XML 47 R32.htm IDEA: XBRL DOCUMENT v3.20.4
DERIVATIVE INSTRUMENTS (Tables)
 3 Months Ended
Dec. 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
December 31, 2020September 30, 2020
(Thousands)Balance Sheet LocationAsset
Derivatives		Liability
Derivatives		Asset
Derivatives		Liability
Derivatives
Derivatives not designated as hedging instruments:
Natural Gas Distribution:
Physical commodity contractsDerivatives - current$1 $176 $78 $76 
Financial commodity contractsDerivatives - current723 574 71 282 
Energy Services:
Physical commodity contractsDerivatives - current6,416 16,815 6,454 20,438 
Derivatives - noncurrent1,159 12,668 1,264 12,003 
Financial commodity contractsDerivatives - current25,784 6,866 16,671 12,965 
Derivatives - noncurrent333 2,265 2,037 1,346 
Foreign currency contractsDerivatives - current163 13 36 104 
Derivatives - noncurrent55 — 48 3 
Total fair value of derivatives$34,634 $39,377 $26,659 $47,217 
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, 2020:
Derivative assets:
Energy Services
Physical commodity contracts$7,575 $(2,455)$(200)$4,920 
Financial commodity contracts26,117 (9,131)(888)16,098 
Foreign currency contracts218 (13)— 205 
Total Energy Services$33,910 $(11,599)$(1,088)$21,223 
Natural Gas Distribution
Physical commodity contracts$1 $(1)$— $— 
Financial commodity contracts723 (574)— 149 
Total Natural Gas Distribution$724 $(575)$— $149 
Derivative liabilities:
Energy Services
Physical commodity contracts$29,483 $(2,455)$— $27,028 
Financial commodity contracts9,131 (9,131)— — 
Foreign currency contracts13 (13)— — 
Total Energy Services$38,627 $(11,599)$— $27,028 
Natural Gas Distribution
Physical commodity contracts$176 $(1)$— $175 
Financial commodity contracts574 (574)— — 
Total Natural Gas Distribution$750 $(575)$— $175 
As of September 30, 2020:
Derivative assets:
Energy Services
Physical commodity contracts$7,718 $(3,587)$(200)$3,931 
Financial commodity contracts18,708 (14,311)— 4,397 
Foreign currency contracts84 (84)— — 
Total Energy Services$26,510 $(17,982)$(200)$8,328 
Natural Gas Distribution
Physical commodity contracts$78 $(65)$— $13 
Financial commodity contracts71 (71)— — 
Total Natural Gas Distribution$149 $(136)$— $13 
Derivative liabilities:
Energy Services
Physical commodity contracts$32,441 $(3,587)$— $28,854 
Financial commodity contracts14,311 (14,311)— — 
Foreign currency contracts107 (84)— 23 
Total Energy Services$46,859 $(17,982)$— $28,877 
Natural Gas Distribution
Physical commodity contracts$76 $(65)$— $11 
Financial commodity contracts282 (71)— 211 
Total Natural Gas Distribution$358 $(136)$— $222 
(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, 2020:
Derivative assets:
Energy Services
Physical commodity contracts$7,575 $(2,455)$(200)$4,920 
Financial commodity contracts26,117 (9,131)(888)16,098 
Foreign currency contracts218 (13)— 205 
Total Energy Services$33,910 $(11,599)$(1,088)$21,223 
Natural Gas Distribution
Physical commodity contracts$1 $(1)$— $— 
Financial commodity contracts723 (574)— 149 
Total Natural Gas Distribution$724 $(575)$— $149 
Derivative liabilities:
Energy Services
Physical commodity contracts$29,483 $(2,455)$— $27,028 
Financial commodity contracts9,131 (9,131)— — 
Foreign currency contracts13 (13)— — 
Total Energy Services$38,627 $(11,599)$— $27,028 
Natural Gas Distribution
Physical commodity contracts$176 $(1)$— $175 
Financial commodity contracts574 (574)— — 
Total Natural Gas Distribution$750 $(575)$— $175 
As of September 30, 2020:
Derivative assets:
Energy Services
Physical commodity contracts$7,718 $(3,587)$(200)$3,931 
Financial commodity contracts18,708 (14,311)— 4,397 
Foreign currency contracts84 (84)— — 
Total Energy Services$26,510 $(17,982)$(200)$8,328 
Natural Gas Distribution
Physical commodity contracts$78 $(65)$— $13 
Financial commodity contracts71 (71)— — 
Total Natural Gas Distribution$149 $(136)$— $13 
Derivative liabilities:
Energy Services
Physical commodity contracts$32,441 $(3,587)$— $28,854 
Financial commodity contracts14,311 (14,311)— — 
Foreign currency contracts107 (84)— 23 
Total Energy Services$46,859 $(17,982)$— $28,877 
Natural Gas Distribution
Physical commodity contracts$76 $(65)$— $11 
Financial commodity contracts282 (71)— 211 
Total Natural Gas Distribution$358 $(136)$— $222 
(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 derivativesAmount of gain (loss) recognized
in income on derivatives
Three Months Ended
December 31,
Derivatives not designated as hedging instruments:20202019
Energy Services:
Physical commodity contractsOperating revenues$5,252 $9,836 
Physical commodity contractsNatural gas purchases(5,054)(1,410)
Financial commodity contractsNatural gas purchases47,755 46,093 
Foreign currency contractsNatural gas purchases200 115 
Total unrealized and realized gains$48,153 $54,634 
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
December 31,
(Thousands)20202019
Natural Gas Distribution:
Physical commodity contracts$342 $840 
Financial commodity contracts(4,272)(1,088)
Total unrealized and realized losses$(3,930)$(248)
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)
The following table reflects the effect of derivative instruments designated as cash flow hedges in OCI:
(Thousands)Amount of Pre-tax Gain (Loss) Recognized in OCI on DerivativesLocation of Gain (Loss) Reclassified from OCI into IncomeAmount of Pre-tax Gain (Loss) Reclassified from OCI into Income
Three Months EndedThree Months Ended
December 31,December 31,
Derivatives in cash flow hedging relationships:2020201920202019
Interest rate contracts$— Interest expense$(343)$— 
Schedule of Outstanding Long (Short) Derivatives
NJNG and Energy Services had the following outstanding long (short) derivatives as of:
Volume (Bcf)
Transaction TypeDecember 31,
2020		September 30,
2020
Natural Gas DistributionFutures24.0 23.7 
Physical Commodity4.4 6.0 
Energy ServicesFutures(25.3)(27.5)
Swaps(1.2)(1.8)
Physical Commodity(7.3)5.0 
Schedule of Broker Margin Accounts by Company The balances are as follows:
(Thousands)Balance Sheet LocationDecember 31,
2020		September 30,
2020
Natural Gas DistributionRestricted broker margin accounts$20,282 $13,525 
Energy ServicesRestricted broker margin accounts$27,823 $55,919 
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, 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$159,541 
Noninvestment grade16,482 
Internally rated investment grade26,364 
Internally rated noninvestment grade24,543 
Total$226,930