sales, installations and services, other investments and general corporate activities.
Information related to the Company's various reporting segments and other operations is detailed below:
Three Months Ended
December 31,
(Thousands)20202019
Operating revenues
Natural Gas Distribution
External customers$195,729 $219,623 
Clean Energy Ventures
External customers6,370 6,212 
Energy Services
External customers (1)
227,349 368,304 
Intercompany2,128 2,111 
Storage and Transportation
External customers12,447 8,405 
Intercompany657 667 
Subtotal444,680 605,322 
Home Services and Other
External customers12,410 12,492 
Intercompany167 415 
Eliminations(2,952)(3,193)
Total$454,305 $615,036 
Depreciation and amortization
Natural Gas Distribution$19,169 $16,817 
Clean Energy Ventures5,433 6,316 
Energy Services (2)
42 29 
Storage and Transportation2,640 1,681 
Subtotal27,284 24,843 
Home Services and Other260 246 
Eliminations(182)(452)
Total$27,362 $24,637 
Interest income (3)
Natural Gas Distribution$82 $107 
Energy Services— 37 
Storage and Transportation694 697 
Subtotal776 841 
Home Services and Other132 491 
Eliminations(239)(1,146)
Total$669 $186 
(1)Includes sales to Canada for the Energy Services segment, which are immaterial.
(2)The amortization of acquired wholesale energy contracts is excluded above and is included in natural gas purchases - nonutility on the Unaudited Condensed Consolidated Statements of Operations.
(3)Included in other income, net on the Unaudited Condensed Consolidated Statements of Operations.
Three Months Ended
December 31,
(Thousands)20202019
Interest expense, net of capitalized interest
Natural Gas Distribution$8,974 $7,832 
Clean Energy Ventures5,034 4,492 
Energy Services680 1,226 
Storage and Transportation3,982 2,822 
Subtotal18,670 16,372 
Home Services and Other1,116 272 
Eliminations— (574)
Total$19,786 $16,070 
Income tax provision (benefit)
Natural Gas Distribution$8,367 $8,635 
Clean Energy Ventures(3,086)(3,834)
Energy Services12,122 10,752 
Storage and Transportation646 702 
Subtotal18,049 16,255 
Home Services and Other118 219 
Eliminations(726)(3)
Total$17,441 $16,471 
Equity in earnings of affiliates
Storage and Transportation$3,193 $3,664 
Eliminations(518)(275)
Total$2,675 $3,389 
Net financial earnings (loss)
Natural Gas Distribution$49,467 $43,856 
Clean Energy Ventures(10,274)(8,179)
Energy Services1,500 (5,122)
Storage and Transportation3,508 3,004 
Subtotal44,201 33,559 
Home Services and Other(62)1,109 
Eliminations518 263 
Total$44,657 $34,931 
Capital expenditures
Natural Gas Distribution$79,246 $77,797 
Clean Energy Ventures22,335 45,699 
Storage and Transportation7,613 2,561 
Subtotal109,194 126,057 
Home Services and Other686 126 
Total$109,880 $126,183 
Investments in equity investees
Storage and Transportation$286 $509 
Total$286 $509 
The Chief Executive Officer, who uses NFE as a measure of profit or loss in measuring the results of the Company's segments and operations, is the chief operating decision maker of the Company. A reconciliation of consolidated NFE to consolidated net income is as follows:
Three Months Ended
December 31,
(Thousands)20202019
Net financial earnings$44,657 $34,931 
Less:
Unrealized gain on derivative instruments and related transactions(37,491)(41,766)
Tax effect8,913 9,931 
Effects of economic hedging related to natural gas inventory(7,532)(8,887)
Tax effect1,790 2,112 
NFE tax adjustment(2,068)(2,211)
Net income$81,045 $75,752 

The Company uses derivative instruments as economic hedges of purchases and sales of physical natural gas inventory. For GAAP purposes, these derivatives are recorded at fair value and related changes in fair value are included in reported earnings. Revenues and cost of natural gas related to physical natural gas flow is recognized when the natural gas is delivered to customers. Consequently, there is a mismatch in the timing of earnings recognition between the economic hedges and physical natural gas flows. Timing differences occur in two ways:

•unrealized gains and losses on derivatives are recognized in reported earnings in periods prior to physical natural gas inventory flows; and

•unrealized gains and losses of prior periods are reclassified as realized gains and losses when derivatives are settled in the same period as physical natural gas inventory movements occur.

NFE is a measure of the earnings based on eliminating these timing differences, to effectively match the earnings effects of the economic hedges with the physical sale of natural gas, SRECs and foreign currency contracts. Consequently, to reconcile between net income and NFE, current period unrealized gains and losses on the derivatives are excluded from NFE as a reconciling item. Additionally, realized derivative gains and losses are also included in current period net income. However, NFE includes only realized gains and losses related to natural gas sold out of inventory, effectively matching the full earnings effects of the derivatives with realized margins on physical natural gas flows. Included in the tax effects are current and deferred income tax expense corresponding with the NFE. NJR also calculates a quarterly tax adjustment based on an estimated annual effective tax rate for NFE purposes.

The Company's assets for the various business segments and business operations are detailed below:
(Thousands)December 31,
2020		September 30,
2020
Assets at end of period:
Natural Gas Distribution$3,531,162 $3,531,477 
Clean Energy Ventures838,586 814,277 
Energy Services259,463 244,836 
Storage and Transportation854,476 844,799 
Subtotal5,483,687 5,435,389 
Home Services and Other156,544 138,375 
Intercompany assets (1)
(243,326)(257,287)
Total$5,396,905 $5,316,477 
(1)Consists of transactions between subsidiaries that are eliminated and reclassified in consolidation.