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DERIVATIVE INSTRUMENTS (Tables)
 3 Months Ended
Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Fair Value of Derivative Assets and Liabilities
The following table presents the fair value of the Company's derivative assets and liabilities recognized on the Unaudited Condensed Consolidated Balance Sheets as of:
Derivatives at Fair Value
December 31, 2022September 30, 2022
(Thousands)Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
Derivatives not designated as hedging instruments:
Natural Gas Distribution:
Physical commodity contractsDerivatives - current$710 $29 $252 $11 
Financial commodity contractsDerivatives - current4,893 7,352 85 6,281 
Energy Services:
Physical commodity contractsDerivatives - current7,888 14,549 9,857 17,051 
Derivatives - noncurrent7 15,354 376 13,561 
Financial commodity contractsDerivatives - current31,187 26,174 14,423 26,488 
Derivatives - noncurrent3,438 8,123 6,009 630 
Foreign currency contractsDerivatives - current— — 18 17 
Total fair value of derivatives$48,123 $71,581 $31,020 $64,039 
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 and 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, 2022:
Derivative assets:
Energy Services
Physical commodity contracts$7,895 $(1,698)$(1,310)$4,887 
Financial commodity contracts34,625 (14,224)— 20,401 
Total Energy Services$42,520 $(15,922)$(1,310)$25,288 
Natural Gas Distribution
Physical commodity contracts$710 $— $— $710 
Financial commodity contracts4,893 (4,893)— — 
Total Natural Gas Distribution$5,603 $(4,893)$— $710 
Derivative liabilities:
Energy Services
Physical commodity contracts$29,903 $(1,698)$— $28,205 
Financial commodity contracts34,297 (14,224)— 20,073 
Total Energy Services$64,200 $(15,922)$— $48,278 
Natural Gas Distribution
Physical commodity contracts$29 $— $— $29 
Financial commodity contracts7,352 (4,893)— 2,459 
Total Natural Gas Distribution$7,381 $(4,893)$— $2,488 
As of September 30, 2022:
Derivative assets:
Energy Services
Physical commodity contracts$10,233 $(404)$(200)$9,629 
Financial commodity contracts20,432 (12,198)— 8,234 
Foreign currency contracts18 (17)— 1 
Total Energy Services$30,683 $(12,619)$(200)$17,864 
Natural Gas Distribution
Physical commodity contracts$252 $— $— $252 
Financial commodity contracts85 (85)— — 
Total Natural Gas Distribution$337 $(85)$— $252 
Derivative liabilities:
Energy Services
Physical commodity contracts$30,612 $(404)$— $30,208 
Financial commodity contracts27,118 (12,198)— 14,920 
Foreign currency contracts17 (17)— — 
Total Energy Services$57,747 $(12,619)$— $45,128 
Natural Gas Distribution
Physical commodity contracts$11 $— $— $11 
Financial commodity contracts6,281 (85)— 6,196 
Total Natural Gas Distribution$6,292 $(85)$— $6,207 
(1)Derivative assets and liabilities are presented on a gross basis on the condensed consolidated balance sheets 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 and 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, 2022:
Derivative assets:
Energy Services
Physical commodity contracts$7,895 $(1,698)$(1,310)$4,887 
Financial commodity contracts34,625 (14,224)— 20,401 
Total Energy Services$42,520 $(15,922)$(1,310)$25,288 
Natural Gas Distribution
Physical commodity contracts$710 $— $— $710 
Financial commodity contracts4,893 (4,893)— — 
Total Natural Gas Distribution$5,603 $(4,893)$— $710 
Derivative liabilities:
Energy Services
Physical commodity contracts$29,903 $(1,698)$— $28,205 
Financial commodity contracts34,297 (14,224)— 20,073 
Total Energy Services$64,200 $(15,922)$— $48,278 
Natural Gas Distribution
Physical commodity contracts$29 $— $— $29 
Financial commodity contracts7,352 (4,893)— 2,459 
Total Natural Gas Distribution$7,381 $(4,893)$— $2,488 
As of September 30, 2022:
Derivative assets:
Energy Services
Physical commodity contracts$10,233 $(404)$(200)$9,629 
Financial commodity contracts20,432 (12,198)— 8,234 
Foreign currency contracts18 (17)— 1 
Total Energy Services$30,683 $(12,619)$(200)$17,864 
Natural Gas Distribution
Physical commodity contracts$252 $— $— $252 
Financial commodity contracts85 (85)— — 
Total Natural Gas Distribution$337 $(85)$— $252 
Derivative liabilities:
Energy Services
Physical commodity contracts$30,612 $(404)$— $30,208 
Financial commodity contracts27,118 (12,198)— 14,920 
Foreign currency contracts17 (17)— — 
Total Energy Services$57,747 $(12,619)$— $45,128 
Natural Gas Distribution
Physical commodity contracts$11 $— $— $11 
Financial commodity contracts6,281 (85)— 6,196 
Total Natural Gas Distribution$6,292 $(85)$— $6,207 
(1)Derivative assets and liabilities are presented on a gross basis on the condensed consolidated balance sheets 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:20222021
Energy Services:
Physical commodity contractsOperating revenues$10,038 $150 
Physical commodity contractsNatural gas purchases(670)1,505 
Financial commodity contractsNatural gas purchases41,611 61,189 
Total unrealized and realized loss$50,979 $62,844 
Effect of Derivative Instruments Designated as Cash Flow Hedges on OCI The following table reflects the gains (losses) associated with NJNG's derivative instruments for the periods set forth below:
Three Months Ended
December 31,
(Thousands)20222021
Natural Gas Distribution:
Physical commodity contracts$(28,031)$1,696 
Financial commodity contracts(31,663)(14,647)
Total unrealized and realized loss$(59,694)$(12,951)
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) The following table reflects the effect of derivative instruments designated as cash flow hedges in OCI for the periods set forth below:
(Thousands)Amount of pre-tax gain (loss) recognized in OCI on derivativesLocation of gain (loss) reclassified from OCI into incomeAmount of pre-tax gain (loss) reclassified from OCI into income
Three Months EndedThree Months Ended
December 31,December 31,
Derivatives in cash flow hedging relationships:2022202120222021
Interest rate contracts$— $— Interest expense$(343)$(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,
2022		September 30,
2022
Natural Gas DistributionFutures23.1 30.5 
Physical Commodity1.8 6.8 
Energy ServicesFutures(10.7)(0.7)
Physical Commodity(5.2)2.7 
Schedule of Broker Margin Accounts by Company The balances by reporting segment are as follows:
(Thousands)Balance Sheet LocationDecember 31,
2022		September 30,
2022
Natural Gas DistributionRestricted broker margin accounts-current assets$23,846 $26,138 
Energy ServicesRestricted broker margin accounts-current assets$69,327 $68,123 
Restricted broker margin accounts-current liabilities$7,297 $— 
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, 2022. 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$263,489 
Noninvestment grade75,575 
Internally rated investment grade34,871 
Internally rated noninvestment grade46,725 
Total$420,660