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DERIVATIVE INSTRUMENTS (Tables)
 6 Months Ended
Mar. 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
March 31, 2022September 30, 2021
(Thousands)Balance Sheet LocationAssetsLiabilitiesAssetsLiabilities
Derivatives not designated as hedging instruments:
Natural Gas Distribution:
Physical commodity contractsDerivatives - current$101 $16 $36 $16 
Financial commodity contractsDerivatives - current111 1,887 2,046 13 
Energy Services:
Physical commodity contractsDerivatives - current1,853 21,594 2,818 24,592 
Derivatives - noncurrent131 19,632 333 13,237 
Financial commodity contractsDerivatives - current19,483 21,701 30,226 62,521 
Derivatives - noncurrent4,009 — 3,068 260 
Foreign currency contractsDerivatives - current38 18 125 3 
Derivatives - noncurrent— — 2 — 
Total fair value of derivatives$25,726 $64,848 $38,654 $100,642 
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 March 31, 2022:
Derivative assets:
Energy Services
Physical commodity contracts$1,984 $(480)$(200)$1,304 
Financial commodity contracts23,492 (18,300)— 5,192 
Foreign currency contracts38 (18)— 20 
Total Energy Services$25,514 $(18,798)$(200)$6,516 
Natural Gas Distribution
Physical commodity contracts$101 $(8)$— $93 
Financial commodity contracts111 (111)— — 
Total Natural Gas Distribution$212 $(119)$— $93 
Derivative liabilities:
Energy Services
Physical commodity contracts$41,226 $(480)$— $40,746 
Financial commodity contracts21,701 (18,300)— 3,401 
Foreign currency contracts18 (18)— — 
Total Energy Services$62,945 $(18,798)$— $44,147 
Natural Gas Distribution
Physical commodity contracts$16 $(8)$— $8 
Financial commodity contracts1,887 (111)— 1,776 
Total Natural Gas Distribution$1,903 $(119)$— $1,784 
As of September 30, 2021:
Derivative assets:
Energy Services
Physical commodity contracts$3,151 $(894)$(700)$1,557 
Financial commodity contracts33,294 (33,294)20,532 20,532 
Foreign currency contracts127 (3)— 124 
Total Energy Services$36,572 $(34,191)$19,832 $22,213 
Natural Gas Distribution
Physical commodity contracts$36 $(8)$— $28 
Financial commodity contracts2,046 (13)— 2,033 
Total Natural Gas Distribution$2,082 $(21)$— $2,061 
Derivative liabilities:
Energy Services
Physical commodity contracts$37,829 $(894)$— $36,935 
Financial commodity contracts62,781 (33,294)— 29,487 
Foreign currency contracts3 (3)— — 
Total Energy Services$100,613 $(34,191)$— $66,422 
Natural Gas Distribution
Physical commodity contracts$16 $(8)$— $8 
Financial commodity contracts13 (13)— — 
Total Natural Gas Distribution$29 $(21)$— $8 
(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 March 31, 2022:
Derivative assets:
Energy Services
Physical commodity contracts$1,984 $(480)$(200)$1,304 
Financial commodity contracts23,492 (18,300)— 5,192 
Foreign currency contracts38 (18)— 20 
Total Energy Services$25,514 $(18,798)$(200)$6,516 
Natural Gas Distribution
Physical commodity contracts$101 $(8)$— $93 
Financial commodity contracts111 (111)— — 
Total Natural Gas Distribution$212 $(119)$— $93 
Derivative liabilities:
Energy Services
Physical commodity contracts$41,226 $(480)$— $40,746 
Financial commodity contracts21,701 (18,300)— 3,401 
Foreign currency contracts18 (18)— — 
Total Energy Services$62,945 $(18,798)$— $44,147 
Natural Gas Distribution
Physical commodity contracts$16 $(8)$— $8 
Financial commodity contracts1,887 (111)— 1,776 
Total Natural Gas Distribution$1,903 $(119)$— $1,784 
As of September 30, 2021:
Derivative assets:
Energy Services
Physical commodity contracts$3,151 $(894)$(700)$1,557 
Financial commodity contracts33,294 (33,294)20,532 20,532 
Foreign currency contracts127 (3)— 124 
Total Energy Services$36,572 $(34,191)$19,832 $22,213 
Natural Gas Distribution
Physical commodity contracts$36 $(8)$— $28 
Financial commodity contracts2,046 (13)— 2,033 
Total Natural Gas Distribution$2,082 $(21)$— $2,061 
Derivative liabilities:
Energy Services
Physical commodity contracts$37,829 $(894)$— $36,935 
Financial commodity contracts62,781 (33,294)— 29,487 
Foreign currency contracts3 (3)— — 
Total Energy Services$100,613 $(34,191)$— $66,422 
Natural Gas Distribution
Physical commodity contracts$16 $(8)$— $8 
Financial commodity contracts13 (13)— — 
Total Natural Gas Distribution$29 $(21)$— $8 
(1)Derivative assets and liabilities are presented on a gross basis on the balance sheet as the Company does not elect balance sheet offsetting under ASC 210-20.
(2)Includes transactions with NAESB netting election, transactions held by FCMs with net margining and transactions with ISDA netting.
(3)Financial collateral includes cash balances at FCMs as well as cash received from or pledged to other counterparties.
(4)Net amounts represent presentation of derivative assets and liabilities if the Company were to elect balance sheet offsetting under ASC 210-20.
Effect of Derivative Instruments on Consolidated Statements of Operations
The following table presents the effect of derivative instruments recognized on the Unaudited Condensed Consolidated Statements of Operations for the periods set forth below:
(Thousands)Location of gain (loss) recognized in income on derivativesAmount of gain (loss) recognized
in income on derivatives
Three Months EndedSix Months Ended
March 31,March 31,
Derivatives not designated as hedging instruments:2022202120222021
Energy Services:
Physical commodity contractsOperating revenues$(11,582)$36,419 $(11,432)$41,671 
Physical commodity contractsNatural gas purchases(875)2,650 630 (2,404)
Financial commodity contractsNatural gas purchases(31,223)(27,315)29,966 20,440 
Foreign currency contractsNatural gas purchases(14)27 (14)227 
Total unrealized and realized (gain) loss$(43,694)$11,781 $19,150 $59,934 
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 EndedSix Months Ended
March 31,March 31,
(Thousands)2022202120222021
Natural Gas Distribution:
Physical commodity contracts$4,538 $1,091 $6,234 $1,433 
Financial commodity contracts61,485 645 46,838 (3,627)
Total unrealized and realized gain (loss)$66,023 $1,736 $53,072 $(2,194)
Schedule of Outstanding Long (Short) Derivatives
NJNG and Energy Services had the following outstanding long (short) derivatives as of:
Volume (Bcf)
Transaction TypeMarch 31, 2022September 30,
2021
Natural Gas DistributionFutures29.6 22.2 
Physical Commodity12.8 7.6 
Energy ServicesFutures(0.7)(13.4)
Swaps(0.2)(0.3)
Physical Commodity7.5 0.6 
Schedule of Broker Margin Accounts by Company The balances are as follows:
(Thousands)Balance Sheet LocationMarch 31, 2022September 30,
2021
Natural Gas DistributionRestricted broker margin accounts-current assets$11,617 $2,790 
Energy ServicesRestricted broker margin accounts-current assets$38,284 $70,050 
Restricted broker margin accounts-current liabilities$(2,464)$— 
Summary of Gross Credit Exposures
The following is a summary of gross credit exposures grouped by investment and noninvestment grade counterparties, as of March 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$128,926 
Noninvestment grade9,601 
Internally rated investment grade20,566 
Internally rated noninvestment grade22,225 
Total$181,318