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DERIVATIVE INSTRUMENTS (Tables)
 9 Months Ended
Jun. 30, 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
 
 
June 30, 2020
 
September 30, 2019
(Thousands)
Balance Sheet Location
Asset
Derivatives
Liability
Derivatives
Asset
Derivatives
Liability
Derivatives
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Natural Gas Distribution:
 
 
 
 
 
 
 
 
 
Physical commodity contracts
Derivatives - current
 
$
66

 
$
133

 
$
67

 
$
245

Financial commodity contracts
Derivatives - current
 
—

 
190

 
382

 
570

Interest rate contracts
Derivatives - current
 
—

 
5,056

 
—

 
—

Energy Services:
 
 
 
 
 
 
 
 
 
Physical commodity contracts
Derivatives - current
 
5,440

 
17,242

 
6,847

 
27,540

 
Derivatives - noncurrent
 
2,671

 
22,448

 
1,710

 
12,641

Financial commodity contracts
Derivatives - current
 
23,852

 
13,447

 
17,806

 
29,057

 
Derivatives - noncurrent
 
3,647

 
1,129

 
5,716

 
6,105

Foreign currency contracts
Derivatives - current
 
9

 
230

 
1

 
211

 
Derivatives - noncurrent
 
29

 
23

 
—

 
75

Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
Home Services and Other:
 
 
 
 
 
 
 
 
 
Interest rate contracts
Derivatives - current
 
—

 
10,796

 
—

 
—

Total fair value of derivatives
 
 
$
35,714

 
$
70,694

 
$
32,529

 
$
76,444
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 June 30, 2020:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
8,111

 
$
(3,097
)
 
$
(200
)
 
$
4,814

Financial commodity contracts
 
27,499

 
(14,576
)
 
—

 
12,923

Foreign currency contracts
 
38

 
(38
)
 
—

 
—

Total Energy Services
 
$
35,648

 
$
(17,711
)
 
$
(200
)
 
$
17,737

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
66

 
$
(39
)
 
$
—

 
$
27

Total Natural Gas Distribution
 
$
66

 
$
(39
)
 
$
—

 
$
27

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
39,690

 
$
(3,097
)
 
$
—

 
$
36,593

Financial commodity contracts
 
14,576

 
(14,576
)
 
—

 
—

Foreign currency contracts
 
253

 
(38
)
 
—

 
215

Total Energy Services
 
$
54,519

 
$
(17,711
)
 
$
—

 
$
36,808

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
133

 
$
(39
)
 
$
—

 
$
94

Financial commodity contracts
 
190

 
—

 
(190
)
 
—

Interest rate contracts
 
5,056

 
—

 
—

 
5,056

Total Natural Gas Distribution
 
$
5,379

 
$
(39
)
 
$
(190
)
 
$
5,150

Home Services and Other
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
10,796

 
$
—

 
$
—

 
$
10,796

Total Home Services and Other
 
$
10,796

 
$
—

 
$
—

 
$
10,796

As of September 30, 2019:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
8,557

 
$
(2,906
)
 
$
(200
)
 
$
5,451

Financial commodity contracts
 
23,522

 
(19,646
)
 
—

 
3,876

Foreign currency contracts
 
1

 
(1
)
 
—

 
—

Total Energy Services
 
$
32,080

 
$
(22,553
)
 
$
(200
)
 
$
9,327

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
67

 
$
(9
)
 
$
—

 
$
58

Financial commodity contracts
 
382

 
(382
)
 
—

 
—

Total Natural Gas Distribution
 
$
449

 
$
(391
)
 
$
—

 
$
58

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
40,181

 
$
(2,906
)
 
$
—

 
$
37,275

Financial commodity contracts
 
35,162

 
(19,646
)
 
(15,516
)
 
—

Foreign currency contracts
 
286

 
(1
)
 
—

 
285

Total Energy Services
 
$
75,629

 
$
(22,553
)
 
$
(15,516
)
 
$
37,560

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
245

 
$
(9
)
 
$
—

 
$
236

Financial commodity contracts
 
570

 
(382
)
 
(188
)
 
—

Total Natural Gas Distribution
 
$
815

 
$
(391
)
 
$
(188
)
 
$
236

(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 June 30, 2020:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
8,111

 
$
(3,097
)
 
$
(200
)
 
$
4,814

Financial commodity contracts
 
27,499

 
(14,576
)
 
—

 
12,923

Foreign currency contracts
 
38

 
(38
)
 
—

 
—

Total Energy Services
 
$
35,648

 
$
(17,711
)
 
$
(200
)
 
$
17,737

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
66

 
$
(39
)
 
$
—

 
$
27

Total Natural Gas Distribution
 
$
66

 
$
(39
)
 
$
—

 
$
27

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
39,690

 
$
(3,097
)
 
$
—

 
$
36,593

Financial commodity contracts
 
14,576

 
(14,576
)
 
—

 
—

Foreign currency contracts
 
253

 
(38
)
 
—

 
215

Total Energy Services
 
$
54,519

 
$
(17,711
)
 
$
—

 
$
36,808

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
133

 
$
(39
)
 
$
—

 
$
94

Financial commodity contracts
 
190

 
—

 
(190
)
 
—

Interest rate contracts
 
5,056

 
—

 
—

 
5,056

Total Natural Gas Distribution
 
$
5,379

 
$
(39
)
 
$
(190
)
 
$
5,150

Home Services and Other
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
10,796

 
$
—

 
$
—

 
$
10,796

Total Home Services and Other
 
$
10,796

 
$
—

 
$
—

 
$
10,796

As of September 30, 2019:
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
8,557

 
$
(2,906
)
 
$
(200
)
 
$
5,451

Financial commodity contracts
 
23,522

 
(19,646
)
 
—

 
3,876

Foreign currency contracts
 
1

 
(1
)
 
—

 
—

Total Energy Services
 
$
32,080

 
$
(22,553
)
 
$
(200
)
 
$
9,327

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
67

 
$
(9
)
 
$
—

 
$
58

Financial commodity contracts
 
382

 
(382
)
 
—

 
—

Total Natural Gas Distribution
 
$
449

 
$
(391
)
 
$
—

 
$
58

Derivative liabilities:
 
 
 
 
 
 
 
 
Energy Services
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
40,181

 
$
(2,906
)
 
$
—

 
$
37,275

Financial commodity contracts
 
35,162

 
(19,646
)
 
(15,516
)
 
—

Foreign currency contracts
 
286

 
(1
)
 
—

 
285

Total Energy Services
 
$
75,629

 
$
(22,553
)
 
$
(15,516
)
 
$
37,560

Natural Gas Distribution
 
 
 
 
 
 
 
 
Physical commodity contracts
 
$
245

 
$
(9
)
 
$
—

 
$
236

Financial commodity contracts
 
570

 
(382
)
 
(188
)
 
—

Total Natural Gas Distribution
 
$
815

 
$
(391
)
 
$
(188
)
 
$
236

(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 derivatives
Amount of gain (loss) recognized
in income on derivatives
 
 
Three Months Ended
Nine Months Ended
 
 
June 30,
June 30,
Derivatives not designated as hedging instruments:
2020
 
2019
2020
 
2019
Energy Services:
 
 
 
 
 
 
 
Physical commodity contracts
Operating revenues
$
(18,061
)
 
$
1,435

$
3,871

 
$
74

Physical commodity contracts
Gas purchases
1,014

 
2,392

(2,288
)
 
266

Financial commodity contracts
Gas purchases
2,408

 
22,919

71,820

 
17,732

Foreign currency contracts
Gas purchases
181

 
37

(179
)
 
(188
)
Home Services and Other:
 
 
 
 
 
 
 
Interest rate contracts
Interest expense
—

 
(43
)

 
(228
)
Total unrealized and realized gains (losses)
$
(14,458
)
 
$
26,740

$
73,224

 
$
17,656
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
Nine Months Ended
 
June 30,
June 30,
(Thousands)
2020
 
2019
2020
 
2019
Natural Gas Distribution:
 
 
 
 
 
 
Physical commodity contracts
$
308

 
$
812

$
1,357

 
$
5,225

Financial commodity contracts
1,029

 
(10,368
)
(11,493
)
 
(7,129
)
Interest rate contracts
1,636

 
—

(5,056
)
 
—

Total unrealized and realized (losses) gains
$
2,973

 
$
(9,556
)
$
(15,192
)
 
$
(1,904
)
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 Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion)
Amount of Gain or (Loss) Reclassified from OCI into Income (Effective Portion)
 
Three Months Ended
Three Months Ended
 
June 30,
June 30,
Derivatives in cash flow hedging relationships:
2020
2019
2020
2019
Interest rate contracts
$
(807
)
$
—

$
—

$
—

 
Nine Months Ended
Nine Months Ended
 
June 30,
June 30,
Derivatives in cash flow hedging relationships:
2020
2019
2020
2019
Interest rate contracts
$
(13,299
)
$
—

$
—

$
—
Schedule of Outstanding Long (Short) Derivatives
NJNG and Energy Services had the following outstanding long (short) derivatives as of:
 
 
 
Volume (Bcf)
 
 
 
June 30,
2020
 
September 30,
2019
Natural Gas Distribution
Futures
 
18.8

 
27.6

 
Physical
 
10.3

 
11.6

Energy Services
Futures
 
(38.4
)
 
(29.6
)
 
Physical
 
12.6

 
44.5

 
Swaps
 
(2.3
)
 
(5.0
)
Schedule of Broker Margin Accounts by Company The balances are as follows:
(Thousands)
Balance Sheet Location
June 30,
2020
September 30,
2019
Natural Gas Distribution
Restricted broker margin accounts
$
—

$
1,982

 
Accounts payable and other
$
(219
)
$
—

Energy Services
Restricted broker margin accounts
$
52,211

$
71,741
Summary of Gross Credit Exposures
The following is a summary of gross credit exposures grouped by investment and noninvestment grade counterparties, as of June 30, 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
 
$
126,026

 
Noninvestment grade
 
8,915

 
Internally rated investment grade
 
22,877

 
Internally rated noninvestment grade
 
12,319

 
Total
 
$
170,137