EMPLOYEE BENEFIT PLANS

12 Months Ended

Sep. 30, 2023

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

11. EMPLOYEE BENEFIT PLANS

Pension and Other Postemployment Benefit Plans

The Company has two trusteed, noncontributory defined benefit retirement plans covering eligible regular represented and non-represented employees with more than one year of service. Defined benefit plan benefits are based on years of service and average compensation during the highest 60 consecutive months of employment. The Company also provides postemployment medical and life insurance benefits to employees who meet certain eligibility requirements.

All represented employees of NJRHS hired on or after October 1, 2000, non-represented employees hired on or after October 1, 2009 and NJNG represented employees hired on or after January 1, 2012 are covered by an enhanced defined contribution plan instead of the defined benefit plan. Participation in the postemployment medical and life insurance plan was also frozen to new employees as of the same dates, with the exception of new NJRHS represented employees, for which benefits were frozen beginning April 3, 2012.

The Company maintains an unfunded nonqualified PEP that was established to provide employees with the full level of benefits as stated in the qualified plan without reductions due to various limitations imposed by the provisions of federal income tax laws and regulations. There are no plan assets in the nonqualified plan due to the nature of the plan.

The Company’s funding policy for its pension plans is to contribute at least the minimum amount required by the Employee Retirement Income Security Act of 1974, as amended. In fiscal 2023 and 2022, the Company had no minimum funding requirements and did not make any discretionary contributions to the pension plans. The Company does not expect to be required to make additional contributions to fund the pension plans during the next fiscal year based on current actuarial assumptions; however, funding requirements are uncertain and can depend significantly on changes in actuarial assumptions, returns on plan assets and changes in the demographics of eligible employees and covered dependents.

There are no federal requirements to pre-fund OPEB benefits. However, the Company is required to fund certain amounts due to regulatory agreements with the BPU. The Company contributed $4.2M and $6.1M in fiscal 2023 and 2022, respectively, and estimates that it will contribute between $5M and $10M over each of the next five years. Additional contributions may be required based on market conditions and changes to assumptions.

The following summarizes the changes in the funded status of the plans and the related liabilities recognized on the Consolidated Balance Sheets as of September 30:

	Pension (1)				OPEB
(Thousands)	2023		2022		2023		2022
Change in Benefit Obligation
Benefit obligation at beginning of year	$	290,823	$	395,547	$	173,217	$	244,674
Service cost	5,402		8,291		2,471		4,305
Interest cost	15,174		9,632		9,146		6,355
Plan participants’ contributions (2)	32		59		552		423
Actuarial (gain) loss	(7,057)		(109,320)		25,363		(77,775)
Benefits paid, net of retiree subsidies received	(14,053)		(13,386)		(7,343)		(4,765)
Benefit obligation at end of year	$	290,321	$	290,823	$	203,406	$	173,217
Change in plan assets
Fair value of plan assets at beginning of year	$	284,347	$	355,284	$	99,736	$	114,183
Actual return (loss) on plan assets	27,456		(58,239)		9,826		(15,996)
Employer contributions	579		628		4,192		6,082
Benefits paid, net of plan participants’ contributions (2)	(14,021)		(13,326)		(6,971)		(4,533)
Fair value of plan assets at end of year	$	298,361	$	284,347	$	106,783	$	99,736
Funded status	$	8,040	$	(6,476)	$	(96,623)	$	(73,481)
Amounts recognized on Consolidated Balance Sheets
Postemployment employee benefit asset
Noncurrent	$	18,684	$	4,388	$	—	$	—
Postemployment employee benefit liability
Current	$	(538)	$	(578)	$	(4,201)	$	(900)
Noncurrent	(10,106)		(10,286)		(92,422)		(72,581)
Total	$	8,040	$	(6,476)	$	(96,623)	$	(73,481)

(1)Includes the Company’s PEP.

(2)Employees hired prior to July 1, 1998, that were eligible to elect an additional participant contribution to enhance their benefits, and contributions made during the periods were immaterial.

The Company recognizes a liability for its underfunded benefit plans as required by ASC 715, Compensation - Retirement Benefits. The Company records the offset to regulatory assets for the portion of liability relating to NJNG and to accumulated OCI for the portion of the liability related to its unregulated operations.

The following table summarizes the amounts recognized in regulatory assets and accumulated OCI as of September 30:

	Regulatory Assets				Accumulated Other Comprehensive Income (Loss)
(Thousands)	Pension		OPEB		Pension		OPEB
Balance at September 30, 2021	$	56,187	$	60,335	$	22,790	$	12,696
Amounts arising during the period:
Net actuarial (gain)	(14,922)		(35,781)		(14,885)		(18,422)
Amounts amortized to net periodic costs:
Net actuarial (loss)	(5,843)		(4,577)		(2,902)		(1,107)
Prior service (cost) credit	(101)		133		—		11
Balance at September 30, 2022	$	35,321	$	20,110	$	5,003	$	(6,822)
Amounts arising during the period:
Net actuarial (gain) loss	(10,493)		9,936		(4,048)		12,320
Amounts amortized to net periodic costs:
Net actuarial (loss)	(87)		—		(213)		—
Prior service (cost)	(103)		—		—		—
Balance at September 30, 2023	$	24,638	$	30,046	$	742	$	5,498

The amounts in regulatory assets and accumulated OCI not yet recognized as components of net periodic benefit cost as of September 30 are:

	Regulatory Assets								Accumulated Other Comprehensive Income (Loss)
	Pension				OPEB				Pension				OPEB
(Thousands)	2023		2022		2023		2022		2023		2022		2023		2022
Net actuarial loss (gain)	$	24,577	$	35,157	$	30,046	$	20,110	$	742	$	5,003	$	5,498	$	(6,822)
Prior service cost	61		164		—		—		—		—		—		—
Total	$	24,638	$	35,321	$	30,046	$	20,110	$	742	$	5,003	$	5,498	$	(6,822)

To the extent the unrecognized amounts in accumulated OCI or regulatory assets exceed 10% of the greater of the benefit obligation or the fair value of plan assets, an amortized amount over the average expected future working lifetime of the active plan participants is recognized. Amounts included in regulatory assets and accumulated OCI expected to be recognized as components of net periodic benefit cost in fiscal 2024 are as follows:

	Regulatory Assets				Accumulated Other Comprehensive Income (Loss)
(Thousands)	Pension		OPEB		Pension		OPEB
Net actuarial loss (gain)	$	815	$	667	$	(12)	$	661
Prior service cost	62		—		—		—
Total	$	877	$	667	$	(12)	$	661

The projected benefit and accumulated benefit obligations and the fair value of plan assets as of September 30, are as follows:

	Pension
(Thousands)	2023		2022
Projected benefit obligation	$	290,321	$	290,823
Accumulated benefit obligation	$	267,794	$	265,933
Fair value of plan assets	$	298,361	$	284,347

The components of the net periodic cost for pension benefits, including the Company’s PEP, and OPEB costs (principally health care and life insurance) for employees and covered dependents for fiscal years ended September 30, are as follows:

	Pension						OPEB
(Thousands)	2023		2022		2021		2023		2022		2021
Service cost	$	5,402	$	8,291	$	8,730	$	2,471	$	4,305	$	4,844
Interest cost	15,174		9,632		9,112		9,146		6,355		6,071
Expected return on plan assets	(19,972)		(21,275)		(20,150)		(6,721)		(7,575)		(6,497)
Recognized actuarial loss	300		8,745		11,446		—		5,684		7,909
Prior service cost (credit) amortization	103		101		102		—		(144)		(179)
Net periodic benefit cost recognized as expense	$	1,007	$	5,494	$	9,240	$	4,896	$	8,625	$	12,148

Assumptions

The weighted average assumptions used to determine the Company’s benefit costs during the fiscal years below and obligations as of September 30, are as follows:

	Pension									OPEB
	2023			2022			2021			2023			2022			2021
Benefit costs:
Discount rate	5.50/5.50%		(1)	3.10/3.07%		(1)	2.95/2.92%		(1)	5.51/5.51%		(1)	3.24/3.17%		(1)	3.08/3.03%		(1)
Expected asset return	7.00	%		6.75	%		6.75	%		7.00	%		6.75	%		6.75	%
Compensation increase	3.00/3.50%		(1)	3.00/3.50%		(1)	3.00/3.50%		(1)	3.00/3.50%		(1)	3.00/3.50%		(1)	3.00/3.50%		(1)
Obligations:
Discount rate	5.89/5.87%		(1)	5.50/5.50%		(1)	3.10/3.07%		(1)	5.97/5.94%		(1)	5.51/5.51%		(1)	3.24/3.17%		(1)
Compensation increase	3.00/3.50%		(1)	3.00/3.50%		(1)	3.00/3.50%		(1)	3.00/3.50%		(1)	3.00/3.50%		(1)	3.00/3.50%		(1)

(1)Percentages for represented and non-represented plans, respectively.

When measuring its PBO, the Company uses an aggregate discount rate at which its obligation could be effectively settled. The Company determines a single weighted average discount rate based on a yield curve comprised of rates of return on a population of high quality debt issuances (AA- or better) whose cash flows (via coupons or maturities) match the timing and amount of its expected future benefit payments. The Company measures its service and interest costs using a disaggregated, or spot rate, approach. The Company applies the duration-specific spot rates from the full yield curve, as of the measurement date, to each year’s future benefit payments, which aligns the timing of the plans’ separate future cash flows to the corresponding spot rates on the yield curve.

Information relating to the assumed HCCTR used to determine expected OPEB benefits as of September 30, and the effect of a 1% change in the rate, are as follows:

($ in thousands)	2023		2022		2021
HCCTR	7.4%		6.6%		6.9%
Ultimate HCCTR	4.5%		4.5%		4.5%
Year ultimate HCCTR reached	2032		2027		2027
Effect of a 1 percentage point increase in the HCCTR on:
Year-end benefit obligation	$	30,818	$	26,710	$	43,217
Total service and interest cost	$	2,117	$	2,544	$	2,959
Effect of a 1 percentage point decrease in the HCCTR on:
Year-end benefit obligation	$	(25,283)	$	(21,853)	$	(34,669)
Total service and interest costs	$	(1,700)	$	(1,966)	$	(2,253)

The Company’s investment objective is a long-term real rate of return on assets before permissible expenses that is approximately 5% greater than the assumed rate of inflation, as measured by the consumer price index. The expected long-term rate of return is based on the asset categories in which the Company invests and the current expectations and historical performance for these categories.

The mix and targeted allocation of the pension and OPEB plans’ assets are as follows:

	2024		Assets at
	Target		September 30,
Asset Allocation	Allocation		2023		2022
U.S. equity securities	34	%	34	%	32	%
International equity securities	17		16		16
Fixed income	33		31		32
Collective investment trusts at NAV	16		19		20
Total	100	%	100	%	100	%

The Company adopted the revised mortality assumptions published by the Society of Actuaries for its pension and other postemployment benefit obligations, which reflected increased life expectancies in the U.S. The adoption of the new mortality projection scale, MP-2021, and the Pri-2012 mortality study, did not materially impact the projected benefit obligation for the plans.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid during the following fiscal years:

(Thousands)	2024		2025		2026		2027		2028		2029 - 2033
Pension	$	15,227	$	16,233	$	17,255	$	18,246	$	19,219	$	110,341
OPEB	$	6,925	$	7,602	$	8,481	$	9,337	$	10,211	$	63,780

The Company’s OPEB plans provide prescription drug benefits that are actuarially equivalent to those provided by Medicare Part D. Therefore, under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, the Company qualifies for federal subsidies. Estimated subsidy payments for fiscal 2024 and 2025 are immaterial and zero thereafter.

Pension and OPEB assets held in the master trust, measured at fair value, are summarized as follows:

	Pension				OPEB
(Thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Total
As of September 30, 2023
Assets
Registered Investment Companies:
Equity Funds:
Large Cap Index	81,171		81,171		30,884		30,884
Extended Market Index	17,256		17,256		6,444		6,444
International Stock	48,557		48,557		17,966		17,966
Fixed Income Funds:
Emerging Markets	11,471		11,471		4,306		4,306
Core Fixed Income	—		—		22,241		22,241
High Yield Bond Fund	20,685		20,685		7,651		7,651
Long Duration Fund	58,484		58,484		—		—
Total assets in the fair value hierarchy	$	237,624	237,624		$	89,492	89,492
Investments measured at net asset value
Collective investment trusts			60,737				17,291
Total assets at fair value			$	298,361			$	106,783
As of September 30, 2022
Assets
Money market funds	$	—	$	—	$	28	$	28
Registered Investment Companies:
Equity Funds:
Large Cap Index	75,394		75,394		26,939		26,939
Extended Market Index	15,783		15,783		5,578		5,578
International Stock	44,846		44,846		16,106		16,106
Fixed Income Funds:
Emerging Markets	11,074		11,074		4,026		4,026
Core Fixed Income	—		—		16,594		16,594
Opportunistic Income	—		—		3,283		3,283
Ultra Short Duration	—		—		3,296		3,296
High Yield Bond Fund	19,816		19,816		7,320		7,320
Long Duration Fund	59,084		59,084		—		—
Total assets in the fair value hierarchy	$	225,997	225,997		$	83,170	83,170
Investments measured at net asset value
Collective investment trusts			58,350				16,566
Total assets at fair value			$	284,347			$	99,736

The Plan had no Level 2 or Level 3 fair value measurements during fiscal 2023 and 2022, and there have been no changes

in valuation methodologies as of September 30, 2023. The Plan held assets that are valued using NAV as a practical expedient, which are excluded from the fair value hierarchy. The following is a description of the valuation methodologies used for assets measured at fair value:

Asset Types	Description of the Valuation Methodologies
Money Market funds	Represents bank balances and money market funds that are valued based on the NAV of shares held at year end.
Registered Investment Companies	Equity and fixed income funds valued at the NAV of shares held by the plan at year end as reported on the active market on which the individual securities are traded.
Collective investment trusts	The NAV for collective investment trusts is provided by the Trustee and is used as a practical expedient to estimate fair value. The NAV is based on the value of the underlying assets owned by the fund less liabilities.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Defined Contribution Plan

The Company offers a Savings Plan to eligible employees. The Company matches 85% of participants’ contributions up to 6% of base compensation. Represented NJRHS employees, non-represented employees hired on or after October 1, 2009, and NJNG represented employees hired on or after January 1, 2012, are eligible for an employer special contribution of between 3.5% and 4.5% of base compensation, depending on years of service, into the Savings Plan on their behalf. The amount expensed and contributed for the matching provision of the Savings Plan was $5.9M in fiscal 2023, $5.5M in fiscal 2022 and $5.1M in fiscal 2021. The amount contributed for the employer special contribution of the Savings Plan was $2.1M in fiscal 2023, $2.4M in fiscal 2022 and $2.1M in fiscal 2021.