FAIR VALUE (Tables)

12 Months Ended

Sep. 30, 2023

As of September 30, the estimated fair value of long-term debt, including current maturities, excluding natural gas meter sale leasebacks, debt issuance costs and solar asset sale leasebacks, is as follows (1):


(Thousands)	2023		2022
NJNG (2) (3)
Carrying value	$	1,467,845	$	1,292,845
Fair market value	$	1,097,088	$	979,388
NJR (4)
Carrying value	$	1,120,000	$	1,070,000
Fair market value	$	1,009,448	$	966,968

(1)See Note 9. Debt for a reconciliation to long-term and short-term debt.

(2)Excludes the sale leasebacks of natural gas meters of $31.4M and $30.3M as of September 30, 2023 and 2022, respectively. The fair value of certain sale leasebacks of natural gas meters amounted to $20.9M and $15.7M as of September 30, 2023 and 2022, respectively.

(3)Excludes NJNG’s debt issuance costs of $9.8M and $9.5M as of September 30, 2023 and September 30, 2022, respectively.

(4)Excludes NJR’s debt issuance costs of $3.7M and $3.8M as of September 30, 2023 and September 30, 2022, respectively.

Schedule of Fair Value Hierarchy

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to inputs that are based on unobservable market data and includes the following:


Fair Value Hierarchy	Description of Fair Value Level	Fair Value Technique
Level 1	Unadjusted quoted prices for identical assets or liabilities in active markets	The Company’s Level 1 assets and liabilities include exchange-traded natural gas futures and options contracts, listed equities and money market funds. Exchange-traded futures and options contracts include all energy contracts traded on the NYMEX, CME and ICE that the Company refers to internally as basis swaps, fixed swaps, futures and financial options that are cleared through an FCM.
Level 2	Other significant observable inputs, such as interest rates or price data, including both commodity and basis pricing that is observed either directly or indirectly from publications or pricing services	The Company’s Level 2 assets and liabilities include over-the-counter physical forward commodity contracts and swap contracts, SREC forward sales or derivatives that are initially valued using observable quotes and are subsequently adjusted to include time value, credit risk or estimated transport pricing components for which no basis price is available. Level 2 financial derivatives consist of transactions with non-FCM counterparties (basis swaps, fixed swaps and/or options). Inputs are verifiable and do not require significant management judgment. For some physical commodity contracts, the Company utilizes transportation tariff rates that are publicly available and that it considers to be observable inputs that are equivalent to market data received from an independent source. There are no significant judgments or adjustments applied to the transportation tariff inputs and no market perspective is required. Even if the transportation tariff input were considered to be a “model,” it would still be considered to be a Level 2 input as the data is: •widely accepted and public; •non-proprietary and sourced from an independent third party; and •observable and published. These additional adjustments are generally not considered to be significant to the ultimate recognized values.
Level 3	Inputs derived from a significant amount of unobservable market data	These include the Company’s best estimate of fair value and are derived primarily through the use of internal valuation methodologies.

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized as follows:


	Quoted Prices in Active Markets for Identical Assets			Significant Other Observable Inputs			Significant Unobservable Inputs
(Thousands)	(Level 1)			(Level 2)			(Level 3)			Total
As of September 30, 2023
Assets
Physical commodity contracts		$	—		$	7,054		$	—	$	7,054
Financial commodity contracts		25,265			—			—		25,265


Money market funds		145			—			—		145
Other		2,641			—			—		2,641
Total assets at fair value		$	28,051		$	7,054		$	—	$	35,105
Liabilities
Physical commodity contracts		$	—		$	21,115		$	—	$	21,115
Financial commodity contracts		2,997			—			—		2,997



Total liabilities at fair value		$	2,997		$	21,115		$	—	$	24,112
As of September 30, 2022
Assets
Physical commodity contracts		$	—		$	10,485		$	—	$	10,485
Financial commodity contracts		20,517			—			—		20,517
Financial commodity contracts - foreign exchange		—			18			—		18

Money market funds		59			—			—		59
Other		1,884			—			—		1,884
Total assets at fair value		$	22,460		$	10,503		$	—	$	32,963
Liabilities
Physical commodity contracts		$	—		$	30,623		$	—	$	30,623
Financial commodity contracts		33,231			168			—		33,399
Financial commodity contracts - foreign exchange		—			17			—		17


Total liabilities at fair value		$	33,231		$	30,808		$	—	$	64,039