XML 38 R17.htm IDEA: XBRL DOCUMENT v3.21.2
INVESTMENTS IN EQUITY INVESTEES
 12 Months Ended
Sep. 30, 2021
Equity Method Investments and Joint Ventures [Abstract]  
INVESTMENTS IN EQUITY INVESTEES
7. INVESTMENTS IN EQUITY INVESTEES

As of September 30, the Company’s investments in equity method investees includes the following:
(Thousands)20212020
Steckman Ridge (1)
$109,050 $112,378 
PennEast (2)
5,479 95,997 
Total$114,529 $208,375 
(1)Includes loans with a total outstanding principal balance of $70.4 million for both fiscal 2021 and 2020, which accrue interest at a variable rate that resets quarterly and are due October 1, 2023.
(2)Includes a deferred tax component related to AFUDC equity of $4.6 million for September 30, 2020. As a result of the impairment of the equity method investment in PennEast, the deferred tax component was reversed and charged to earnings as of September 30, 2021.

Steckman Ridge

The Company holds a 50 percent equity method investment in Steckman Ridge, a jointly owned and controlled natural gas storage facility located in Bedford County, Pennsylvania. NJNG and Energy Services have entered into storage and park and loan agreements with Steckman Ridge. See Note 18. Related Party Transactions for more information on these intercompany transactions.

PennEast

The Company, through its subsidiary NJR Midstream Company, is a 20 percent investor in PennEast, a partnership whose purpose was to construct and operate a 120-mile natural gas pipeline that would have extended from northeast Pennsylvania to western New Jersey.

PennEast received a Certificate of Public Convenience and Necessity for the project from FERC on January 19, 2018. On June 29, 2021, the Supreme Court ruled in favor of PennEast reversing the earlier decision by the Third Circuit on the use of eminent domain to acquire state owned lands for pipeline construction and remanding the case back to the Third Circuit for further proceedings.

Despite the favorable outcome from the Supreme Court, PennEast continues to experience regulatory and legal challenges. As a result, the Company evaluated its equity investment in PennEast for impairment as of June 30, 2021, and determined that it was other-than-temporarily impaired. The Company estimated the fair value of its investment in PennEast using probability weighted scenarios assigned to discounted future cash flows. The impairment is the result of management's estimates and assumptions regarding the likelihood of certain outcomes related to required regulatory approvals and pending legal matters, the timing of which remains uncertain, the timing and magnitude of construction costs and in-service dates, the evaluation of the current environmental and political climate as it relates to interstate pipeline development, and transportation capacity revenues and discount rates.

As of September 30, 2021, the Company recognized an other-than-temporary impairment charge of $92.0 million, or approximately $74.5 million, net of income taxes. The other-than-temporary impairment is recorded in equity in (losses) earnings from affiliates in the Consolidated Statements of Operations. On September 27, 2021, the PennEast partnership determined that this project is no longer supported, and all further development has ceased. Given that construction of the pipeline will not continue, the Company re-evaluated its investment for an additional other-than temporary impairment as of September 30, 2021. It was determined that no additional impairment was needed as the current value of the investment noted above represents the best estimate of the salvage value of the remaining assets of the project.

It is possible that future developments could impact the fair value and could result in the recognition of additional impairment charges.
The following is the summarized financial information for Steckman Ridge and PennEast for fiscal years ended September 30:
(Thousands)202120202019
Steckman Ridge
Operating revenues$21,847 $28,814 $32,087 
Gross profit$13,350 $20,537 $24,051 
Income from continuing operations$11,483 $16,926 $18,944 
Net income $11,483 $16,926 $18,944 
Net income attributable to NJR$5,742 $8,463 $9,472 
Current assets$14,786 $7,979 
Noncurrent assets$202,670 $207,051 
Current liabilities$9,738 $945 
Noncurrent liabilities$140,810 $140,810 
PennEast
Operating revenues$— $— $— 
Gross profit$— $— $— 
Income from continuing operations$(406,305)$34,376 $31,689 
Net (loss) income$(406,305)$34,376 $31,689 
Net (loss) income attributable to NJR$(81,261)$6,875 $6,338 
Current assets$822 $2,829 
Noncurrent assets$44,998 $446,212 
Current liabilities$248 $1,761 
Noncurrent liabilities$500 $500